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Date

Thursday, June 4, 2026 at 5:00 p.m. ET

Call participants

• Chief Executive Officer — Bipul Sinha
• Chief Financial Officer — Kiran Choudary

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Takeaways

• Subscription ARR -- $1.57 billion, up 32% year over year, driven by adoption of Rubrik Security Cloud and increased customer scale.
• Subscription revenue -- $374 million, representing 41% year-over-year growth as primary revenue driver.
• Cloud ARR -- $1.39 billion, up 43%, now representing 89% of total subscription ARR as the cloud transition nears completion.
• Large customer count -- 2,946 customers with $100,000 or more in subscription ARR, increasing 24% year over year and comprising 88% of subscription ARR.
• Subscription NRR -- Approximately 120%, indicating solid retention and expansion dynamics within the customer base.
• Non-GAAP subscription ARR contribution margin -- 13.2% for the trailing twelve months, up over 500 basis points year over year from 8% on a non-GAAP basis.
• Free cash flow -- $74 million, more than doubling from $33 million in the prior-year quarter, attributed to higher sales and improved efficiency.
• Total revenue -- $387 million, up 39% year over year; revenue normalized for material rights increased 43%.
• Geographic revenue -- Americas revenue of $279 million, up 38%; international revenue of $108 million, growing 43%.
• Non-GAAP gross margin -- 82.9%, compared to 80.5% last year, reflecting gains from cloud efficiencies and customer support productivity.
• Identity business -- Identity-related subscription ARR surpassed $50 million after 38% quarter-over-quarter growth.
• Customer expansion drivers -- Adoption of additional security products, Rubrik Agent Cloud, and growth in secured applications and identities all contributed to heightened subscription NRR.
• Material rights revenue -- $8.5 million recognized in the quarter related to cloud transformation, marking a substantial decline versus prior quarters.
• Balance sheet -- $1.7 billion in cash, cash equivalents, restricted cash, and marketable securities; $1.1 billion in convertible debt outstanding.
• Fiscal Q2 revenue guidance -- Projected revenue of $395 million to $397 million, reflecting anticipated growth of 27% to 28%.
• Fiscal Q2 material rights impact -- Expected $3 million to $4 million in material rights revenue for the quarter, indicating continued wind-down of cloud migration effects.
• Fiscal Q2 margin and EPS guidance -- Projected non-GAAP subscription ARR contribution margin of 11% to 12%, and non-GAAP EPS of $0.03 to $0.05 on 224 million average shares outstanding.
• Fiscal 2027 subscription ARR guidance -- Anticipated $1.854 billion to $1.862 billion, implying approximately 27% year-over-year growth (fiscal year ending April 30, 2027).
• Fiscal 2027 revenue guidance -- Expected total revenue range of $1.638 billion to $1.648 billion; $17 million of this from material rights related to cloud transformation.
• Fiscal 2027 profitability and cash flow guidance -- Non-GAAP subscription ARR contribution margin of about 14%, non-GAAP EPS of $0.25 to $0.35, and free cash flow of $293 million to $303 million, all based on 228 million weighted-average shares outstanding.
• Strategic focus areas -- Continued investments in R&D and go-to-market targeting high-ROI regions and verticals; scaling of Identity Resilience and Rubrik Agent Cloud emphasized.

Summary

Rubrik (RBRK 3.06%) reported record first-quarter results with both subscription and total revenue metrics at or above guidance. Management stressed the increase in customer engagement around cyber resilience and noted rising demand for solutions addressing AI-driven cyberattacks and agentic operations. Strategic partnerships, such as with Anthropic’s Project Glasswing and the integration of the Predibase acquisition into Rubrik Agent Cloud, were highlighted as competitive advantages. Forward-looking guidance was raised across revenue, ARR, margins, and cash flow, despite explicitly noting that revenue growth will face an accounting headwind from declining material rights related to the cloud transition.

• The company cited material progress in shifting customer focus toward cyber resilience as the dominant cybersecurity paradigm over traditional prevention and detection strategies.
• Bipul Sinha described a surge in customer meetings about resilience, with a reported 50% sequential quarter-over-quarter increase in discussions with CIOs and CISOs.
• Management asserted that higher hardware and storage costs have had “no real impact” on Rubrik due to its software and cloud-first business model.
• Kiran Choudary stated, “All vectors of expansion are healthy contributors to our NRR, highlighting the meaningful runway we have to more deeply penetrate our customer base.”
• The identity business was positioned as both a customer expansion vector and a risk management necessity, supported by rapid ARR growth and high attach rates for cybersecurity budgets.
• The Rubrik Agent Cloud saw early production deployments, particularly in highly regulated industries, with direct customer adoption cited in financial services for policy-based agent governance.
• Management laid out evolving sales strategies, with “lateral” teams incubating new offerings before broader deployment by core sales forces.
• The company plans to leverage further strategic partnerships and ecosystem integrations, especially with major hyperscaler AI platforms, to accelerate Rubrik Agent Cloud adoption.
• Material rights revenue from cloud migrations is expected to be a diminishing contributor going forward, reducing its impact on reported growth rates.
• Leadership reaffirmed a disciplined approach to investing, prioritizing opportunities with “attractive ROI” while maintaining profitable growth.

