Rubrik, an information cybersecurity company that has raised over half a billion dollars, being private, made public after the bell on Monday. Following quickly after the debuts of Reddit and Astera Labs, Rubrik’s decision to pursue an IPO now may indicate that the IPO market is warming up for technology companies.
As an organization operating on the private market, Rubrik last recorded a big round in 2019, when, in line with Crunchbase data, it closed at USD 261 million at a post-money valuation of USD 3.6 billion. The company might have been lucky and priced its shares within the IPO much higher than within the last round of the initial public offering. In recent months, secondary market buyers have placed bids for shares valuing the corporate at $6.6 billion. Secondary data platform Caplight estimates the corporate’s valuation to be around $6.3 billion.
Rubrik sells its cloud-based data protection platform to enterprises. As of January, the corporate had greater than 1,700 customers with annual contract value of $100,000 and nearly 100 customers who paid Rubrik greater than $1 million a yr, in line with its IPO filing.
Inside Rubrik’s development
Rubrik initially bills itself as a moderately growing software company with net losses of $354 million in its last fiscal yr.
From fiscal 2023 through fiscal 2024, which led to late January of this yr, the corporate’s revenue grew from $599.8 million to $627.9 million, or slightly below 5%. However, subscription revenue increased 40% over the identical period, from $385.3 million to $537.9 million.
Growth in subscription revenue, slightly than legacy revenue, is the driving force that would propel Rubrik to a successful IPO. The company began as a software company that sold its products on a perpetual license basis. However, after a couple of years in fiscal yr 2019, the corporate began shifting to a subscription model. Over time, it expanded its subscription (SaaS) offerings, and in its IPO filing it told investors that it anticipates its one-time revenues “will continue.” reduce” because it doesn’t typically offer perpetual licenses at the moment.
Rubrik’s transformation towards recurring revenue is nearing completion, and the corporate reported that in probably the most recent quarter – ending January 31, 2024 – subscription-related revenue accounted for 91% of its total revenue. This is an increase in comparison with 73% in the identical quarter last yr.
The shift to subscription revenue helped Rubrik increase gross margins, which increased from 70% in fiscal 2023 to 77% within the recently ended fiscal 2024.
However, a growing software business generating recurring revenues and rising gross margins didn’t address Rubrik’s severe losses. The company’s net losses increased from 46% of revenues in fiscal 2023 to 56% in fiscal 2024, totaling roughly $354.2 million for the twelve months ended January 31, 2024.
However, despite its significant unprofitability, Rubrik’s money losses are relatively modest. The gap between net losses and operating money deficits is not going to be resolved by eliminating expansionary stock-based compensation; these are single-digit, million-dollar annual company expenses. Instead, pre-collecting taxable revenues has helped Rubrik increase deferred revenues by tons of of hundreds of thousands lately and reduced its net operating money outflows over the identical period.
The history of Silicon Valley
Rubrik’s potential IPO could prove to be a coup for Lightspeed Venture Partners, a distinguished Silicon Valley enterprise capital fund. Bipul Sinha, co-founder and CEO of Rubrik for the past decade, was a former partner at Lightspeed. The enterprise capital firm led Rubrik’s Series A and, in line with Crunchbase, participated in all subsequent funding rounds. Investing in a former partner will not be unusual in enterprise capital circles, and a few companies are even constructing founder or resident entrepreneur roles internally. But seeing Sinha’s company enter the market with a 23.9% stake within the hands of his former employer highlights how personal networks can influence who raises capital in startup land.
Greylock is the second enterprise capital firm most definitely to hit Rubrik’s planned IPO, with its investor Asheem Chandna on the board and owning about half of Lightspeed, or 12.2% of Rubrik’s voting shares, before selling latest shares within the offering public. Greylock led Rubrik within the B series.
Other investors who led Rubrik-listed rounds didn’t meet the 5% threshold required for the corporate’s mandatory S-1 filing, but Bain Capital Ventures’ Enrique Salem, who led the corporate’s Series E, is also on its board. Other board members include Yvonne Wassenaar, former CEO of Puppet, Mark McLaughlin, who also serves on Snowflake’s board, and John Thompson, one other Lightspeed resident and former Microsoft board member. NBA player and investor Kevin Durant was previously announced as an advisor to the corporate’s management boardeven though it was not mentioned within the IPO filing.
The founders are the sort of Silicon Valley A-list that the VC community adores, demonstrating the usually incestuous relationships these tech companies can maintain with one another through their personal networks. Related third-party disclosures show that Sinha co-founded one other startup called Confluera, where he still serves on the board. In fiscal 2022, Rubrik spent $124,640 at Confluera. Co-founder Arvain Jain, who stays a serious shareholder but founded a beloved latest artificial intelligence startup, Glean, can be well-known from his time as an early Google worker. Rubrik reports in its S-1 filing that it has spent $356,000 at Glean since April 2021.
While Rubrik notes that purchases of technology services from Confluera and Glean were “negotiated in the ordinary course of business,” it highlights the connections that exist between many Silicon Valley operators. These same connections will help founders repeat past successes by buying and selling to friends and former colleagues. Rubrik S-1, while not mentioning anything inappropriate, is a reminder that network effects in startup and enterprise circles often rely on relationships and their geographic density in places like Northern California.
What’s on the road
Currently, there are over 1,000 startups on the earth with valuations exceeding $1 billion. Those who’re still in fighting shape must discover a technique to exit and return capital to their supporters. With the IPO market lagging far behind the pace needed to clear the decks, many private market companies are waiting for a transparent go-to signal to pursue their very own IPOs. If Rubrik can price and trade well in its own IPO, it could help other enterprise software companies which are still unprofitable attempt to go public. This could be excellent news for each founders and enterprise capitalists.
Credit : techcrunch.com
