How to Invest in Rubrik Pre-IPO

As cyberattacks consistently threaten the private and public sectors, cybersecurity is increasingly in demand, motivating some investors to seek cybersecurity exposure in the form of Rubrik stock. Since 2014, Rubrik has grown into a leading provider of cybersecurity solutions that encompass data protection, data threat analytics, data security posture, and cyber recovery. The company is led by two of its co-founders, Bipul Sinha, who serves as both Rubrik's CEO and chairman, and Arvind Nithrakashyap, Rubrik's chief technology officer.

The appeal of cybersecurity providers like Rubrik is understandable, considering the significant risk that cyber attacks represent. To help protect the data of more than 5,500 customers, Rubrik has partnered with tech industry leaders. Rubrik helps customers using Microsoft (MSFT 1.82%) Azure to store data in the cloud, in addition to numerous other uses. For businesses who have turned to Amazon (AMZN 3.43%) for cloud-based data services, Rubrik has solutions to ensure cybersecurity.

Investors with an eye on Rubrik stock have several things to consider, including how to buy shares of Rubrik, when it might hold a potential initial public offering (IPO), and if alternative investment opportunities exist.

Is it publicly traded?

Is Rubrik publicly traded?

As of February 2024, Rubrik is not a publicly traded company, so people looking for cybersecurity investments have to look elsewhere.

In 2019, Rubrik held a Series E funding round that valued the company at $3.3 billion and raised $261 million from a new investor, Bain Capital Ventures, as well as previous investors like Lightspeed Venture Partners and Greylock Partners. More recently, Rubrik held a funding round in 2021, during which Microsoft acquired equity in the company.

When will it IPO?

When will Rubrik IPO?

Growth investors often keep a close eye on the IPO calendar so they can get into compelling investments -- like Rubrik -- as soon as possible. It's not surprising that investors familiar with the company may want to pick up shares of Rubrik during its IPO.

Although Rubrik hasn't officially announced a date for an IPO, Reuters reported in June 2023 that the company has hired banks to assist it in making a debut on the public markets. More recently, Reuters cited sources familiar with the matter who suggested that Rubrik may be planning an IPO for April 2024. Taking a notable step in this direction, Rubrik has submitted a confidential IPO filing with the Securities and Exchange Commission.

How to invest

How to buy Rubrik stock:

Although some investors may be eager to buy Rubrik stock, they will be discouraged to find that this is impossible since it's still a privately held company. Fortunately, though, there are other cybersecurity stocks investment options that will grab their attention.

Step 1: Open a brokerage account

Before buying shares of Rubrik or any stock, new investors must have access to a brokerage account. Opening a brokerage account is easy, and there are many choices available to investors. People without a lot (or any) investing experience may want to consider a brokerage account from Fidelity, which offers commission-free, online stock trades.

Step 2: Figure out your budget

Congrats! You're the proud owner of a shiny, new brokerage account, and you've taken a great stride towards growing your personal wealth. A good idea now is to look over your finances and decide how much you'd like to allocate toward buying stock. For some, buying a stock in a single acquisition is a good strategy, while others may be better off building a position with small purchases over time.

Step 3: Do your research

You may not have a term paper due, but that doesn't mean that you can skip the research. There are plenty of resources available online for investors to investigate potential stock picks.

Step 4: Place an order

Once investors have a brokerage account, know how much they can invest, and have researched the company, they're ready to place an order. Each brokerage's user interface is a little different. Basically, investors need to navigate to the trade option and enter the ticker symbol and either how many shares they want to buy or how much money they want to invest.

Investors will notice the option to place either a market or a limit order. A market order is the stock's price at the time of trade. However, the market price could fluctuate wildly. The Motley Fool generally recommends a market order.

While Rubrik isn't an investment option for ordinary retail investors, there are similar companies that investors will find appealing:

1. Microsoft

Although it's not clear how much Microsoft invested in the startup cybersecurity company, investors can gain indirect exposure to Rubrik by picking up shares of Microsoft. Plus, Microsoft's integration of Rubrik's solutions for its own cybersecurity means that investors can gain another level of exposure to Rubrik by purchasing shares of its stock.

Rubrik's solutions are visible across Microsoft's ecosystem. Microsoft Sentinel, for example, uses Rubrik to provide cybersecurity solutions to customers, including security analytics, attack detection, and threat response. Microsoft's generative artificial intelligence (AI) product, Copilot, will also use Rubrik to help customers. Microsoft Security Copilot is an AI-powered assistant that will use Rubrik's solutions to help security teams respond to cyberattacks and automate recoveries.

2. Palo Alto Networks

Although Rubrik stock is not currently an option, investors looking to scratch their itches for leading cybersecurity stocks should consider Palo Alto Networks (PANW 0.91%). One of the largest cybersecurity stocks based on market capitalization, Palo Alto Networks helps mitigate the risk of cyberattacks through its three platforms: Prisma, Cortex, and Strata.