Industry glossary

• ARR: Annual Recurring Revenue—subscription-based revenue expected to recur annually from existing contracts.
• NRR: Net Revenue Retention—a metric expressing the percentage of recurring revenue retained from existing customers, including upsells and churn offsets.
• Material rights: Accounting recognition referring to revenue associated with customer entitlements resulting from the company’s cloud migrations, distinct from underlying recurring revenue.
• Rubrik Security Cloud (RSC): Rubrik’s primary multiproduct platform delivering cyber resilience solutions across data and identity assets.
• Rubrik Agent Cloud: The company’s platform for AI operations monitoring, agentic policy guardrails, and AI-powered “agent rewind” remediation.
• Preemptive Recovery Engine: Rubrik’s proprietary capability that continuously creates recovery points before an attack occurs, enabling rapid post-incident business restoration.

Full Conference Call Transcript

Bipul Sinha: Thank you, Melissa, and thank you all for joining us today. We are off to a strong start to fiscal 2027 with a record Q1. I'm proud to announce that we have once again exceeded all guided metrics across top line and profitability. Here are the five key numbers. First, subscription ARR reached $1.57 billion, growing 32% year-over-year. Second, our subscription revenue was $374 million, growing 41% year-over-year. Third, our subscription NRR remained strong at approximately 120%. Fourth, customers with $100,000 or more in subscription ARR reached 2,946 growing 24% year-over-year. And finally, on profitability, we once again made material improvement in subscription ARR contribution margin, up over 500 basis points year-over-year.

We generated $74 million in free cash flow this quarter. Let me start with a few observations. We are now in a new era of cybersecurity. Today, AI agents are attacking us. These autonomous agents can intrude, breach and encrypt at machine speed. Mythos was a powerful breakup call for the cybersecurity industry, but it is already something of the past. Better faster model versions are already in development. Mythos has proven that attack detection is near impossible and cyber resilience is now the most fundamental cybersecurity requirement for the AI era. In fact, Mythos is driving more customer conversations around cyber resilience and recovery.

And that is one of the reasons why we have raised our top line guidance for the rest of the year. And at the same time, AI agents are increasingly running business processes. Workflows that assume identities, access sensitive data and take autonomous action. Once compromised, these agents can potentially inflict 10x more damage in 1/10 of the time. As you can see, both threat actors and business operators are now agentic. This is not about instilling fear. This is about helping institutions be better prepared and putting every effort in staying ahead of the new cyber risk that could dramatically affect their operations. As I mentioned before, in this new cyber reality, prevention and detection are no longer enough.

What you will need in addition is preemptive risk assessment, real-time guardrail and machine speed system remediation. In short, agentic cyber resilience. Rubrik has led in cyber resilience for year, delivering machine speed cyber recovery for thousands of businesses around the world. That work helped us build for AI agents and have full awareness that technology leaps like Mythos were on their way. While this may seem grim, we believe Rubrik is and will continue to be the answer to helping institutions stay ahead. Along these lines, Rubrik recently joined Anthropic's Project Glasswing and received early access to the Claude Mythos research preview.

Putting the new model to work directly to ensure we can serve our customers better when cyber breaches inevitably happen. This partnership aligns to our vision of agentic cyber resilience, defending a world where AI agents are both the cyber attackers as well as the business executor. It is clear that cyber residence is now the most fundamental cybersecurity strategy for the agentic era. Let me talk about why our products are transformative. We are a multiproduct company built on a unique and differentiated platform that solves the most consequential problems across data, identity and AI. On top of this platform, we deliver two solution suites.

Rubrik Security Cloud for cyber resilience and Rubrik Agent Cloud for trusted, accelerated AI transformation. Let me start with Rubrik Security Cloud or RSC. Our platform has the unique ability to bring together time series data and metadata across complex enterprise environment, spanning on-premises, sovereign, cloud, SaaS and identity providers. We believe our depth and breadth of enterprise context is unmatched by other solutions in the marketplace. This architectural advantage allows us to deliver our proprietary preemptive recovery engine, which continuously precalculate clean points of recovery across data and identity before an attack occurs. The preemptive recovery engine is the backbone of Rubrik agenetic cyber resilience. Our RSC platform orchestrates resilience continuously and proactively, not reactively post breach.

This is how we deliver record fast recovery when our customers have breached or agents get compromised. And this is why we continue to grow while the competition has stalled. There are many examples I can talk about, but let me just share two specific customer examples of legacy replacement in very large enterprises. First, a large U.K. public sector organization chose Rubrik this quarter to fully displace a decade-long legacy incumbent across on-premises, cloud, NAS and identical workloads. Outcompeting several legacy and new gen vendors, Rubrik was recognized for delivering comprehensive cyber resilience across every workload. With Rubrik, this customer can consolidate a fragmented environment of 400-plus legacy backup policies into a single unified platform.

Second, a Global 2000 insurer chose Rubrik this quarter to displace a legacy incumbent and native cloud backup across their full enterprise footprint, including on-premises and cloud workloads. Rubrik was selected for our single pane of glass across all key workloads and for our ability to deliver demonstrable cyber readiness, unmatched by incumbent and competitive alternatives. The cyber resilience market is consolidating around platforms, not point solutions. When CIOs and CSOs rationalize their vendor portfolios, Rubrik win because we deliver complete cyber resilience across on-premises, sovereign, cloud, SaaS and identity in a single unified architecture. This is because Rubrik is built on the principle of complementary network effects.

