Rubrik (RBRK) Grew Revenue 38%, but Free Cash Flow Margin Fell to 15%. Is Growth Becoming Less Cash-Efficient?
Free cash flow increased 14% to $65.7 million, causing free cash flow margin to fall to 15% from 19%. Operating cash flow margin also declined to 18% from 21%. Rubrik, Inc. (NYSE:RBRK) defines free cash flow as operating cash flow minus purchases of property and equipment and capitalized internal-use software. The quarter generated more cash, but less for each dollar of revenue.
The quarterly margin compression was broad. GAAP gross margin declined to 78.4% from 79.5%, while company-defined non-GAAP gross margin, which primarily excludes stock-based compensation and acquired-intangible amortization, fell to 81.0% from 81.6%. Management attributed the non-GAAP decline to lower material-rights revenue and revenue mix, which offset greater scale in customer support.
Capital investment increased. Purchases of property and equipment and capitalized internal-use software totaled approximately $11.2 million, compared with $7.2 million a year earlier. Combined with the lower operating cash flow margin, this limited free cash flow growth to well below the revenue growth rate.
Rubrik, Inc. (NYSE:RBRK) remained unprofitable under GAAP. It reported a GAAP net loss of $61.8 million, or $0.30 per share, despite company-defined non-GAAP net income of $44.7 million and diluted earnings of $0.20 per share. The reconciliation included $101.0 million of stock-based compensation, up from $88.5 million a year earlier, along with smaller amortization adjustments.
The filings available so far reflect positions held before Rubrik, Inc. (NYSE:RBRK) reported its fiscal second-quarter 2027 results. Insider Monkey's database showed 44 hedge funds holding Rubrik, Inc. (NYSE:RBRK) at the end of 2Q2026, down from 46 funds three months earlier.
Demand remains exceptionally strong, but gross margins, quarterly cash conversion, and stock-based compensation now matter more to the operating-leverage story. Rubrik, Inc. (NYSE:RBRK) must show that the second-quarter cash-flow compression was temporary while sustaining its ARR momentum.
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