Rubrik, a data cybersecurity company, has announced its plans to go public, following in the footsteps of recently debuted tech companies like Reddit and Astera Labs. This comes as a surprise, as Rubrik has managed to raise over half a billion dollars while remaining a private-market company.
According to Crunchbase, Rubrik’s last funding round was in 2019 when it raised a lettered round of $261 million at a post-money valuation of $3.6 billion. However, the company may be able to price its IPO shares at a much higher rate compared to its last primary round. In recent months, buyers on the secondary market have placed bids valuing the company at $6.6 billion. Even secondary data platform Caplight estimates Rubrik’s value to be around $6.3 billion.
Rubrik offers a cloud-based data protection platform to enterprises. In January of this year, the company reported having over 1,700 customers with an annual contract value of $100,000 and nearly 100 customers with yearly payments exceeding $1 million, according to its IPO filing.
Behind Rubrik’s Growth
Initially, Rubrik may have presented as a moderately growing software business with net losses that reached $354 million in its most recent fiscal year. However, from fiscal 2023 to fiscal 2024, which ended in January of this year, the company’s revenue grew from $599.8 million to $627.9 million, which is just under 5%. The real growth, however, came from its subscription revenue, which grew by a whopping 40% during the same period, rising from $385.3 million to $537.9 million.
It’s this growth in subscription revenue that could potentially lead Rubrik to a successful IPO. The company initially started as a software company that sold its product on a perpetual license basis. However, in fiscal 2019, it began to shift towards a subscription model, which it has continued to expand over time. In its IPO filing, Rubrik stated that it expects its non-recurring revenues to continue decreasing, as it no longer offers perpetual licenses.
As of its most recent quarter ending on January 31, 2024, subscription-related revenue accounted for 91% of Rubrik’s total revenue, up from 73% in the previous year.
Transition to a Subscription Model
The shift towards a subscription model has also helped Rubrik improve its gross margins, which increased from 70% in fiscal 2023 to 77% in fiscal 2024. However, despite the growth in recurring revenue and improved margins, Rubrik is still facing losses. In fiscal 2023, its net losses accounted for 46% of its revenue, which increased to 56% in fiscal 2024, with a total loss of $354.2 million.
However, it’s worth noting that even with the steep losses, Rubrik’s cash burn has been comparatively moderate. The company’s net losses and operating cash deficits are not resolved through the excision of expansive share-based compensation, which only amounts to single-digit million expenses each year. Instead, upfront collection of ratable revenue has helped the company boost its deferred revenue by hundreds of millions, limiting its net operating cash outflows.
A Silicon Valley Story
Rubrik’s potential IPO could be a huge success for Lightspeed Venture Partners, a prominent Silicon Valley venture capital firm. Bipul Sinha, Rubrik’s co-founder and CEO for the past decade, is also a former partner at Lightspeed. The VC firm led Rubrik’s Series A and has participated in all subsequent funding rounds, according to Crunchbase. While it’s not uncommon for firms to invest in former partners, it’s worth noting that Sinha’s company is going public with Lightspeed still owning 23.9% of Rubrik’s voting stock, highlighting the impact personal networks can have on capital raising in the startup world.
Greylock is another venture capital firm with a significant stake in Rubrik’s IPO. Investor Asheem Chandna is on Rubrik’s board and owns about half of Lightspeed’s stake, which amounts to 12.2% of Rubrik’s voting stock before new shares are sold in the IPO. Greylock led Rubrik’s Series B round.
Other investors who led lettered rounds in Rubrik did not meet the 5% threshold required for mandatory inclusion in the company’s S-1 filing. However, Enrique Salem from Bain Capital Ventures, which led Rubrik’s Series E, is also present on its board. Other board members include Yvonne Wassenaar, the former CEO of Puppet, Mark McLaughlin, who also sits on Snowflake’s board, and John Thompson, another Lightspeed denizen and former Microsoft board member. It’s worth noting that NBA player and investor Kevin Durant was previously announced as a board adviser, but he is not mentioned in the IPO filing.
The founders of Rubrik are part of Silicon Valley’s A-list, which is highly regarded by the VC community. This demonstrates the often inseparable relationships that exist between tech companies through their personal networks. The company’s S-1 filing also reveals that co-founder Sinha sits on the board of another startup called Confluera, which is reportedly worth $124,640. Additionally, co-founder Arvain Jain, who remains a major shareholder at Rubrik, has gone on to found another startup called Glean, which Rubrik has spent $356,000 with since April 2021.
What’s at Stake
Currently, there are over 1,000 startups with a valuation of $1 billion or more. However, many of these companies need to find a way to exit and return capital to their investors. With the IPO market falling behind the required pace, many private-market companies are waiting for a clear signal to pursue their own public offerings. If Rubrik can successfully price and trade its IPO, it could pave the way for other unprofitable enterprise software companies to go public. This would be great news for both founders and venture capitalists alike.
