"We are evolving into the security and AI company." - Bipul Sinha
Rubrik Inc (RBRK) QQ2 2026 Results: Strong ARR Growth, Improved Profitability, and AI-Driven Expansion in Cyber Resilience
Executive Summary
Rubrik delivered a standout Q2 FY2026, underscoring the company’s transition from a data-protection vendor to a security and AI platform provider. Key metrics highlight durable ARR growth and improving profitability: subscription ARR surpassed $1.25 billion, up 36% year over year; subscription revenue reached $297 million, up 55% YoY; and subscription net revenue retention remained robust above 120%. Large customers (subscription ARR >$100k) rose to 2,505, up 27%, signaling deepening enterprise penetration. Free cash flow was positive at about $57.5 million, with a free cash flow margin of roughly 19%, aided by ARR strength, improved subscription ARR contribution margins (up ~1,800 basis points YoY), and capital-structure optimization. Management raised full-year guidance as Rubrik accelerates into enterprise AI with Predibase and AI-centric products like Identity Recovery and DSPM integration under Rubrik Security Cloud (RSC). On the operating side, non-GAAP gross margin expanded to 82%, supported by higher ARR mix and efficiency gains, while the GAAP net income remained negative as Rubrik continues to invest in growth and AI-driven capabilities. The company acknowledges seasonality in quarterly margins and continues to fund R&D and GTM investments to sustain long-dated growth. Overall, Rubrik’s quarterly performance reinforces a two-thread thesis: (1) execution in the cyber resilience market with an expanding land-and-expand model, and (2) a meaningful AI-enabled growth vector via Predibase and enterprise AI solutions that could extend durability of ARR and margin expansion over the multi-year horizon.
Headline Q2 FY2026 metrics and YoY/QoQ context:
- Revenue: $309.86M, YoY +51.2%, QoQ +11.3%
- Gross profit: $246.301M, gross margin 79.49%
- Non-GAAP gross margin: 82% (versus 77% prior year)
- Operating income: -$94.463M, margin -30.48%
- Net income: -$95.929M, net income margin -30.96%
- EPS (GAAP): -$0.49; Weighted avg shares: 194.89M
- Subscription ARR: >$1.25B, up 36% YoY; net new subscription ARR: $71M
- Subscription revenue: $297M, up 55% YoY
- Cloud ARR: $1.1B, up 57% YoY
- Net Revenue Retention (NRR): >120%
- Customers with ≥$100k subscription ARR: 2,505, up 27%
- Free cash flow: ~$57.5M, FCF margin ~19% (Q2)
- Cash position: $1.523B in cash and short-term investments; total debt $1.128B; net debt ~$0.806B
- Guidance: Q3 revenue $319-321M; full-year revenue $1.227-1.237B; subscription ARR $1.408-1.416B; non-GAAP subscription ARR margin ~7%; non-GAAP EPS -$0.50 to -$0.44; Free cash flow $145-155M
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
309.86M
51.19%
11.27%
Gross Profit
246.30M
64.44%
12.98%
Operating Income
-94.46M
43.87%
-1.47%
Net Income
-95.93M
45.78%
6.05%
EPS
-0.49
50.00%
7.55%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management insights from the Q2 FY2026 earnings call, grouped by theme:
- Strategy and AI pivot
- Bipul Sinha: “Rubrik is evolving into the security and AI company” and pursuing enterprise AI acceleration alongside cyber resilience.
- Focus on Predibase as a driver of enterprise AI acceleration and the broader Rubrik Security Cloud platform to unify data security, identity resilience, and cyber recovery.
- Announcement of Agent Rewind and ongoing AI initiatives to enable safe, scalable AI adoption within enterprises.
- Market conditions and opportunity
- Bipul emphasized an assumed-breach mindset among IT/security leaders and a large, expanding cyber resilience market.
- Identity resilience and DSPM are highlighted as differentiators and critical components of a unified cyber resilience strategy.
- Execution and financial momentum
- CFO Kiran Chaudhry highlighted ARR strength, cloud transformation tailwinds, and higher nonrecurring revenue contributing to revenue growth.
- Noted 1,800 bps improvement in subscription ARR contribution margin YoY, driven by scale, efficiency, and cost management.
- Positive free cash flow of $57.5M in Q2, supported by ARR strength, renewals timing, and balance-sheet optimization (debt restructuring).
- Customer wins and real-world validation
- Examples include cloud protection expansions (M365, Azure workloads, Github, Jira), and large enterprise wins in transportation, pharma, and financial services, underscoring Rubrik’s cyber resilience value proposition.
- Guidance and outlook
- Management raised full-year guidance and framed Q3 as seasonally softer for margins but with continued ARR growth and AI investments shaping the longer-term growth trajectory.
We are evolving into the security and AI company.
— Bipul Sinha
We generated over $57 million in free cash flow this quarter.
— Kiran Chaudhry
Forward Guidance
Outlook assessment based on management guidance and industry positioning:
- Near-term trajectory: Q3 revenue guidance of $319–$321 million implies 35–36% YoY growth, with material rights contributing a few percentage points to revenue. Non-GAAP subscription ARR contribution margin is guided to ~6.5%, reflecting seasonal effects on net new ARR and OpEx. FY2026 guidance contemplates subscription ARR of $1.408–$1.416 billion (up ~29–30% YoY) and total revenue of $1.227–$1.237 billion (up ~38–40% YoY; 32–34% excluding material rights). Free cash flow is guided to $145–$155 million.
