Rubrik Aktie

Thanks for joining our keynote today. Lessons from the Front Line. Today, I'm joined by 2 people I'm very excited for you to meet. John Riggi is the National Adviser for Cybersecurity and Risk at the American Hospital Association and Nicole Perlroth, former New York Times lead reporter for cybersecurity. She has produced several seasons of To Catch a Thief, a cybersecurity podcast sponsored by Rubrik and has a long-time voice in the cybersecurity space. Welcome to you both. Thank you so much for being here with us.

Thanks, Josh.

Thanks so much for having me.

So Nicole, I want to start with you. Your new season traces how North Korea is funneling hundreds of millions of dollars from IT workers and the organizations that employ them into their weapons program. And I'm curious what you think a hospital CIO should take from that -- what implications it has for who may already be in their supply chain? What sort of things do leaders need to think about in light of this unusual angle of attack?

It's pretty interesting. I did this season on North Korean IT workers, infiltrating American companies because I just was hearing about it everywhere. And at some point, it occurred to me that we used to use this refrain in cyber, there's only 2 types of companies left, companies that have been hacked by a Chinese APT or nation-state group and those that don't know they've been hacked by a Chinese APT nation-state group. And I realized now the same refrain really applies to this North Korean IT worker situation.

I have yet to meet a Chief Information Security Officer in the Fortune 500 who has not experienced this, where they have inadvertently hired a North Korean IT worker. So when I started investigating it, I knew it was widespread, but I did not understand the scale of this. And if you listen to the podcast, you'll hear that we were able to get an inside look at one of these pretty small DPRK IT worker cells that was operating on Discord. This is just 12 people, and it was only a 3-month window that we were able to capture because we worked with a security firm that intentionally hired one of these folks so they could get inside their accounts and see how they were operating.

And what we saw was just in a 3-month period, we saw them apply to more than 160,000 jobs just in the United States. And so there are a number of health care institutions and suppliers on that list. Now there was some odd comfort in the beginning in that we believe that they were just doing this for the salary. We could see that they had quotas to me every month and that those quotas would go back to the regime, go back to the munitions department. We've seen some research since that it's actually directly helping fund Russia's war in Ukraine and weapons programs. So it's a national security threat for sure.

But as we started flagging this, as companies grew more aware to the fact that there were North Koreans in their midst HR teams have gotten involved. We've had fruitful conversations like this one. Companies have started flagging these incidents much earlier and firing these individuals. The problem is that the monetization continues. It's not like their quotas go down, right? And so what we're starting to see is that a threat that was really, we believe, mainly for the salary unless you were a crypto firm or there was some sort of immediate financial gain there is really now a situation where these DPRK IT workers are getting hired and they are under pressure to monetize that access from day 1, meaning steal your data, extort you for that data, potentially funnel it over to one of the DPRK hacking groups that do ransomware and other sort of more disruptive attacks. And there are many, many, many health care institutions on that list. I have yet to hear about hospital and that didn't come up in my research, but it's certainly something that could impact hospitals through the supply chain.

It's kind of alarming when you talk about the scale of that. In the first season of To Catch a Thief, you explored how China went from, we'll say, mediocre to quite formidable in terms of their cyber capabilities. And at the same time, we know that health care is notorious or infamous for having a lot of connected medical devices that may not be fully patched or it's legacy tech that's typically connected. How concerned should leaders be about that specific mismatch? And what can be done about bringing that legacy tech up to date and trying to close off that angle of attack?

Yes. I think health care has been notoriously impacted by a lot of these more disruptive events. And then, of course, we've had these incidents like UnitedHealthcare, where these are incidents that have third, fourth, even fifth order effects and to life, right? This is impacting patients' lives. This is disrupting services. This is disrupting emergency response services. As far as the supply chain, it is -- I don't think people understand the level of supply chain attacks we are witnessing right now and how vulnerable suppliers are.

I think it's particularly acute when it comes to the life sciences and medical devices space. We -- and John can certainly speak to this better than I can, but we saw the disruptive attack by Iranian hacktivist hackers or aligned Iranian-aligned hackers back in March against Stryker. This is a target. Why is it a target? Because it has such acute potentially life-threatening impacts that it's -- these are attacks that are intended to send a message. As far as what we can do in terms of updating legacy systems, we've had this conversation forever, and we've never really addressed the underlying problem.

I served on the CISA Advisory Committee under Biden, and we talked a lot about Secure by Design, getting CEOs to sign a pledge that they would build Secure by Design. And I'd like to think we've had some improvement, right, especially with these notorious incidents like the UnitedHealthcare case. But I think we're actually now at the AI inflection point where either you build these things Secure by Design or you get eaten alive. So all of these best practices that we've talked about to death for decades now, it's like, all right, like we're done talking about best practices. Let's see how vulnerable you are to these AI attacks, which are all day, every day, as I understand it right now.

Nicole, that's really interesting. Maybe could you explore that a little bit further? What do you think has changed in terms of what AI is allowing attackers to do and specifically maybe even like low-skilled groups? What do you anticipate happening in the next 12 months?

Well, we're now in this post-Mythos era, right? And I actually interviewed the red teamer at Anthropic, who is in charge of red teaming Mythos and was one of the people who was arguing that they needed to hold it back and launch Project Glasswing -- Project Glasswing? You guys might have to edit me on that one. But basically, we're at the point where hackers may have used known vulnerabilities to hack you, but now they can do it at scale, right? With the click of a button, they can do this at machine speed, just find every known vulnerability that you haven't patched and you're owned.

The problem now is, even if you have patched, these models are now capable of finding undiscovered vulnerabilities or zero-day vulnerabilities and chaining those vulnerabilities with zero-days together to launch you in extremely creative ways that are tuning human minds would take months or years in some cases to develop. And all of that can be found, developed and launched in minutes or seconds in some cases. So this is our brave new world. And it's sort of -- we're entering this era of sink or swim. And I was just looking at a chart yesterday where it was showing the number of critical known vulnerabilities just in the last, I think, 7 years and severe vulnerabilities. And it's just a hockey stick right now.

So what we are basically expecting as security teams at this point may be unsustainable in the near term until we can figure out a new angle on this. But what we can really expect is that any vulnerability or any misconfiguration or any human error that you have in managing your security estate will be discovered at machine speed and exploited at machine speed. But also, we are now entering this new, in my opinion, very scary era that I didn't even foresee in my book, which is called This Is How I -- How They Tell Me the World Ends.

This is How They Tell Me the World Ends, where I was talking about humans finding zero-days, right? But now the machines and the models are capable of finding zero-days. So short term, I'm very cynical and pessimistic and worried. Long term, I hope that we basically get to a place we've never been before that this forces us to do the things that we have talked about to death over the past few years in terms of Secure by Design, formal methods, patching, backups, real-time backups, backup intelligence, et cetera, et cetera, et cetera.

Yes. It's a tough time to be a leader in health care. I struggle a bit when I sit across the table from someone who's working against declining reimbursement rates and lower operating margins. And at the same time, there is this brand-new panoply of threats that's coming from every angle. And it's like Everything Everywhere All at Once. So not to make us further depressed, but you've been covering this space for 10-plus years. What's something that you think leaders haven't come to terms with yet or are overlooking with this change in the threat landscape?

Well, I think you just branded it. We -- the Everything Everywhere All at Once cyberattack scenario is something we talked about a lot in the wake of a few things, Colonial Pipeline, the Living off the Land Chinese cyberattacks that we're finding in critical infrastructure in the United States. And we would talk about it, and I talked about it in the first season of my podcast -- in the context of if Beijing were to make a call that they were going to invade Taiwan, perhaps the best way to get us to think twice about coming to Taiwan's defense would be to cut off critical services like access to emergency response services, medical services, power, gas, water, clean water.

And that was really the context for that podcast, and we talked about it in this -- we called it the Everything Everywhere All at Once cyberattack scenario where it's not just one Colonial pipeline that they hijacked, but every major provider of gas, diesel, and jet fuel across the United States, plus water treatment facilities, plus select power grid operators, et cetera, et cetera. And now I think in this post-Mythos era, we're dealing with what I think is really truly the Everything Everywhere All at Once cyberattack, which is we are going to be probed at machine speed, not just by the APTs and the cybercriminal groups that we are all now familiar with their names, Scattered Spider, et cetera.

But anyone who has an axe to grind can essentially use these tools to hack you. And they can do it in a way that has been completely democratized by these models. And so I think what leaders need to understand is that this is real. This has been coming in sort of waves at faster and faster rates over the past 20 years, but now it's going to be happening all at once. And I think the critical things to remember are asking yourself, do you have a business continuity plan in place? Have you gone through that exercise, not one time or once a year, but continuously? Have you asked yourselves, what are the crown jewels that need to be up and running no matter what?

What is the fallback plan? How are people going to communicate once these systems are hacked or hijacked or exfiltrated? And do you have backup plans? Or do you have a clean slate that you've migrated your critical tools to? Those are the questions that I think shouldn't just be the realm of the Chief Information Security Officer anymore. This is really something that should be treated as a priority business risk across every business unit. And I think if people haven't gotten there, I think the reality will force them to get there.

Yes. I kind of suspect in the year or 2 ahead, we're going to find out what's actually immutable and what isn't and the difference between Secure by Design and architecture. So that's going to be interesting. John, I want to bring you into this. You've been firm in the discussions we've had and the events we presented at that you see ransomware attack on a hospital as a threat-to-life crime -- and not necessarily just a crime against data or a theft of data. Is that framing actually changing how law enforcement and regulators respond?

Josh, thanks for the question, and great to be here. And Nicole, great to meet you in person. As I said earlier, read your book prior to this interview, knowing that I'd be here today. So I appreciate your insights as always. So here's why it's a threat to life crime. Today, health care is so dependent on network- and internet-connected technology, not only to deliver basic care, but really to deliver life-saving care, whether it's a stroke, trauma, heart attack, or time-sensitive oncology treatments, almost everything we do from patient admission, whether it's by ambulance or somebody walking in the door through diagnostics, through labs, through the operating room depends on network- and internet-connected technology.

So when that technology fails because perhaps even some design failure and wasn't designed securely, but which the bad guys have exploited or found today at machine speed, as Nicole said, when those systems go down, there is an immediate disruption and delay to health care delivery. We know from medical literature, any delay in urgent care situations of stroke, heart attack, and trauma, for example, increases the risk of a negative outcome or death. So when the bad guys, and these are foreign adversaries primarily based in Russia, China, North Korea, and Iran, target our medical systems, they know upfront, it will cause a delay to health care delivery, risking patient safety and really posing a threat to life.

And not only for the patients in the hospitals, but for the entire surrounding community that depends on the availability of their nearest hospital, the nearest emergency department and for these life-saving treatments. So really, these are, in effect, attacks on the entire region served by those hospitals. And once we had framed that what the impact is for the government, quite frankly, in my old organization, especially the FBI, they, quite frankly, didn't understand what the cascading effects were to patient care and safety when that medical technology was lost.

And as Nicole said, it's just -- it's not just the medical technology that goes down. There's a simultaneous disruption of information technology, operational technology, and telecommunications, all at the same time. Once they understood that these were threat-to-life type crimes, it really allowed the government to really employ all their capabilities, including offensive cyber capabilities beyond law enforcement. So it would allow them to work more closely with DoD, with Cyber Command, with NSA, and with intelligence agencies from aligned partners all over the world. And using those capabilities and authorities to go after cyber bad guys, just like we use those capabilities and authorities to go after terrorists. Prior to coming to the Cyber Division at the FBI, I did a lot of work in counterterrorism.

And we knew that our law enforcement capabilities and authorities would only be effective to a certain point when you're dealing with foreign adversaries that are being provided shelter by adversarial nation-states. For instance, Al-Qaeda was sheltered by the Taliban. The FBI just couldn't go and put handcuffs on Bin Laden without assistance from U.S. military intelligence authorities. And obviously, we knew that in the end, that was a military solution, not a law enforcement issue. So once the federal government understands that these really are akin to terrorist attacks in a sense because the bad guys know their intent is to create fear and disruption on a mass scale.

And they are often, if not directly encouraged or, I would say, aided by a nation-state, they are at a minimum provided safe harbor by these nations to conduct attacks against the West. So the nation-states, even in a passive way, if Russia allows these groups to conduct these type of attacks against the West, they are complicit. They are complicit in threats against patients and entire regions and to American society.

John, thank you for that. Speaking of Iran and nation-state actors, so the Stryker attack was claimed by a pro-Iranian group that DOJ has linked to Iranian intelligence. How does this mismatch between, on one hand, an attacker that is -- has nation-state ties and a lot of resources and capability up against the defenders we have in our health care systems who are typically constrained by budgets and time, and oftentimes wear more than one hat. How can we help level the playing field a little bit? I know the AHA has a number of programs, but perhaps you could talk a little bit about the resources that may exist out there.

Yes. Again, it just goes to highlight that Today, hospitals aren't dealing with defending against script kiddies in the basement of some foreign location, much, much more sophisticated. These are nation-state-level attacks, even when it comes to supposed criminal ransomware groups or hacktivists like Handala claim. And AI is bringing nation-state-level capability to these criminal organizations as well. So Iran, for example, in particular, has been known in the intelligence community and law enforcement circles for many years to have first-world offensive cyber capabilities. And they use that as the great equalizer. When they know they can't defeat us in a military head-to-head confrontation, they resort to cyber means.

And so the average hospital or health system really doesn't have the capability to withstand a dedicated, determined cyber adversary that has nation-state-level tools enhanced and augmented by AI. So really, it's as much as we try to defend against these attacks and we do our best, I do remind folks that hospitals are not cybersecurity companies. We are not U.S. government agencies. Our job is to care for patients and save lives. So ultimately, if we are faced with nation-state-level threats, that's where we need nation-state-level defense as well.

And John, you've talked in the past when we've presented at things or you did my YouTube series that you believe hospitals need to be prepared to deliver safe care for 30 days or more without their applications and IT systems. Realistically, how many do you think are actively prepared to do that today?

Well, realistically, not many. And this is an evolving issue that has surfaced over the last several years. So the level of ability and capability to keep systems running or resort to downtime procedures has varied from a few days to a couple of weeks. Remember, the requirement for hospitals was to be prepared for a 96-hour outage for whatever the reason, whether it's a hurricane or a cyberattack. What we had failed to anticipate was that our dependency on so much technology and the difficulty in restoring these technologies would take about 30 days. And we use that number based on experience.

So we have found that whether you're a small critical access hospital with 10 beds or you are a very large multi-state national system, the average time to restore is about 30 days. And again, depending on the security of their backups. So now we are advising hospitals to prepare, at least start thinking about how would we continue to provide care, most importantly, for 30 days or longer without the benefit of network- or internet-connected technology, including many of our mission-critical third-party providers that are cloud-based and may not want to connect back to us until they receive a letter of attestation saying that we're safe to reconnect. We know in certain cases, that actually has delayed restoration of patient care because third parties have refused to reconnect with us until they have that letter of attestation from our incident response firms.

But here's the good news. Hospitals, and I talk to a lot of CEOs, almost every CEO I speak to now ranks cyber risk as their top priority or in at least the top 3, including in -- I was shocked about a month ago to learn even in Florida, some hospitals now rank cyber risk as their #1 enterprise risk issue ahead of hurricanes. And I said, Really? And they said, "John, think about it. We get a forecast on a hurricane. We have plenty of time, plenty of experience to prepare for those. We're not getting any warning on a cyberattack. And then ultimately, even though the building may still be standing to lose that technology can be just as devastating as a Category 5 hurricane.

So more and more hospitals are moving towards this process of what we call clinical continuity, not just business continuity, but clinical continuity. How will we continue to provide safe and quality care for patients for 30 days or longer. And as a result of all this experience, battle experience in a sense we've had over the last several years, we've partnered with the Joint Commission, the primary accreditation body for the majority of hospitals to develop a cyber resilience readiness program focuses on clinical continuity. It's voluntary, has nothing to do with their accreditation, but helps hospitals develop -- understand the impact of losing this technology and develop plans to carry on that care, especially life-saving and life-sustaining care.

And to put it simply for the non-technical leaders, I always put it -- frame it this way. I said, folks, 3 simple questions to ask your teams. Every department, every hospital, system-level, department-level, frontline. In the context of losing the Internet, and your internal network, 3 simple questions to ask, which are extraordinarily difficult to answer. What will work? What won't work? And what's the plan? What's the plan to carry on safe and quality care for 30 days or longer without technology, whatever your function is? And we get a lot of dazed looks. And again, so that it's not overwhelming, we say at least focus on those essentials, life-saving, life-sustaining care.

So speaking of supply chain and third-party risk, Change Healthcare, the blood and plasma supply, Stryker Medical, none of these were necessarily hospital systems, but the effects of those attacks were felt across the health care sector. And it feels like the attack surface has actually changed and organizations need to think far beyond their own walls and the services they depend on. And I know some organizations responded to the Change Healthcare attack by looking at perhaps having a diversity of suppliers so that they weren't single-threaded, but I know that's more easily said than done. Some systems and applications just don't allow for that. How do you see your members responding to this supply chain style threat and the third-party risk challenge?

Yes. Great question, Josh. And it's something that we have emphasized over the years. And for us, it's not notional. It happens all the time. We have become painfully aware of what the cascading effect and disruption to health care delivery is when a Stryker, Change Healthcare, Baxter, on and on services are taken offline by a cyberattack. And quite frankly, even when you look at the data, the reported even breaches, to HHS Office of Civil Rights, you'll find about 80%, 80% of the reported cyberattacks to the Office of Civil Rights actually come from third-party providers and non-hospital providers. So we are very, very aware of it. Third-party risk is, I, quite frankly, think one of our biggest single sources of cyber risk, insecure technology, insecure service providers, and insecure third-party supply chain.

Thank you. So Nicole and John, I want to bring you both in on this next set of questions. You're both tracking the same nation states and attacker groups from very different vantage points. And my question is, where does your read of the threat agree and disagree? And what are you seeing that we're not talking about here today?

That's a good question. I think in the context of health care and digital attack, I think what we don't see as a country is just how much leverage these other nation-states have over us when it comes to cyber. Anytime we're engaging in any kind of attack, like we have this engagement with Iran right now. I think we continually underestimate the potential for blowback. And in Iran's case, they immediately came for Stryker. Now did they -- were they already inside and this is sort of a target of opportunity and [indiscernible] Stryker was able to get back on its feet so quickly.

I think that we need to -- when we make these political decisions, I think we need to understand that we have a very soft underbelly when it comes to risk, especially in our health care systems because of the complexity of the supply chain, because in some cases, of the underinvestment in updating legacy systems because until we started seeing these notorious attacks like the UnitedHealthcare attack, et cetera, we weren't asking the right questions perhaps of our suppliers. And just because it's an urgent target, right? I remember we covered this incident where a list of 400 hospitals -- American hospitals was trading on the dark web. And the hospitals were targets because this is some retaliation by a number of Russian cybercriminal groups for a takedown. -- that the U.S. government had done.

And they didn't take weeks or months to put this thing together. It was like a ready-made list of hospitals they planned to target. Why did they plan to target hospitals? Because these are cases where there is such life-threatening potential that these hospitals were more than likely to pay rather than have their systems frozen. We just have to change that asymmetry, right? We have to basically make sure that when a hospital is attacked, it doesn't matter because they've already gone through the clinical continuity exercises that John was just speaking to, and they have fallback systems in place and because they have backup systems and because perhaps they have investigated or made Secure by Demands of their suppliers and vendors. We just have to get to that place. And again, we've been talking about this today for years and years and years, but I really think these AI-powered attacks are about to force this conversation in a way that we've never really reckoned with before.

John, any thoughts from you on that?

Yes. I totally agree with Nicole on many of those points, actually all those points. The issue for us, when I speak about the threat environment for hospitals, I not only speak about the adversarial threat environment, cyber, I talk about the financial threat environment and the regulatory threat environment that we face as well. So these are investments that hospitals want to make to strengthen their defenses, to strengthen their resiliency, and clinical continuity capabilities, but it's literally coming down to -- do we fund another department, an oncology department?

Do we hire these 10 nurses or do we spend more money on technical issues, especially as we're facing these massive Medicaid cuts that are coming after the midterm elections. Drug reimbursements under the 340B drug discount program may affect revenue for hospitals as well. All these things are interrelated and absolutely are fundamental in determining what our level of capability is to enhance our cyber defenses and resiliency. So it is not just a hospital problem. It is not just a federal government problem. It really is a whole nation issue, as Nicole said.

And I think the American society really has to understand and heed the warnings, the public warnings by the federal government that China, for instance, is deeply implanted on our critical infrastructure through various Typhoon campaigns for preposition for disruptive or destructive action against telecom, energy, water. We've seen the Iranians already go after, just recently, multiple water systems in dozen states or so. So we have to understand that even if we secure our health care infrastructure, we are dependent on energy, communications, the grid, the fiber optic network.

So really, this must be a cross-sector approach and really truly a whole-of-nation, whole-of-society approach. And as we focus on the technical vulnerabilities, bad guys are quick to adapt, not only through AI. So we're using AI to identify and patch vulnerabilities. But we've had recent cases in very large corporations. The bad guys call up a worker and convince them to provide their user name, password, and multi-factor authentication code, and their adversary races. So we can't lose sight of the fact of continuing to address this most significant vulnerability to human vulnerability as well while we're focused on patching technology.

So John, you just brought up something that I hadn't necessarily thought very much about, but the human vulnerability piece, I want to come to you first with this last question. What's something that you've been watching that you think is going to be really important in 2027 and isn't getting enough attention?

For 2027, it's hard to predict specifically, right? We don't know what's coming next week, next month. But in general terms, I'm very, very concerned about the current geopolitical situation between Ukraine and Europe, Middle East and tensions in Southeast Asia with China.

So right now, we have 2 hotspots that are ablaze in the Middle East and Ukraine, and we have some smoke and smoldering in the Southeast Pacific. And what I'm concerned about that these tensions and global conflicts erupt and perhaps join. And ultimately, Russia, Iran, and China, again, have prepositioned offensive cyber capabilities and prepositioned potentially destructive malware to disrupt society. So I am concerned about a large-scale kinetic conflict involving the U.S. in 2027, which results in massive retaliatory cyberattacks against the U.S.

