Rubrik Shares Face Dual Test in Earnings Results, Lock-Up Expiry

(Bloomberg) -- Rubrik Inc.’s volatile stock is facing a two-day test with its second-ever earnings release as a publicly traded company coming Monday just ahead of an expiration of a restriction preventing insiders from selling.  

Shares of the cybersecurity company have slumped 11% since its first quarter report in mid-June, making it the worst performer among the 10 biggest US IPOs this year and the only one trading below its initial offer price. That’s upped the ante for the company to report results that beat Wall Street expectations and give a solid outlook. 

Wall Street expects Rubrik to report $196.3 million in revenue in the quarter ending in July, a 30% jump from a year ago. The company is expected to post a loss per share of 49 cents. 

“They naturally have to deliver upside on numbers and specifically there are very close eyes on the profitability performance,” Citigroup Inc. analyst Fatima Boolani said on the sidelines of the bank’s tech conference last week. “They need to deliver upside so that they can get credit for delivering a beat-and-raise cadence and can manage investor expectations around those dynamics.”

Technology company IPOs have been slow to rebound from a relative drought. They raised just $6.7 billion in the US this year, dwarfing the amounts raised in the same period in recent years but nowhere near the $55 billion seen in the corresponding months of 2021, data compiled by Bloomberg show. Even before the pandemic, tech IPOs raised $23 billion on US exchanges in the same period in 2019.

Whether the company boosts its forward guidance is also a focus. In its June earnings release, Rubrik forecast revenue of $810 million to $824 million for the fiscal year and as much as $997 million in annual recurring revenue from subscriptions. 

They could be poised to raise the full-year guidance for both metrics, Guggenheim analysts led by John DiFucci wrote in a note dated Sept. 3. 

“This is in contrast to the previous period (F1Q25) when very strong results were not flowed through to annual guidance,” DiFucci said. 

After a choppy year, some cybersecurity companies’ recent results have been cheered by investors. Palo Alto Networks Inc. gave a rosy outlook in earnings released early August, sending shares higher. Fortinet jumped after reporting strong margins that boosted earnings. CrowdStrike shares also gained after its late-August earnings report —the first since its July issue — showed a better-than-feared outlook. 

The company will face a second test a day after its earnings report. On Tuesday, Rubrik’s lock-up period expires, which could trigger selling pressure as long-time holders are able to cash in stock for the first time since it went public. Strong investor demand enabled the Microsoft Corp.-backed company to exceed its IPO goals by selling more shares than anticipated at a price above a marketed range in April. 

“Some investors just want the lock-up event to pass so they’re not dealing with a mechanical supply overhang,” Boolani said. “As soon as that’s behind us as an event it’ll probably help galvanize a lot more fundamental investor interest.” 

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