Rubrik (RBRK)

The Last Line of Defense

In this post I am going to try to make a case that RBRK is in fact undervalued using relative multiples when compared to similar companies in their high growth phase.

The Breach:

At 3:17 a.m., the quiet hum of Meridian Health’s data center turned sinister. Screens began to flicker, patient charts froze mid-update, and somewhere deep in the system, a silent algorithm unspooled its code. Quickly the code went to work encrypting, erasing, and mocking the hospital’s best-laid defenses. The attackers had quietly infiltrated weeks earlier through a forgotten API key, studying the rhythm of the network like a thief memorizing a guard’s patrol.

CrowdStrike’s sensors had caught faint tremors but by the time the alert surfaced, the attackers were already inside. Palo Alto’s firewall held for a while, blocking outbound traffic until the attackers tunneled through an overlooked cloud service. Zscaler’s zero-trust access policies slowed the breach, isolating several non-critical systems, but the intrusion had momentum now. Microsoft’s Sentinel dashboard lit up the back of the room with red alerts, telemetry scrolling like ticker tape, but it was too late: The ransomware payload detonated in synchronized bursts.

By dawn, chaos ruled. Doctors scribbled patient vitals on sticky notes, IV pumps blinked error codes, and the billing system started issuing refunds to ghost accounts. The boardroom filled with weary and terrified executives and lawyers. Each layer of the defense stack had done its job, buying precious time but unable to stop the inevitable.

Except one.

In the far corner of the operations room, Rubrik’s console still glowed an almost calm ambient green. It’s immutable snapshots, sealed off from even the most privileged administrators, had survived the purge. As the hospital reeled, Rubrik’s platform spun up clean environments, verifying cryptographic signatures and restoring systems to their pre-attack state. Files reappeared like ghosts returning to the living. Monitors flickered back online, the heartbeat of the hospital returning to rhythm.

When the press later called it a “near-catastrophe,” insiders used another word: resurrection. In the postmortem report, beneath the line labeled last line of defense, someone scribbled in pen: CrowdStrike saw them coming, Palo Alto slowed them down. Zscaler boxed them in. But Rubrik brought us back from the dead.

RBRK’s Unique Value Proposition:

Our fictional hospital paints a very real picture of the problems with ransomware attacks. By 2024 ransomware had become a cost of doing business. According to IBM’s Cost of a Data Breach Report 2024. The average global breach costs hit US ~$4.88 million. Veeam’s research paints a darker backdrop: more than 93% of cyber attacks now target backup repositories, and in three-quarters of those incidents, attackers successfully cripple recovery capabilities.

RBRK’s unique value proposition is that it assumes the attack has already happened. Instead of being yet another preventative security protocol, RBRK stands ready to reconstitute the platform with its immutable zero trust data backups. This positions the company not as competition to the existing CRWD and PaloAlto’s but as the missing link that seamlessly integrates.

Things That Give The Bulls Buyers Hesitation, and My Counter Argument:

RBRK is in its land and expand growth phase. They recently crossed 1B in ARR but the company is still losing money, though they are fcf positive. Given this its appropriate to value the company through the lens of NTM EV/Sales. Bulls are concerned that the current ~11.5x multiple is expensive. I argue however that this is at the very least a fair multiple. I base that off the following:

• ZS is the closest publicly traded doppelganger for RBRK. When ZS crossed 1B in revenue in 2022 with similar margins and growth rates the company traded at 32x NTM EV/Sales

• RBRK has strong partnerships, and MSFT has invested into the company and is currently cross selling with their Azure technology

• RBRK is uniquely positioned, even close competitors have a difficult time competing directly as the legacy solutions currently are more hardware focused where RBRK is cloud native. That coupled with RBRK partnerships with CRWD, PANW, MSFT position the company as a logical first choice vs competitors like Cohesity and Veeam.

• RBRK’s revenue growth is strong, with its MRQ ~50% yoy ARR and 120% Net Revenue Retention

RBRK Partnerships and Moat

I am really interested in the MSFT partnership with RBRK. On the surface its easy to gloss over this relationship, and that is obvious reading through many analyst reports that don’t mention it.

MSFT rarely invests in cybersecurity firms because it has its own security stack. However in 2021 MSFT bought into RBRK not as merely a partner, but deeply integrated into MSFT architecture through Azure, Microsoft 365 and Microsoft Graph API. Basically MSFT relies on its own platform to prevent, but outsources recovery to RBRK. This positions Rubrik as an obvious first choice to enterprises that already use MSFT .

If MSFT is the co-signer for RBRK, then CRWD and PANW are the rest of the puzzle. Instead of competing with this proven security stack, Rubrik is actually the missing link. Rubrik is tightly integrated with these partners as the last line of defense. This implies that regardless the customers current security stack, implementing RBRK is a seamless process.

Aside from customer stickiness, the company also has a moat in government solutions. Currently the company has FedRAMP authorization which is a high barrier in US government contracting. This gives Rubrik a narrow market segment that is difficult for direct competitors to compete, at least for the short run.

My Price Target:

For my price target I wanted to keep it simple with easy to fall logic that doesn’t require complex assumptions. What you’re buying into with RBRK is a fast growing security resilience company with a unique value proposition inside an industry with secular tailwinds. The company has guided towards 25-30% revenue growth in 2026 with a history of giving conservative guidance. I assume its fair to assign 30% revenue growth lending to ~1.6B Revenue in January 2026. I also assume that the current NTM EV/Sales multiple of ~11.5x is not only realistic but conservative for the more asset light SaaS company. That gives a price target of ~$100 for NTM, that is to say a 20% upside from current prices.

Risks:

There are risks associated with the company, mainly around growth. If the company is unable to achieve its growth targets, or if they face policy hurdles it could lead to a multiple compression. I believe that many of these risks are already priced into the current pps, but there is a large degree of execution risk going forward. That said, I argue that the company is priced attractively given the growth profile and the unique portion of the value chain that RBRK solves. In hindsight its solution is an obvious one, which is usually the case for some of the best solutions that come to market.