Rubrik, Inc. (RBRK) Q2 2027 10-Q Summary
Business Context and Reporting Period
This summary covers Rubrik, Inc.'s unaudited financial results for the quarterly period ended July 31, 2026 (Q2 of Fiscal Year 2027). Rubrik is a security and artificial intelligence (AI) operations company focused on Zero Trust Data Security. The company operates a single reportable segment: software and services. Key strategic developments in this period include the continued transition of customers to the Rubrik Security Cloud (RSC) suite and the commercial launch of Rubrik Agent Cloud (RAC) in February 2026 to support AI agent operations.
Key Financial Metrics
| Metric | Three Months Ended July 31, 2026 | Six Months Ended July 31, 2026 |
|---|---|---|
| Total Revenue | $427.3 million | $814.3 million |
| Subscription Revenue | $407.2 million (95% of total) | $781.3 million (96% of total) |
| Gross Profit | $335.1 million | $646.9 million |
| Gross Margin | 78.4% | 79.4% |
| Operating Loss | $(71.9) million | $(124.5) million |
| Net Loss | $(61.8) million | $(103.6) million |
| Diluted Net Loss Per Share | $(0.30) | $(0.51) |
| Operating Cash Flow (6mo) | $158.5 million | |
| Free Cash Flow (6mo) | $139.3 million | |
| Cash & Short-Term Investments | $1.75 billion (as of July 31, 2026) | |
| Convertible Senior Notes | $1.15 billion principal (due 2030) |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 38% year-over-year (YoY) for the quarter and 38% YoY for the six-month period. Subscription revenue grew 37% for the quarter and 39% for the six months, driven by a 33% increase in Subscription Annual Recurring Revenue (ARR) to $1.66 billion.
- Cost of Revenue: Total cost of revenue increased 45% YoY for the quarter. Subscription cost of revenue rose primarily due to a $7.9 million increase in hosting costs and a $5.1 million increase in customer support organization costs. Other cost of revenue surged 139% due to higher hardware sales in international regions (APAC) not yet fully transitioned to contract manufacturers.
- Operating Expenses:
- R&D: Increased 38% YoY, driven by headcount growth and increased AI/hosting expenses.
- Sales & Marketing: Increased 23% YoY, driven by headcount growth and higher advertising/event spend.
- G&A: Decreased 16% YoY, primarily due to lower stock-based compensation and a release related to a previously disclosed legal matter.
- Profitability: While the company remains unprofitable, the operating loss narrowed significantly on a percentage basis. Net loss decreased 36% YoY for the quarter and 48% YoY for the six months.
Guidance, Outlook, and Risks
Management Commentary & Outlook:
- Management expects Subscription ARR to remain the primary driver of growth, with RSC representing the majority of revenue. The benefits from customers exercising or forfeiting "Subscription Credits" (material rights) are expected to decline in fiscal 2027.
- The company anticipates continued investment in R&D and sales/marketing to capture market share in data security and AI solutions.
- Free cash flow improved to $139.3 million for the six months ended July 31, 2026, attributed to higher sales and improved operating leverage.
Risks and Contingencies:
- Supply Chain: Reliance on a limited number of contract manufacturers for commodity servers exposes the company to global chip shortages and allocation constraints, potentially delaying deployments.
- AI Regulation & Liability: The use of generative and agentic AI tools introduces risks regarding intellectual property, data privacy, and potential legal liability for erroneous outputs.
- Legal Proceedings: The company is cooperating with a Department of Justice (DOJ) investigation regarding potential violations of federal law in connection with government contracts involving a former employee. The outcome is uncertain and could result in fines or reputational harm.
- Macroeconomic Conditions: Inflation, interest rates, and geopolitical tensions may impact customer spending and sales cycles.
Investor Verification Checklist
- Subscription Credit Impact: Verify the specific timing and magnitude of revenue recognition related to the expiration or exercise of Subscription Credits, as this creates volatility in revenue comparability.
- Hardware Transition: Confirm the status of the transition of Rubrik-branded Appliance sales to contract manufacturers, particularly in the APAC region, to assess future margin stability.
- DOJ Investigation: Monitor updates regarding the DOJ investigation into government contract compliance to evaluate potential financial exposure or debarment risks.
- Hosting Costs: Analyze the trajectory of hosting costs as a percentage of subscription revenue, given the shift to fully-hosted SaaS (RSC) and the associated margin compression risks.
- Convertible Notes: Review the terms of the $1.15 billion Convertible Senior Notes due 2030, specifically the conversion triggers and the impact of the associated capped call transactions on potential dilution.