What that means is every new product we build makes every other product on the platform more powerful. So when a customer adopts Rubrik, they are not just buying a solution, they are stepping into an ecosystem. For example, when a data protection customer adopts Rubrik's Identity Resilience product, they not only achieve cyber resilience across data and identity but also gain a complete understanding of the blast radius and characteristics of a cyber attack across data and identity through the Rubrik platform. This is the additional platform value. Customers do not simply use Rubrik. They rely on it to deliver resilient minimal viable business. And the more they use it, the more indispensable it becomes.

That is the value creation that endures. Now let's talk about our Identity business. Our identity solutions continue to gain momentum as the rise in identity-based attacks has increased the need to protect both data and identity simultaneously. Identity continues to be highly successful in garnering budget from CISOs, extending Rubrik beyond our traditional CIO and CTO buying personas. We have been rapidly disrupting the identity protection market with our identity recovery and resilience products. In fact, our Identity business grew 38% in sequentially quarter-over-quarter to reach over 50 million in subscription ARR in Q1. Let me give you a representative identity win. A large U.S. agricultural organization and existing Rubrik customers expanded into identity resilience this quarter.

They added Entra ID and Okta protection after a ransomware attack on their active directory environment. That attack created significant operational downtime and financial loss, while also exposing critical cyber resilience gaps. The customer chose Rubrik's Identity Resilience as the cornerstone of their identity modernization initiative. Now let's talk about how Rubrik accelerates trusted AI transformation with Rubrik Agent Cloud. As we have said before, while agents promise 100x more productivity, they also introduce 100x more risk, agents breaking existing controls, agents tricked into leaking confidential information, agents deleting entire code bases, these kinds of events are becoming more common. If agents assume your identity, access your sensitive data and take real-world action who governs them.

It's clear that while AI gives you a better, faster car, you need an intelligent autonomous driving system for control to steer, change lanes and break safely. We believe enterprises need a comprehensive AI operations platform that can dynamically monitor, control and remediate agentic actions. You need to have visibility into what agents sanctioned or unsanctioned exist in your environment and what they are doing. You also need real-time guardrails to dynamically authorized agenetic interactions that comply with your company's policies and industry regulation. If agent get compromised or hallucinate, then you need a rewind button to undue destructive actions. That is why we designed the Rubrik Agent Cloud, the comprehensive AI operations platform.

This is the intelligent autonomous driving system that we provide so customers can safely drive fast with AI agents. Our Predibase acquisition, which developed a LLM fine-tuning and inference serving platform provides the AI firepower required to dynamically govern agentic interactions. This technology underpins our Semantic AI Governance Engine, or SAGE, which is the industry's first AI governance engine purpose built to guardrail, autonomous agents in real time. By leveraging AI to control agentic work, agents can't leak sensitive data, can't say the wrong thing and can't take the wrong action. AI controlling AI agents is key. We believe that understanding intent is critical to controlling probabilistic agents at scale.

In just one quarter of selling, we are already seeing early POCs convert to production deployments. The next example is a critical evidence of the customer interest in this product. A U.S. financial services firm and existing Rubrik customer committed to Rubrik Agent Cloud this quarter, moving from AI experimentation to full production deployment across AWS Bedrock and Microsoft Copilot. The customer chose RAG for its unified visibility and monitoring of AI agents across all platforms, policy-based guardrail controls and ability to remind and remediate agent actions, which they identified as the essential capability for scaling AI safely in a regulated environment. In closing, I'll leave you with three takeaways.

First, Rubrik is winning the cyber resilience market across data and identity. In the age of Mythos and frontier AI model, cyber resilience is paramount for cybersecurity, which is why thousands of customers rely on our unique architecture and platform depth. Second, we continue to grow while the competition has stalled. Our unique solution at the convergence of data, identity and AI positions us to solve cyber resilience across all 3 domains. Third, we are establishing Rubrik as the data and identity infrastructure platform for the AI era, with a platform for agentic operation and resilience that no competitor can match.

While the world is going through the AI transformation, we are steadfast in helping our customers embrace that transformation with a greater degree of confidence. That is why we are extremely optimistic about the future of Rubrik. Having said that, thank you to all our shareholders for your trust. We are just getting started in this new era. We look forward to seeing some of you at our Analyst Day on June 10 in Las Vegas, where we'll unpack our vision for agenetic cyber resilience. And lastly, to the entire Rubrik team. Thank you. Your work made these results possible. I couldn't be happier with our first quarter results, and I'm excited about what's ahead.

With that, I'm pleased to pass it to our Chief Financial Officer, Kiran Choudary.

Kiran Choudary: Thank you, Bipul. Good afternoon, everyone, and thank you for joining us today. We had a strong Q1, exceeding all of our guided metrics, and demonstrating continued execution in the large and growing cyber resilience market. We are pleased with our solid start to fiscal year 2027 and are raising our outlook for the year. Let me start by briefly recapping our first quarter fiscal 2027 financial results and key operating metrics, and then I'll provide guidance for the second quarter and full year fiscal 2027. All comparisons, unless otherwise noted, are on a year-over-year basis. We are very pleased to have ended Q1 with subscription ARR of $1.57 billion, growing 32% year-over-year.

