Rubrik Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kash Rangan - Goldman Sachs Group, Inc. - Analyst : Bipul, if you could talk about the month of April and also the month of May, the last month of the quarter and the first month, starting quarter, did you notice any changes in business conditions? And one for you, Kiran, to just keep it short and sweet. What are the fundamental drivers of free cash flow conversion from revenue, be it unit economics, cost to acquire lifetime value of the customer? How should we think about Rubrik's position to be able to generate free cash flows in the future? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 11, 2024 / 9:00PM, RBRK.N - Q1 2025 Rubrik Inc Earnings Call

Question: Kash Rangan - Goldman Sachs Group, Inc. - Analyst : And just on the subscription gross margin, what are the drivers? Is that scale or cost of acquisition, improved retention, improved upsell? What caused that number to -- yes.

Question: Saket Kalia - Barclays Bank PLC - Analyst : I echo my congrats on your first quarter as a public company. Bipul, maybe just to start with you. A lot of great customer examples in your prepared remarks. And can you just talk about the growing security tools that Rubrik is adding on top of secure backup? I think, more of your customers are opting for higher-end bundles, which, of course, include more security, talk to us a little bit about how they're using those tools and what you're hearing from those customers that are increasingly using the security components?

Question: Saket Kalia - Barclays Bank PLC - Analyst : Got it. If I could sneak in a follow-up. Kiran, maybe for you for the follow-up. There was a great beat on ARR this quarter. I saw that we flowed through some of the upside but not all of it, just to make sure the question is asked, are there any timing elements that we should consider for ARR this year, given the beat and given the adjustment to guide, to your point, still very early in the year, but I want to make sure the question is asked.

Question: Fatima Boolani - Citigroup Inc. - Analyst : Therefore I wanted to unpack some of the broad-based strength in business activity. And specifically wanted to hear some of your comments on what type of procurement and buying behavior you're seeing from midsized enterprises versus larger enterprises. And the spirit of the question really here is, it is an uneven macro and a lot of your peers in the software complex have just experienced a lot of volatility, certainly with some of the smaller customers and just deal cycle elongation on the larger side. So I'm curious how you've sort of been able to buck the trend in executing well across both those vectors?

Question: Andrew Nowinski - Wells Fargo Securities, LLC - Analyst : Congrats on a nice quarter as well. I want to ask a question on the security side and specifically Laminar. I think most people understand your security capabilities and why other vendors can't provide those capabilities applied to the business data, but where there might be some overlap on the DSPM side. So I was wondering if you could explain why Laminar is different from the other DSPM offerings in the market from CrowdStrike and Palo Alto and others. And then what you're seeing from a pipeline perspective as it relates to that new high-end bundle that you introduced that includes Laminar?

Question: Howard Ma - Guggenheim Securities, LLC - Analyst : This is Howard Ma on for John DiFucci. We want to add our congratulations on the strong performance in what is still a challenging selling environment. So for either Bipul or Kiran, when we think about the balance of the year, how would you rank order your growth catalyst across, call it, data security driven demand vendor consolidation on the data protection side. And I realize the two may be hard to separate. And also AI-driven data growth and the need to secure incremental Gen AI workloads. And do you think these catalysts are enough to offset the macro unevenness to use? Bipul, your words.

Question: Gregg Moskowitz - Mizuho Securities USA LLC - Analyst : I'll add my congratulations. Obviously, these are a strong set of results, but what I may be most impressed by is that your net new subscription ARR actually grew over 20% sequentially, and this is compared to your seasonally strong this quarter. I know that you benefited from larger transactions. You called that out a couple of times possibly you can provide a little bit more context around that. But even so, just wondering if there's anything else that you would expand on in terms of how you saw so much strength in the fiscal Q1 and again, in the current macro environment or less?

Question: Gregg Moskowitz - Mizuho Securities USA LLC - Analyst : Super helpful, guys. One quick follow-up, if I may. It doesn't get mentioned often, but Bipul, I was curious if cyber insurance is playing a role as well when it comes to how customers are approaching data security?

Question: Joel Fishbein - Truist Securities, Inc. - Analyst : Congrats on the excellent execution. I have two follow-up questions to the last question, to Gregg's question. Number one, Bipul, can you just talk a little bit more about Ruby AI. You talked about the one customer, but overall demand for Ruby AI, I'm just curious, I know it's early days, but would love to get clarification there. And Kiran, for you, just in terms of large deal, can you just remind us of what the large deal pipeline looks like going forward? That would be helpful.

Question: Brad Zelnick - Deutsche Bank AG - Analyst : And congrats guys on a really strong entree -- strong first quarter out of the gate. My question for you, Bipul, is forward last week, you talked about adding capabilities to the product that help better prioritize operational recovery of the most important data first to further enhance our tier for customers. And we often hear a lot about Rubrik strength on the security side of data resiliency. But maybe could you touch on speed of recovery and how important a factor that is for customers evaluating the product. And how Rubrik stacks up against the competition?

Question: Eric Heath - KeyBanc Capital Markets Inc. - Analyst : I guess, Bipul, I'd love to hear more your perspective on what you see from customers as they move their core workloads and their IT estate to the cloud. Just curious to hear more on how their spend and coverage of their environment change when they do make that move to the cloud of their applications and infrastructure. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 11, 2024 / 9:00PM, RBRK.N - Q1 2025 Rubrik Inc Earnings Call

Question: Yi Fu Lee - Cantor Fitzgerald & Co. - Analyst : Congrats on your inaugural earnings and IPO. So a question for Bipul or Kiran. It's related to the public sector vertical. I understand Rubrik has achieved the StateRAMP certification, SLED certification earlier this year. Was wondering if you could give me some feedbacks on Rubrik's Security Cloud government that hunting module as well as other public sector vertical?

Question: Todd Coupland - CIBC Capital Markets - Analyst : I wanted to ask about market share as well. You're clearly growing faster than market and faster than public legacy peers. Can you just talk about where most of your market share has been coming, I guess, in this last quarter and over the last couple of quarters?

Question: Todd Coupland - CIBC Capital Markets - Analyst : And as the consolidation amongst one of your main competitors, is that -- does that change your win rate at all? Is that an opportunity for you? Just talk about that.

Question: Taz Koujalgi - Wedbush Securities Inc. - Analyst : Two questions. Two for Bipul. Bipul, can you talk about your partner ecosystem and specifically the partnership with Kyndryl, what does that bring to the table? Is that focused on large customers, mid-market? And how does that change your competitive positioning? Is that really unique in terms of offering this managed service through Kyndryl or other companies, your other competitors were doing who offer something similar as a managed service.

Question: Taz Koujalgi - Wedbush Securities Inc. - Analyst : Got it. And one follow-up for Kiran. Kiran, very strong results in the quarter, strong NRR. If you can just comment on within the new ARR in this quarter, how is the mix between, I guess, new logos and upsell. And then going forward in terms of the guide, like what is implied for NRR and the guidance? How do you expect NRR to trend going forward for the rest of the year?