Rubrik's growth deceleration ahead: A potential rating downgrade

Rubrik, a cybersecurity software company, has seen significant success as a public IPO despite lacking profitability metrics. The market has been complacent about the company's growth deceleration, which has led to a rating downgrade. Despite enjoying a cybersecurity premium, the company's lack of profitability and growth concerns raise doubts about its long-term sustainability.

Rubrik, Inc. (NYSE: RBRK), a cybersecurity software company, has seen significant success since its public IPO, despite lacking profitability metrics. The company has managed to enjoy a cybersecurity premium in the market, but recent developments suggest that the market may be complacent about the company's growth deceleration. This complacency has led to a rating downgrade by some analysts.

In the latest quarter, Rubrik reported a revenue increase of 48.7% year-over-year, achieving earnings per share of ($0.15), which surpassed analysts' expectations [1]. However, the company's unprofitability and the potential for growth deceleration have raised concerns among some investors and analysts. The company's valuation, while not obviously bubbly, represents a steep premium compared to its software peers [2].

Rubrik's strong dollar-based net retention rate of over 120% is a notable achievement, but the company's growth may not be sustainable in the long run. The company's transition to subscription revenues should not affect the cleanliness of its story, which was a factor when it came public last year [2]. However, the company's lack of profitability and its reliance on a single product portfolio raise doubts about its long-term sustainability.

Several institutional investors, including Adams Wealth Management, Russell Investments Group Ltd., PNC Financial Services Group Inc., KBC Group NV, Point72 Hong Kong Ltd., and Quarry LP, have recently bought or increased their stakes in Rubrik [1]. Despite this, some analysts remain skeptical about the company's ability to sustain its aggressive growth rates and maintain its valuation.

The market's complacency about Rubrik's growth deceleration has led to a rating downgrade by some analysts. While the company has seen significant success since its IPO, the market's focus on its growth and profitability metrics suggests that investors should be cautious about the company's long-term sustainability.

References:
[1] https://www.marketbeat.com/instant-alerts/filing-adams-wealth-management-acquires-shares-of-3573-rubrik-inc-nyserbrk-2025-08-16/
[2] https://seekingalpha.com/article/4815080-rubrik-market-complacent-on-growth-deceleration-ahead