And again, hopefully, I'm not saying something that people haven't heard before. The government has been saying and warning about China, in particular, being on our infrastructure, critical infrastructure for years. And we need to proceed with a sense of urgency to help defend against those potential impacts and disruption, but not one sector at a time, all of us together with the government.

Yes. And I think I would just piggyback on that to say I agree with everything John just said, but the scariest word he just used was the word joint. We are sort of looking at these incidents in isolation, and it's not as if these are strong alliances that are formed between China and Russia and Iran. But if I were Beijing and I was looking at what is going to be the best time to act on Taiwan, in the South China Sea, it's not a bad time when you think about how overstretched we are with this Iranian engagement, where we've had to migrate resources out of Southeast Asia to Iran, some of our weapons and missiles being depleted there, and the prepositioning that they have with cyber.

And just to sort of tack on, I just spent a year investigating these DPRK North Korean IT operatives that now have remote work and inside access to many American major enterprises. And yes, in the beginning, it was cute and weird and bizarre just for the salary, but that's a different form of repositioning, where not only are they inside the organization, they have built the code and the systems and know the environment from the inside out. And they, too, have a relationship with Beijing. So if I was Beijing and I was as strategic as they have shown themselves to be, this is a very interesting time. And I think a lot of this will play out in cyber.

But I would also just add that we are also going to see an up-leveling of cybercriminals with AI and hacktivists with AI. And so I think this is sort of going to be, I think, 2027 will end up being not just a wild year of entertainment in this regard, but really the year of digital reckoning. And I think to your point, John, it's not enough to sort of prep yourself, right, and pour your resources if you have them to buying this state-of-the-art enterprise security mousetraps because at the end of the day, we all still rely on the fact we need to get clean water, power, energy. And so if we're just treating these issues in isolation, it's not going to work, right, because we're part of this larger ecosystem.

And so conversations like these are really critical. Water was always my #1 thing that kept me up at night. Whenever anyone asked me that question, what keeps you up at night? I would always answer very specifically an attack on a water treatment facility, where I'm not able to get water, or somehow worse in my mind, getting contaminated water, every water system looking like Flint, Michigan did there for a while. That's all possible with the cyberattack. But for a long time, it was just a hypothetical. Well, now we see Iran gunning for these water treatment facilities. So this is going to be, unfortunately, a very interesting year, and hopefully, it turned out better than I'm predicting.

Totally agreed. Yes, I think we all hope that. So with that, I think we can wrap this up. John, Nicole, we really appreciate the generous amount of time and your thoughts for the audience. Thank you so much for being with us today.

Thanks, Josh, and thank you, Nicole.

All right. Good morning, folks. We're going to get started in the interest of time. Here we have the pleasure to have Bipul Sinha, CEO of Rubrik here this morning. Welcome back to the conference, Bipul.

Thanks, Matt.

All right. Well, let's get started. So Bipul, you've called this a singularity moment for AI and cybersecurity. As enterprises become increasingly reliant on AI systems and autonomous agents, what do you think changes most about the way organizations think about risk and resilience?

We have been talking about this for the last many years that prevention and detection is not sufficient. Folks have to really think about recovery and resilience because you can't prevent the unpreventable. And what Mythos and frontier models have shown is that you can't really prevent and detect anything because these attacks are at machine speed. And at machine speed, you can't prevent. All the technologies that we have built for cyber in the last 20, 30 years was built for a human operator and human attackers.

We are in a completely different era. So this is a new moment. And all you can do is to think about how do you patch your systems at machine speed and how do you deliver cyber recovery at machine speed. And that's what Rubrik is solving for our customers, doing a cyber recovery at machine speed.

Okay. And even over the last 2 years, I think Rubrik started with backup, you evolved into cyber resilience, and now you talk about security and AI operations. So when you connect those dots, what do you ultimately want Rubrik to become 3 years from now? What do you think customers will be buying from Rubrik that they're largely not buying today?

So our goal is to deliver resilience to every aspect of operations. What are the different things we do? Number one is data. So we want to ensure that your data is recovered and your applications are up and running. Number two is identity. Because we want to ensure that the data risk comes from identity and identity systems are up and running, and they are in the correct state. And then the third piece is AI. As we know, agents assume identity and operate on sensitive data. So you need to have resilience and security for agents. So how do we ensure that agents are only taking the right actions? And if they do bad action, how do we rewind the action of agents? So we are very clear.

There are 2 major trends in the market, AI and cybersecurity. Underneath AI and cybersecurity is identity and data, we want to deliver complete cyber resilience across data, identity and agentic world.

Okay. You talked about prevention and detection alone not being enough. I think you've been very consistent in that message. So if attacks are becoming increasingly autonomous and continuous, what does the security architecture ultimately look like on the other side of that shift? And where does Rubrik sit within that architecture?

So in my mind, since attacks are going to be at machine speed, it will be a world of continuous attacks. Today, operations and cyber are 2 different teams and two different things inside any business. I believe that these two, operations and security, will merge. And you will have a situation of continuous attack and continuous recovery and continuous patching. And in this world of continuous attack and continuous patching, you need to have a human in the loop at the very, very minimum level where the humans are making decisions, but machines are implementing decisions. And this is where the cyber is going to go. It's going to be a world of no human in the loop patching, mostly no human in the loop recovery.

Let's pull that into the most recent quarter. Net new ARR accelerated to 35%. You raised the full year guide. I guess, a 2-parter here. One is, what felt different in the business this quarter? And then, I guess, if we dovetail off previous question, are you seeing Rubrik sort of increase in relevance within sort of the security budget more broadly? Like how is that shaping customer conversations today even relative to a year ago?

If you think about this idea of Mythos and frontier AI and machine speed, businesses, particularly Board and CEOs are realizing more and more that cyber has gone from a technology discussion whether it's endpoint, network, cloud, Zero Trust network, all of that mumbo jumbo, to a risk discussion that can we keep our business up and running. What is our dollar at risk should we go down for a day or 2 or 3? Do we have a situation where my large manufacturing will come to a screeching halt is because of the ransomware attack or cyber-attacks?

So that's the discussion now. And Rubrik plays in that discussion because we are giving assurance to our customers saying, no matter what happens, whether it's AI attack, human attack, machine speed attacks, you'll always be up and running because of our preemptive recovery engine. We precalculate a clean data estate in peacetime to be able to deliver a machine speed recovery. And this message is resonating. Obviously, Rubrik is a considered purchase. We are not like a Facebook app that millions of people download overnight and we won the market. So there will be a process. But I like that process because at the end of the day, I want us to have consistent high growth for many years. And we believe that we are set up for it.

Okay. Now a lot of the strategy increasingly is around data, identity and agents, right? So you broadened the aperture from just pure cyber resilience into some new categories. Why is it important to see all three of those together? And what can Rubrik do with that combination that customers can't get from separate point solutions?

Let's just take agents. If you think about agentic security and governance, there are many pieces to it. You need to have visibility into all your agents, sanctioned or unsanctioned. Second piece is, can you do identity-based just-in-time regulation on activity of these agents? That's the number two. So that's an identity-based MCP server level, which database, which entity these guys can update. The third one is runtime security, and this is where the intent understanding of agents are important. What happened in the OpenAI Hugging Face is these agents to get to a goal they actually circumvented the guardrails that was built for them. So you need to understand the intent of the agent and check the intent on every interaction of the agent to be able to stop the agentic action on runtime at the point of action.

And then finally, the rewind piece, that if the agent still does something that is not desirable, how do you undo it? Folks are now buying observability from one vendor, identity from a different vendor, runtime security intent from third vendor and agent rewind or recovery from a fourth vendor. We believe that businesses need a consistent, fully integrated agentic security and governance platform. And Rubrik has the vision and the path to deliver that.

Just on the OpenAI Hugging Face point, right? I mean, I think in the past, you've seen a lot of basically major ransomware attacks creating a catalyst for new spend within the security category. To what extent are you actually seeing that play out in your own customer conversations and pipeline, particularly for Agent Cloud?

I mean Hugging Face incident is new, and the word is getting out in the last few weeks, but if you look at like all the write-ups around it and what is new is that there were attacks in Europe and in America coming out of a largely innocuous testing and sandboxing of agents. Just think about if it was a malicious kind of a situation where somebody designed these agents for attack and the goal was to attack. The goal here was to -- was different, we would be -- we would have a completely different outcome. So now folks are realizing that agents and AI is making their world more dangerous.

And obviously, AI has tremendous promise of like productivity and benefits, but it also creates 100x more risk. So now they are looking at a world where you have 100x more opportunities, but it can also do 10x more damage in 1/10 of the time. And that's what they're grappling with.

Okay. Let's pivot to identity. I think it was sort of interesting your disclosures at the Analyst Day, you showed how enterprise data security scaled to $100 million in 2.5 years. You did that with identity. It's $50 million in just over a year. So tell me about your sort of aspirations for the identity business more broadly. Could this be the next several hundred million dollar business? What are the biggest factors that determine how large that opportunity becomes?

Look, data security fundamentally is impacted by identity because user interaction on data is what creates risk. If you have more user interaction or identity interaction on sensitive data, you have more risk. So identity is critical for enterprise data security. And what we are also seeing is that identity has become the perimeter for enterprise. Hackers are not breaking in. They are logging in. And as a result, identity systems have become ground zero for cyber-attack. You have issues around destruction of identity systems, persistence -- persistent identity where identity -- bad identity persists for a long period of time.

And you can't just undo the identity system because then you'll not just undo the persistent bad identity, but you will also bring your ex-employees back into the system. So how do you undo and redo both together? Undo for all the identity changes and redo for only good identity changes so that you bring the identity system in a current -- correct state. All these are very difficult problems for our customers to solve, and this is what Rubrik is delivering in the marketplace.

If you look at the identity systems, it's not just 1 or 2 systems. You have Active Directory, you have Entra ID, you have Okta. Ping Identity is just a number of identity systems and you need consistency and recovery and removal of persistence across all of these. So we believe that it's a tremendous opportunity. We are in the early innings of it. I can't tell you here that if it is bigger than data protection or smaller than data protection, but if you look at the growth rate and acceleration in this market, we are very excited.

And then maybe another way to think about this, just I think Rubrik has traditionally priced identity like per heartbeat, if you will. With nonhuman identities, I mean, we've all seen the statistics 80:1, 100:1. I mean how are you thinking about maybe evolving the pricing mechanics to kind of capture that opportunity as we start to see a lot more agents running on our behalf?

I mean, look, we'll work with our customers. We learn from the market as how they want to protect the nonhuman identity or agentic identity. Maybe agentic identities could be more important than human identity in the next several years. Ultimately, our goal is to meet where our customers are, create value for them. And I'm confident that monetization will happen.

Okay. I want to get your perspective on a more recent development within the business, which is sort of self-hosted and sovereign. You guys have actually started to see a bit of an improvement in that business. And it's not just Rubrik specific. We're starting to see that across broader software. From your lens, what's driving that trend? Are customers thinking differently about where critical data and AI workloads should live? And does that make this a more durable opportunity than investors appreciate?

So this has been the trend for the last few years. And I'll give you an example. I was in Germany and talking to one of our very large customer's CIO. And she came into the room and first question he asked was that, "Bipul, we are using your cloud and what if you guys decided to shut down the cloud for us because of geopolitical situations or the geopolitical risk?" And so everybody in lots of countries around the world are thinking "I want sovereignty in terms of operations, sovereignty in terms of data, sovereignty in terms of infrastructure, locality."

So we are giving them Rubrik Security Cloud Private Edition to ensure that the sovereignty is maintained. And sovereignty is not always going into their own data centers, it could be colocation, it could be a bunch of controls around cloud and cloud is hosted in the right country. So there is a lots of flavor to it. But ultimately, I believe that geopolitics will force more localization. And we have the solutions to meet our customers where they are. So we believe that the non-cloud sovereign on-prem deployments, particularly international could be a good part of our business.

Okay. And then let's talk about Flex. You introduced a new consumption model. I think this sort of defines your pivot from, let's say, more cyber recovery to a broader sort of platform play. What kind of early customer feedback have you gotten there? And with the early deployments under your belt, like, what are you learning? Is it changing how customers evaluate, adopt or expand with Rubrik in ways that you expected or perhaps didn't expect?

If you look at our business in the last, say, 3, 4 years, we are now a fully-fledged platform play with many different products that has this complementary network effect. What I mean by complementary network effect is if customers adopt more than one product on Rubrik platform, the value of all the products go up. For example, if they're protecting data and start to protect identity with us, now we can give them information about threat actor on both sides of the equation. Same thing with data center and the cloud.

If they're protecting data center, if they add cloud, we can immediately tell them if the same threat actor or the security posture is same, different across these two. And because of 6, 7 different products that we have on our platform, every time we wanted to introduce a new product to the customer, you have to go do a new contract because we didn't have a vehicle on which we can add new SKUs or have them try new things.

Plus, they are buying many different products. They don't -- they want to swap one for another. If customers go from on-premises to the cloud, they want to increase cloud more and reduce on-premises or the vice versa. So they need flexibility to have one contract, one commitment, one purchase across 6 or 7 different product suite that Rubrik has. And Flex made more sense to give our customers flexibility so that they can actually buy and consume Rubrik in a consistent way.

Let's drill into competition. As Rubrik expands into identity resilience and agent security, does the competitive landscape start to look materially different from the one you operated in a few years ago? Like where are you seeing the basis of competition evolve most quickly as you expand into these newer product categories and markets?

Obviously, with identity, we are seeing a new set of competition, whether they are legacy or the new-age competition for identity recovery, identity resilience. I mean that's the nature of the game, right? We want -- we are an ambitious company. We are building a platform play with many different products. And as we expand, we run into new competition. But what we have to make sure what I have to make sure is -- we have products that are ahead of the market that have a very compelling value proposition. And as the customers adopt more of the Rubrik solution on our platform, we increased the value of all other products because it's naturally fully integrated as opposed to them buying different products.

I mean ultimately, Rubrik is a platform company. We are not a vendor of tools. We are a vendor of one platform with many products.

And maybe just another one at a different angle on competition. I mean if you think about the broader security platforms, they've all extended into new market categories. Data security seems to be one of the highest growth priorities within security budgets. So what makes this problem so difficult to solve? And I guess what sort of like sustains Rubrik's moat relative to some of these other vendors that could be looking at the space?

Dealing with the data infrastructure and Rubrik ultimately is a data infrastructure company. It's a very different ball game than do risk analysis of attack. If you have like -- think about firewall or whatever. And if it tells you, "I have 90% probability that you have an attack," that's a high-value thing. But if I give you a 90% correct data, nothing will work in your environment.

I have to deliver every single bit to the last bit right. It's a very deterministic, complex data management, data infrastructure issue. So obviously, everything is a C program or Java or whatever kids write these days, anybody can do anything, but these are completely different disciplines. And so what we do is an extremely hard problem to solve, because not only we are extracting data from a running system, but we're restoring data back to the system and bring that back up. Think about your banks doling out money on ATM. None of that will work if Rubrik doesn't deliver the right data.

Got it. All right. At Rubrik Forward, you guys kind of moved from preemptive recovery to autonomous recovery, right? So how far can that evolution go? Does autonomous recovery ultimately create a new spending category? Or does it mainly increase the value of the existing platform?

Here is the fundamental question. Everybody talks about fighting AI with AI. But to fight AI with AI, they bring their 20-year-old software, where human beings are using that software and responding to a cyber-attack. If the attacks are happening at machine speed, you can't respond at human speed with your old software.

So the first thing we did was we made Rubrik platform itself as an agent. That agent watches what is happening, understands the implications of it, creates the recovery plan and brings human in the loop only for decisions, but the implementation and recovery is done autonomously. That's the vision, vision for the future, because if agents are attacking you, agents have to also respond and recover so that you are in the continuous recovery mode. And that's the new world. And it is our first step in that direction. But this is where the whole security industry has to go. Every aspect of cybersecurity has to be agentic response.

Is this having an effect on -- we talk a lot about the newer products, Identity, Agent Cloud. But even just in the core, there's a pretty large sort of brownfield displacement opportunity out there. I mean how are the advancements on the core platform driving sort of accelerated engagement or win rates across some of these legacy competitors that you compete with? I mean what are you seeing out there?

I mean our win rate continues to be extremely high against legacy. I mean, the competitive landscape remains the same as we have been saying. I mean, we do lots of legacy replacement. But the thing is that we are also adding more and more capabilities because unlike infra discussion where cloud is the new infra and on-prem is old infra, we discuss data and data in the cloud is as important as data on-premises or the other way around. Data on-premises is, in many cases, more important because they may be running the most critical application on premises.

So ability to consistently apply security policy and autonomously orchestrate recovery and response is where the market is, and this is where we are actually driving the industry.

Okay. And I want to talk about agents again. I mean enterprises seem to be experimenting with agents today, but feels like relatively few are actually letting them operate autonomously. What do you think the biggest gating factors are here? Like what is the change for companies to get comfortable allowing agents to execute critical business processes on their own because that obviously dovetails with sort of Agent Cloud selling motion broadly?

So just like in the world of SaaS, the same kind of things will repeat in the world of AI. So if you look at businesses, businesses built custom software for their custom business processes. And then they bought horizontal software to actually do things that is not their core expertise. So if you look at what is happening in AI, they are buying coding agents, search, Copilot, these are horizontal things that every business needs.

And these things are getting adopted very, very fast because it doesn't have impact or implication on their own business processes. But when it comes to their own business processes, understanding what is the customer for a customer, what is the order-to-cash process, every business has a different process. So the AI will be custom AI when it comes to the enterprise workflow automation.

Because you need to understand data and entity relationship, what Palantir calls ontology, across different silos of data to be able to orchestrate AI across your enterprise to run your custom business process or your own proprietary business process. That's not going to be overnight. Somebody flips a switch and you automatically transform your enterprise into an AI enterprise. So that's going to be a process.

Our goal is to make sure that our customers can deploy agents, whether it's coding agent, search agent, Copilot with confidence that these agents are not doing things outside of the scope of these agents. And as they build more custom agents for their own business processes as they automate their own business workflows, we want to parlay the same platform, same technology on this custom AI. That's how this industry will go. Early days for custom, the coding and search are going faster. And that's how these things go.

And how do you think about -- I mean everyone seems to want a piece of this broader AI governance opportunity, observability, traditional security, ITSM? I guess, as this market develops, like what capabilities do you think will ultimately separate the winners from everybody else?

So typically, cybersecurity companies have not been in the online business operations. Because once you get the authorization, then you do your things, they are not in that process of doing things. And all the log collection happens in the background and offline. So expertise in online business operations is going to be critical if you want to truly win in this market.

Let me ask you another question from earlier in the discussion. I mean I guess, what -- you talk about protection and detection prevention not being enough in an AI world, I guess what -- where could you be wrong in that scenario, right? I mean, is there anything that the existing vendors could do to maybe meet the moment as it pertains to kind of agent runtime security?

They have tons of opportunities. But when I say that prevention and detection is not relevant, doesn't -- that doesn't mean that they go away. If you build a house, you have windows and doors and set an alarm, that doesn't mean that people are not breaking in. But you need to have those imperatives. So where the near-term opportunity for lots of prevention and detection companies is that as the AI-based attacks ramp up, there has to be investigation effort from these companies to ensure that they understand what kinds of attacks are happening.

Detection is impossible, but post facto, once the things enter in your environment, you need to understand where they went. So it's not that prevention and detection companies are going to go away. But the focus of this strategy, the focus of this strategy has to be resilience.

Okay. We've talked a lot about what enterprises need to trust agents. But underneath all that is, I guess, the question of trusted data. Annapurna was one of the more intriguing announcements or evolutions from the Analyst Day because it suggests Rubrik sees an opportunity beyond resilience and security. What problem is Annapurna solving that existing data and AI platforms weren't designed to address?

If you look at businesses, they have much bigger size of unstructured data that sits in their files, other places than structured data that are in their databases. Most of the AI discussion so far has been on unstructured data or semi-structured data. Semi-structured means textual data. But if you think about geospatial data, think about your X-rays, think about images and other data that comes from different sensors, that's a huge amount of data that is still not available for AI to operate on.

And these are not cost effective to load them into a very expensive AI system or database systems just like that because you may be only wanting to see 5% or 10% of this huge amount of data to do certain AI analytics. So since Rubrik has this unique technology of the understanding of the data and the metadata on the data, we have the ability to only give a slice of the data to the AI processes based on what they need instead of loading all their data.

So our ability to load the metadata, customers to decide what part of the data they want to operate in and then only bring data that is relevant is a unique opportunity for us.

How early is this? I mean are you starting to engage with customers on this opportunity?

Yes. So we are starting to engage with the customers. There is a high degree of interest. Again, super early. I can't tell you how big and how fast it goes. But we are excited about what we see very, very early.

All right. We'll stay tuned. Maybe close out in the last couple of minutes we have here, you created Rubrik X because large companies often struggle to build their second and third act. Looking across the portfolio today, which bet feels the least appreciated externally but has the potential to become a major business over time?

I mean if you look at just the unstructured part of our bet, so just the unstructured data resilience, unstructured data recovery, is not as appreciated, but I believe that it's a tremendous opportunity for us because in terms of like cyberattacks and risk on the data, it doesn't matter whether it's your structured data or your unstructured data because you can't go explain to your customers if you're a business that has got attacked saying, "Oh, it was attack on unstructured." It is like not going to fly. And on that unstructured data, we also have this opportunity to power Annapurna and updated Annapurna that we talked about. So that whole area is a high potential area for us. Again, relatively new and under scale, but we believe we have tremendous opportunity ahead of us.

Excellent. Well, I think that's a great place to leave it. Bipul, thank you so much for joining us today.

Thank you.

Hello, everyone. Thank you for joining us, and welcome to the Rubrik Second Quarter Fiscal Year 2027 Results Conference Call. [Operator Instructions] I will now hand the conference over to Melissa Franchi, Vice President of Investor Relations. Please go ahead.

Hello, everyone. Welcome to Rubik's second quarter fiscal year 2027 financial results conference call. On the call with me today are Bipul Sinha, CEO, Chairman and Co-Founder of Rubrik, and Kiran Choudary, Chief Financial Officer. Our earnings press release was issued today after the market closed and may be downloaded from the Investor Relations page at www.ir.rubrik.com. Also on this page, you'll be able to find a slide deck with financial highlights that, along with our earnings release, includes a reconciliation of GAAP to non-GAAP financial results. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP.

