Rubrik's Q1 FY2026 Results Signal a Turn in the Cloud Security Playbook

Rubrik (NASDAQ: RBRK) just delivered a Q1 fiscal 2026 earnings report that underscores a critical inflection point for the cloud security company. With subscription ARR surging 38% year-over-year to $1.18 billion, margin improvements hitting record levels, and strategic partnerships with Google Cloud and Deloitte driving enterprise adoption, the company is positioning itself as a leader in a $200 billion+ cybersecurity market. For investors, the question isn't whether Rubrik's growth story is intact—it's whether the stock's valuation has finally caught up with its potential. The answer, based on the numbers, is a resounding no. Here's why RBRK is now a compelling buy.

Subscription ARR Growth: The Engine of SaaS Dominance

Rubrik's core metric—subscription Annual Recurring Revenue (ARR)—has become the gold standard for measuring its transition to a SaaS powerhouse. In Q1, ARR hit $1.18 billion, up 38% from $856 million a year ago, driven by two key forces:

1. Customer Expansion: The number of customers with $100K+ in ARR rose 28% YoY to 2,381. More importantly, the cohort of customers spending $1 million+ annually jumped 64% YoY to 162. These are the enterprise clients that will fuel scale.
2. Net New ARR: The company added over $90 million in net new subscription ARR in the fourth quarter of fiscal 2025 alone, a sign of strong retention and upselling.

This growth isn't just about volume—it's about profitability. The Subscription ARR Contribution Margin, which measures the profitability of recurring revenue after costs, turned positive to 8.0% in Q1, a dramatic improvement from -10.6% in the same period last year. For context, this metric was negative just two years ago; now it's moving toward double-digit margins.

Margin Improvements: The Burn Rate Is Finally Falling

The real story in Q1 isn't just top-line growth—it's the bottom-line progress. Rubrik's GAAP net loss per share narrowed to $(0.53), down from $(11.48) a year ago, while non-GAAP net loss per share improved to $(0.15) from $(1.58). The key driver? Operational leverage.

• Gross Margin: GAAP gross margin jumped to 78.3%, up from 48.8% in Q1 2025, as Rubrik scaled its cloud-native platform. Non-GAAP gross margin hit 80.5%, reflecting efficiency in its SaaS delivery model.
• Free Cash Flow: The company generated $33.3 million in free cash flow in Q1, a stark reversal from -$37.1 million a year ago. With $762 million in cash reserves, burn rate is now a relic of the past.

Strategic Partnerships: Google Cloud and Deloitte as Growth Multipliers

Rubrik's partnerships are no longer just “nice to have”—they're now critical accelerants for its growth. Two stand out:

1. Google Cloud Partnership of the Year: Rubrik's recognition as Google's top Infrastructure Modernization partner (2025) is no accident. The companies are co-developing solutions like isolated recovery platforms on Google Cloud, which combine Rubrik's data security with Google's AI-driven threat detection. This isn't just marketing buzz—the integration of Rubrik's Annapurna platform with Google's Agentspace (a tool for AI data governance) creates a moat against competitors like Veeam or Commvault.

2. Deloitte Alliance: Rubrik's tie-up with Deloitte, a top-tier consulting firm, is a masterstroke. Deloitte's network of Fortune 500 clients and its IndustryAdvantage™ framework now embed Rubrik's Zero Trust Data Security platform into enterprise IT strategies. This partnership isn't just about selling licenses—it's about selling outcomes, like reducing downtime after ransomware attacks.

These alliances aren't just about sales; they're about reducing customer acquisition costs. Rubrik's CAC (customer acquisition cost) is implicitly dropping as it leverages partners' existing relationships, while its lifetime value (LTV) per customer is rising as clients expand their use of the Security Cloud.

Valuation: A Stock Flying Under the Radar

At current levels, Rubrik trades at a forward P/S ratio of ~5x, modest compared to peers like CrowdStrike (16x) or Palo Alto Networks (9x). But this is a classic case of underappreciated growth. Consider:

• ARR Growth vs. Peers: Rubrik's 38% ARR growth is faster than CrowdStrike's 14% (in its core business) and 10x faster than legacy players like Commvault (3-4% growth).
• Margin Trajectory: If Rubrik can sustain its margin improvements, it could hit non-GAAP profitability in 2027, years ahead of expectations.
• Analyst Sentiment: 14 of 16 analysts rate RBRK a “Buy,” with a $89.30 average price target. That's a 50% upside from current levels.

Risks and Considerations

• Competitor Pushback: Microsoft, AWS, and legacy vendors like Dell Technologies could undercut Rubrik's pricing.
• SaaS Transition Execution: While Rubrik's transition to SaaS has been smooth, any misstep in onboarding large clients could slow ARR.
• Margin Volatility: The non-GAAP ARR Contribution Margin is still low (8%) relative to SaaS peers. Sustaining improvements will require discipline.

Backtest the performance of Rubrik (RBRK) when 'buy condition' is triggered on quarterly earnings announcement dates, and 'hold for 20 trading days', from 2020 to 2025.

Historical backtesting of this strategy reveals significant risks. Buying RBRK on earnings announcement dates and holding for 20 days from 2020 to 2025 resulted in an average return of -9.07%, with a maximum drawdown of -34.22%. This underscores the importance of a long-term investment horizon to offset short-term volatility, particularly around earnings events.

Investment Thesis: Buy Rubrik for the Cybersecurity Multiplier

Rubrik is at a pivotal moment. Its SaaS flywheel—driven by ARR growth, margin expansion, and partnerships—is now self-sustaining. The stock's 150% surge since its April 2024 IPO has been impressive, but it's still undervalued given its growth trajectory and the secular tailwinds in cloud security.

Buy RBRK at current levels. The combination of enterprise adoption, margin leverage, and strategic partnerships creates a compound growth story that few cybersecurity stocks can match. Analysts' price targets suggest 50% upside, but if Rubrik can hit its FY2026 guidance (ARR of $1.38 billion, free cash flow of $75M), the upside could be even sharper.

The risks? Yes, but they're manageable. For investors who can stomach volatility in a high-growth name, Rubrik is now a core holding in the cybersecurity space.