Performance completely crushed expectations but was sold off. Wall Street criticized Rubrik (RBRK.US): the long-term logic was perfect, and the market “only sees trees, not forests”

The Zhitong Finance App learned that although the results and future guidance for the second quarter of fiscal year 2027 announced by cybersecurity company Rubrik (RBRK.US) completely exceeded Wall Street expectations, and many analysts described this report card as “impressive,” Rubrik's stock price did not rise but fell due to investors' early expectations being too high.

According to financial reports, Rubrik achieved revenue of US$427.3 million in the second fiscal quarter, an increase of 38% over US$309.9 million in the same period last year, which is higher than market expectations. The adjusted diluted earnings per share were $0.20, compared with a loss of $0.03 per share in the same period last year, marking the company's return to the adjusted earnings range.

Annual recurring revenue from subscriptions is one of the core metrics the market is most concerned about. Rubrik's ARR subscription for the second fiscal quarter increased 32.6% year over year to reach US$1.66 billion, higher than the US$1.64 billion guideline previously given by the company, and higher than the 31.0% growth rate expected by the market. Notably, this growth rate was slightly faster than 32.5% in the first fiscal quarter, indicating that the growth momentum of the subscription business has not abated.

Net new ARR subscriptions reached $96 million, up 35% year over year, significantly exceeding analysts' expectations of $75.9 million. The company said its second-quarter results completely surpassed all indicators in its guidance.

Supported by strong quarterly results, Rubrik simultaneously raised its full-year outlook for the 2027 fiscal year.

For the third fiscal quarter, the company expects revenue to be between US$429 million and US$431 million, higher than analysts' expectations of US$418.3 million; adjusted earnings per share are expected to be US$0.07 to US$0.09, higher than market expectations of US$0.06.

For the full fiscal year 2027, Rubrik raised its revenue guidance from US$1.64 billion to US$1.65 billion to US$1,685 billion to US$1,693 million; the adjusted earnings per share forecast rose sharply from US$0.07 to US$0.27 to US$0.47 to US$0.53. In contrast, analysts had anticipated full-year revenue of $1.64 billion and adjusted earnings per share of $0.32.

In terms of ARR guidelines, the company expects annual ARR subscriptions to be between US$1.88 billion and US$1.89 billion, compared to the previous range of US$1.85 billion to US$1.86 billion. The adjusted midpoint was US$1.88 billion, corresponding to a year-on-year increase of 28.8%; the previous midpoint was US$1.86 billion, corresponding to an increase of 27.1%. The company explained that this increase reflects performance in the second quarter that exceeded previous guidance by about $20 million, and an additional increase of about 4.5 million US dollars expected in the second half of the year.

Wall Street view: The long-term logic is perfect, and the short-term stock price response is “only trees, no forest”

Despite the pre-market decline in stock prices, many Wall Street analysts are still firmly bullish on Rubrik's long-term prospects after the earnings report, believing that market concerns about some details have amplified short-term fluctuations.

Jefferies analyst Joseph Gallo maintained Rubrik's “buy” rating with a target price of $120. “As a leader in cyber resilience, Rubrik is well-positioned for long-term sustainable growth, driven by long-term tailwinds such as ransomware, SaaS/cloud workloads, and data growth,” he wrote in the customer report. Gallo believes that there is room for improvement in the market's agreed ARR expectations for FY2027, and it is expected that Rubrik's subscription ARR growth rate will remain above 20% in the next few years, driven by cloud ARR growth and cross-selling of SaaS/cloud workload protection, network resiliency, and data/AI governance products.

Gallo admits that Rubrik still lags behind cybersecurity peers of the same revenue scale in terms of operating profitability, but he also pointed out that the company has a “path to significant improvement.”

BTIG analyst Gray Powell raised Rubrik's target price from $109 to $125 and reaffirmed the “buy” rating. Powell said that although market expectations were already high before the release of the earnings report, Rubrik's performance “surpassed expectations in all key indicators.”

Powell further stated, “In our view, Rubrik is benefiting from the increased need for network resilience driven by Mythos and the broader AI advancements. The identity security business is still going strong, and early data from Rubrik Agent Cloud is encouraging.” At the same time, he also responded to some questioning voices in the market. Some investors believe that the company's guidelines mean that net new ARR will slow in the second half of the 2027 fiscal year, while others are concerned about the composition ratio of cloud and non-cloud businesses. But according to Powell, “these arguments only see trees, not forests.”