During this call, we will make forward-looking statements, including statements regarding our financial outlook for the third quarter and full fiscal year 2027. Our expectations regarding market trends, our market position, opportunities, including with respect to generative and agentic AI, growth strategy, product initiatives and expectations regarding those initiatives and our go-to-market motion. These statements are only predictions that are based on what we believe today, and actual results may differ materially. These forward-looking statements are subject to risks and other factors that could affect our performance and financial results which we discuss in detail with our filings with the SEC.

Rubrik assumes no obligation to update any forward-looking statements that we may make on today's call. And with that, I'll hand the call over to Bipul.

Thank you, Melissa. And thank you all for joining us today. I'm pleased to report that our second quarter results were truly outstanding. Once again, we exceeded all guided metrics across top line and profitability. And this is not the first time. In fact, it is our tenth consecutive quarter of outperformance as a public company. And this quarter, we accelerated. Yes, let me repeat, accelerated net new subscription ARR growth. This is a testament to the strength of our platform and the continued durability of demand for Rubrik's agentic cyber resilience. Here are the key numbers.

First, subscription ARR reached $1.66 billion, growing 33% year-over-year. Second, net new subscription ARR reached approximately $96 million in the second quarter. Third, our subscription revenue was $407 million, growing 37% year-over-year. Fourth, our subscription NRR remained strong at over 119%. And I'm not done yet. There are 2 more key numbers. Customers with 100,000 or more in subscription ARR reached 3,084, growing 23% year-over-year. And finally, on profitability, we once again made material improvement in subscription ARR contribution margin, up about 460 basis points year-over-year. We generated $66 million in free cash flow this quarter. Very few companies at Rubrik's scale can drive this level of growth plus expanding margins and strong free cash flow generation.

I'm pleased to report we are once again raising our outlook for the year. Let me start by giving you some context on how the market is evolving and what is driving our confidence in the future of our business. Needless to say, AI is the most transformative technology of our lifetime. What is fascinating to us is that the scale of productivity that AI creates is matched only by the scale of new risks that AI. Mythos and Frontier AI models are proving it every day. Rubrik is a participant in Anthropic's Project Glasswing. We built a complete harness to close the loop from vulnerability discovery to core patient. The reason I bring this up is because our Project Glasswing findings underscore our belief that we are in a singularity moment with AI and cybersecurity.

As you might recall from my comments earlier this year, we are no longer in a world of human speed. A few years ago, humans we are attacking us and humans were running our business processes. Enterprises have spent billions across thousands of security tools, trying to detect and prevent those threats from materializing. These investments are not proving to be relevant anymore. Today, AI agents are attacking us. These autonomous agents use AI for vulnerability chaining to find the right malicious combination to intrude, breach and encrypt at machine speed. If you have yesterday's super security tools with human speed response, you have a huge mismatch.

And at the same time, AI agents are increasingly running business processes, workflows that assume identities, access sensitive data and take autonomous action. Both threat actors and business operators are now agentic. We have witnessed vivid real-world illustrations of the unprecedented risk that these dynamics pose. This includes the recent hugging phase incident in which we saw an autonomous AI agent exploit a zero-day vulnerability and gained unauthorized access to live systems all without human direction. This clearly demonstrated both halves of the risk companies are grappling with an AI orchestrated attack moving faster than any human speed response and an agent operating well outside the guardrails, anyone intended for it.

In this new reality, prevention and detection are no longer enough. At the same time, you can't fight AI with the same legacy software you have been using. What you will need is a new approach, preemptive risk assessment, real-time guardrail and AI speed recovery. In short, agentic cyber resilience. No wonder businesses around the world are turning to Rubrik for agentic cyber resilience. We delivered Rubrik as an AI agent because an agent is the only way to respond to AI speed attacks. Rubrik as an agent is designed to autonomously collect, monitor and understand information create recovery plans, ask humans for permission and create outcomes. Rubrik also has agentic governance and security built onto our platform to create runtime guardrails for agentic work. This is the same capability we are delivering to our customers with Rubrik Agent cloud, which governs and secures our customers' own AI agents.

As you may know, we operate 2 complementary product suites onto our single platform. Rubrik Security Cloud for Cyber Resilience and Rubrik Agent Cloud for agentic security and governance. These 2 suites map directly to the 2-sided risk enterprises face as they adopt AI assuming AI-powered breach and assuming agentic overreach. Let me first discuss our opportunity with Rubrik Security Cloud or RSC. Our proprietary preemptive recovery engine is the backbone of Rubrik agentic cyber resilience. Our architectural advantage, which combines time series data and meta data allows us to continuously precalculate clean points of recovery across on-prem, cloud, SaaS, unstructured data and identity before an attack occurs.

Rubrik's preemptive recovery engine does the work in peace time to be able to achieve recovery at AI speed in war time. This is how we deliver record fast recoveries with RST when our customers are eased or their agents get compromised. And this is why we continually deliver extremely high competitive win rate. Our cyber resilient data protection business continues to benefit from the ongoing transformation towards cyber resilience and consolidation to platforms, not point solutions. Amid an increasingly malicious cyber environment, customers increasingly view Rubrik's unified single platform approach to cyber resilience as a Board level mandatory requirement rather than a discretionary purchase.

Customers can initially adopt Rubrik in many different ways. Cloud, on-prem, unstructured data, identity M365, Agent cloud but we initiate the same single policy engine on our single Rubrik platform. When a customer adopts Rubrik, they are not just buying a solution. They are stepping into an ecosystem where each additional product adopted makes all existing Rubrik products more powerful. This is a testament of a true platform built on complementary network effects. Let me share 2 of the many illustrative customer wins from the quarter. First, we landed a new logo deal with the U.S. state government agency which displaced its legacy incumbent after concerns around cyber recovery time amid the rise of cyber threats. The agency chose Rubrik for enterprise and M365 protection, noting our reliability, compliance fit and the speed of cyber recovery.

And second, we won a new Global 2000 financial services customer displacing a legacy vendor and outcompeting a NuGen competitor. This customer selected Rubrik to protect its full data environment, including on-premises, data centers, cloud, M365 unstructured data and identity with Rubrik winning due to the strength of our cyber resilience capabilities across a single platform. In addition to cyber resilience, Rubrik solved for the customer's tool consolidation needs amid growing...

Turning to Rubrik Flex. our unified platform contract vehicle, which we introduced at Forward in June. Rubrik Flex is 1 license, 1 contract, 1 commitment for complete agentic cyber resilience. We are pleased with the early reception and have already closed a handful of Flex deals. As an example, one of our largest expansion deals of the quarter was a Flex deal with a large U.S. health care system extending our platform beyond its existing on-premises footprint to cover M365, cloud and identity data under a single enterprise agreement. This win came against cloud-native backup tools with customers citing a single pane of glass across on-prem, cloud, SaaS and identity data as the deciding factor for true cyber resilience.

We believe Flex will become the default motion for our largest strategic accounts over time. Turning to identity. Our identity resilience business continues to be one of the fastest-growing product lines in the company's history. As you might recall, we started our identity journey with the release of identity recovery, which provides the rapid recovery of identity services following cyber attacks or operational failures. We then launched Rubrik Identity Resilience, which enhances risk posture by tracking misconfigurations and high risk or malicious changes within identity services. We continue to rapidly disrupt the identity protection market with our recent announcement of the identity roll forward in Identity Resilience. With these capabilities, Identity Resilience now gives our customers the ability to recover identity systems to a clean current state without losing legitimate business progress and without leaving attackers persistence behind. We have been building towards Identity for years.

Our recent acquisition of Strata Identity only accelerated, bringing orchestration capabilities that makes our platform complete. There is nothing like this in the market. Let me share one specific example of an identity win. In the second quarter, we won an Identity Resilience cloud data and SaaS protection deal with a large online fashion retailer, displacing its incumbent native backup tools and beating out a point solution competitor. The customer chose Rubrik for its mission-critical applications across M365, Active Directory and its e-commerce platform in Azure, citing our AerCap immutable backups and the speed of clean recovery in case of a cyber incident.

Let me turn to Rubik Agent Cloud or RAC. As we have discussed in detail at our Analyst Day, RAC is built around 3 pillars. Continuous monitoring and observability of sanctioned and unsanctioned agents, dynamic runtime security and governance through our semantic AI governance engine, or SAGE, and agent rewind, which allows our customers to surgically undo destructive agent actions. More recently, we unveiled Rubrik agent identity, the access plane for that. It governs who can do what with agents, which users and groups can use which agent, with MCP servers and tools those agents can reach and what is scoped access each individual tool calls received at the moment of action. Agent identity extends existing identity infrastructure that customers already run and federate with Okta and Microsoft Andra ID.

This brings user and group context into every access decision. Rubrik Agent Identity completes the RAC governance model. As a reminder, in RAC, we are building a complete agent security and governance platform across agent visibility, agent identity, agent runtime security and agent rewind. This is extremely valuable for our customers as they don't have to buy point solutions from many vendors than is season together by themselves. While early, we are pleased with the momentum of RAC and continue to see proof-of-concept engagements convert into production deployment. We now have over 15 and growing RAC customers. One of our larger RAC wins came from a long-time platform customer already relying on Rubrik for cyber resilience across on-prem, cloud and M365 workloads.

As these large retailer scales AI coding agents across engineering, the customer expanded on to RAC, extending the same platform is already trust for recovery into agentic governance. The customer noted the appeal of agent rewind to undo destructive agent actions at machine speed and SAGE to secure those same agents in real time with AI. In summary, as I look back on to the quarter, 3 things stand out. Number one, AI speed breaches and agentic overreach are no longer hypothetical. They are inevitable. Companies are waking up to a new reality that AI agents can and will attack at machine speed and increasingly compromised enterprise agents, resulting in massive insider attacks. This is exactly why agentic cyber resilience, not legacy prevention, detection and recovery is becoming the Board level standard.

Number two, every part of our platform is compounding on the power of complementary network effect. Data protection, identity resilience and agent security and governance are in 3 separate beds, they are 1 flywheel. This quarter shows customers consolidating onto the Rubrik platform rather than buying another point solution. And finally, number three, the results prove the model, not just the moment. accelerating net new ARR, expanding margins and raised outlook show our confidence that this is a durable execution at scale. With Agentic AI adoption still early, our opportunity ahead is far larger than what we have capped so far. In closing, as always, I want to thank my fellow Rubrikan for outstanding innovation and execution. I also want to thank our customers and partners for their continued trust and of course, you, our shareholders, for your continued support.

It is still early innings in this era of agentic cyber resilience, and I strongly believe Rubrik's best is yet to come. With that, I'm pleased to pass it over to our Chief Financial Officer, Kiran Choudary.

Thank you, Bipul. Good afternoon, everyone, and thank you for joining us today. We had a strong second quarter, exceeding all our guided metrics and demonstrating continued execution in the large and growing cyber resilience market. We are pleased to once again raise our outlook for the year. Let me start by briefly recapping our second quarter fiscal 2027 financial results and key operating metrics and then I'll provide guidance for the third quarter and full year fiscal 2027. All comparisons, unless otherwise noted, are on a year-over-year basis. We are very pleased to have ended the second quarter with subscription ARR of $1.66 billion, growing 33% year-over-year. We added approximately $96 million in net new subscription ARR in the quarter. We did not see any material impact to our subscription ARR from rising hardware costs or supply constraints. As a reminder, we are primarily in the business of selling software, either in the cloud or self-hosted. Moving along, our differentiated land-and-expand model benefits from multiple avenues to gain new customers and grow our footprint after the initial contract.

Expansion occurs through data growth in existing applications, securing more applications and identities, adding more security products or adding Rubrik agent cloud. As a result, we continue to see strong subscription net retention rate of over 119% in the second quarter. We are very proud of the high customer retention and expansion dynamics of our business. All vectors of expansion are healthy contributors to our NRR, highlighting the meaningful runway we have to more deeply penetrate our customer base. We ended the second quarter with 3,084 customers with subscription ARR of $100,000 or more, up 23%. These larger customers now contribute 88% of our subscription ARR, which continues to grow as we become an increasingly strategic partner to our enterprise customers. Customers with subscription ARR of $1 million grew over 57%.

For the second quarter, subscription revenue was $407.2 million, up 37%, and Subscription revenue in the second quarter primarily benefited from stronger ARR growth as well as more upfront revenue in the quarter, including higher RSCP and material rights. Material rights related to our cloud transformation contributed approximately $4.7 million to subscription revenue in the quarter compared to $8.5 million in the prior quarter. Our other revenue category includes services as well as hardware sales in some regions such as APAC that have not been fully transitioned to our partners. In Q2, Other revenue benefited from the higher price and volume of hardware due to business strength in those regions. Please note that our subscription ARR does not include sales related to other revenue.

Total revenue was $427.3 million, up 38%. Revenue normalized for material rights increased 43%. Turning to the geographic mix of revenue. Revenue from the Americas grew 33% to $299 million. Revenue from outside the Americas grew 52% to $129 million. Before turning to gross margins, expenses and profitability, I would like to note that I'll be discussing results on a non-GAAP basis going forward. Our non-GAAP gross margin was 81% in the second quarter compared to 81.6% in the year ago period. Our gross margin benefited from greater scale in our customer support organization, offset by lower material right related revenue and revenue mix. We continue to expect gross margins in our long-term target range of 77% to 82% as we discussed at our Analyst Day.

As a reminder, we look at subscription ARR contribution margin as a key measure of operating leverage. We believe the improvement in our subscription ARR contribution margin demonstrates our ability to drive operating leverage and profitability at scale. Subscription ARR contribution margin was 14% in the last 12 months ended July 31 compared to 9.4% in the year ago period an improvement of 460 basis points. The improvement was driven by higher sales, the benefits of scale and improving efficiencies and cost management across the business. Free cash flow was $65.7 million compared to $57.5 million in the second quarter of fiscal 2026. The increase was primarily driven by higher sales and improved operating leverage.

Turning to our balance sheet. We ended the second quarter in a strong cash position with $1.75 billion in cash, cash equivalents and short-term investments. And $1.13 billion in convertible debt. Let me now provide some context on our guidance. We are confident in our outlook, driven by the robust cyber resilience market, our differentiated technology platform and the scaling of our emerging products, such as Identity Resilience. This momentum, coupled with our consistent and effective execution positions us to achieve strong subscription ARR growth ahead. We plan to continue making operational investments across 2 key areas. First, we will continue to invest in R&D to accelerate innovation in the large but developing markets of data, security and AI.

Second, we will invest in our go-to-market specifically targeting regions and verticals that we believe offer the most attractive ROI. These go-to-market investments will also focus on scaling our newer innovations including our Identity Resilience platform and Rubrik Agent Cloud. Now turning to our guidance for the third quarter and full year fiscal 2027. In the third quarter, we expect revenue of $429 million to $431 million, up 23% or up 31% when normalized for material rights. We expect material rights related to our cloud transformation to contribute approximately $2 million to $3 million to revenue in the third quarter. We expect non-GAAP subscription ARR contribution margins of approximately 14%. We expect non-GAAP earnings per share of $0.07 to $0.09 based on approximately 230 million weighted average shares outstanding.

For the full year fiscal 2027, we expect subscription ARR in the range of $1.88 billion to $1.885 billion, reflecting a year-over-year growth rate of approximately 29%. We expect total revenue for the full year fiscal 2027 in the range of $1.685 billion to $1.693 billion. As a reminder, in fiscal 2027, the substantial reduction in material rights revenue will represent a meaningful headwind to our reported revenue growth. We expect material rights related to our cloud transformation to contribute approximately $18 million to revenue for the full year. Revenue growth normalized for material rights is expected to outpace our subscription ARR growth rate. In terms of profitability, we plan to continue to stay focused on capturing the market opportunity in cybersecurity and AI while balancing growth with improved efficiency.

Based on our current investment plans, we expect non-GAAP subscription ARR contribution margins of approximately 15.5% for the full year fiscal 2027. We expect non-GAAP earnings per share of $0.47 to $0.53 based on approximately 228 million weighted average shares outstanding for the full year. We expect free cash flow of $323 million to $333 million. As always, we have included additional modeling points in our investor presentation. In closing, we are very pleased with our strong second quarter results and remain confident in our ability to deliver durable and efficient growth as a market leader in cyber resilience. With that, we'd like to open up the call for questions.

[Operator Instructions] Your first question from the line of Saket Kalia with Barclays.

Okay. Great. I'll keep it to one. And maybe the question is for you Kiran and a little bit of a housekeeping question. Can you just talk about how much ARR in the quarter, subscription ARR came from the STRATA Identity deal or just inorganic in general. I think there are some questions out there just around how big that was. So just for everybody's benefit, can you just walk through how much of this quarter's ARR came from inorganic?

Sure, Saket. Thanks for the question. I'll just clarify here that most recent reported quarter, Q2, there was 0 ARR from Strata acquisition and also clarify that in the guidance we provided, there's assumption of 0 ARR as well. So both 0 in the quarter, 0 for the year.

Your next question from the line of Fatima Boolani with Citi.

Kiran, I wanted to talk to you a little bit about the guidance. You've seen a pretty remarkable degree of growth on a net new ARR basis. year-to-date. And when I look at what is implied by your guidance, for the back half, we're seeing a pretty material step down essentially from something in the 20s on average, down to mid-single digits. That's a pretty precipitous deceleration. So barring some of the baseline conservatism that you always apply. I'm wondering what other factors that you are explicitly accounting for to have that be part of your thought process? And relatedly, what are some of the levers or I guess, positive externalities that transpire such that you can have a back half net new ARR growth performance that's comparable to, if not better than the first half?

Sure, Fatima. So let me take the first part of the question. So obviously, very pleased with the first half performance, including Q2. As you know, we accelerated net new ARR growth. And when I look at the guidance, we took the guidance up by the full beat in Q2 as well as raise some more. So totally when you look at the last guide versus this guide, it's about $24 million to $25 million higher. In fact, the net new ARR growth rate implied by the new guidance for the year is 700 basis points over the previous guide. It went from 7% to 14%. Obviously, we run the business, as we have said many times, on an annual net new ARR basis, sales compensation as well. The plans have changed over the last year on an annual basis as well.

So it's really the annual number. We focus and run the business for. We have a multiproduct motion with multiple products doing really well. And it's obviously the half time in the year. We still have 2 quarters to execute, I feel pretty confident about the numbers we put forward and the pipeline we have to execute it.

Just to add a little more color for them on that. If you look at where we started the fiscal year in terms of our net new ARR for the year, we have -- in 2 quarters, we have raised the net new ARR by $45 million. which is more than 10% from the beginning of the year number that we projected. And that is without any inorganic. I mean, as Kiran said, we added 0 ARR from Strata acquisition and the Strata acquisition is also not part of our projections. So 0 in the projection and 0 in the quarter. So we are accelerating our business. And if you look at this particular quarter, our net new ARR grew 35% year-over-year, which is a significant acceleration from our past quarter.

I'll just add 1 more thing, Fatima. This is Kiran. On the -- and we have talked about in the past as well in terms of the cloud net new ARR, we obviously have had a very successful run with the migrations, it is wrapping up this year. So when you look at the cloud net new ARR growth, as of last quarter, we were reporting out the adjusted number without migrations, and we grew 20% year-over-year in terms of the cloud net new ARR growth. We obviously provided that in the press release and the investor presentation as well.

Your next question is from the line of John DiFucci with Guggenheim.

Thanks for clarifying that. Kiran, that is, I think, like I said, you already had, but I think you said it verbally. Anyway, I look at these numbers and I see really good numbers here. And the acceleration is something that I don't think people see everywhere, they don't. But I have sort of a thematic question for Bipul. Bipul, you've been ahead of the curve. You, your team. When the world changed as it pertains to the needs of backup and recovery to not just be looking at time series data, but also the metadata, the application layer. And because of doing that, you were able to do other things that you might not have anticipated when you made that decision for different reasons. And it really seems like because of that, too, you're also well positioned when it comes to AI, and you've explained that in detail to me, and I appreciate that.

But as you point out, we're still really early with AI. Like some companies have deployed agents, but they haven't done it in mass. And they really haven't done a lot of trying to secure them. I guess where are you? I know you're well positioned because of where you sit and see all the data and not only see it, you manage it. But where are you as far as the products? And will your products be ready when the world is ready when all your customers need you.

Thanks, John. If you look at our strategy, we have 3 pillars of products from data to identity to AI. And why are we doing AI because AI agents assume identity and work on sensitive data, and that's why you need to have a comprehensive agent security and governance platform as folks are adopting agents. As you know, businesses will have 2 kinds of agents. One is custom agent that is custom-built for their business workflows and those take time to build because you need to have harmonized data structures, harmonized ontology and context on the data before you can really design an agentic business processes customed to your business. But coding and search has become too widely adopted use case within enterprise when it comes to AI.

But when customers deploy these agents to do coding or search, they are worried about these agents taking destructive action or not following security protocols of the business. And that's why we focused on building agentic security and governance. But agentic security and governance, everybody is taking a point solution approach. We are taking a comprehensive approach from agent visibility, so telling what sanctioned or unsanctioned agents you have to agentic identity, which actually gives you the control and access plan for that agent so that at run time through MCP proxy, we are enforcing only the right set of data is being touched by the right user.

Then we have agent runtime security with our Symantec governance engine stage, where we are looking at the Agentic intent and the stopping actions that are not aligned to the business process and rules. And then finally, agentic rewinds that if agents take bad action, you can undo those actions. So we are taking a comprehensive approach to agentic security and helping our customers go on their agentic journey. They are mostly around coding and search so far. Just to give you a sense, one of our large U.S. health care technology firm bought Rubrik and the CIO was involved in that purchase to ensure that their agentic usage is compliant. And they were worried about -- since it's a health care company, they were worried about data leakage and compliant with the health care data and with our Rubrik agent cloud, they will be able to securely expand agentic uses across the organization because they now have both ability to secure the access in run time, understanding the intent of the agent as well as the ability to remind.

So these are the kinds of things our customers are coming to us, just like we have delivered data resilience and identity resilience, we are now delivering AI resilience.

So it sounds like you're there. You're ready. It's just when they're ready, you're ready. Is that accurate?