- Profitability and leverage: The company has demonstrably shifted toward operating leverage at scale, with non-GAAP subscription ARR contribution margin up ~1,800 bps YoY (net of IPO payroll tax effects) and gross margins expanding to 82%. The path to sustained profitability will depend on maintaining ARR growth, achieving operational efficiency, and managing the cadence of renewals and multiyear contracts.
- AI and growth catalysts: Predibase integration and Agent Rewind are positioned to unlock incremental AI-focused workflows and operating efficiency, potentially expanding addressable market and ASPs. The market will monitor the rate of customer adoption of AI features and the extent to which these capabilities translate into durable ARR expansion.
- Risks and watch points: Material rights revenue remains nonrecurring and can cause quarterly revenue volatility; seasonality in ARR and operating margins persists; the degree of acceleration in AI-related offerings and Fed/government-facing opportunities remains uncertain but is a meaningful optionality. Investors should monitor Q4 performance, ARR growth consistency, NRR trajectory, and any changes in deal duration or pricing strategies as Rubrik’s product portfolio expands.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
RBRK Focus
79.49%
N/A
N/A
N/A
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Rubrik’s QQ2 2026 results validate a dual-growth thesis: (1) scaling a durable cyber resilience platform with a compelling land-and-expand model that delivers sustained ARR growth and improving margins, and (2) leveraging a rapidly expanding AI exposure through Predibase, identity resilience, and agentic AI capabilities to accelerate enterprise AI adoption. The company has demonstrated meaningful profitability improvements at scale, evidenced by a 19% FCF margin (Q2) and an 82% non-GAAP gross margin, while guiding to 29–30% subscription ARR growth and positive free cash flow for FY2026. The market appears receptive to Rubrik’s integrated approach to data protection, identity, and AI, and large enterprise adoption remains a strong tailwind. Key caveats include the reliance on nonrecurring material rights for revenue in some quarters, seasonal margin dynamics (Q3 being seasonally weaker), and execution risk associated with integrating Predibase and expanding multiproduct GTM. If Rubrik sustains ARR expansion, improves non-GAAP profitability, and successfully monetizes its AI platform, the investment thesis remains favorable, with upside potential from large enterprise deployments and government-related cyber resilience opportunities.
Key Investment Factors
Growth Potential
Growth potential stems from: (a) continued expansion in cyber resilience with a multi-product approach (data protection, cloud protection, and identity resilience), (b) enterprise AI acceleration via Predibase and agentic AI capabilities (Agent Rewind, identity resilience integration with DSPM), and (c) high-value deals with large customers; subscription ARR growth of ~29–30% in FY2026 and cloud ARR growth of ~57% YoY indicate a durable growth engine supported by a land-and-expand model. The company’s strategy to consolidate data security and identity intelligence within Rubrik Security Cloud is designed to increase customer stickiness and cross-sell opportunities across workloads and cloud platforms.
Profitability Risk
Key risks include: (1) continued reliance on non-recurring material rights revenue which can inflate near-term revenue, (2) profitability and free cash flow depend on ARR velocity and renewal timing; seasonality may pressure margins in Q3, (3) execution risk in scaling AI initiatives and integrating Predibase effectively, (4) competition from legacy and new-gen backup vendors, and (5) macro and geopolitical dynamics affecting enterprise IT spend and Fed-specific adoption.
Financial Position
Liquidity remains robust with cash and short-term investments of approximately $1.523B and convertible debt of about $1.128B, yielding a net debt position around $0.806B. Total assets approximate $2.388B against total liabilities of $2.953B and negative stockholders’ equity of about -$0.564B, reflecting capitalization and balance-sheet structure typical of a recently IPO’ed/high-growth software company. The balance sheet shows a substantial deferred revenue balance (~$0.898B) and a mix of cloud-native, subscription-based revenue, indicating strong future revenue recognition. While the near-term profitability remains negative on a GAAP basis, non-GAAP margins are improving (gross margin 82%; subscription ARR contribution margin improved by ~1,800 bps YoY), supported by operating leverage as ARR scales.
SWOT Analysis
Strengths
Large and growing subscription ARR (> $1.25B) with 36% YoY growth and 120%+ NRR signaling durable expansion once customers adopt multipleRubrik workloads.
Differentiated platform with preemptive recovery engine and unified Rubrik Security Cloud combining data security, identity resilience, and cyber recovery.
Strong enterprise focus evidenced by 2,505 customers with ≥$100k ARR, up 27% YoY, and expansion across workloads (M365, Azure, GitHub, Jira, etc.).
Strategic AI initiatives (Predibase, Identity Resilience, DSPM integration, Agent Rewind) positioning Rubrik for enterprise AI acceleration and multi-cloud protection.
Weaknesses
GAAP profitability remains negative in Q2; continued reliance on nonrecurring rights revenue could introduce volatility to top-line growth.
Execution risk in rapidly integrating new AI offerings and expanding go-to-market for a broader multiproduct portfolio.
Opportunities
Enterprise AI acceleration market is sizable; Predibase integration and Agent Rewind could unlock additional ARR and attach-based upsell.
Identity Recovery and DSPM offer differentiated, integrated security capabilities that enhance cyber resilience and data protection value across cloud and on-premises workloads.
Fed and public-sector cyber resilience demand (RAMP, US government workloads) present a notable growth vector.
Threats
Intense competition from legacy backup vendors and newer gen players could pressure pricing and win rates.
Macro-driven IT spending cycles and potential customer budget constraints could impact ARR expansion pace.
Regulatory changes and data protection mandates could affect deployment timelines and product features.