With its initial public offering (IPO) only happening back in April, cybersecurity company Rubrik (RBRK 20.44%) is waisting no time getting the attention of investors. As of 3:30 p.m. ET on Friday, Rubrik stock was up a whopping 25%, hitting an all-time high, after reporting financial results for its fiscal third quarter of 2025.
One of the newest cybersecurity stocks
Rubrik believes it has a differentiated business in the cybersecurity space. It’s trying to secure enterprise data wherever it is — on the cloud or elsewhere. Whether it’s truly unique might be debatable. But one thing that’s for sure is that its customers seem to love it. Its Q3 revenue jumped a whopping 43% year over year to $236 million, which was far better than its 35% growth in the previous quarter.
Most of Rubrik’s revenue is on a subscription basis. And those annualized numbers look good as well. Its annual recurring revenue (ARR) surpassed $1 billion in Q3, which is why management raised its full-year guidance. Previously, it believed its ARR would be $1,026 million to $1,032 million by the end of the fiscal year. Now it believes it will be $1,057 million to $1,061 million.
Wells Fargo analyst Andrew Nowinski raised his price target for Rubrik stock from $40 per share all the way up to $76 per share, according to The Fly. It was one of the largest price-target increases among the analyst community. And Nowinski reportedly said that he’s expecting “strong growth and operating leverage” from the company, which is high praise from a prominent analyst.
Put Rubrik stock on a watch list, at least
Rubrik’s operating leverage is something for investors to watch. The company ended its fiscal 2024 with $784 million in subscription ARR and turned in negative free cash flow of almost $25 million. It’s ARR is now already over $1 billion, and it expects negative free cash flow of $39 million to $45 million.
That’s slightly the wrong direction for profits, but the outflow isn’t bad for a company that’s scaling as fast as Rubrik. Moreover, it has over $600 million in cash and investments on the balance sheet, so there’s no need to worry about financial stress for this company for a while. In short, Q3 was definitely a good report for the young company, and it’s a company for investors to watch from here.
Jon Quast has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