Exactly.

Your next question from the line of Gregg Moskowitz with Mizuho.

I echo John's sentiment that it was important here and just to quantify and reiterate the net new cloud ARR growth of 20% year-over-year, very healthy. That being said, it was still fairly well below the total debt new subscription ARR growth. And I'm wondering hearing if you could walk through the dynamics behind this as well as what your high-level expectations are going forward for the mix of cloud versus other ARR growth?

Sure, Greg. I can clarify that. So what -- I think we spoke about in the previous quarter as well. We have a cloud business as well as a non-cloud business. And the non-cloud business is largely directed towards folks who are in the regulated industry, government agencies as such on-prem, who do not want to use the cloud. And that business has started to grow. Obviously, we went through a period of migrations when there were -- there was a piece of the non-cloud business, which was moving to cloud, but that has largely been done now. So going forward, you'll see the non-cloud business grow as well. We saw that last quarter, we're going to see -- we saw it this quarter and going forward too. So the total net new growth for subscription ARR is going to be a combination of the cloud as well as non-cloud.

Just to add a little bit of a color, Greg. Given the geopolitics and given all the things that we are seeing around the world in terms of security. Every country is now concerned about continuing their supply chain and economic infrastructure. And as you can imagine, digital infrastructure and AI infrastructure is an important economic infrastructure. And that's why folks are working on digital embassies and containing data containing infrastructure in their own sovereign realm. And this whole sovereign cloud and sovereign infrastructure is actually driving some trend to our non-cloud Rubrik sales. And that's what you see around regulated industries, sovereign sensitive industries, defense, government. And overall, geopolitics concerns is driving noncloud sovereign deployments.

I'll also add, Greg, that there's ample demand in both these markets, both the cloud and the noncloud. So we run the business on subscription ARR. That's the primary metric we focus on, and the mix of cloud noncloud play out depending on the quarter. We have given some modeling points to guide for the second half in terms of cloud -- noncloud contribution, which should help you with the modeling.

Your next question from the line of Eric Heath with KeyBanc.

Great. question for you, high level on the demand environment. We're hearing commentary and see in your results as well. But hearing commentary about post Mythos inflection. So can you just talk about the incremental demand you're seeing for cyber resilience or RAC in response to meet those? And maybe how that's starting to materialize in the quarter or the outlook.

Thanks, Eric. So we have been saying for the last 6, 7 years, saying prevention and detection of cyberattack is not sufficient. Folks have to assume breach and prepare for cyber recovery and cyber resilience. And Mythos and Frontier AI models have been a huge inflection point for our industry. What Mythos has demonstrated is the vulnerability chaining will make low priority vulnerability into a P0 problem. And as a result, and these models are so smart, that there is no real time between intrusion and breach. So you cannot stop breaches. You cannot detect or prevent pretty much anything if it all if the vulnerability exists. So the real strategy is fast recovery of what we call machine speed recovery and patching without human intervention.

So the whole industry is now aligned to our original vision of assumed breach and deliver machine speed recovery. So we are seeing acceleration in terms of the customers coming to us, having concerns about Mythos, deploying cyber resilience capabilities that can deliver preemptive recovery engine, which delivers AI speed recovery. That's the conversation. And so that's the first part of the agentic cyber resilience, where AI is attacking you. At the same time, your agent that you're deploying in your enterprise can get compromised and that could lead to a significant insider attack. So folks are also worried about resilience for these AI agents. And that's why we have a complete agentic resilience platform with Rubrik Agent cloud that delivers both security and governance of AI agents.

Your next question from the line of Keith Bachman with BMO.

Yes. And Bipul, I wanted to ask and Kiran too on RAC and just trying to gauge expectations and I'll break it into a few different pieces. And so first part is on competition. When I hear the message on RAC, particularly around governance, it sounds a lot like what the identity providers are suggesting not on the access piece, but on the governance piece, but I just wanted to hear your perspective on where you think you're going to face competition. The second part is just on the 15 customers, are those paying customers? Could you just clarify? And then more broadly, the final piece of expectations is you've conditioned us to not think about RAC really contributing ARR this year, but should we be thinking about ARR, given all the activity surrounding agentic risk, can that contribute ARR in calendar year '27 or your next fiscal year? That's it for me.

So let me start by giving you where we are. So yes, we have more than 15 paying customers for RAC. So -- and we are seeing a strong proof of concept to production deployment trend on rack. You talked about the competition and noise in this particular market. Yes, there is competition for point solutions. So observability companies are providing visibility into agents. Identity companies are providing access and governance into agents. Pretty much not many people are doing watching intent of AI agent with AI. That's unique. That we brought into the marketplace. And obviously, Agentic Rewind is our heritage. So if you look at Rubrik's strategy instead of having our customers buy 4 or 5 point solution and stitch them together to have complete visibility and control on AI agents, they could buy Rubrik platform, which has visibility, identity, runtime security as well as agent rewind all on a single platform.

So we are taking a very long-term platform approach because we believe that this particular market requires comprehensive platform because the risk with agents are very high. And we want our customers to deploy agents with confidence and get the benefit of the productivity that AI delivers.

This is Kiran. I'll just add that we're very pleased with the progress so far, but the focus here is on finding the right product market fit and making our customers successful. So there's minimum assumption of RAC in this year's ARR, and we keep you updated as the year progresses.

Your next question from the line of Todd Coupland with CIBC.

Your next question comes from the line of Junaid Siddiqui with Truist.

Great. Kiran, you mentioned not seeing a material impact to your business from rising hardware costs or supply constraints. But are you seeing a measurable increase in displacement opportunities where customers are reconsidering more hardware-dependent backup architectures. And could the current pricing environment create a more durable share gain opportunity over the next couple of years?

So Junaid, just to give you the market and product sense, Rubrik does have a product that utilizes our customers' existing infrastructure to deliver cyber resilience. Having said that, we are a software company, and we are in the business of selling software and our customers have the opportunity to deploy cloud data protection across their many vendors that they might have in terms of their hardware supply chain. Plus, if you look at where our business is today, Rubrik is not a point solution on data center. That is a smaller part of our business. If you look at our overall business around cloud, M365, Identity and all -- and RAC all of the products that we are selling. So that's the reason that we have no material impact from hardware cost rising or supply chain issues. Kiran, do you want to give some.

No, just to reiterate enterprise protection is a smaller part of the business. We had shared some data at our Analyst Day in June as well. So just in terms of the scale of that business. So we have a -- we're a multiproduct company with different avenues for growth and customers can protect data across different workloads in the cloud as well as on-premise.

Your next question from the line of Param Singh with Oppenheimer.

I wanted to kind of dive a little bit more on to the Identity Resilience side. I want to understand how ubiquitous is the adoption of that across your installed base today? And do you think that's an incremental opportunity to penetrate other customers? How are you leading with it.

Thank you, Param. So if you look at data security, the risk on the data security comes from user interaction on data, that is your identity. And that's why we built the complete identity resilience platform. It's still early days for us in identity and penetration in our customer base is still very early. Obviously, we started with identity recovery as the first product and then we built Identity Resilience that brings the risk aspect of the identity and in that risk as take misconfigured identity, privilege escalation, sensitive data exposure because of the privilege escalation, and this is where we bring the DSPM flavor into identity. And we have a significant opportunity with identity.

Just this quarter, we closed the largest international identity deal in Rubrik's history with an existing customer. The customer had the requirement of recovery in hours and their current solution was recovering in days like 7 days. And so this deal was a very high variety CIO, CISO level deal and Rubrik Identity Resilience provided that solution to the customer. So as you can see, identity data and the whole AI resilience, we are delivering the complete package to our customers to be ready for Mythos or whatever comes next.

Your next question from the line of Shrenik Kothari with Baird.

This is Zack on for Shrenik. And so one distinctive part of the Rubrik's story really has been your ability to organically build successive businesses, cloud, SaaS, now identity while still selectively using acquisitions to accelerate certain capabilities. And so really as the opportunity broadens across identity, AI, et cetera, I would love to hear how you guys are thinking about the build versus buy prospect from here? And maybe are there any areas where the speed or data advantages increasingly makes M&A more attractive maybe than just the organic incubation model.

Thank you. In terms of Rubrik's strategy, we always took a platform strategy because we believe that the complementary network effects of the Rubrik platform is very powerful to our customers because they are not just buying a solution from Rubrik, they are entering into an ecosystem of solutions where each additional product that they buy from Rubrik increases the value of all existing product that they already have with Rubrik. And this is the power of our platform. So we always take this approach that we want to look at teams, technologies, products, that we can bring in and integrate into our platform so that our customers continue to have a seamless experience.

Having said that, we are not dogmatic. We are always looking at new opportunities with the lens saying, can we accelerate our road map. Can we accelerate our customers' journey to AI, customers' journey to more of AI transformation and so we are always looking both organic and inorganic. But so far, we have found opportunities where we can accelerate our road map by finding teams technologies product to bring -- build into the Rubrik platform.

Your next question from the line of Gray Powell with U.S. Banc.

Okay. Great. And congratulations on the strong results. So I just want to make sure that I understand one of the points that we often get from investors and if I'm looking at your guidance and the model points in the deck, it looks like noncloud ARR should be growing around 10% this year, give or take whereas in prior years, it was declining. And I know everybody likes to focus on cloud ARR, but like all else equal, isn't growth in non-cloud, a good thing? Like is there any difference in the gross margin profile or the expansion potential of these products? I guess I'm just asking because I'm a little bit confused why people seem to have overly focused on the cloud metric.

This is Kiran. So that's a great question. And I think earlier on the call, I answered as well. For us, we have 2 businesses. We have a larger cloud business, which is represented by the cloud ARR and a smaller but now growing non-cloud business as well. We started our cloud transformation, where we started building cloud products and marketing them about a few years back after several years of deep R&D, which really allows our customers to manage data sources wherever they said, cloud, noncloud and SaaS applications or from the cloud.

But we also understand that there are some regulatory and requirements for which customers would want to sell host. And we respect that, and Bipul talked about earlier, there's an opportunity in sovereign clouds, in governments and in some regulated environments as well. So we will serve those markets fully as well. So you should expect that both these businesses are growth drivers. But we focus on a total subscription ARR. Really, the mix at this scale, we are 89% cloud. Maybe there's a little bit more in terms of contribution. But for us, both are important businesses, albeit the non-cloud business smaller. I would say from a margin perspective, the non-cloud business would have a higher mar because the customers are hosting, and we are not hosting it for them.

Your next question from the line of Rudy Kessinger with D.A. Davidson.

I want to double click on maybe just what you're seeing from a hardware standpoint. Obviously, you said there's no overall impact to the business, the quarter that's evident in the numbers. You also had mentioned you had sold some higher hardware in APAC, I believe, to some customers. So just what are your customers seeing from a lead time standpoint, relative to 90 days ago? And how are they navigating instances where they can't procure that hardware and going about on your software in those instances?

Yes. This is Kiran. I can answer that. So as we mentioned in the prepared remarks, there was no material impact from hardware pricing or supply chains on our subscription ARR. And that was the case the last quarter as well as the quarter before. So we saw the same phenomena this time as well. On your question on lead times, actually, we are not in the hardware business per se. There is a small portion of hardware, which we sell, and that's largely in regions which are smaller like in some regions in Asia Pacific. And we did see lead times actually get better from the start of the year. But no material impact to subscription ARR.

We'll take the last question.

Your last question comes from the line of Joe Vandrick with Scotiabank.

Bipul, maybe for you. Can you help us understand what's driving the strength in your Identity Resilience business today? And is that demand primarily, is that incident driven? Is it proactive? And are these mostly greenfield deployments? Or are these competitive displacements?

So as you know, hackers are not breaking in, they are logging in because identity has become the weakest link in cyber attacks. And once these attackers get in, lots of times, they actually destroy identity systems or do a ransom or encrypt the identity systems or have long-term persistence in the identity system and that can be host to attack other places. So identity systems have become also ground 0 for cyber. And so customers are looking for Identity Resilience to understand misconfigured identity, identity recovery to recover after the cyber attack. Also, if you have persistence in terms of the malicious identity you want to roll back and roll forward identity system and roll forward only legitimate identity changes so that you can bring back your identity system in a clean state. So this has become a significant problem.

Historically, only regulated industries, customers bought identity recovery system. And now with cyber attack and on the rise and everything else that is happening, particularly now with Mythos and other AI models, identity is recognized as a significant weakness. So we are seeing both brownfield as well as whitespace customers that have never bought Identity Resilience or recovery they are buying into it. We are very excited about this market. We identified this market early built on to our same platform that is giving data protection with identity and now we are connecting the dots across data, identity and AI. And so that's the power of the platform we are bringing to bear to solve this problem.

There are no further questions at this time. I will now turn the call back to Bipul Sinha for closing remarks.

So thank you, everyone, for joining us today. I truly appreciate your time and questions. We are very excited about agentic cyber resilience and the opportunity ahead of Rubrik. As I said in the prepared remarks that these are early innings for Rubrik. The best of Rubrik is yet to come. Thank you so much. Talk to you soon.

This concludes today's call. Thank you for attending. You may now disconnect.

[Operator Instructions] Please welcome to the stage, Melissa Franchi.

Great. Well, thank you. Welcome to our first Analyst Day. Welcome to Las Vegas for the [ FORWARD ] User Conference. And then for the folks on the webcast, thank you for joining us.

I'm Melissa Franchi, Head of Investor Relations here at Rubrik. Before we get started, I'll do a quick disclaimer.

The slides for today's presentation, which include a reconciliation of GAAP to non-GAAP financial results are available at our Investor Relations page at www.ir.rubrik.com. These non-GAAP financial measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. These statements are based on what we believe today, and actual results may differ materially. These forward-looking statements are subject to risks and other factors that could affect our performance and financial results, which we discussed in detail with our filings with SEC.

Great. With that out of the way, let me give you a quick snapshot of what we have entailed today. I know it's a super busy season, so we'll make the best use of our time. We are very excited to do a deeper dive in the breadth and the depth of our platform, opportunity, strategy as well as the breadth and depth of our executive leadership team. We'll have a variety of different presentations today. We will have some time for Q&A both in the morning and in the afternoon. We're going to break for lunch. We'll have a customer and a partner panel for those on the webcast that will be offline. And then we'll continue with our presentations. We'll end the day with Q&A. I do ask that everyone reserves their questions for those designated times.

So with that, we'll get started, and I am very pleased to welcome to the stage Bipul Sinha, CEO, Chairman and Co-Founder. Thank you.

Good morning, everyone. Hope you are -- you had plenty of coffee because going as at 10:00 in the morning, after a very busy first day of a conference is a tough time to get started. Are you guys ready?

Awesome. I wanted to start with just a quick reminder of Rubrik's mission. When we started Rubrik 12 years ago, our goal was to build an enduring institution. An enduring institution with the cultural foundation that really creates value for everyone in the ecosystem, including our customers, partners, investors, Rubrikants and everyone. And we wanted to also align all of our stakeholders towards a common mission. And our mission is to secure and accelerate world's AI transformation. As you know, AI will probably be the most transformative technology, at least for our lifetime. And every customer, every business, every government want to take advantage of this AI transformation. But this AI transformation creates significant challenges, too. And Rubrik's goal is to give confidence so that our customers can transform their business, roll out trusted agents and really take advantage of 100x productivity opportunities that AI is bringing.

So with that, let me tell you where we are as a business. There are a lot of numbers. Obviously, we are a fast-growing business at our scale, lots of customers, what I focus on is our top line growing fast, do we have great margins. But I'm most proud of more than 80 net promoter score. This is a strong indicator of how strong our business is. And more than 80%, I wanted to remind you, is top 1% of the enterprise B2B. So we are in rarified air. Mind you, we sell very complex operational software. And all of the Rubrikants we get up in the morning and think about how do we innovate on behalf of our customers and not just to create customer satisfaction, because satisfaction is not a great benchmark. How do we create delight and more than 80 NPS shows delight in our customer base.

You may ask this question, how did we get here? How did we get here to AI as an industry? Because in 12 years of Rubrik, we have seen also evolution, not just of Rubrik, but the whole industry. If you go back 10, 20 years ago, everybody wanted to be digital, a Step 1 from your handwritten CRM on some spreadsheet, maybe to adopting CRM, adopting other systems of record the very, very basic things that we now consider almost legacy or obsolete, but that was rage. And once we got done with automation, which means that our systems of record where digital, then the whole world has started to think about how do we digitally transform ourselves. Because not just systems of record, but how do we work with each other, what are the workflows, how does business work end-to-end. And instead of pushing papers, based on the system of record, can we have workflows that makes all of us more productive. And that really created this whole cloud revolution, SaaS revolution and that peaked in 2021, 2022 era, and that's what gave birth the AI transformation.

So first, we did system of record, then we created workflows. And now people are started asking this question that why do we have people clicking buttons? Why do we even have to do one click? Why can't our systems use AI and do the work? And that's the new transformation, and that has the promise of 100x more productivity. But that is only the upside because all of these transformation different eras created different challenges and risks along the way. If you think about it, once you created the data center and had systems of record, you had the issues of flood fire crater and you needed solutions to make sure that your systems are up and running, and that was the first era of backup and recovery. And that's where Rubrik, we, as a business came in, and we said we are going to give you automated API-driven system of record recovery. That's how we started our business, selling for data center-oriented application recovery.

And as cloud picked up, we also advanced our solution and have started to think about it's not just the natural disaster is the biggest disaster. Cyber is the biggest disaster. And you cannot solve cyber recovery with a legacy product that was designed for flood or fire. You have to fundamentally understand that a clean data recovery is what is needed to recover from digital transformation risk, which was cybersecurity. So we built a purpose-built platform for cyber recovery. In fact, Rubrik created cyber resilience as a phrase. Now the whole world has adopted cyber resilience, but we were the first one who said cyber disaster is the biggest disaster. You have to assume breach. And for you to assume breach, you need to have cyber resilience, cyber resilience has 2 parts. Do you understand the risk of cyber attack when you assume breach? And do you have the ability to remediate? We created a beautiful product across complete cyber resilient solutions.

Now we have entered a new era, and this era is different. And this area is different, the AI era because in this era, you cannot practically do any prevention or most of the prevention or any detection. Anybody who says, "I stop anything" is living in the digital transformation era, not in the AI transformation area. So in the AI transformation era, attacks are inevitable. And you heard it from Ethos that vulnerability chaining, toxic combination of vulnerability discovery makes attacks inevitable. So cyber resilience is very, very critical.

But the question is, is your yesterday's cyber resilience relevant event today? Because it's not just somebody is getting into your organization and trying to steal your data. That was the yesterday's problem. Today, somebody sitting in North Korea can run your whole business, can write your core, do customer service, do customer refunds and make you bankrupt. So businesses face unprecedented risk with AI. And all the prevention and detection solution is not going to help in the AI era. And as we have gone from automation to digital, Rubrik is reinventing itself one more time for the AI era.

And here is my fundamental assertion. The cybersecurity industry, as we have all known and grew up with is dead. You may think people is making a bigger statement and trying to shock us. It's not about shock, it's about accepting the reality because we were completely focused on preventing and detecting attacks with 100 or 200 solutions sold by thousands of vendors. Think about it, what -- how good are they? And if they were so good, why did we have a panic with Methos?

This is what the change is. We used to have human attackers. And humans who are working within your companies. Job of the human attacker was to somehow get in and figure out where your critical data is. And human worker had identity. In the worst case, they will steal their identity, steal their data or do ransomware attack by going through human identity. That was the world of cybersecurity. But that world doesn't exist anymore. Because in the new world, you have AI attackers. AI attackers don't sleep. AI attackers don't have to figure out how do I go find the right data and change the vulnerabilities because they're reasoning. They are using AI to reason and find the right toxic combination to attack you.

And at the same time, more and more workers that run business processes are not human beings, they're agents. And these agents are vulnerable to hallucination because they are probabilistic systems or cyber compromise. And should they get compromised, you have a massive insider attack. So you have 2 huge problems. AI attackers that you cannot detect and there are in and doing tremendous damage at machine speed, and you have agents, should they get compromised, you have a massive insider attack.

So when the AI speed breaches happen and if you have yesterday's cyber resilience, that does human speed recovery, there is an impedance mismatch. You can't respond by human speed, which is at best 10 bits per second to an AI attacker which is going million to billion bits per second. You will be out of business. And that's why everybody is so worried about these modern AI models.

Second problem, this agentic operators, these operators that are agents, if they get compromised, they will do 10x more damage in 1/10 of the time. And if you have human processes, human set of rules to figure out what is allowed and what is not allowed or somebody managing these detection. Again, you have huge impedance mismatch. Not only your agents, but you will be out of business. So the question is, you have AI speed, compromise or attack and human speed response. That's the world that we have lived in. And everybody talks about, let's fight AI with AI. The question is how do you fight AI with AI? You can't fight AI with AI with the same thing that you have been doing or use the same old software.

So to fight AI with AI, obviously, you have to deliver AI speed recovery. To make sure that you are in the business after an AI speed attack. And then second piece is you don't let your agent do bad things in the first place. And if they do bad things, then you also recover at AI speed. But the question is that how do you deliver these 2 capabilities with your same old software. To solve that problem, you need to deliver these capability also as AI agent. So you need AI-agentic orchestration to deliver cyber resilience to deliver agentic guardrail. So that is the requirement. If you're not following these requirements, if you're not building capabilities on these requirements, you are not relevant in the AI era and that is challenged to everyone in the cyber industry.

We started Rubrik 12 years ago, as at that time, even today, the best software that you can deliver in the marketplace with API, with automation. But we still needed human beings to be able to deliver these capabilities of automation, ease of use, beautiful UI, but you needed human being to do the recovery. That changes today. We are making Rubrik an agent. Because an agent can only respond to AI speed attacks that are coming in its way. And how does this manifest? Rubrik AI, that is Rubrik agent for all aspects of Rubrik. That never sleeps that monitors, collects information, understands what's going on, creates recovery plan, asked human for permission, not work and creates outcome.

If human says, yes, do the recovery. It will fully orchestrate recovery, bring the business back to its operational state, make sure that your agents are back into operating state without human doing the work. Think about humans are now a manager. They give prompt. I want to get this work done. If Rubrik AI needs to ask for permission or a judgment call, they will involve a human in the loop, otherwise, they'll create the outcome. That's the new world and that is the new Rubrik. And we are manifesting this strategy as a genetic cyber resilience. And that is one more time, Rubrik is redefining what it means to have cyber resilience in the AI era. Just like we define cyber resilience itself for the digital transformation era.

