Rubrik raises guidance on AI threat narrative, shares fall over 10%

Rubrik Inc. raised its outlook after reporting strong second-quarter results and accelerating net new subscription growth, while putting artificial intelligence at the core of its cyber resilience strategy.

CEO Bipul Sinha warned on Thursday's earnings call: "AI agents are attacking us now. These autonomous agents use AI to chain vulnerabilities, finding the right malicious combination of intrusion, breach, and encryption at machine speed."

• Rubrik shares are sliding. Why is RBRK stock falling?

Q2 beats expectations

Rubrik reported quarterly EPS of 22 cents, well above the analyst consensus of 4 cents.

Quarterly revenue reached $427.26 million, beating the $396.28 million estimate. Subscription revenue grew 37% year over year, from $297 million to $407.2 million.

Subscription annual recurring revenue (ARR) reached $1.66 billion, up 33%, with net new subscription ARR of approximately $96 million.

AI integration

Management said increasingly autonomous threats are pushing customers toward rapid recovery and resilience, rather than relying solely on prevention.

Rubrik Agent Cloud now has over 15 paying customers, with proof-of-concept projects converting into production deployments.

However, management expects RAC's contribution to fiscal 2027 ARR to be minimal as the company continues refining product-market fit.

Growth remains organic

Management clarified that the recent Strata Identity acquisition contributed zero subscription ARR in the quarter, and the fiscal 2027 guidance assumes no ARR contribution from Strata.

Subscription revenue grew 37% to $407.2 million, while subscription net retention rate remained above 119%. Subscription ARR contribution margin improved approximately 460 basis points year over year, with free cash flow reaching $66 million.

CFO Kiran Choudhary also noted that hardware costs and supply constraints had no material impact on subscription ARR, while investors are also tracking other independent developments, including previously disclosed institutional holdings.

New growth drivers emerge

As governments and regulated industries seek sovereign infrastructure, non-cloud deployments are becoming another growth driver.

Management said this segment also carries higher margins since customers host the software themselves.

Identity penetration within Rubrik's customer base remains low.

The company closed its largest international identity deal this quarter, helping an existing customer reduce recovery time objectives from roughly seven days to just hours.

Outlook

Rubrik raised its fiscal 2027 adjusted EPS outlook to 47 cents to 53 cents, above the analyst estimate of 31 cents.

The company also raised its revenue guidance to $1.685 billion to $1.693 billion, exceeding the $1.65 billion estimate.

RBRK stock movement: As of Friday's writing, Rubrik shares were down 10.75% at $95.51.