We added $103 million in net new subscription ARR, a record for Q1. Continued adoption of Rubrik Security Cloud resulted in $1.39 billion of cloud ARR up 43%. We are at the tail end of our cloud transition with cloud ARR now representing 89% of subscription ARR as of Q1. We did not see a material impact to our business from rising hardware costs or supply constraints. As a reminder, we are in the business of selling software, either in the cloud or self-hosted. Moving along, our differentiated land-and-expand model benefits from multiple avenues to gain new customers and grow our footprint after the initial contract.

Expansion occurs through data growth in existing applications, securing more applications and identities, adding more security products or adding Rubrik Agent Cloud. As a result, we continue to see a strong subscription net retention rate approximately 120% in the first quarter. We are very proud of the high customer retention and expansion dynamics of our business. All vectors of expansion are healthy contributors to our NRR, highlighting the meaningful runway we have to more deeply penetrate our customer base. We ended the first quarter with 2,946 customers with subscription ARR of $100,000 or more, up 24%. These larger customers now contribute 88% of our subscription ARR, continuing to grow as we become an increasingly strategic partner to our enterprise customers.

Customers with subscription ARR of $1 million or more grew over 50%. For our first quarter, subscription revenue was $374 million, up 41%. Total revenue was $387 million, up 39%. Revenue in Q1 primarily benefited from a strong ARR growth. Material rights related to our cloud transformation, contributed approximately $8.5 million to revenue in the quarter. A substantial reduction compared to the prior quarter, reflecting the near completion of our cloud transition. Revenue normalized for material rights increased 43%. Turning to the geographic mix of revenue. Revenue from the Americas grew 38% to $279 million. Revenue from outside the Americas grew 43% to $108 million.

Before turning to gross margins, expenses and profitability, I would like to note that I'll be discussing results on a non-GAAP basis going forward. Our non-GAAP gross margin was 82.9% in the first quarter compared to 80.5% in the year ago period. Our gross measure benefited from the revenue outperformance, greater efficiency in our cloud hosting costs and the improved productivity of our customer support organization. As a reminder, we look at subscription ARR contribution margin as a key measure of operating leverage. We believe the improvement in our subscription ARR contribution margin demonstrates our ability to drive operating leverage and profitability at scale.

Subscription ARR contribution margin was 13.2% in the last 12 months ended April 30 compared to 8% in the year ago period, an improvement of over 500 basis points. The improvement was driven by higher sales, the benefits of scale and improving efficiencies and cost management across the business. Free cash flow was $74 million compared to $33 million in the first quarter of fiscal 2026. The increase was driven by higher sales and improved operating leverage. Turning to our balance sheet. We ended the first quarter in a strong cash position with $1.7 billion in cash, cash equivalents restricted cash and marketable securities and $1.1 billion in convertible debt. Let me now provide some context on our guidance.

We are confident in our outlook, fueled by our robust cyber resilience market, our differentiated technology platform and the scaling of our Identity Resilience and Rubrik Agent Cloud offerings. This momentum, coupled with our consistent and effective execution, positions us to achieve strong subscription area growth ahead. We plan to continue making operational investments across two key areas. First, we will continue to invest in R&D to accelerate innovation in the large but developing markets of data, security and AI. Second, we will invest in our go-to-market, specifically targeting regions and verticals that offer the most attractive ROI. These go-to-market investments will also focus on scaling our newer innovations, including our Identity Resilience platform and Rubrik Agent Cloud.

Now turning to our guidance for the second quarter and full year fiscal 2027. In Q2, we expect revenue of $395 million to $397 million, up 27% to 28%. We expect material rights related to our cloud transformation to contribute $3 million to $4 million to revenue in Q2. We expect non-GAAP subscription ARR contribution margins of 11% to 12%. We expect non-GAAP EPS of $0.03 to $0.05 based on approximately 224 million weighted-average shares outstanding. For the full year fiscal 2027, we expect subscription ARR in the range of $1.854 billion to $1.862 billion, reflecting a year-over-year growth rate of approximately 27%.

We expect total revenue for the full year fiscal 2027 in the range of $1.638 billion to $1.648 billion. As a reminder, in fiscal 2027, the substantial reduction in material rights revenue will represent a meaningful headwind to our reported revenue growth. We expect material rights related to our cloud transformation to contribute approximately $17 million to revenue for the full year. Revenue growth normalized for material rights is expected to outpace our subscription ARR growth rate. As we have communicated, subscription ARR is the primary top line metric to evaluate our business performance as it is not impacted by accounting dynamics related to our cloud transformation.

In terms of profitability, we will continue to stay focused on taking advantage of the market opportunity in cybersecurity and AI while balancing growth with improved efficiency. Based on our current investment plans, we expect non-GAAP subscription ARR contribution margins of approximately 14% for the full year fiscal 2027. We expect non-GAAP EPS of $0.25 to $0.35 based on approximately 228 million weighted-average shares outstanding for the full year. We expect free cash flow of $293 million to $303 million. As always, we have included additional modeling notes in our investor presentation.