Investors interested in Rubrik will be especially interested in Palo Alto since it leverages Rubrik's solutions in its own offering, Cortex XSOAR, providing investors with another indirect means of exposure. Helping customers to automate tasks and respond to cyber incidents, Cortex XSOAR uses Rubrik's Polaris, a software-as-a-service platform that helps enterprises consolidate fragmented metadata. According to Rubrik, the integration with Cortex XSOAR provides "advanced security orchestration by enabling customers to enrich threat investigations, accelerate ransomware remediation, and automate sensitive data classification."

3. Varonis Systems

With a market cap of about $5 billion, Varonis Systems (VRNS 1.09%) is a cybersecurity company closer in scale to the $4 billion valuation that Rubrik apparently had back in 2021. Investors looking for a comparable growth opportunity may want to dig deeper into Varonis, which also helps customers protect data as well as identify and respond to cyber threats.

Like Rubrik, the cybersecurity platform that Varonis offers is available to customers regardless of the cloud where they store data. Whether enterprises use Amazon Web Services, Microsoft Azure, or Google Cloud, Varonis can help them keep their data secure.

In its 10-year history, Varonis has developed into a leader in cybersecurity. The company has more than 7,000 customers and operates 12 offices worldwide.

Profitability

Is Rubrik profitable?

Since Rubrik is not a publicly held company, it's not subject to the same financial reporting regulations as its peers that have launched IPOs. It's impossible to say with certainty if the company is profitable.

Rubrik provided a glimpse into its financials in January 2023, when it issued a press release that heralded its strong revenue growth. Rubrik announced that it had exceeded $500 million in annual recurring revenue (ARR) from its software subscription business. According to reporting from Reuters, Rubrik has since grown its ARR to more than $600 million. For context, Varonis reported a 2022 ARR of $465 million.

The January 2023 press release offered another indication of the company's strong financial well-being; Rubrik reported a net dollar retention rate of more than 140%. This metric provides insight into a company's additional sales from new customers or additional revenue from previous customers. In short, a net dollar retention rate of over 100% is an encouraging sign that the company is attracting new customers and existing customers are happy and willing to spend more on Rubrik's offerings.

Should I invest?

Should I invest in Rubrik?

Since the market is still waiting for Rubrik to hold its IPO, ordinary investors can't add this cybersecurity stock to their holdings. Should the speculation about Rubrik's April 2024 IPO be accurate, however, investors will have a better sense of the company's financial well-being when the company submits regulatory filings. When this happens, investors will have a better sense of whether Rubrik is an appropriate fit for their portfolios.

ETFs

ETFs with exposure to Rubrik:

Because Rubrik isn't a publicly traded stock, investors can't gain exposure to the company through an exchange-traded fund (ETF). However, investors can gain exposure to stocks like Rubrik through a cybersecurity ETF.

• First Trust Nasdaq Cybersecurity ETF (NYSEMKT:CIBR): With approximately $6.4 billion in assets under management, the ETF includes 32 holdings that are found in several industries -- software, communications equipment, and semiconductor manufacturers, for example -- and that all have exposure to cybersecurity. The fund's three largest holdings are Broadcom (AVGO 3.84%), CrowdStrike Holdings (CRWD 2.03%), and Infosys (INFY -0.41%), which represent 6.7%, 6%, and 5.8% of the fund, respectively. The fund has a 0.6% expense ratio, and holdings are rebalanced quarterly.
  
• Wisdom Tree Cybersecurity Fund (NYSEMKT:WCBR): Although it only has about $72 million in assets and 26 holdings in the fund, the ETF offers investors exposure to some of the most prominent cybersecurity companies. In addition to CrowdStrike, the largest position, SentinelOne (S 1.7%), Palo Alto Networks, and Varonis Systems are all found among the top eight holdings. The fund has a 0.45% expense ratio.
  
• Global X Cybersecurity ETF (NYSEMKT:BUG): According to Mirae Asset Group, the fund's manager, the Global X Cybersecurity ETF invests in companies that may prosper as cybersecurity technology adoption grows "such as those whose principal business is in the development and management of security protocols preventing intrusion and attacks to systems, networks, applications, computers, and mobile devices." In addition to common names like CrowdStrike and Palo Alto Networks, the ETF counts top cybersecurity names like Zscaler (ZS 1.28%) and Fortinet (FTNT 0.23%) among its 24 holdings. The fund has net assets of $764 million, and it has an expense ratio of 0.51%.
  

Related investing topics

The bottom line on Rubrik:

With Rubrik gaining considerable attention -- and investment dollars -- from Microsoft, it's not surprising that investors are interested in picking up shares themselves. But they'll have to wait until the company decides to hold its IPO. As of early 2024, the Department of Justice was pursuing a fraud investigation into Rubrik stemming from allegations of employee misconduct. Citing sources familiar with the matter, Reuters reported that the company is cooperating with the investigation and hopes to wrap it up by the end of March so it can hold its IPO in April.

Whether the company adheres to this timeline or not remains to be seen. In the meantime, investors looking for indirect exposure to Rubrik can pick up shares of Microsoft. Similarly, investors may also find Palo Alto Networks stock and Varonis Systems stock as possibilities for gaining cybersecurity exposure. Conservative investors, on the other hand, may opt for a cybersecurity ETF that provides more broad exposure to the industry.

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