Rubrik Q2 EPS beats estimate; stock falls 9.7% in after-hours
- Rubrik Q2 EPS of $0.22 beat $0.04 estimate; revenue rose 38% to $427.3M
- Shares fell 9.73% to $97 in after-hours trading despite strong results
- Subscription ARR grew 33% YoY to $1.66 billion; Cloud ARR up 39% to $1.48B
- Full-year revenue guidance raised to $1.685B-$1.693B; EPS guidance raised to $0.47-$0.53
*this image is generated using AI for illustrative purposes only.
Rubrik, Inc. (NYSE: RBRK) shares fell 9.73% to $97 in extended trading on Thursday, despite the company 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.
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.
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.
| Metric | Q2FY27 | Q2FY26 | YoY Change |
|---|---|---|---|
| Total Revenue | $427.3 million | $309.9 million | +38% |
| Subscription Revenue | $407.2 million | $297.0 million | +37% |
| Subscription ARR | $1.66 billion | $1.25 billion | +33% |
| Cloud ARR | $1.48 billion | N/A | +39% |
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
"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.
"Rubrik’s Agentic Cyber Resilience delivers on both to enable trusted AI transformation. We are more confident than ever that we are in the early innings of the AI acceleration opportunity," Sinha added.
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.
How might the persistent divergence between GAAP and non-GAAP profitability, driven by $101 million in stock-based compensation, impact institutional investor sentiment and long-term valuation multiples?
Given the slight contraction in gross margins despite strong top-line growth, what specific cost pressures or pricing dynamics in the cloud security market could threaten Rubrik's margin expansion trajectory?
To what extent will Rubrik's pivot toward 'Agentic Cyber Resilience' and AI agent security require significant R&D investment, and how might this affect future free cash flow generation?
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