In closing, we are pleased with our strong start to fiscal year 2027 and remain confident in our ability to deliver durable and efficient growth as the market leader in cyber resilience. We look forward to sharing more about our opportunity and strategy at our upcoming Analyst Day at our Forward user conference. With that, we'd like to open up the call for any questions.

Operator: [Operator Instructions] your first question comes from the line of Saket Kalia with Barclays.

Saket Kalia: I'll keep it to one. Bipul, maybe for you. Can you just dig a little bit more into how the dynamics of the hardware market are potentially impacting customer buying behavior in the cyber resilience market. It's just been such a key question to the quarter. I'd love to get your perspective, so we're all on the same page.

Bipul Sinha: Thanks, Saket. Good to hear from you. To start with, Rubrik has no real impact from the hardware market dynamics. As you might reckon, Rubrik is a software company. And moreover, the enterprise data protection part of our business is a relatively a smaller part of our business now that we have cloud, SaaS, identity, M365, a number of other solutions that Rubrik sells. And if you look at our customers, they are holistically looking at cyber resilience across all these platforms because cyber attacks are not choosing just the data center or just the cloud. So we sell a comprehensive solution. And as a software company, we have -- again Rubrik has no real impact on the hardware dynamics.

Kiran Choudary: And just to add for what Bipul said, Saket, I wanted to emphasize that this is the same message as of last quarter to no material impact. And the sales cycles over the past few quarters have been stable even with this dynamic in the broader environment. We remain confident in our outlook based on what we see in our pipeline and our multiproduct platform motion.

Operator: Your next question comes from Matt Martino with Goldman Sachs.

Matthew Martino: Bipul, you described a world where AI makes everything more dangerous, more data, more agents, more surface area to cover. If that's the arc, does cyber resilience become a bigger line item in the enterprise over the next couple of years? And does Rubrik's role start shifting from an insurance policy to something more central to how companies actually run? Curious to see how resilient is evolving as the enterprise goes fully agentic?

Bipul Sinha: Thanks, Matt. What I will say is Cyber security strategy has moved from being a prevention detection-oriented strategy to squarely now as a cyber resilience strategy. And what Mythos and other frontier AI models have done, they have accelerated this transformation because with Mythos, cyber detection is almost impossible. So as soon as intrusion happens, breach will happen. And as Gartner also sent out notes to all the clients that the real answer to Mythos is a cyber resilience is a must, and preemptive technologies have to be explored both for patching as well as cyber recovery.

And if you look at Rubrik, call it vision, call it, luck, call it, right time, right place, 2 years ago, we launched something called Preemptive Recovery Engine, which does all the work of cyber recovery in the peace time before attack happens. So that when attack happens, you are able to recover at AI speed. In this new era of AI, Mythos and AI-powered attacks, recovery at AI speed is critical. And Rubrik has a unique technology to deliver that for our customers. In fact, our vision is attacks will be continuous us and recovery has to be continuous. So at any given point in time, you have to be ready to recover at AI speed.

And that's what our Preemptive Recovery Engine delivers. That's what we are educating our customers on. And if you just look at what has happened post Mythos, I have personally done 140 CIO and CISO meetings in the last quarter, that is up 50% sequentially quarter-over-quarter. Cyber resilience is the only cybersecurity strategy that is viable for the AI era. We created the cyber resilience category, and we are taking our customers on this agentic cyber resilience journey.

Operator: Your next question comes from Brad Zelnick with Deutsche Bank.

Brad Zelnick: Congrats on a really nice start to the year. Bipul, my question for you, and I know we're going to dive into it next week at Forward. So I'm looking for the expanded version. But maybe just for today, and it speaks to a lot of the comments you've already made. We've heard competing claims from vendors across the security and IT stack over who has the right to win as the AI control plane. Why does Rubrik stand to be a leader in this category against vendors like ServiceNow, for example, where we've heard convincing arguments that agentic control is a CMDB problem at its core.

Bipul Sinha: Thanks, Brad. Here is what I'll tell you. Delivering a comprehensive agentic security and resilience requires a comprehensive platform. Just doing observability on agents is not enough. Just doing posture management on identity for agents is not enough. Just doing real-time, run-time, agentic security guardrail is not enough. Because when all of these things fail, you need to also deliver fundamental agentic rewind, so that you can bring your systems back into a clean state and continue operating with other agents. And Rubrik has a comprehensive platform to deliver to each one of these aspects from monitoring to security controls, real-time security to agent rewind. And we believe that we have the most comprehensive solution to sell in this marketplace.

And that's why we are seeing strong customer interest in our Rubrik Agent Cloud solution. Let me give you an example. A financial services company adopted Rubrik Agent Cloud this past quarter. This particular company was very slow in adopting AI because of the concerns around compliance, governance and security. And moreover, they were worried about what if the agent bypasses all of this and does real damage, how do I bring the systems back into order? With Rubrik Agent Cloud, we deliver not only the fastest way and safest way to deliver security and compliance rollout.

But with Rubrik Agent Rewind, saw this as a must-have capability that should -- the agents to skip those steps because of hallucination or otherwise, they have peace of mind that they can also deliver Agent Rewind. So I'll repeat, Rubrik delivers monitoring, guardrail and security for run time as well as Agent Rewind. We have the most comprehensive solution in the marketplace unmatched by any other vendor.

Operator: Your next question comes from John DiFucci with Guggenheim Securities.

