Rubrik, Inc. (NYSE: RBRK) shares fell 9.73% to $97 in extended trading on Thursday, despite reporting second quarter fiscal year 2027 adjusted earnings per share of $0.22. This result significantly beat the analyst consensus estimate of $0.04.

The Security and AI Operations firm posted quarterly sales of $427.3 million, surpassing the $396.3 million estimate by nearly 8%. The market reaction came even as Rubrik raised its full-year guidance for both revenue and earnings, while emphasizing that "AI agents are attacking us" with autonomous threats.

Financial Performance

Total revenue reached $427.3 million in Q2FY27. Subscription revenue, which accounts for the majority of the top line, rose 37% to $407.2 million. Subscription Annual Recurring Revenue (ARR) grew 33% year-over-year to $1.66 billion as of July 31, 2026, with approximately $96 million in net new subscription ARR.

Cloud ARR grew 39% year-over-year to $1.48 billion as of July 31, 2026. Adjusted net new Cloud ARR grew 20% year-over-year in the second quarter of fiscal year 2027.

Non-GAAP net income per share was $0.20, compared to a non-GAAP net loss per share of $(0.03) in the prior year period. GAAP net loss per share narrowed to $(0.30) from $(0.49).

What the Numbers Show

The divergence between GAAP and non-GAAP profitability highlights the significant impact of stock-based compensation on Rubrik's reported results. While the company generated a GAAP operating loss of $71.9 million, it achieved a non-GAAP operating income of $33.5 million after adding back $101.0 million in stock-based compensation expense. This adjustment underscores that underlying operational cash flows are positive, even as equity compensation costs weigh heavily on statutory earnings.

Cash Flow and Margins

Operating cash flow margin stood at 18%, while free cash flow margin was 15%. Cash flow from operations totaled $76.8 million, an increase from $64.7 million in the prior year quarter. Free cash flow rose to $65.7 million from $57.5 million.

GAAP gross margin decreased slightly to 78.4% from 79.5% in the second quarter of fiscal year 2026. Non-GAAP gross margin contracted to 81.0% from 81.6% over the same period.

Subscription ARR contribution margin improved significantly to 14.0% from 9.4% in the prior year, reflecting strong net new subscription ARR and improved operating leverage.

Strategic Outlook and Growth Drivers

"Mythos and frontier AI models have fundamentally changed the cybersecurity landscape. This new reality demands not only machine-speed cyber recovery but also autonomous runtime AI agent security," said Bipul Sinha, Rubrik’s CEO.

CEO Bipul Sinha warned during Thursday’s earnings call, "Today AI agents are attacking us. These autonomous agents use AI for vulnerability chaining to find the right malicious combination to intrude, breach and encryption at machine speed."

Management said increasingly autonomous threats are pushing customers toward rapid recovery and resilience rather than relying solely on prevention. Rubrik Agent Cloud has more than 15 paying customers, with proof-of-concept engagements converting into production deployments. However, management assumes only a minimal contribution from RAC to the fiscal 2027 ARR as it continues to refine product-market fit.

Non-cloud deployments are becoming another growth driver as governments and regulated industries seek sovereign infrastructure. Management said the business also carries higher margins because customers self-host the software. Identity Resilience also remains lightly penetrated across Rubrik’s customer base. The company closed its largest international identity deal to date during the quarter, helping an existing customer target recovery in hours rather than the previous roughly seven days.

Management clarified that the recent Strata Identity acquisition contributed zero subscription ARR in the quarter and that fiscal 2027 guidance assumes no ARR contribution from Strata. CFO Kiran Choudhary also said hardware costs and supply constraints had no material impact on subscription ARR.

Guidance

Rubrik raised its outlook for the third quarter and full fiscal year 2027:

• Q3FY27 Revenue: $429 million to $431 million
• Full Year Revenue: $1,685 million to $1,693 million (vs $1,645 million estimate)
• Full Year Subscription ARR: Between $1,880 million and $1,885 million
• Full Year Non-GAAP Net Income Per Share: $0.47 to $0.53 (vs $0.31 estimate)

The company expects weighted-average shares outstanding of approximately 230 million for the third quarter and 228 million for the full fiscal year.

Analyst Reactions

Following the earnings announcement, several analysts raised their price targets for Rubrik:

• BTIG analyst Gray Powell maintained the stock with a Buy rating and raised the price target from $109 to $125.
• BMO Capital analyst Keith Bachman maintained the stock with an Outperform rating and raised the price target from $98 to $115.
• KeyBanc analyst Eric Heath maintained the stock with an Overweight rating and raised the price target from $112 to $120.

Rubrik (NYSE: RBRK) reported second-quarter fiscal year 2027 results that exceeded all guided metrics, driven by accelerating demand for its agentic cyber resilience platform. The cybersecurity firm raised its full-year outlook as subscription annual recurring revenue (ARR) grew 33% year over year.

The company highlighted significant expansion in its enterprise footprint, with customers spending $100,000 or more on subscription ARR increasing by 23% to 3,084. Management attributed the growth to a shift toward board-level mandatory requirements for unified cyber resilience rather than discretionary point solutions.

Financial Performance

Rubrik’s total revenue reached $427.3 million in Q2 FY27, marking a 38% increase from the prior year period. Subscription revenue, which forms the core of the business, grew 37% to $407.2 million. This growth was supported by strong net new subscription ARR of approximately $96 million in the quarter.

Geographically, revenue from outside the Americas surged 52% to $129 million, outpacing the 33% growth seen in the Americas region, which contributed $299 million. The international expansion reflects broader adoption of Rubrik’s platform in regulated and sovereign infrastructure markets.

Profitability and Cash Flow

Despite the revenue surge, non-GAAP gross margin contracted slightly to 81% from 81.6% in the year-ago quarter. Management noted this dip was offset by greater scale in customer support operations but impacted by lower material-rights-related revenue and mix changes. However, operational leverage improved significantly elsewhere, with subscription ARR contribution margin expanding by 460 basis points to 14% for the trailing twelve months ended July 31.

Free cash flow generation strengthened to $65.7 million, up from $57.5 million in Q2 FY26. The company ended the quarter with a robust balance sheet, holding $1.75 billion in cash, cash equivalents, and short-term investments against $1.13 billion in convertible debt.

What the Numbers Show

A notable divergence exists between top-line growth and margin performance. While subscription revenue accelerated at 37%, gross margins compressed by 60 basis points. However, this compression is structural rather than operational; it stems from the normalization of material rights revenue related to cloud transformation, which contributed only $4.7 million this quarter compared to $8.5 million previously. Meanwhile, the underlying operating efficiency improved sharply, evidenced by the 460 bps expansion in subscription ARR contribution margin. This suggests the business model is becoming more efficient at scale, even as accounting adjustments temporarily pressure headline gross margins.

Strategic Focus and Outlook

Management emphasized the strategic pivot toward "agentic cyber resilience," leveraging AI to address machine-speed threats. Key product initiatives include Rubrik Security Cloud for cyber recovery and Rubrik Agent Cloud for governing AI agents. The company reported early traction with Rubrik Flex, a unified contract vehicle, securing deals with large U.S. healthcare systems and global financial services firms.

Looking ahead, Rubrik raised its full-year FY27 guidance. It now expects subscription ARR to grow approximately 29% to between $1.88 billion and $1.885 billion. Total revenue is projected between $1.685 billion and $1.693 billion. For the third quarter, the company anticipates revenue of $429 million to $431 million and non-GAAP earnings per share of $0.07 to $0.09.