You may ask, how does it work? What are its foundations. Obviously, agents can't run on [ Ether ], it requires data. It assumes identity. So Rubrik platform brings together all data and all identity from all the business, process, business systems, across on-premises, cloud, SaaS identity everywhere onto a single platform. And on top of it, we have built Rubrik agent orchestration. These are the set and hierarchy of agents that is built into the Rubrik platform to create agentic outcome. Where these agents are doing the work, not humans. You may say how about these agents, it's -- can they hallucinate?

Yes, they are also probabilistic systems. And so we have also built agentic governance and security onto our platform, built into our platform. And this agentic governance layer not only governs the Rubrik's own agents, but we are also selling it to our customers to make sure that we create run time guardrails for customers, agents for sales and marketing and support and other systems. So in some ways, we are drinking our own champagne to ensure that our own agents are governed and secure. And we are also giving the same capability to our customers to govern and secure their other agents.

You will ask this question that Bipul, why did you change Rubrik from software to agent. Obviously, speed of recovery, but what is a higher-level governing thesis. If you think about it, our customers are deploying marketing agents, sales agents, coding agents, customer service agents. When they come to IT, they don't want to manage the software. That is not only creating more work for them, but it's also not ready for AI speed recovery. So Rubrik now fits in the AI framework that our customers are creating across the whole enterprise. And Rubrik is an agent for cyber resilience, agentic governance and security. And it's all built into our platform. And this platform delivers 2 product suites, Rubrik Security Cloud for cyber risk assessment plus recovery and Rubrik Agent Cloud for agentic security and governance.

How does Rubrik Security Cloud delivers AI speed recovery? It preempts the work needed for recovery. And that preemptive recovery engine does the work in peace time to be able to do AI speed recovery in war time. It automatically understands what identity systems should be recovered or rolled back and then autonomously creates minimal viable business plan, all built into the platform. Rubrik Agent Cloud not only innumerates and monitors both sanctioned and unsanctioned which is shadow IT agents, but also creates run time security guardrails so that should your agent take action or attempt to take action that is not commensurate with a policy, it is stopped. And we are applying AI to actually create the guardrails.

And finally, Rewind is what rewinds the whole agentic work. So if you come to it, agentic cyber resilience is delivering 2 outcomes for our customers. We are telling our customers to assume breach which means that in the AI era, attacks will come to you and it will be continuous and how do you deliver AI speed recovery, as well as assume agentic overreach, where agents will misbehave, and how do you ensure that your agents are not doing damage to your business.

As I was preparing these slides, our Rubrik Innovation Lab came to me and said, Bipul remember Annapurna. We have been working fast and furious on Annapurna. And we were trying to figure out where does Annapurna really creates the maximum value? Because Rubrik has all sorts of data. But where does we can really make an impact? And this is the updated Rubrik Annapurna. What we found was that vast majority, 80%, 90% of enterprise data is unstructured data sitting in their file system or in the S3 or object store. And it is very hard or very expensive and very slow to understand the classification and nature of this data. And it is such a high volume data that if you load all the data before you can figure out what you can use and what is the classification and categorization of this data. It's a very expensive proposition and people don't do it. And these data is like your x-ray data, your semiconductor design data, it is your manufacturing images data to see that the batch manufacturing is going all right. So lots of sensor data that all comes in.

Rubrik not only breaks the law of physics, but also economics to deliver unstructured data AI by creating catalog integration with Unity catalog and providing catalog before loading data so that people can figure out what is the right set of data they want to actually apply AI to? And once they apply AI to the right data, and we actually deliver data in the tabular format so that they can create an AI outcome and also have the providence and history on what data they created the AI solution. We believe that it's a very important area, could be an important market opportunity for us. Early days, still in the innovation lab, but very excited.

So in summary we have one platform, solving for two imperatives, assume breach and assume overreach across 2 suite of products built on a very strong foundation of the Rubrik platform, and that is agentic cyber resilience. What is our market opportunity? Where we can and who we can sell this product to?

Rubrik sits at the intersection of data, identity and now AI. If you look at the data piece, that has been our heritage. We help our customers secure their data. We help our customers understand their data. We help our customers recover their data and restart their businesses. So we are doing across data dimension, both the risk of the data and remediation of the data. If you look at identity piece, we have a strong business in identity resilience across 2 vectors also, identity risk and identity remediation. With AI, and with the Predibase acquisition and creating this run time guardrail engine, we are doing 3 things: understanding all your agents, creating guardrails for our agents and then doing Agent Rewind should anything go wrong. So a complete platform end-to-end.

You may ask Bipul, why are you doing AI? We are doing AI because agents assume identity and work on sensitive data. And Rubrik has full enterprise context on data, full enterprise context on identity, so it's very natural for us to give full security for agents. And we are doing all of it on a single platform with multiple products. And that is where the Rubrik's huge consolidation opportunity is. Because if you look at our customers, just across data dimension, whether it's enterprise on-premises or cloud or SaaS, buying numerous point solutions. These solutions don't talk to each other. Should anything happen to your data, you have to turn 30 norms, one for each service within AWS to be able to recover. Rubrik has a single policy engine, single platform, single way to bring your business back into action. And now we are doing through agents, so at AI speed.

If you look at identity dimension, again, our customers have multiple point solutions they are buying for identity posture management plus identity recovery. And if you have different kinds of identity platforms, they have one solution for each. Rubrik is one platform, one solution across all your identity. And similarly, for AI, you may hear there's a lot of companies trying to do AI agent security. Some people are only doing observability, some people are only doing identity risk. Some people are only doing run time. Some people are talking about Agent Rewind, Rubrik is one platform where all 4 capabilities are built into the platform with full enterprise context around data and identity. And that's why we believe that we have a unique opportunity to not only solve the data issues but identity plus AI.

And that's what creates significant TAM for us, from data protection expanding into security and resilience pieces. Another large market opportunity, expanding into identity resilience and identity recovery solutions and then expanding into a massive AI deployment and security. If you combine all of it, we are not opportunity constrained, over $125 billion market. But Rubrik has didn't get there with this number to start with. We always build solutions and expanded TAM. Every single product, every single vision, every single market that we enter, we think about how do we get a bigger share of wallet, how do we consolidate for our customers, create a single solution, a single platform that is logically and intellectually for our customers connected and deliver a complete end-to-end solution.

And it creates a significant flywheel for our customers and us because our customers also wants to deal with fewer vendors. So they want to adopt more of Rubrik solutions, and they can start with Rubrik in one of the six or seven ways. They can just start with our AI solution. They can just start with the identity solution. They can just start with the cloud solution. They can just start with the SaaS solution, just start with on-prem data center solution. But any product they buy, we instantiate Rubrik platform for them, single policy, single platform. They just click more buttons and expand the solutions.

And that's the power of our platform, and that's the power of flywheel. And that is the reason that when we introduce new products, we are able to scale it quickly because they don't have to buy [indiscernible] another product and think about yet another way to manage it is fully and completely integrated onto our platform.

So this is a practical example of how it manifests for Rubrik as a business. When we first introduced cloud or cloud solutions, it took 4.5 years to get to $200 million ARR because this was our first attempt to the multiproduct thinking. But when we introduced our M365 solutions, it went faster because customer understood that it's a single platform you have to flip a switch and adopt a new platform. So it went from 4.5 years for cloud to 3.5 years for M365. When we introduced enterprise edition data security products to detect ransomware to do data classification to do threat hunting monitoring as a package. It took only 2.5 years to get to $200 million.

Again, it shows that the effect of the platform. Our platform is based on complementary network effect. What is complementary network effect? When you adopt more solutions, the value of all your existing solutions go up. So that's why it accelerates. So when you introduce new products, it goes faster because the value of all other products increases. So when we introduced identity, in just over a year, we went to $50 million from cold start organically built product. That's the platform effect, not platformization, real platform.

But our customers are also saying you guys have lots of products. We want to consolidate, make it easier for us to adopt Rubrik. So we are launching Rubrik Flex, which is truly a platform contract, one contract, one commitment. It helps our customers adopt our products faster, adopt new products faster, they can pick what products they want to consume and they go. We are very proud of our team and our velocity of execution not only in building products and taking to market but also scaling the business operationally, creating a disciplined execution engine that takes the suite of products across the whole platform to the customers and scale the business. We are just getting started. In my mind, company's age is in decades, not in years. We just finished our first decade. We are on to our second decade. We have the product. We have the technology. We have the team. And most importantly, we have the entrepreneurial hunger to go build a lasting company. There is Rubrik, the security and AI operations company. Thank you.

Great to see all of you here in person. I'm Arvind Nithrakashyap, Co-Founder and CTO of Rubrik. I've been in the industry for a long time. I'm probably rating myself. The Internet was nascent and e-commerce was nascent when I first entered the industry. So I've seen the Internet transformation. I've seen the cloud transformation. I've seen the mobile revolution. But I have never seen change at this space in the tech industry before. And organizations businesses are dealing with a lot. But when you think about risk, there is a whole new dimension of threats that they have to contend with today.

Cyber attacks, which are previously engineered by smart hackers, sitting in a remote corner of the world are now going to be engineered by AI. What this means is that not only are breaches inevitable, they're going to become more frequent. And then, of course, we want to -- everybody wants to deploy agents. There's a huge promise of productivity, 10x, maybe even more with agents, but they also present a huge risk to the critical business data and assets.

As we all know, agents can be -- can hallucinate and make mistakes. We've all seen that every time we've used a chat bot. But it's also pretty easy through malicious prompts to coerce them to do something that they should not. And the challenge is all of this is happening at AI speed. Things are changing so rapidly. So the only real solution for organizations is to be resilient. They have to know that these things will happen and they have to be resilient and be able to get back up.

Now if you think about it, any solution to this problem has to span across data, identity and AI. Most vendors and platforms focus on just one of these areas. If you think of a cyber attack, you need to understand what are the identities that are compromised. You need to understand what critical business data could they access. And then you need to be able to recover all of this if something -- if they do destroy your critical business data. And again, agents also assume identities, operate on critical business data. And so to make -- to be resilient to agent mistakes, you again need to be -- need to understand both data and identity.

So fundamentally, you need a platform that is the intersection of data identity in AI and Rubrik is the only platform out there. We ourselves started in the data management space, but because of the unique architecture and platform that we built, we were able to bring that same platform into identity and provided solutions and identity. And today, as agents become more mainstream, we are able to now bring that same cyber resilience capability for agents as well.

So let me take you back in time about when we started this company and we built this platform. So when we started Rubrik 12 years ago, typically, what the solutions did was really bring together multiple products. You bring a backup software, say something like Commvault or Veeam, you would bring backup storage, say your data domain. You would buy media servers from Dell and HP or other such server vendors, put it all together and build a solution. The challenge with this is, each of these components only have a partial view of the enterprise data. Nobody has this holistic picture.

As a new startup, we had a clean sheet of paper. We said, why don't we reimagine this whole thing. What is we built a single stack of software, which capture data and meta data and we created this concept called self-describing data. This is an extremely powerful concept, and I just want to dwell a little bit here. So let's take an analogy. So let's assume you have a bunch of rooms. They're all locked. You have a bunch of keys. One of them has a safe with the crown jewels in it. Now if all you have is a bunch of keys, you don't know which door opens -- which key opens which door and you don't know where the safe is, so you have to go try each key on each door, and figure out where the crown jewels are.

But let's say the keys came with a little tag. It said, "Hey, this is what -- this is a door this key opens". And all he tells you, "Oh, by the way, this is a room that has it safe". So one, that is that important key you need to safeguard. And you know that if you need to get to the crown jewels, you can get to it very quickly. So this is the power of self-prescribing data. What it does is it gives you a map of the entire enterprise. It shows you where the critical assets are. It shows you the identities or users who operate on the critical data, and it tells you what are those critical data and identities you need to monitor.

And today, you hear a lot about enterprise context, how that's the most important thing for AI. If you think about it, this is the crux of what enterprise context is. Your critical applications, your critical data and the users who operate on them. And what we do is we don't just have a point in time up data and meta data or the self-describing data we take snapshots of this over time. So we actually have the full history. We have a full time series of how enterprise data and identities are evolving. And that is what allowed us to capture the full context of applications, identities and build a data threat engine natively into the platform. That is what allowed us to say, where does your sensitive data lie? Who are the users of access to it? Who are the users are maybe accessing it? Are there threats in your system? Could there be an attack that's happening right now? All of this information is because we have this enterprise context built into the platform.

Now obviously, we've been delivering cyber resilience. I'll call it for the software era. But now as we enter the AI era, everything is happening at AI speed. So you need to be able to have AI help you recover your business as well. And this is where we were able to build this agent orchestration layer. And again, you cannot do this unless you have that enterprise context. Because the agents themselves know how to access applications, how to secure them, how to set the right SLAs. That's how we're able to completely automate your minimum viable business recovery.

And it's the same enterprise context that allows to understand what are the applications agents that are now being deployed access, what kind of identities they assume. When an agent takes an action we have the understanding of what the intent behind the action is and then we are able to determine whether it's in violation of an organization policies or not. And then if the agent does make -- still make mistakes, we can surgically understand the actual operations that were erroneous and surgically rewind them.

So the challenge with cyber recovery. It's not just about recovering the data. You just can't go to yesterday's backup and recover the data. The challenge is that you need to answer a lot of critical questions before you can even start on your recovery action. Many industries, regulated industries, they need to know, was there any customer data that was compromised, health care? Was there any patient information, HIPPA data that was compromised? They have an obligation to disclose this to their customers. You need to understand where the sensitive data lies. Was there -- do you need to understand before you can recover, you need to know what the source of the attack was. Was that malware sitting in a bunch of applications within the organization?

So this is the reason why cyber recovery takes so long, gathering all these answers requires us to scan large amounts of data. If you want to recover at AI speed, you have to precompute all this information beforehand so that you're ready to go when an attack happens.

And this is fundamentally what the preemptive recovery engine we've built into the platform does. As we ingest the data, we are able to capture the data and metadata for both data applications as well as IT systems, and we create a uniform representation which builds is time series over time. And then we index the metadata, and we also hash all the content. So this is what allows us to, for example, if a new threat is published today that nobody knew up until now, within a few seconds, we can go and say, "Oh, by the way, yes, this threat is present in your organization. It originated in this application 10 days ago, but now is present in 15 different systems within your organization.

So this is the power of doing all of this, precomputing all of this so that you can quickly answer these questions. So when you are hit by cyber attack, you don't need to go scan and find this information. The information is at your fingertips. And this is also what allows us to actually figure out the right clean recovery point that we can then say, you -- this is the point you have to recover it so that you know the malware is no longer present in the system. So this is the key behind the preemptive recovery engine that [indiscernible] all the information piece time so that you can quickly act when there's an attack.

Now identity has become the biggest attack vector. Almost 80% of attacks, the hackers aren't hacking into your systems, they're logging in. And the interesting thing about such identity compromises that these often act as backdoors for attackers to do future attacks. So this is why it's extremely important to understand the relationship between identities and data. If you think about a hospital, which has critical patient information, or a bank that has critical financial information. You need to know where this data sits, which applications this data sits in. You need to understand who are the users have access to this. So that when such user is compromised, you know that you have to act immediately. Without this knowledge, you'll be inundated with a lot of alerts and you won't know which ones are important, which ones are not.

So our platform applies the same methodology that we applied to applications where we capture data and metadata, so we understand user hierarchies. We understand users, groups, roles and how these privileges change over time. Obviously, we also understand how applications have -- and data have evolved over time, where the sensitivity sits. And we are also able to understand the relationship between identities and this critical business data.

Now obviously, attacks are happening at AI speed. So you can't have humans trying to do the recovery. So think of what it takes. If you have -- if your cloud account gets or your secure billing application gets hacked, these are all the steps you need to take to get your business up and running. You don't want to be doing this on the day of the attack. It's going to take you weeks to get this done. But because it takes so long and it's so complex. Most organizations would love to do this on a regular basis before an attack happens, but they don't do it because this takes a lot of effort and time to be able to do this.

But think of this in the agentic era. The human comes and expresses the outcome they desire. They want to secure their billing application. The agent goes and figure it all out, figures their dependencies, builds a run book and says, "Hey, here's a run book", can you validate that I've got it right? If the human says no, it goes back, figures it out, comes back with a new run book. And then the human says, yes, this looks good. Go ahead and test it. And then it goes and test the recovery, make sure that it works. If it doesn't work, again, we'll go back, figure out what went wrong, fix it. And then final say, yes, I have a working -- I can now -- I have a working recovery run book. And I can say, if you want I can schedule it to run monthly and send you report.

This is what -- so now when a CIO or CISO goes to the Board, they can say, "Yes, I'm prepared for cyber attack because you know what? I've done this 12 times over the last year, I know this works". This is the confidence that customers need to have in this era of AI based attacks.

And if you look under the hood, what we have done is really built an agent orchestration layer, again, taking this enterprise context that we have in the platform and then run -- we run multiple agents which are all understanding where sensitive data sits, where there's malware, how to build calculated dependences build a run book and then humans are mostly reviewing and approving. And this is how we have to operate in this new area.

And finally, let's talk about as organizations deploy agents. Agents are also operating at AI speed. You can't have human stepping in and monitoring every action that the agent takes. This is why you need AI to govern agent actions. Now obviously, with the enterprise context that we have, we already understand where agents, what identities they assume, what access applications they access. But in terms of dynamically controlling the actions that they take. With the Predibase acquisition, we have actually built small language models that are able to efficiently just take a policy written natural language. And then based on the actions that the agent is taking, they can make a decision whether it's in violation of the policy or not. If it's in violation, it will block the action. So that action doesn't even hit your production.

But let's say, you missed one case in the policy, and something sneak through, then we can again, surgically, we can rewind the action that the agent took. And all it takes to fix that hole is to go back to the policy and add a line that covers the case and now the next time that action will be blocked.

So I talked about the platform, but what does it take to build such a platform at scale? We have actually been securing applications across the enterprise, data center, cloud, SaaS, identity providers and now agents. What we have essentially built is this ultimate system of record, which is a system of record of last resort. When everything else fails, customers come to us. And such a platform has to be able to restore data to production and we can get one bit of information wrong because if we do the applications won't come up. This is why this is an extremely complex platform to build, and it requires a very deep understanding of applications, identities and the relationships between them to be able to do this across all the different kind of infrastructure that an enterprise has.

But just that is not enough. These applications, each enterprise configures these applications in very different ways based on their business needs. So that these applications explore under thousands of configurations. And there's no manual or run that tells you how enterprises configure these allocations. So the only way to do this is to work with thousands of customers, understand the different ways in which they configure these applications, bring that knowledge back into the platform and iterate. And this is what we've been doing over 12 years with thousands of customers. It requires a lot of time and deep relationships with enterprises to be able to get the platform to where we are today. That's why a small startup or two kids in a garage can't white code this platform.

So again, there you have it. We have built a platform with a very unique architecture with this fundamental concept of self-prescribing data. This allows us to deliver agentic cyber resilience to our customers. We deliver it through 2 product suites, the Rubrik Security Cloud and Rubrik Agent Cloud, and they address the assumed breach and assume agent overreach problems. And to talk in more detail about these product suites.

And now I'd like to welcome Anneka Gupta, Chief Product Officer. Thank you.

Good morning, everybody. I'm Anneka Gupta. I'm the Chief Product Officer at Rubrik. And I first want to say this is such an exciting time to be in product. I don't think that there's a moment in history more exciting than right now, given the speed of transformation that AI is creating for all businesses. You heard from Bipul on why agentic cyber resilience is the most important problem that enterprises need to be solving today. And you just heard from Arvind about the ingredients that make up this platform, the enterprise contact the preemptive recovery engine, the agentic orchestration and guardrails that make that up.

Now I want to take you a few clicks deeper into our actual product suites and product portfolio and show you the power of our multiproduct platform.

And to begin with, I really want to start with autonomous Minimum Viable Business because this is the place where we're pouring in hours and tons of people and time to actually innovate because this is a place where organizations have incredibly important and complex business outcomes and technology hasn't delivered on the promise of being able to secure these applications.

So I want to take you into the day of an organization getting hit with the cyberattack. So imagine you're in an organization, you get hit with the cyberattack. The very first call the CEO is going to make is to the CISO. And he's going to ask, "Is our business up and running?" And the CISO is going to go to his team, his or her team, and say, "Okay, what are our critical business applications? Are those still up and running? Can we recover that?"

Those applications are what -- which make up your minimum viable business. Now why this is really hard. If you think about an example application. Applications are made up of many different components. You have data, you have identity, you have configurations, you have infrastructure. And all of these pieces come together to build your application. If you go to recover this application and you get the order, the sequencing, the dependencies incorrect, then your application will not run and your business will be down.

Now layer on top of that, a cybersecurity instance and what you have to do. Before an attack, you have to take these incredibly complex dynamic applications and be able to map all the dependencies, map the full topology. Then you actually have to create your recovery plans ahead of time so that you can make sure that, that application will be up and running.

On the day you're hit with a cyberattack, you then have to determine the scope of the attack. What identities, what data was actually compromised during the attack. You have to figure out the point of infection. When did the attackers first get into the system? What are all the back doors that they created? You need to look at where the actual malware or other indicators of compromise first landed in your data so that you know where is a clean point of recovery.

And you need to assess the sensitive data impact for most organizations, especially highly regulated organizations, they're going to have to report this back to their auditors, to their regulators. And then you have to quarantine the malware. You have to make sure that the bad actors don't reenter your platform when you do your recovery. And after all of that, you have to orchestrate the recovery.

This is an immense amount of steps. And when you think about the complex applications that make up an organization's Minimum Viable Business and the multiple steps that they have to take for each application for -- in a cyber recovery incident and you multiply that and compound that with the fact that attacks are happening now at AI speed, the reality is human operators just can't keep up. And that is why we built Rubrik AI.

With Rubrik AI, all of these steps that I told you about both before the attack and during the attack are completely absorbed. All that complexity is absorbed and replaced by agents.