John DiFucci: Nice job on this. I don't always say that, but really, your results here were strong and subscription ARR was what we thought you could do, which is sort of like the scenario, we sort of think maybe that you can do it. However, the mix was different than we thought we'd see. With on-prem better than what we expected and cloud a little bit below what we expected. I was just wondering if you could talk about the dynamics of that, and how we should think about it going forward?

Kiran Choudary: Sure, John. This is Kiran. And I can take that. So overall, we're very pleased with the quarter. You saw the results and both pleased with both the cloud portion as well as the non-cloud portion. This quarter, we were at 89% cloud. I think if you're looking at the growth rates for cloud ARR year-over-year, one thing I just want to remind that now we are nearing our end of our transition. Last Q1, we had 82% cloud as percentage of sub ARR, and we're 89%. If you actually back out the migrations, then we actually grew Cloud ARR a little bit faster than subscription ARR. So it was a very strong quarter.

At the same time, non-cloud ARR also grew. You have seen that on a dollar basis, and that's because we are nearing the end of our migrations as well. So we had a strong quarter there as well. So I just wanted to clarify that.

John DiFucci: That's actually really helpful, Kiran. How should we -- same question on the non-cloud stuff, as we think of that going forward, how should we think about that?

Kiran Choudary: When we talked about over the past few quarters, there were declines quarter-over-quarter as the migrations were still continuing. But we are talking about a time at some point, it stabilizes and then there is growth from there because there's a very small, but meaningful business there of selling our software to customers who were self-hosted, especially in the federal agencies, government as well as regulated industries. So we're at that point right now where we expect it to grow. But obviously, there could be some quarter-to-quarter variance. There's a little bit migrations left as well. But generally, I would say with the multi-quarter period, the trend line is upward.

Bipul Sinha: One thing I'll add to this, John, is what we are seeing also is an interest in Europe and Middle Eastern countries around sovereign infrastructure, and which is nothing but an environment that is controlled by the customer and call it to some non-cloud solution. So if that trend continues because of geopolitics, data locality, sovereignty, we might see, again, increase in non-cloud portion. But as Kiran said, it will first stabilize and then will -- it might grow.

Operator: Your next question comes from Eric Heath with KeyBanc Capital Markets.

Eric Heath: I wanted to maybe follow up on Brad's question in a slightly different way. But Bipul, the early customers that are adopting the Rubrik Agent Cloud, who are you competing with there? I mean, as Brad kind of alluded, there's lots of vendors coming at this from every angle, trying to secure agents, whether that's the identity endpoint or elsewhere. So just curious what that competitive landscape is, and why the Rubrik angle is resonating with customers thus far?

Bipul Sinha: No, it's a really insightful question. Like whenever a new market or area starts, you have lots of different approaches that people bring. And as Brad mentioned, you have larger companies that are coming into this market from observability angles. You have a startups coming into this market from identity angle, you have companies starting in this market through just giving the posture, management or some companies are looking at it from the shadow IT perspective. But what we are hearing consistently from our customers is that they do not want point solutions. They do not want to stitch together five solutions to create full agentic security. And it is not dissimilar to what happened in the cloud security.

Remember, in the cloud security, you have 5 or 6 different companies coming in with 5 or different parts of the market and then Palo Alto and later with consolidated with a platform solution end-to-end. And we believe that from observability to identity posture to real-time security to the Rewind, which is undoing of the agentic action that is not desirable, has to be delivered in a single platform in an end-to-end solution. And that's where we see our unique advantage because of the previous acquisition.

We have the best run time AI guarding agent solution combined with Rewind, which is our heritage in the Rubrik backup, plus the observability through our proxy and gateway, we believe that we have the most comprehensive solution. And because of our comprehensive nature of the solution and end-to-end security compliance plus Rewind, we are winning deals.

Operator: Your next question comes from Gregg Moskowitz with Mizuho.

Gregg Moskowitz: Nice job on the quarter. Bipul, this is perhaps not a very easy question to answer, but you have two really exciting initiatives with identity recovery and resilience, and of course, Rubrik Agent Cloud. If you were to look out over the next 2 to 3 years, which opportunity do you personally think is the larger one for Rubrik?

Bipul Sinha: Obviously, AI market is going to be very, very massive and agentic -- Rubrik Agent Cloud is the linchpin for our customers to succeed in delivering trusted agents at a scale. So that is definitely a massive opportunity. Having said that, identity is both a risk and enabler to enterprise agents because identity-based attacks have become the norm, the #1 attack vector. And should an agent get compromised, your've massive insider attack. So identity is paramount. And then on the second -- on the other side, identity and data interaction is core to agentic security because agent assume identity and take action on autonomous action on sensitive data.

And that is the reason that we believe Rubrik is uniquely positioned to win in this market because Rubrik's heritage is data. Now with identity, particularly Identity Resilience, both posture and recovery, we have created over 50 million ARR business in just 4, 5 quarters. We grew 38% sequentially between Q4 and Q1. Q1 typically is the start of the fiscal year. And because of this data and identity stronghold that Rubrik has, it uniquely positions us with the Predibase acquisition to create this platform. So we are very excited about both of these opportunities. They are intertwined. They reinforce each other.