So now I want to show you what Rubrik AI really looks like in action. So meet Mallika. She's an IT admin and he just up to her worst nightmare. A security incident has occurred within her Microsoft 365 application. By the time Mallika sees the alerts through our integration with CrowdStrike, Rubrik AI has already done the investigation. It knows what was compromised and built a recovery plan. Mallika didn't have to figure it out, any about on our own. All she has to do is review and approve.

In the old world, this moment kicks off days of chaos, security teams scrambling to understand what happened, recovery teams manually piecing together what to restore, executives asking for timelines no one can answer. It's expensive, it's slow and it's very manual.

Here's what's different with Rubrik AI. She sees that the finance group was compromised. Eight users were deleted and the attacker escalated privileges to get unrestricted access. Typically, putting together these insights would have required collaborating with multiple teams jumping between multiple tools. But now she can get a clear summary of how her identity systems were compromised all in one place. She also sees the attacker deleted and downloaded a bunch of data. So this is a full-blown ransomware and data exfiltration attack.

Rubrik recommends a previously created recovery plan. It's not asking the customer to figure out what to restore and in what order. This is the moment that used to take days, building a recovery run book, coordinating across teams, deciding what's critical enough to restore first. Rubrik AI surfaces the details of the identity recovery plan. You can see exactly what's going to fix. The AI has scoped this precisely. It's not just restoring everything blindly, it knows which users were affected and exactly what needs to be rolled back. One prompt and it's done.

With the recovery of identity initiated, so users can go back and log in. Rubrik AI immediately follows up on recovering the data. It's staying in the loop, not just firing and forgetting. Rubrik AI then pulls up your data recovery plan, which shows the data that will be recovered based on the scope of the attack. Rubrik is orchestrating the entire M365 recovery autonomously. Instead of security and IT teams having to piece together what actually happened during the attack and what to restore to get back to a clean state. Rubrik AI is giving transparency and a clear recommendation.

And then, the Minimum Viable Business recovery is in progress. What previously took admin hours and days to investigate is now down to a couple of prompts, minimizing business impact.

So you can see here the power of Rubrik Security Cloud to consolidate the work of multiple teams across security and IT during a cyberattack. This is the platform of -- this is the reason why having all of these capabilities available in one platform helps organizations accelerate their cyber recovery, especially in the face of AI speed attacks.

Rubrik Security Cloud is a platform. And within this platform, there are multiple products we sell. We sell Oracle protection, Nutanix protection, RDS in AWS, M365, Salesforce, DevOps protection, unstructured data, identity. And with all of this, our Rubrik Security Cloud is integrating with leading cybersecurity vendors who focus on detection and prevention so that we can bring together detection and prevention with cyber resilience to help teams fight AI with AI.

You layer on top of that Rubrik Agent Cloud, which is helping monitoring with -- for agents, providing the agent guardrails and then providing Rewind in the inevitable case where an AI agent goes awry. And now together, we have an incredibly powerful set of product suites.

With Rubrik Security Cloud and Rubrik Agent cloud, we have a platform that delivers true agentic cyber resilience, cyber resilience for the agentic enterprise and agents for cyber resilience.

So Rubrik is a platform, and we have numerous products and solutions we sell to different buyers. Agentic cyber resilience is truly an enterprise-wide problem. It matters to the CIO, it matters to the CISO, it matters to the CTO. So what does the CIO care about? The CIO cares about business transformation. When they come to Rubrik, they buy M365 protection, cloud protection, data center protection, identity protection. And they're looking at all of this and consolidating multiple solutions into one platform. So they don't have to buy point solutions, they just buy the Rubrik platform.

When you look at the security teams and the CISOs, they're in charge of managing risk, which is only getting more and more complicated in an AI-powered world. They come to Rubrik, and instead of buying these niche solutions for protecting identity, whether it's active directory, Entra ID or Okta and piecing together both the risk and posture piece and the remediation and not having any context of the data as they buy the Rubrik platform, one consolidated place for managing risk for data and identities.

And if you look at the CTO, what does the CTO care about? They care about accelerating agent deployment. And instead of buying all these different point solutions and trying to layer together piecemeal, a strategy for how you secure agents with monitoring with real-time runtime protection and with Rewind, they buy the Rubrik platform.

So all of these organizations and teams are coming together because they care about agentic cyber resilience. So how do we actually capture the value across all of these different buying centers. And all of these different personas. We've developed a multi-vector monetization model that really meets our customers where they are. So whether a customer wants to start with data on-prem, cloud, SaaS data, whether they want to start with identity, whether they want to start with AI agents.

They're able to pick and choose and expand with Rubrik across all of the surface areas that matter in their enterprise. And if you look at these surface areas and if you look at the way that we monetize these surface areas, all of this is accelerated with AI. AI creates more data, AI creates more nonhuman identities. And of course, as organizations adopt AI faster and faster, deploy more agents, that's only going to grow exponentially, the amount of agent activity.

The second factor of our monetization is really looking at our -- the cyber resilience maturity of an organization. So we've developed additions that allow an organization to land with some of the more basic capabilities. But then as their resilience matures with their organization, they can expand with us. What we find is that many customers start with one, two, three products and then they want to consolidate more and more and more solutions with Rubrik across our platform. And that is why we launched enterprise -- or Rubrik Flex.

Rubrik Flex is one license, one contract, one commitment for agentic cyber resilience. Similar to other large platform companies, we've developed the solution so that no matter where an organization wants to start. Maybe they want to start in the data center and they want to go to cloud. Maybe they want to start with SaaS and then go to identity. Maybe they want to start with their applications and then go to agents. We're able to solve all of that on their time scale with Rubrik Flex. This gives customers one commitment and ability to access all of the products and flexibly allocate their spend across those products.

Rubrik Flex is going to enable Rubrik to sign larger ACV deals massively differentiate from competition and enable frictionless sales for our sales teams.

As an example, we recently signed a Global 2000 insurance company on Rubrik Flex. It was an over $6 million ACV deal, over $30 million. TCV deal over 5 years. They ripped and replaced legacy backup solution for their on-prem environment as well as their cloud native backup solution, and they chose Rubrik for agentic cyber resilience. They're starting with three products to begin with, and they have a plan to scale across the entire portfolio.

Our belief is that Rubrik Flex is going to be the default motion for selling to Tier 1 and Tier 2 customers who really buy into our vision of a agentic cyber resilience and who buy into these two product suites of Rubrik Security Cloud and Rubrik Agent Cloud.

In the 5 -- almost 5 years that I've been with Rubrik, it still feels like day 1 because of the pace and velocity of our innovation. We have a deep culture of being able to stack S curves to continuously innovate on the edge so that we're constantly differentiating from our competition. And we're doing this while building all of it on one platform, even when we make acquisitions.

And all of this is super exciting because as organizations adopt more and more of our products, they get compounding value from those products as well. So if you look at our innovation history, we started with enterprise data protection in the data center. We then layered on cloud data protection to expand to cloud and SaaS protection for all of the SaaS apps that are critical for running an organization's business. And then as the world realized that ransomware attacks were prevalent and you needed cyber recovery, we layered in data security and continue to innovate on that frontier as well.

And as attacks move from just ransomware to actually identity as the primary attack vector, we built Identity Resilience. And now in the past year, we've layered on agentic security on top of that. So as you can see, when we say we're multiproduct, we are really multi-product. Customers are sometimes consolidating up to 10 different solutions that they were using for cyber resilience that were disconnected, that didn't talk to each other into Rubrik when they buy Rubrik.

One of the real keys to this success beyond all the R&D work that we do to drive this innovation has been our go-to-market engine. We have our forward team with Jesse and Alok leading the way to make sure that we're continuing to sell the products that are tried and true. And we have our Rubrik X team, led by Mike Tornincasa, who helps us incubate and take new products to market as our lateral motion.

So now I would like to invite Alok Agrawal to the stage, and Jesse Green, who's going to be with us on Zoom to talk about our forward go-to-market motion.

Hello, everyone. Hopefully, you can hear me in the room. I'm Jesse Green, Chief Revenue Officer at Rubrik. And I'm joined with Alok Agrawal, our Chief Solutions Officer. I just want to start by saying I wish I could be there in the room with all of you. I know we haven't met yet. I was in Vegas at Ford for the past 2 days. But I caught a ride last night to get home from my son's graduation, which is one of those moments I need to show up for. But hopefully, I'll get a chance to meet you next time we get together.

Maybe just a quick background. Since this is the first time we're meeting. I joined Rubrik 3 years ago from MongoDB, and I was at Mongo for 8.5 years, joining pre-IPO when we were around $50 million ARR at the time and then leaving post-IPO well north of $1 billion. And I was running the Americas. And when Bipul recruited me to the Rubrik, we had discussed moving into the CRO role really at the appropriate time, and that came this past quarter. So I've been in seat for a quarter in the CRO role. But I will say that the transition has felt relatively seamless given that I spent the last 3 years at Rubrik as the President of the Americas, building out a repeatable go-to-market playbook, hiring the team, and this playbook will translate really well internationally.

Alok, maybe you could introduce yourself as well.

Absolutely. Thank you, Jesse. My name is Alok Agrawal. I joined Rubrik about 6 years back to lead our global sales engineering team. And at that time, we were just starting our journey from single product to multiproduct, and I helped architect taking our platform, creating a solution package and taking it to market.

Last year, my role was expanded to also lead our global partner org. And our idea here was how do we create and bring more of an engineering and solutions focused to our partner ecosystem, so we can take our multiproduct platform and combine it with our partners' expertise in consulting, services and last-mile customizations, so we can jointly create and add more value and outcomes for our joint customers.

Over to you, Jesse.

Thanks, Alok. So look, over the next 15 to 20 minutes, we'll take you inside our go-to-market and I hope that you walk away with a better understanding of our strategic priorities. Will hit on a couple of our independent growth levers. And then hopefully, you will walk away with the confidence that our go-to-market is built for sustained durable growth.

So why don't we get started. Alok, if you could flip to the next slide, please. Start off with our three strategic priorities, and we'll drill into each of these further in the subsequent slides. But the first one that you heard a lot from this morning already is our multiproduct platform and specifically the go-to-market motion we have across these.

And just as a reminder, this is our agentic cyber resilience platform, which now spans data, identity and AI. And it provides us a critical growth engine so that we can drive our land and expand and explode motions, which we'll talk further about in a few. And so this is driving for us bigger deal sizes, higher attach rates, better expansions across more product categories and industry-leading net retention.

If I shift over to the middle, our second is really our evolution to an AI-native selling motion. And this, for us, is really about the efficiency of our sellers and the productivity where we embed AI across the entire sales process, everywhere from research to beating prep all the way through post sales. And we're measuring the outcomes which we'll hit upon. And then third is really our distribution leverage and reach, which Alok is going to spend more time on later on in the presentation.

This for us is really about how do we scale through our global partners. And how do we leverage our internal transformation team, which is unique to Rubrik really is the growth multiplier extending our reach, both up as well as across org structures as we now sell across multiple buying personas as Anneka just mentioned.

Next slide, Alok. So let's first kind of dive into our segments segmentation strategy, so you know how we're organized. And we'll start with our serviceable market, which, to us, is about 100,000 organizations, which we've defined in our ICP. And within each one, as I mentioned, we will now sell in multiple different areas across that organization. So it's no longer just selling into the CIO organization for data center protection. We now have the ability within these 100,000 accounts to really target the CIO or the CISO org and the CTO org.

And then when we look at segmentation, we really look at it horizontally in three ways to slice up this serviceable market. So the first is strategics. These are -- think of it as your Fortune 500 organizations and a subset of our Global 2000. So this is a much bigger high-touch motion, right? More complexity in the sales process and the sellers here have smaller books. They are certainly more intimate with their accounts, and they have strong relationships with the partners across these core initiatives.

Then you move down to our enterprise, which we define as companies above $500 million in annual recurring revenue, and we refer to this as our core. So this is a critical segment for us. And then, of course, our mid-enterprise which is up to $500 million. And so increasingly in this, you'll see a lot of digital, a lot of cloud, a lot of AI native companies, here, and we have more of a high velocity and less complexity motion sellers earlier are on in their career and working on scale plays.

And so then if you take our segmentation and you break it out by sort of market penetration, you can see in strategics, we've now landed north of 40% of the Fortune 500, which to me, proves that we have sort of the talent as well as a platform, the playbook to go win in the most demanding accounts in the most sophisticated companies in the world. And yet the enterprise and in mid enterprise, we're still only in the low teens and in the single digits of penetration. And so to me, this prevents an opportunity as we proven we can win in the most difficult, demanding use cases and organizations, and we can scale with them. And now we have the opportunity to go penetrate the serviceable market in some of these other segments, and there's a big road in front of us.

So of course, across each of these segments, you can kind of think of it as different sales plays, which we've defined and trade the field on. And so for example, in mid-enterprise, like I mentioned, we're focused more with the value-added resellers on scale plays, focus more maybe on our SaaS solutions or identity solutions, our cloud protection, where in strategics, we have a very large opportunity to do significant transactions around larger initiatives. So things like legacy modernization, things around cloud migrations.

We partner here very heavily with the Global Systems Integrators. We're super excited about the press release that came out yesterday around agentic cyber resilience for Claude Code partnering with some of the GSIs as mentioned in the press release. And then we're working on large transformational cyber resilience initiatives across these.

Just one other point I want to emphasize here before we move on is that we're not concentrated in any single vertical within these segments, although we do have several high-growth industries, specifically healthcare and banking financial services and insurance and public sector, where we have the most market share, we're growing faster than some of the other segments, but we still are very, very relevant in segments like retail and manufacturing and services and [ iTech ] and others. And this gives us the ability to be very opportunistic as we look at ways to grow our segmentation strategy and potentially some vertical motions as we scale.

And so really the takeaway here on the slide that I want to leave you with is that we're still in a very large, very underpenetrated serviceable market. And we have several opportunities where we can evolve this segmentation strategy so we can acquire more market share.

Alok, if you could go to the next slide. we'll just turn to our global opportunity. And so right now, we've sold products across 79 countries, despite only having, I think, sellers in beaten the street direct sellers within our organization within '26. We obviously have some partner coverage and others, but directly, we only have seller in '26. And so given that we have demand and deployments in dozens of markets where we have not yet but dedicated coverage and some of these markets, by the way, I won't call them out, but several of these markets are places where peer companies like, say, a Datadog or Palo Alto where MongoDB are doing well north of $100 million in ARR. We believe this provides us a good area to be opportunistic as we look at scaling out our capacity.

And when you look to the bottom right on the revenue mix, you'll see that 68% of all of our subscription ARR is coming from the United States with 32% coming for the rest of the world. And currently, we're seeing especially strong growth in our international markets. And so we'll continue to invest and we'll scale international opportunities at the appropriate time.

And so the way I break this map up from a go-to-market standpoint is and from a sales leader perspective is we have four key theaters with leaders that report directly to me, where we have the Americas, we have EMEA, we have APAC. And given the opportunity in some of the nuances in Japan, we have that broken out as well into its own theater.

Next slide, Alok. So this slide focuses on the first strategic priority that I talked about, our multiproduct platform, expanding data, identity as well as AI. And with the breadth of the platform, we now have multiple entry points into an account, as Bipul mentioned earlier. So data protection, we could start with cyber recovery, it could be identity and resilience. It could be SaaS and now agentic resilience. And for us in the go-to-market or this is effectively a playground for our sellers as we no longer are dependent on a single product area or a single buying center to get in the door. These solutions now span, as I mentioned, multiple different buying centers across these orgs. And so we have several plays that allow us to go identify and figure out how we can enter it into an account.

And it also means that even if a competitor is in there in the data center, we still have plenty of opportunities to be able to get into the account and grow our wallet share. And so once we've landed with an initial product in this multiproduct motion, we have three different ways to expand, and we built sales motions around each of those. You probably heard Kiran mentioned on the earnings call. But our primary unit of measure, what we index on is data. And so once we've landed an account, we'll likely see those accounts given the growing size of data within the enterprise, we'll see those accounts organically grow within the workload that we sold to. And then we can also sell to additional workloads.

So Anneka mentioned that we could sell to the Oracle databases. We could bring on VMs, we could bring on RDS if we're in the cloud as an example of data cloud services that we can protect. And so we can continue to expand workload coverage. And then the third area is we can sell additional product categories. So we could sell security products, Identity Resilience as an example to a data center customer.

And so for us, this gives us a massive opportunity to not only land but also expand, continue to expand and then get to the point where we explode. And I couldn't be more happy personally. And our partners, frankly, we couldn't be more happy with what we had announced yesterday around flex licensing.

Anneka gave you the case study, so I won't say it back again, but our largest deal in the first half are one of our largest deals, I should say, leverage Flex for agentic cyber resilience across multiple different workloads. So we think there's a big opportunity here and we think this multiproduct platform strategy gives us a real opportunity to continue to land, expand and explore with our customers.

And maybe just to illustrate this with a few statistics, this past year alone, over 75% of our customers now are using multiple different products in multiple different product categories, and even our new customers now 70% are landing with multiple product categories attached. And so this helps us also grow up our average deal size, which I mentioned earlier.

So to make this real, Alok, why don't you share two customer examples since you're in the room of what we mean by land and expand and explode.

Absolutely, Jesse. So I have two customer examples. I'll start off first with a healthcare IT provider serving over 10 million citizens. And their initial problem was very classic. They essentially had multiple different tools, a lot of complexity, ransomware exposure, and to top it all off, they had very, very high costs.

And so we landed into this account with their on-prem data center. So we essentially were protecting and securing their data for a subset of their data centers. And we consolidated five different tools on the one Rubrik platform. We simplified their operations, and we were able to show significant TCO savings, their entire ROI model completely changed.

The second very, very quickly thereafter, they went and added our DSPM software to secure their healthcare data. They were extremely afraid they were very concerned that if they have a breach that their sensitive data, their healthcare data, they're very important citizen data will get exfiltrated. And I can tell you that as soon as we were deployed very quickly, we not only showed them, but they were certainly shocked with where their sensitive data lived and who had access to it, help them remediate it. And of course, now we do it on an hourly and daily basis.

And I want to say the defining moment -- in both of these examples, I'm giving from examples where I was personally engaged along with the rest of the Rubrik team. But I want to say that after this happened, the defining moment for us was when this particular company had to go through an audit based on the NIST framework.

Not only did they pass this flying colors, the auditors had 0, and I'll repeat that the auditors had 0 remediation requirements. For a public sector company, that's the difference between operational confidence and regulatory crisis. And I want to say personally for me, this was a very, very fun moment in the account because they completely standardized on Rubrik. They essentially made the decision, we want Rubrik everywhere.

And I should keep clicking this -- so that was the DSPM, the defining moment. And what they did at this point in time was they standardized on Rubrik and displaced all of their legacy tools and put Rubrik in all of their data centers across the entire country. Big moment, huge expansion. They standardized.

They started asking questions. The next question they started asking was what happens to our active directory in an attack, who's protecting Microsoft 365 in the environment. What happens if that gets compromised. Both of those questions were answered by a single click. It was a single flip. I think Bipul mentioned, the single flip of a button and we just enable the license, they had the capabilities within hours, they were up and running.

I call that the platform in action. It's the platform effect. The customer has confidence in the technology. They have confidence in our account team. They have confidence in Giri's support and post-sales teams, and they just go and standardize and keep adding more and more software footprint.

Earlier this year, this particular customer also added Rubrik Agent Cloud to their environment. Their criteria was really very simple. They basically said, we're rolling out agents, how do we get a level of confidence that we have some control on the agentic actions, and our strategy is not just hope. And the second was, they had seen all of these the last 6, 9, 12 months' worth of agents going in, deleting a calendar, the leading a database, deleting someone's e-mail, deleting code repos. I think that's more of a recent news, at least from my memory. And so what they wanted was how do we have some level of control, some level of guardrail for agentic actions. But if an agent does something destructive, how do I go and recover and remediate.

And this particular account is not done adopting Rubrik. They're already talking to us in terms of how they can add Rubrik for their PACs data and footprint. And for those of you who are familiar with PAC, that's a ton, petabytes and petabytes worth of capacity. So they're not done yet. Big, big platform moment for us. We'll keep expanding here in this particular account.

Healthcare. I think Jesse mentioned two of our top verticals, I would say, growth from a growth perspective, healthcare, financial. The second example I'll give is in the U.S., so in the Americas, financial institution, they came to us, and this was introduced to us by one of our top partners here in the U.S.

The requirement was we have a lot of data across multiple different data centers. And this was a few years back, they essentially said, we need better ransomware protection for our core applications. I want to say this was MVD before we coined the term MVB. And so they basically said they want immutability, indelibility, air gap. And I remember asking the person who is now our champion, I asked him, I said, "Why don't you just do that with your existing solution?" He said, "We did talk to our existing vendor and they said their idea of immutability, indelibility, air gap is selling them more hardware, more software, more complexity, much higher cost, much higher cost of operations".

They did a demo with us. They did a pretty extensive proof of value with us. We won that. We landed with $300,000 with -- on the data center for a small core set of apps. Very quickly after that, they essentially said, Microsoft 365, it's a Tier 2 application for us. None of our employees can work if they cannot collaborate with each other, e-mail each other, use Teams, SharePoint, things like that. So they deployed our SaaS protection, our M365 product for 26,000-plus users.

And then I want to say at this point in time, again, similar, similar motion. They have confidence in the technology. They love our sales team. They love their partner. The partner that introduced us into this account. They have a very, very long standard trusted relationship with this particular partner, they decided at this point in time, we are going to roll out Rubrik for all of our data centers across all of the Americas, big, big massive expansion at this point in time.

And then this is where, again, I want to say that the platform effect starts to take place. As they started bringing up new applications, they started their journey towards developing applications in the cloud, moving workloads, moving data to the cloud. They essentially said, we have Rubrik everywhere else, why don't we click this button and get cloud data protection, cloud data security. How do we go and better protect our Entra ID with M365? How do we go and better protect our Okta footprint? How do we go and better protect our Active Directory on-prem footprint. And that's where they adopted cloud identity.

And then I want to say the next purchase after this was they essentially said, "Hey, we have good immutability, indelibility, air gap. We have confidence that with Rubrik, our backups are going to survive a cyberattack and a ransomware attack? But we are now afraid that we will not meet our commitments, our SLAs for cyber recovery". And this was the moment where they upgraded from what we call the Rubrik Foundation Edition to Rubrik Enterprise Edition. And this is where you get all the capabilities in terms of very quickly identifying your blast radius, your sensitive data, threat hunting, threat monitoring, what we call the preemptive recovery engine.