And it actually enables us to have conversation outside of our traditional core, which is CTO and CIO organization to have conversations with CISO organizations with the identity teams. And as you know, agent rollout and security and compliance also sits at the intersection of CTO and CISO organization. So in many ways, we are positioned with our buyer in the right way. We have the right platform and technology to deliver the solution in the right way. And most importantly, we have the most comprehensive platform for our customers to do end-to-end agentic security compliance as well as Rewind.

Operator: Your next question comes from Jason Ader with William Blair.

Jason Ader: So for Rubrik Agent Cloud, can you talk about the sales strategy there? Is it mostly cross-sell? Is it a lot of new customers? Is there an overlay organization? Just wondering, is this the same kind of sales reps that are selling Agent Cloud as we're selling the Security Cloud?

Bipul Sinha: So Jason, as you might recall, Rubrik has two teams to take our products to market. One, we call forward team, and their job is to amplify our current successes. And then we have a lateral team that incubate new products into the marketplace and scale it before handing it over to the forward team. So we have incubated data security products, our enterprise edition through this team, M365 to this team, cloud security through this team, identity resilience through this team and now the same team is actually taking the Rubrik Agent Cloud into the market. So this is a separate team.

They actually take new products, figure out the product market fit, figure out the messaging, get the initial customer scale, and that's the team that is focused on selling a Rubrik Agent Cloud because lingo is different. Again, what customers are buying this product for the use case is different. Many customers are interested in this product that is outside of the Rubrik core customer base. Many of our existing customers are interested in this product. This is a very exciting time for this team.

Again, new product, early go-to-market but there is a significant interest and market kind of awareness that without a proper agent security governance rewind platform, they can't really rollout agent with the proper permission without the confidence.

Operator: Your next question comes from Todd Coupland with CIBC.

Thomas Ingham: I had an agent cloud go-to-mark question as well. To augment your incubator team, can you imagine creating partnerships with some of the larger players in this market to accelerate enterprise take-up. And on top of that, will this take as long or will it be shorter to get to that $50 million mark that you saw on the Identity side.

Bipul Sinha: Thank you, Todd. So let me start with the -- this question. Obviously, this -- what we are doing is to discovering all the agents that exist in the enterprise environment. And for that, we actually integrate with platforms such as Bedrock, Microsoft Copilot, Copilot Studio, Google and other platforms. So definitely, we believe that there's an opportunity for a deeper partnership and go to market together across all of that. And we really want to build an ecosystem because we have a platform play. We're not just doing one thing, but we are creating a comprehensive solution, and it is important to have this full partnership end-to-end. In terms of like how fast it will go.

I mean, I can't predict the future. We are very excited about this opportunity. We see a market, again, demand for such a product, and we are pushing as hard as possible.

Operator: Your next question comes from Junaid Siddiqui with Truist.

Junaid Siddiqui: Bipul, as Rubrik expands beyond backup into data security, governance and AI trust, how do you think about moving further up the security stack in a way that is differentiated from established security vendors, particularly in areas like identity, data security posture and threat response. And what specific capabilities or outcomes allow you to displace or win alongside those vendors rather than just merely augment them.

Bipul Sinha: Thank you, Junaid. Rubrik -- our approach has always been that we want to be a resilient platform. We are not a prevention and detection solution. And so that we partnered with CloudStrike, we partner with Palo Alto Network, we partner with Okta and all of the players that are in the business of [ rolling ] out identity or preventing and detecting attacks. We believe that the cyber resilience is a much bigger opportunity because again, Mythos and AI models are proving that resilience against the AI attacks and resilience against the agentic compromise, these two are very, very large problems to be sought, and Rubrik is uniquely positioned to solve these problems.

So we'll continue to focus on resilience, both against AI attacks as well as agentic compromise or overreach, and we'll continue to build solutions around it and then partner with, again, as I said, prevent some detection, identity infrastructure companies to ensure that our customers have an end-to-end solution so that they're not having a fragmented experience.

Operator: Your next question comes from Keith Bachman with BMO.

Keith Bachman: Congratulations on the results. Bipul, I wanted to go back to the supply chain, if I could. I understand your answer is that you're not impacted by the cost of servers or storage media and you're not in that business. But when customers like the Bank of Montreal, think about deploying Rubrik, it is part of the total cost of ownership. And so for instance, you can deploy on Dell servers and servers have doubled in price. And when I think about storing on the cloud, HDDs, flash and DRAM have all increased by 100% or close thereabouts. And that is a cost that's borne by the solution.

So when you say you're not impacted by it, is it because that -- if we exclude servers even, is it because you have contracts in place where you're not exposed to those costs? Or is it because it's a relatively small part of the total cost of ownership? I'm just trying to flush out why in some ways, it isn't impacting. Is it a timing issue? Or do you think it's a permanent thing whereby Rubrik won't feel the consequences, so to speak of, in particular, the cost of storage media?

Bipul Sinha: So our customer -- first of all, our customers, if they are actually buying Rubrik for the data center enterprise data protection, then they are exposed to the server cost. Outside of it, they are not exposed because they are now consuming cloud and cloud service, and they have long-term contracts. And we never take the ownership of the data in the cloud environment, unless they have a SaaS application, where they don't have the infrastructure to store data. So we are purely delivering our solution in the cloud, in the customer's own environment. And the customer's own environment within their data center.

Many of our customers have long-term contracts with server vendors, and we are not mandating a crazy configuration. It fits into their own configuration that they purchased in the past or will purchase in the future. So as well as the data center is a smaller part of our -- relatively a smaller part of our business because we have now so many different solutions. If you think about it, our customers are buying Rubrik solution on AWS, Azure, GCP, they're buying M365, they are buying Google Workspace. They are buying Identity Solution, Okta, they are buying Activate Directory, Entra-ID. So Rubrik now has such a comprehensive platform.

We are not like Rubrik of 10 years ago, which we were purely in the data center because our customers were in the data center. So given all the dynamics, given that we are a software company, given that our customers have contracts with the server manufacturer or they are in the cloud in both places, they have long-term contracts, the impact for us is immaterial. And that's why we believe that we have like -- we are confident about our execution, and how we are going to deliver this year. But here is the most important thing, we are selling cyber resilience, cyber resilience is not a discretionary purchase.

You have to be in the business, first and foremost, to be even able to adopt AI. Cyber resilience is in a higher priority for the customer than adopting AI because everybody is worried about -- I remember talking to a very large transportation company CEO, and his first thing was that the cybersecurity is the #1 business risk for me. And this is the #1 businesses for almost every business. Every Board is asking that can you recover from a cyber attack? What's your bounce back plan? And so we have -- it's not a discretionary product. It's the highest priority. And so if you look at all things combined, that's why we are confident about our execution.

And this also demonstrates, if you look at the cybersecurity industry, we delivered the best result in the cybersecurity industry. If you look at our magnitude of net new ARR of $103 million at our scale, we are unmatched by any company that you see in the cybersecurity industry. And that is not an accident. That is purely a result of what we deliver, and we deliver peace of mind to our customers so that they can deploy AI with confidence and also have sleep easy at night, because Rubrik is watching for AI attack, not watching as in preventing, but watching as we can bring their business back up and running.

And that's why we believe we are uniquely positioned to help our customers and continue to grow our business.

Operator: Your next question comes from Joseph Gallo with Jefferies.

Joseph Gallo: You made some sales leadership changes last quarter. I was just wondering if you could talk a little bit more about the go-to-market high level. Any changes expected now that Jesse has been in the seat for 3 months? Are you still hiring on the sales capacity side? And how do we think about leverage in the sales and marketing line going forward?

Bipul Sinha: So Jesse has settled very, very well, as you can see from the results of our first quarter. And there is no changes that we anticipate in our sales leadership under Jesse. The team has settled well. We are executing in like high resonance. Again, we are opportunistic in terms of ROI. If we see opportunity to increase sales capacity in markets where we see high ROI, we're definitely looking to invest. But one thing that we are mindful is we want to grow, and we want to take advantage of this market opportunity, but not take the approach that grow at our cost.

And if you look at our cash flow and how we are -- how responsibly we are managing our business while generating a very, very high top line growth. It demonstrates the discipline and controls that we are applying in our business to create a long-term profitable growth business.

Operator: Your next question comes from Jim Fish with Piper Sandler.

Timothy Daniel Shubsda: This is Tim on for Jim Fish. I just was hoping that you could kind of speak to a little bit about what you're seeing in terms of the demand pipeline? Now you're really only kind of raising guide by about twice what the first quarter upside was, which is kind of what you've done historically. So any color on kind of what you're seeing in the demand pipeline would be helpful.

Bipul Sinha: We are definitely seeing a strong demand for the resilience in the marketplace. We are also seeing strong early demand for the agent security and governance in the marketplace. And also Mythos and what has happened with frontier models, it has broad the awareness on to cyber resilience. And as I said, we are seeing increased number of meetings and increased customer interest and understanding of how they can keep their businesses up and running when you have these models that can actually find toxic combination of vulnerability through reasoning and chaining and do attack very, very fast at AI speed.

So -- and because of all of that, and this is one of the reasons that we have actually -- we have increased our outlook for the year. We have raised our outlook for the year because we are confident about the market demand and confident about our execution, and we are feeling great about finishing the year strong.

Operator: We've reached the end of the Q&A session. I will now turn the call back to Bipul Sinha, CEO, for closing remarks.

Bipul Sinha: So in closing, I'll say thank you so much to all our investors and our analyst friends for their continued support for Rubrik. We see tremendous opportunity in a world where AI is attacking us, and AI is also increasingly running our business processes. The demand and the need for cyber resilience, both against AI attacker as well as agentic compromise have never been higher. All of us Rubrikans are hard at work to deliver innovation on behalf of our customers at rapid speed. We are looking at both organic and inorganic opportunities in terms of teams, products, technology to add on to our platform to accelerate the road map for our customers.

This is the most exciting time for Rubrik, everything that we envisioned in terms of cyber resilience and this AI agent world is coming to fruition. We were ahead of the market in terms of preemptive recovery engine and thinking through what it means to deliver cyber resilience in this era where attack detection and attack prevention is near impossible. We are, again, very encouraged by our customers' interest in Rubrik's product. So many customers are coming in our direction. We have a very exciting user conference coming up [ and ] Forward. I'm looking forward to seeing lots of you there. Thank you again for your continued support. We are just getting started. Go Rubrik.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.