Preemptive recovery, the world cannot exist. You cannot wait now no longer with -- and Mythos has changed the world in the last 3 months, you can no longer wait for a process to start after an attack. You need to have the tools and capabilities that will help you find the clean state of data preemptively. And we launched this preemptive recovery engine, I want to say, 3 years back, 2, 3 years back. And so this particular customer upgraded their entire footprint from foundation addition to enterprise edition.

I want to say with this customer, we stopped being our relationship as a customer and vendor. It would became literally a 3-way partnership between the customer, this particular partner and Rubrik. And now we have very, very regular calls. Arvind joins a lot of those calls. I'm very much a part of this as well, where we are strategically thinking about how do we protect this particular financial institution? How do we go and enable them to use this as a way as a competitive advantage with their particular competition.

Jesse, back over to you.

Great. Thank you, Alok. Thank you for putting us in those moments. I felt like I was sitting side by side with you back in that deal. So in those deals, I should say. So let's hit on our second strategic priority. We'll move on here. And this is really the evolution I mentioned around our AI native selling motion. And I recognize you guys likely in the room are hearing go-to-market teams talking about AI all the time.

For Rubrik, I promise you, it's a little bit different. For us, we are like truly making the investment to try to embed and thread AI through every single touch point in our sales process and the buying journey. And so that starts from demand gen, from meeting preparation from call transcription and being able to gain insights from product feedback back to the product team, into validation around how we're doing proof of values, proof of concepts and winning the technical buyers over from how we create presentations to how we create proposals.

And then ultimately, how do we identify within our territories, the best opportunities for cross-sell and upsell to accelerate expansion opportunities? And also what is the right product at the right time, at the right moment to the right seller and the right buyer, I should say, to go land a new logo given that we have a multiproduct platform now to go land on.

And so there's a massive opportunity within AI to really help simplify things for our sellers, and we can measure this in multiple different ways. But when a seller at Rubrik walks in from day 1, we're making the investment where we give them a full AI stack. So a couple of applications that we've built in-house, a few that we bought but they also get access to Claude Cowork. They get access to Glean. Some of them get access to Claude Code even. And then we pair them with eight purpose-built skills that every single seller gets from day 1 so that they can immediately get started analyzing their territory, conducting the research they need, building out their contact list, building out their account sort of maps with our partners and then identifying the right sales plays and the right messages to go start doing outreach immediately.

And so the last thing I'll just highlight here is, for us, we also think about AI as engagement. Every seller right now is -- knows AI is changing the way that they should go-to-market, and they're looking for organizations to step up and provide them with the enablement and the development and help them continue to grow. And so one thing I think we're doing that's pretty cool that I haven't heard any other organization doing right now is we actually have our first go-to-market Hackathon the second half of this year, which I'm sponsoring.

And we already have a ton of excitement, a ton of ideas being thrown around, and it's driving great engagement with the team. So I'm really excited about this. We're still early on in this AI native journey, but we're making the investments in the right AI roles. We're making the investment in the tools. We're instrumenting, I believe, the right processes unique to Rubrik, and then we're obviously making a pretty significant investment in the training and development for the field to make sure that we get value out of this then we can then quantify it back to the business.

Next slide, Alok. And then our third strategic priority, and maybe build out the first one is just -- we had talked about distribution leverage and our reach. And we'll start with our reach, where this is an area where we made significant investments in that you may not be aware of. I don't know if we've talked about it publicly all that much. but we hired a top-tier transformation leader from Zscaler, who's built out a dedicated team, extending our reach and executive mind share within our organizations even before deals exist. And then they help us foster our ongoing CXO-level relationships and the community there.

And so practically, if you want to build it out, you can think of it as going through several reinforcing programs, starting off with the executive access and relationships, which is really our in-house C-level experiences. So you might have seen some things on LinkedIn or some advertisements ranging from some CXO collectives that we put on. We just did one in Rome. We just did one in New York City in Q1. We're doing things like global roundtables, women and technology, executive briefing programs, for example, and we're doing it uniquely to Rubrik.

And just a quick stat here, just this team alone through these programs in Q1 alone, we were able to reach over 1,800 C-level and technical decision makers. And I believe Bipul mentioned in the earnings call that he personally met with over 140 of them just in Q1 alone. I don't have the stats from last year, but I can tell you it's a meaningful increase and a big impact.

Really, the second area that they're adding value is around the business value economics team, which is helping us build CFO ready business cases around cyber resilience and helping us conduct cyber resilience assessments, which are really not product pitches per se. They're helping you understand a baseline where you sit from your cyber posture relative to some of the industry benchmarks out there. And that's typically helping us early on in the sales cycle, gain mind share higher up in the organizations. And in any given quarter, we have somewhere around 40 of these active engagements running in the field with this team.

And then the third area I'll highlight is Rubrik Zero labs, right? So Rubrik Zero Labs is our own bespoke research lab, which provides independent intelligence and credibility. And our most recent research was able to reach over 14.2 million people in the threat newsletter, which we rolled out and launched is now observing over 67,000 subscribers. So this is really connecting Rubrik with being a thought leader in the cyber resilience space and helping our customers understand what's happening broader out there in the environment.

And then lastly, they have a community programs, which ranges from our customer advocates and practitioner programs that drive peer-to-peer credibility and foster deeper relationships with our best customers and our best executives that are truly betting on Rubrik for the future.

And so this team, I'll just double down on it. They provide tremendous influence for the field, and they provide influence over our pipeline. They help us get higher in accounts. They help us gain mind share with the executives. And it's a very unique program, and it's very difficult for our competitors to go out there and copy. And so this is a key area to help us extend our reach and maybe shifting over to slide, next slide, Alok.

We'll hit on the distribution leverage part. So we talked about the third priority being distribution leverage and reach. We just covered reach and I've talked a lot about our direct strategy. Now Alok in the room who's on my team. Could you just talk a little bit about our global partner strategy, which rolls up to you and maybe highlight how we're going about it from an indirect go-to-market standpoint?

Sure. So a big part of my interact team is to create leverage for our direct sellers. And that leverage comes from our partner ecosystem that includes global systems integrators, our value-added resellers, our alliance partners as well as our MSP partners as well.

Now Rubrik has always been right from day 1, has been partner first and channel-friendly. Since I took over the global partner or GRO, a big part of my strategy has been how do we do a lot more focus. So I want to say that the first part has been identifying partners that have the ability and willingness to grow and scale with us.

The second has been how do we go and get top-down alignment from their executives. So this is alignment that they believe that cyber resilience, cyber recovery is the problem worth solving and a strategic bet worth making for their business. So that's alignment #1. And of course, importantly, alignment #2, is that they believe that Rubrik is their chosen horse based on our superior tech as well as our ability to execute.

Third really is I want to see how we go from more transactional to very intentional and meaningful strategic partnerships. And we are seeing this strategy play out where several of our partners are making cyber resilience, cyber recovery Rubrik, part of their top 5, if not their top 3 strategic bets for their business this year. We have several GSIs that are truly committing to Rubrik and have created unique solution offerings powered by Rubrik.

Just yesterday, you may have seen this, we launched Project Hourglass where we have 6 GSI partners that are creating solutions powered by Rubrik to provide agent resilience for Claude Code to their customers. With our strategic value-added resellers, we are creating very intentional growth plans. These growth plans include targets and not just bookings targets, we're going 2 levels deep. We're creating pipe gen targets, we are creating activity targets. We are creating very specific execution plans, aligning incentives, aligning investments. And I can tell you that based on our Q1 results, this cohort of partners we're seeing accelerated growth from them and with them in a short span of the last 3 to 4 months.

Talking about our MSP partners. Last year, 1 of our top 10 deals happens to be a large MSP pre-commit -- pre-buy commit that they did with us. We are seeing a trend. We're seeing more and more customers that want to consume technology as managed services and especially as some of the sovereign, sovereign cloud requirements are coming up, we believe that this area is an important growth area for us.

With our tech alliances, one of the things that I did -- one of the big changes I made was I essentially said we need to go deeper. So we've invested a lot more technical resources in this area, and we are driving a lot more deeper product integrations.

I'll give you an example. We have deep product integration with CrowdStrike. We integrated the CrowdStrike ITDR product with our Identity Resilience product. And the value that we offer to our joint customer here is they are now able to operationalize detection, correlation, along with recovery. Neither of CrowdStrike or Rubrik can solve this end-to-end workflow on our own. And so this joint product integration that we did a deep product integration. It's unique to the two of us. We have existing customers that have gone and adopted this. That is the goal here.

So I'll say in summary, the goal here really is, how do we take the strength of the Rubrik platform, our multiproduct platform and combine it with the expertise that all of these different partner ecosystems provide, and how do we compound the value that our customers get from Rubrik and from our partners.

It really is, I want to say, creating a very nice win-win-win scenario here. It's a win for our joint customers because they get a lot more value, one plus one equal to 11. It's a win for our partner ecosystem because they get another vector for growth, they can go and build a business powered by Rubrik. And it's a win for Rubrik because this particular motion is driving leverage. It's creating leverage for us as well.

Jesse, back to you.

All right. Thanks Alok. So if we hit the next slide, that covers the three strategic priorities I just wanted to highlight at the beginning of the presentation. Our multiproduct platform, our go-to-market native motion as selling motion, I should say, as well as our global partner breach as well as distribution.

In the last 3 minutes here, I'll just hit on a couple of additional growth levers that are really independent of each other. And we talked about some of them but scaling international growth markets. As you saw earlier, we're experiencing strong international growth is only 32% of our overall allocation and we believe we're just scratching the surface in some countries, and we'll look to opportunistically invest where it makes sense.

I mentioned several high-growth industry verticals that provide us an opportunity to evolve our segmentation as we continue to grow at the right time. And then we believe, even though we do very well in global public sector, it still provides us with a very large durable opportunity where we're seeing very good traction, especially in state and local, in certain federal markets, and yet we still have just low single-digit market share.

And then Alok just touched upon our multichannel distribution investment, we are just scratching the surface with some of the largest global systems integrators that are out there as well as the overall channel and our alliance partners. And of course, we'll continue to push the needle on how we go-to-market around this multi-platform, multiproduct, multi-platform as well as the AI native sales motions.

So last slide, and I'll just close with maybe why we win consistently and why we're winning at scale. And it really comes down to these five things, right?

Cyber resilience, as you've heard, has become a board level topic and the mindset of assumed breach is no longer a concession. It's now a strategy. And the answer is preemptive machine speed recovery, and Rubrik's preemptive recovery engine was built for this moment.

And we also delivered this, as we've talked a lot about through a true platform that manages your enterprise cloud, unstructured data, SaaS identity. Customers are not looking for cyber resilience to be a set of point solutions that they have to stitch together in their worst moment. And then, of course, the multiproduct platform offering that we talked a lot about where customers are able to get started and grow over time in the platform sort of land, expand and explode.

And then from a go-to-market standpoint, I joke with the team that I'm confident that we could actually switch products with our competition, and we could still beat them because of our playbooks, because of the talent we hired and a relentless go-to-market sales culture, which starts with Bipul and permeates the entire organization. But then I promised Anneka we won't actually switch products with the competition, and we'll just go beat them with our products and our go to market, but we think we have a real advantage there.

And then underpinning all of this, of course, is we have an unwavering focus on serving our customers, and that shows up in our NPS, which is well above 80, as well as our industry-leading net retention at 120.

So with that, we took a little bit more than 20 minutes, but I hope it was valuable and hopefully, I get the opportunity to meet you all the next time that we get together. But thank you for the time.

Thank you. Okay. We are just going to take a handful of questions this time. And then after that, we're going to take a very quick break for lunch. Grab your lunch, come back and we will get started on the panel.

So I think to start, we'll wait for the microphone, but Brad, you can go first. Thank you.

And actually, if you don't mind, let's get the team up.

Brad Zelnick, Deutsche Bank. And congrats on a great conference. I could think of no better reason to be out here in over 100 degrees in Las Vegas, Nevada.

I think listening to the keynote yesterday, listening to you today, the message of the platform, appreciating how every layer builds on the others to unlock value of each other to meet this moment is very intuitive and really, for us, at least relative to others out there, resonates very, very well.

I wanted to talk about Annapurna. And Bipul, I know you subscribe to maximal thinking and you're thinking very long term. And we've been talking about Annapurna for a couple of years now. And I don't ask this to be critical that it's taking so long, but more to better understand, what goes into it? Because it would seem that for the company you're building decades to come, as you say, this -- and in an era where code is becoming more and more of a commodity, help us understand why is it so difficult and why it will serve as a long-term durable competitive moat for Rubrik.

So about 2 years ago, what occurred to us was we have all of the enterprise data plus metadata plus security and user context. And everybody for AI is looking for it. So why can't we make this data available to the enterprise users so that they can actually take advantage of the actual Rubrik data and use this as one of the data infrastructure platforms.

And to make this thing easier to adopt, we also built in like a vector search so that we can actually supply vector embeddings directly out of Rubrik. And the benefit that we realized of such a platform was we reflect the production permissions because we have to restore the production permission. Every other platform that extracts data from production, whether it's data warehousing or lake, have to repermission because they don't have the production permission natively captured. So we said that this is an amazing data plus metadata plus security model built into our platform. So let's make this available to our customers.

When we started to having conversation with our customers, what we realized was that most of the folks who are actually doing AI-related work in the IT departments used to be a SQL programmers or SQL data collectors. And they are comfortable with the SQL language, but they are not like developers that are actually programming to a new set of APIs. And we didn't have their mind share because they were SQL users.

So we kept discovering and talking to them to figure out how do we make this data available and for them to use. And more and more, we realize that there is a certain set of platforms where they are standardizing on because of the SQL nature.

And then the other realization we had was that our unstructured data engine, which actually powers the Rubrik unstructured data platform, has a unique capability to classify and categorize data natively as bit map in the system. And we can take that classification categorization as a catalog and populate, for example, Databricks Unity Catalog so that they don't have to load the data before they can analyze and figure out what data they want to use as part of their AI work.

And there is no dependency on the SQL language and programmability because the mind share is on Databricks not directly on Rubrik. So it was a great way for us to discover this particular part of the market where the needs were highest. There was no economical solution. So it solves for both speed of AI. Because you are quickly getting the metadata and getting started and then you can get the data. And then economics as well because loading all the data and classifying data is very expensive before you figure out you want only 10% or 20% of that data, for example, x-rays or videos or what have you.

And so this is part of the market discovery process. And that's why every time we introduce new products, I'm always saying that we have to find product-market fit. Because our job is to not push the ball uphill all the time. Our job is to find out how our customers will get maximum value from our platform. And how do we find that use case that unlock it? And we are still early, but we feel like unstructured data gives that opportunity to help solve mission-critical AI problem in a very unique way.

Fatima Boolani from Citi. Jesse, I'll direct this question to you. You were very particular in your commentary about how surgical you are and have been with respect to deploying AI and AI capabilities in the sales process and sales enablement. I was hoping you could give us some feedback or quantitative data points around the outputs you've seen from those investments, right?

So anything related to rep tenure, rep ramp time, speed to expansion. Anything additional you can share as it relates to how a lot of these investments that you're going to continue to make are manifesting in productivity gains? And what the implications are for how you think about overall go-to-market capacity?

Of course, great question. I would love to talk about that. So look, as I mentioned, we're still in the beginning of the journey, but one of the things we did when we first started was try to identify what are the core skills, what are the core use cases that every AE needs, basically look at what does our best sellers do? And then how do we go kind of replicate them and expand those skills across the field. And what are the areas that if we could do that really well, we could impact.

And so you just hit on a couple of them, right? We believe ramp times could potentially come down. I don't want to put a figure on it. But roughly, let's call it somewhere in the 40% to 60% range is our ramping to our ramp sellers. If we can shorten that time to ramp, it's going to show up meaningfully in our productivity and our ability to deliver more.

I think the second area that we're seeing some early traction on is AEs being able to work more deals. And so we call it deal throughput, but instead of maybe only being able to work on four opportunities in a given quarter, can we actually expand that. And that gives us the opportunity to scale faster.

And then the third area, and we actually rolled this out and we're seeing early traction is if you think about what a seller does before they even step into the first meeting? We built a product platform. It's not even deployed as a scale. We actually built our own platform, we call it [ Kobi ]. And that's really helping do what was taking reps mainly 2 to 3 days per account. And we've condensed it down where they can get very surgical research and a very surgical point of view that they can then go engage with the channel or in a partner community, that they can then go take into their first meeting to show up with a perspective on where Rubrik can help that particular customer.

And so it's basically aggregating a bunch of information and then giving them the ability to create messaging off of it and create targeted persona-based messaging, I should say, and then be able to pull together their point of view. So that we're showing up and we're differentiating ourselves against other sellers that just show up with a generic pitch. So those are some of the areas. I think the last area I'll just highlight is, people talk about it oftentimes as an efficiency or productivity lever.

It's also a revenue lever where if we get this right, and we're in the process of building some things right now, we think it gives us a tremendous opportunity to go drive our cross-sell and our upsell motions across that platform. By helping our sellers be able to land the right product, the right expansion play. We've got five or six sales motions I mentioned in sales place, be able to land that at the right time to the right person. And if we get that right, we'll be able to start stacking those S curves that people talked about earlier, even better.

Does that answer your question?

If I may add -- just add one piece to that. So specifically on the sales engineering side. We actually deployed a tool to help with RFPs. As you can imagine, sales engineers spend a lot of time answering RFPs. And some of these RFPs can go tens of pages.

So just imagine, you have hundreds of SEs with different levels of tenure, different levels of English language. Imagine being able to feed all of your previously filled RFPs into a GenAI tool. And now you feed a new RFP and within second and minutes, this tool is giving you answers. It's taking into account all the information that we have. We also worked with, recently, because sometimes the answer to a particular question might be no, from 8 years back, but we just released something a few days back. And so we have all of that capability built in.

So two things that are happening here. One is, of course, efficiency gains. So particular SE and now multiply this with hundreds of SEs, efficiency gains where they're able to go and respond to RFPs much faster versus going and looking at a lot of different sources of data. But the second is also the quality of responses has gone up as well. So just giving you one particular use case that I want to say, one of our initial use cases on the sales engineering side. But then -- so both Jesse and myself, many of us are very passionate about this area. Thanks for asking that question.

Okay. Well, thank you for the questions, and thank you, team. We're going to have additional Q&A time at the end of the day. But at this point, we'll wrap it up here for the first half. We're going to take a quick 5-minute break to grab lunch. And then please come back. We'll do a working lunch and we have a great customer panel with our CMO, John Koo, and then we'll go into the partner panel with Alok. So 10 minutes, we'll be back here. Thank you. And for the webcast, we'll be offline until about 1:00 p.m. Pacific. Thank you.

[Break]

Thank you, everyone. Hopefully, you got some lunch. Welcome back, everyone take a seat. Right now, we're going to kick it off with an awesome customer panel, and I will pass it over to John Koo, our Chief Marketing Officer.

Thank you, Melissa. It's great to be here. Thank you all for coming to Investor Day. I've got a distinguished panel of folks that have experience with Rubrik customers. I'd like to allow them to introduce themselves. So Saeed, why don't you kick us off?

I'm Saeed. I'm the Chief Information Security Officer for a company called symplr. They focus on health care technology.

I'm T.J. Bondarenka, I head up the global IT infrastructure and operations team at Wesco.

Nick Rose. I'm with Genesis Energy, and I am the VP of Information Technology.

We haven't had lunch yet.

You only get that after you perform. Kidding.

Let's actually get a little bit of background information from you guys. I think the audience would love to know how you got started with Rubrik? What kind of made you initially start to rethink your data security strategy and how that relationship has developed over time? Saeed, would you like to kick this off?

Sure. So as I said, symplr focuses on healthcare technology. We sell our own platform. We have 50 SaaS applications used by 9 out of 10 hospitals in the U.S., heavily regulated, we get audited by customers all the time. And if we go down, it will be changed healthcare on steroid. So for us to make sure that we are protecting our data, and/or having access to our data in case of a breach is critical. And was critical in our initiative to engage Rubrik.

We started with Rubrik backup on-prem. And that relationship evolved to, including Rubrik Cloud, Identity resiliency, M365, DSPM and enterprise security.

Yes. So our journey slightly different. If you rewind about 6 years ago, our company went through one of the largest acquisitions that we've ever done. Overnight, it effectively doubled the size of our organization. And as a result, we had to do a tech stack rationalization. And I'd say, historically, we kind of considered backup and recovery as more of a means to keep our operational systems running. But really, we had to start to think a little bit differently as a larger company about cyber resiliency as a strategy. And so when we were evaluating our backup and recovery technologies, there were some pretty vast differences in terms of the approach that was taken by the various vendors to how that data protection occurred and then what that enabled us to be able to do in terms of building out our cyber resilience program. And so when we did that evaluation, we felt like Rubrik had the best set of capabilities. And so that's where we started rationalizing our tech stack and using it in our environment across the Board and then we slowly...

All right. Let's keep it going. My mission is to continue to increase the monetizable products on the Rubrik platform. That's my mission. And it's also to mitigate the risk of the innovator's dilemma.

Quick introduction. My name is Mike Tornincasa, I'm the Chief Business Officer. I joined this company. I joined Bipul and Arvind 12 years ago in the first year, 6 months before the first product was released and I've worn a bunch of hats since I've been here. First AE, first sales leader. I led the transition from backup and recovery to Cyber Resilience. And the role that I have now is probably my most favorite and the most fun.

I'm continually launching the new products. I'm doing perpetual 0 to 1 or 0 to maybe $100 million. And it's really fun. I really enjoy it. There's a lot of entrepreneurial energy still in the company from when I joined to paint the picture for you. Couple of bean bags, 2,000 employees and a ping-pong table. That energy lives on within Rubrik, and I think that's how we continue to stay on the edge of what's next. So I have 2 missions for this next 15 minutes. I want to introduce you to the team that I lead, the lateral team as Bipul calls it, we call it Rubrik X. And I'll speak specifically to one of our current missions, which is the Identity mission. And then I'll introduce Dev Rishi, our GM of AI, to speak directly to Rubrik Agent Cloud.

We have a bunch of irons in the fire within my group, but obviously, those are 2 that are very exciting, and I think that you'll be interested to learn more details about. So let's get right into it.

Most companies that scale die because they're successful. They focus on the product that they have, they scale it, they optimize for it. They extract as much revenue from it, but they miss the adjacent opportunities or the next wave of innovation that ends up unraveling them. We built Rubrik X specifically to solve for that. So within Rubrik, we have a structural advantage in that we have 2 teams. We have a core team on the go-to-market side led by Jesse and Alok that drive and scale the mature products. And then we have a lateral team that stacks the S curves. I lead that lateral team.

It's a structural solution to the innovator's dilemma, and it's working. This team by design is small. It's a small entrepreneurial team with a ton of tenure, and that ton of tenure gives us trust and ability to execute within the organization. We also have the ability to experiment and find product market fit. The way that we do it, you may be interested to know is that we put together a pod at the beginning with a point of view, representation from product, from engineering and from go-to-market, and we bring it to our customers. We define on the front end, a power curve, a bookings trajectory. We have an idea at the beginning of what the potential of this product is, and we hold this team accountable to that outcome. So this is a focused team that's executing with performance orientation outside of our core.

If I had to sum it up, they define the win recipe. They show the path to the rest of the organization of the opportunity, and then we integrate it directly into the core team to scale or create a product-led sales organization that has their own quota that takes that product to scale. And it's not by accident that we've been commercially successful with more than 6 new products over the last 10 years. It's a recognition that there is a recipe. It involves the right set of capabilities out of the gate, a vision and road map that aligns to where the market is going, 1 or 2 steps ahead of our customers, and the GTM tactics that allow us to win. Every time that we've done this, we had to face a new buyer, a new set of competitors, a new set of objections, and we had to figure it out.

So you can imagine when I joined, nobody knows who Rubrik is, we have this Whizbang data center backup thing. We're knocking on a bunch of doors, shaking a bunch of trees. We have success. Then the cloud is now where workloads are running. It's no longer test and dev. Production applications are running in the cloud. Rubrik's opportunity is support our capabilities to the cloud. But our sellers don't know cloud people. They don't know what they want. They don't know what their priorities are. So we had to focus on this specifically. And it took us a couple of years to figure it out, but we did. We crossed the $100 million in just under 5 years with the cloud product line.

We did the same thing with SaaS. Microsoft 365 was becoming a critical workload. You heard that from some folks. And we did this faster. It only gears across $100 million. And I know these 2 products today are, I think, $400 million of Rubrik's total ARR. So it's not just $0 to $100 million. It's $0 to $100 million, get the flywheel going, hand it to the core and the core scales. We did it again with the enterprise applications for data security. We had a couple of product ideas that would hand tie recovery. We put those into a bundle. We crossed $100 million in 2.5 years. This product line in and of itself is north of $400 million for the company today, total ARR. Maybe most exciting is Identity. Most exciting because it's outside of that core data vector and it's a whole another vector. We've successfully transitioned into the CISO's budget. We have our hand in the CISO's cooking jar. And in just over 4 quarters, we crossed $50 million in ARR.

As a company, over the last 5 years, we've been growing at 50% CAGR. The products that come through Rubrik X have been growing at 100% CAGR. And today, the products that have come through Rubrik X are more than 40% of the company's ARR. I don't know of another company that at this scale has been able to organically stay on the leading edge of innovation, let alone build a brand-new product from scratch for a brand-new budgeted line item with Identity.

So there's 2 missions that define what Rubrik X is building next, Identity and AI. I want to dive into Identity with some detail, and then I'll introduce Dev to take AI. Identity is the #1 attack vector. Yes, you guys have heard this a bunch of times. What does that mean. 90% of organizations have had an attack on identity or via Identity in the last 12 months. More than 50% in the last 24 months have had active directory compromised. There's a huge opportunity here. We have $10 billion as the TAM. That's a bottoms-up number based solely on human identities. You guys are probably well aware, there's an explosion of nonhuman identities, service accounts, agents. We didn't put that into the calculation.

And we think that there's a category here to define that is not dissimilar to the category that we already defined. We have Data Resilience, Cyber Resilience, why not Identity Resilience. And what could identity resilience mean? Well, if it follows the same format, it's easy for our sellers to -- first to prevent and it's easier for our buyers to consume. And for us on data, first was recovery because if you can't recover, you're not in business and then we build left into posture, what things can I do, some of the panelists were just saying to be proactive. The same concept applies to Identity, and so we're building the Identity Resilience solution. Fully complementary, network effect, will be illustrated in the forthcoming slides, but also can land by itself as a lower friction door opener for our sales team, where maybe the customer is not ready to replace us in the data center or in the cloud.

Let me speak to the problem statement here. The modern attacker has figured something out. Locking data causes more damage than stealing it. Yes, theft is bad, breach is bad. But if you can't run your business operations, it's not just painful, it's existential. We've been recovering data and applications for the last decade. We do it fast, we do it clean, we are trusted by our customers. What's new is the identity providers being compromised. And even if we can quickly and cleanly restore data and applications, if the users can't authenticate for those applications, it's for nothing.

This is the challenge. If you look at these elongated recovery times from these cyber attacks, the identity provider recovery is measured in days and weeks itself. It was a logical extension for us to focus on this because we were on the front of recovering our customers' data. And we were seeing that, that was useless if they couldn't get to the application. So we built a solution for them. This is the identity resilience solution that we built. We combined identity and data now in one platform, and have complete cyber resilience messaging to our CIOs and CISOs that is resonating exceedingly well.

So if you put that all together, this is the reason why this product is growing so quickly. It's a message that our core team can articulate, that our buyer inherently understands. It feels very natural as part of the same platform. And it's a familiar playbook for us. We start with recovery, we add posture and we get results. Last year, a customer of ours that's classified as critical infrastructure, suffered a cyber attack by a nation state that compromised their active directory environment. Rubrik was able to recover their IDP in 3 hours and 24 minutes. Microsoft's own best practices, which is more than 100 steps, frequently requiring handholding from their consultants is measured in days and weeks. This is the type of impact of this problem of this product.

And the problem is very painful, acute, well understood and easily funded directly from the CISO's budget. So we see an opportunity here and we're doubling down. Transitioning from recovery to resilience is what we're doing right now. Roll forward we announced yesterday, quickly on this, very exciting to me personally and to the market. This is the idea that you might have an adversary in your environment, masquerading as a trusted employee, you want to evict them, but you don't know how. Rubrik can tell you who they are, where they are, rebuild Active Directory from before they got there, play all the sanction changes back so you don't lose the data that happened before they arrive to that day. Nothing in the market like this.

The customers that we've messaged is too are super excited about it. It will only be available with the resilience SKU, which is an uplift SKU. CrowdStrike is super excited about it. They don't have an answer for their customers, tons of upside in this. And I want to just mention the partnership and complementary nature of the CrowdStrike relationship, the Microsoft relationship and Okta. Okta is one of the trusted IDPs, and we built capability for them.

Stacking S services. I think guiding that we've been able to do it over and over again with cloud and SaaS and security and now Identity. Even within Identity, you start to see how these opportunities compound. We're stacking S curves even within this one product line. Case in point. 2017, we launched our first Active Directory solution. Very basic, we included it with the core product, but we seeded the market with it. We got close to customers and we learned. Last year, we launched the Active Directory force recovery product, which automated the restoration of complex environments, and we charged for it and customers willingly paid.

And now this year, we've launched the resilience product, which brings the posture in hardening capability and the roll forward capability to market and we see a very large opportunity. But here's what we didn't expect. Identity is making our entire platform stronger. A couple of stats. Last quarter, 52% of new M365 logos included the Identity product, nearly doubling our ASP. 40% of all M365 deals included the Identity uplift. And those deals had a higher win rate, 8% higher over deals that didn't include Identity. Every mission that this team has taken on had a different buyer, different set of competitors, different objections. We figured it out each time. Identity is just a latest example. AI is next on the conveyor belt. No one better to tell you why we work for AI than our GM of AI, Dev Rishi.

Thanks, Mike, for the introduction and setting the bar high. My name is Dev Rishi. I was one of the cofounders and CEO of Predibase. Now I work as GM for AI. I started the company in 2021, that was all about being a leading-edge AI infrastructure provider. Predibase was the core backbone that really, I think, deployed production small language models for a number of our trusted customers, pointing everywhere from smaller tech forward, digital natives to larger enterprises as well. What we really had as our core competency was an AI infrastructure platform that was optimized for organizations, tuning models on their data and being able to deploy them efficiently and at high scale.

We joined forces with Rubrik via an acquisition at the end of last summer. And the key motivation was to be able to take our core platform that was literally accelerating AI. We helped the organizations get faster model than they would have been able to otherwise. With Rubrik's core assets in data and identity to be able to secure and accelerate the world's AI transformation. Now when you join forces with a new company as a founder, you actually sort of underwrite what your own impression is of what the parent company's mission is. And as I think about Rubrik, I really like the slide that Bipul actually had a chance to be able to share earlier, which is that Rubrik is a company that's helped organizations to be able to navigate and enterprises navigate different waves of transformation.

Started with the automation transformation as we're making a shift from tape to actually something a little bit more digital. And the digital transformation obviously led into the rise of cloud, where we decided to launch the Rubrik Security Cloud to be able to target cyber as the #1 use case that organizations needed to be able to be protected against from a risk standpoint. I think coming up now, we feel convicted that the next enterprise transformation with is in AI, and that AI potentially is operating at a speed that was faster than the other transformations, but also has a large amount of headroom in terms of the productivity gains that we anticipate.

But each of the different transformations has brought in its own amplification of risk, digital with cyber. And with the AI transformation, the risks that we see is with AI and AI agents, which we really define as models that get access to your internal IT infrastructure and have the potential to be able to do an order of magnitude more damage at 1/10th of the time. It's no surprise that I think as organizations are actually thinking about their AI transformation, the #1 blocker that we've seen towards their ability to deploy production AI is that they have a governance guardrails and compliance solutions in place.

At Predibase, we had focused on a number of different solution vectors. We have focused on latency, cost, but as soon as I joined forces with Rubrik, one of the things that I did was I spoke to over 200 customers in my first 5 months. And the most consistent theme was models are getting quite good. The agent harnesses are actually not that bad themselves either. We had a lot of orchestration frameworks, everybody is trying to sell me a platform to make it easy to build agents. But the hard unsolved problem is actually how do I manage the risk around what my agentic deployments can do. And its unsurprising, I think that this is the case.

From our first hand experience, building and deploying agents at Rubrik, I think we've realized that conventional security stack wasn't really built to be able to secure and govern agents. You heard in the panel earlier that agents are sprawled across platform. I have agents turning on my endpoint. I have agents running in the cloud, managed platforms inside of SaaS applications and others. In my opinion, agents tend to be over privileged by default, and they operate on LLMs that are nondeterministic. And finally, they can access and do work at super human speed. So we now have a real compounding of variables where I'm giving a model that's based on something probabilistic rather than deterministic, access to my core IT production infrastructure because I need it to drive results, but it can actually operate outside of the guardrails that I might have set up and it operates at superhuman speed.

I think it's no surprise then that we see a number of these instances make headlines, whether it's coding agents that go rogue and delete production databases or e-mail servers, or the number of [ sudden ] outages we've seen from leading hyperscalers all the way down to hallucinated refund policies. I think it becomes very difficult for an organization to feel comfortable in truly unlocking AI for their company today.

So what do organizations find themselves needing to be able to choose between? I find that most enterprises we speak to are in a few different modes. The first is, well, we'll do security through blocking. I know that my AI agent will never leak sensitive data from Salesforce or leak source code because I've never given an access to Salesforce or my GitHub. Ultimately, I think that this is a relatively secure mechanism, but it's going to kill the ROI of AI because agents need access to your internal enterprise infrastructure in order to be able to drive the productivity gains we're all looking to underwrite.

So the second thing that an organization is trying to do, we try and write static rules. So we try and write a number of if then conditions to be able to try and guardrail what an agent may or may not be able to do. I spoke with one large leader of a financial services company in New York, who mentioned that their current solution towards agentic security and governance was a 1000-person offshore team writing rules around every type of scenario that may go wrong.

In our experience, you cannot secure and govern dynamic AI agents with static rules. At best, they capture a very small percentage of the scenarios, and agents are notoriously good at circumventing these rules. And the final thing that I think people often times find some level of comfort in is going human in the loop in the process. Human in the loop allows us to be able to exercise some semantic judgment. I can understand the intent of what the AI agent is doing. And I can finally make a judgment on whether or not going allow or deny that action.

But the issue with human in the loop is it's not 24/7 or scalable. So agents are operating at machine speed, the way that we actually secure and govern those agents have to operate at machine speed as well. These sets of challenges, I think have led to the fact that most prices that I speak to are currently and actively looking for solutions today. Very few feel like their existing stack have them covered as they start to roll out more dynamic agents, whether that's something like Copilot Studio or Claude Code or Codex. What we see is that organizations tell us that they're interested in a comprehensive agent platform that can provide them the key tenants that they need in order to feel comfortable that they're unleashing AI and not in undue amount of risk.

So earlier this year, we launched the Rubrik Agent Cloud. And the Rubrik Agent Cloud is our platform to help organizations securely deploy AI agents at scale and feel comfortable to be able to integrate into the existing IT infrastructure they need to get the ROI that their boards are demanding. There's 3 key tenants towards the Rubrik Agent Cloud. The first thing that every organization needs is continuous monitoring and observability. You need to plug in to the agent runtimes where they exist and be able to scan that environment to show you what agents are out there, what kind of access do those agents have and what's the risk profile for those agents.

But I often describe monitoring and observability as this base layer of the cake. It's something that is decent to get started, it's a prerequisite that it's not necessarily sufficient for what you want when it comes to risk controls.

So the next thing that we think about is dynamic runtime security with our own AI to secure and govern AI approach that we call SAGE. I'm going to dig into this in just a minute. But really, the core intuition that we found was that in order to be able to secure and govern AI, we needed to use models and small language models specifically ourselves, to be able to introspect every prompt, response and tool call an agent might be making and ensure that it adheres to the organization's policies. So monitoring will give you the observability. SAGE will give you the runtime controls you need in order to make sure agents are staying on their guardrails.

And then finally, Rubrik has always had a mentality of assumed breach, which is to say that eventually, something will go wrong, and we need to make sure that the business is resilient when this happens. In the AI world, we think about Agent Rewind as the core feature that enables AI Resilience. The ability to undo a disruptive action an agent can take by tying our observability with our core understanding of data protection and backup snapshots. And say, if an agent did take a destructive action, we can take the observed action and find the exact healthy snapshot that exists and allow you to do an easy orchestrated recovery from that source.

These core sets of capabilities around monitoring security with SAGE and the ability to rewind those actions have been really instrumental in seeing Rubrik Agent Cloud's initial release and the success that we've been able to see internally. I think there's 2 things that really set Rubrik Agent Cloud apart from the other solutions that have started to make their way into the market. One of them is the ability to do Agent Rewind, and second is our own agent for agentic security that we call SAGE.

I mentioned SAGE earlier, and we think about SAGE as a semantic AI governance engine. What SAGE really does is it acts almost like the air traffic controller over all of your agentic traffic. It hooks into your existing agent run times, whether that's a Claude Code session or Microsoft Copilot Studio agent and starts to introspect every prompt, every response, every tool call that those agents and AI systems are making. And then we run our own proprietary small language model judge over those instances to be able to adjudicate whether or not to allow or deny given action.

SAGE comes with its own AI security research built out of the box based on our experience doing cyber at Rubrik. And it's enriched with the data and identity context that Rubrik has for each of our enterprise customers. When I talk about data and identity context, what I'm thinking about is when it comes to data, where does sensitive data live inside of my organization. When it comes towards identity, who should have access towards these different styles of data? And what are they going to do compromise when I might be thinking about?

Ultimately, our view is that the organization that does the best job of securing and governing AI will use AI themselves. And the companies that build the best AI will have the best infrastructure to be able to deploy those models and the best context to being able to feed into those models. And the concept we feed in is existing data and identity context inside of the organization as well as the organization's own policies that they can define and customize directly from their own call documents or through a natural language interface to customize SAGE to what they need inside of their company.

SAGE is built and deployed on top of the Predibase platform, which is instrumental because we need to be able to do this type of judgment at a very low latency and high accuracy way. So what we have found with SAGE is that we can actually deploy our own custom runtime guardrails at a faster, lower latency and maintain higher accuracy than a number of the leading frontier models that we tested and evaluated.

That small language model infrastructure, coupled with our context that we understand for the data and identity inside of an organization helps to reinforce this is a onetime security solution. And our customers have already seen this become valuable first party. The Rubrik Agent Cloud is our newest products and offering, where we've started to see some great success from the number of the customers we've deployed to, including, for example, a European health care IT provider that needed to be able to start to enable their AI initiatives, which involves building agents inside Microsoft Copilot and also Copilot Studio, but has to have the protections for sensitive data and enforce compliance guardrails that they had as a regulated industry inside of EMEA.

They viewed and acquired [ RAK ] as a solution because it was essentially their AI enabler. They could not go to production without a solution like a Rubrik Agent Cloud in place to make sure all their agent interactions were secured and governed. And we're actually fortunate to have a lot of first-party data on this ourselves, where we've become a relatively large Claude Code shop. You saw the Anthropic CISO on stage yesterday as well. And we have seen Rubrik Agent Cloud be instrumental in securing and governing our own rollout of this technology. As a first party user of Claude Code myself, I've got to tell you the technology is incredible and quite scary in terms of what it can do.

And what we've been able to do with Rubrik Agent Cloud is deployed and protect over 1,000 developers, multiple trillions of tokens processed in just a handful of months and enforce that runtime to ensure everything from disruptive actions, to data filtration, to circumventing of guardrails can be protected and prevented through the Rubrik Agent Cloud. And this has given us confidence that every organization that is starting to actually adopt the higher agency agents like these are going to need a solution like ours in order to be able to mitigate the downside risk.

We've been pleased with the initial momentum that we've seen since we went to you at the end of February. And most of our customers think about us as a solution that helps them get from a proof of concept that is heavily sandboxed in one environment and low risk to natural production deployment of AI. And because I'm a product person, what I'd love to be able to do is actually to spend a few minutes showing you what the product can look like in action and how it looks to be able to secure and govern deployments like Claude Code for our customers.

So this is the Rubrik Agent Cloud interface. As soon as I go in, I'll log in. And the first thing that we see inside of the dashboard is we automatically scan the different environments where agents might be deployed, whether that's endpoints in the cloud or in managed platforms and start to populate an agent inventory that shows you where are the alerts, where are the violations and where the highest risk agents that I might see inside of my organization. One of the things our customers told us is that they don't always know all the instances that they need to investigate. So we also prioritize insights about what kind of vulnerabilities they might have, like this instance where Claude Code deleted a repository on GitHub.

I can click in to invest and insight further. And once I do so, the Rubrik Agent Cloud actually populates and will be called an agent map. This is a list of Claude Code but also all of the different applications and tools that it has access to like GitHub, my File System and NPM. It can even highlight to me where the specific problematic action happens. So in this specific example, I have a developer who is running Claude Code and we thought that what ended up happening was there was a disruptive tool and a shell command. I can dig in and get a full audit trail of what this agent was actually doing up to the point that this action was taken.

So what I saw on this instance was Claude Code was trying to commit a credential file, leak some credentials internally, but that was stopped by one of our onetime guardrails. But then it moves to the clean up stuff and decided to do a GH repo delete, which essentially actually deletes the entire repository inside of my code base. These are the kind of validated permissions that are actually not uncommon for coding agents to have because they use the delegated identities of the underlying user and developer.

I can introspect and understand what was the command that was actually written here. I can see the tractability of the steps that led to this. But when I see a destructive command like this, my immediate intuition is I want to do 2 things. The first is, I want the ability to hit control Z. I want to undo this action as quickly as possible and bring back the production system. And the second thing I want to be able to do is I want to make sure something like this never happens again. The Rubrik Agent Cloud can help with though.

So the first thing I did was I hit Rewind. And with Rewind, we automatically come up with a recommended Rewind plan, which will show you where to restore these actual assets from using your previous healthy snapshot and backup and our AI agent observability. You can always edit the Rewind plan, if you want. But in many cases, we actually find that the Rewind plan automatically generated tons of the right level of intelligence, and you can execute it then directly in one click.

So my Rewind was successfully completed, and that means my repository is now back online, the full commit history is there, but I want to make sure this doesn't happen again. So Rubrik can also recommend a runtime policy to block all coding agents from running destructive shell command like GitHub. This is an AI-generated policy that I can actually click and review, and we'll show you what this policy directly does. We'll show you the scope, what the goals and instructions are and key definitions. And if I want, I can even see and ask for it to show me reference examples where this policy would trigger or not.

I can edit this behavior, if I like. I can see things like if the developer is running something like get reset hard, which is more disruptive force command, then that would be a violation. But if I was just checking the status, that's totally fine and safe. I can review key definitions and this is something customers love. They can actually edit the way that our runtime policy enforcements are going to work directly in natural language. They can provide their own context into the system about what they want to be able to enforce. And when I click save, I can publish my policy in either a monitor mode, which will give me an alert for a violation anytime that it's actually triggered, or I can run it also directly in a blocking mode, where we give policies actual teeth to be able to stop the type of disruptive actions at runtime.

So this is my instance of Claude Code. When I use Claude Code, for example, I might start typing in something like archive to old experimental repo because I want to be able to do a cleanup step. And so this is the type of thing where I was a little ambiguous in my intent. Claude might start to go in and decide what it needs to do is to delete a repository. But because I just configured that onetime active guardrail, it's actually blocked here by the Rubrik Agent Cloud. We have the runtime hook to be able to secure and govern agents like Claude Code directly inside of their interfaces. We not only tell you what was the reason that we've locked it, we can tell you the policy of the severity and give you the ability to edit more in the future as well.

So that's the Rubrik Agent Cloud really in a nutshell. The way we think about it is the lack of governance guardrail compliance and risk is the #1 blocker towards enterprise AI adoption today. In order to be able to actually securely and govern AI agents, you need to be able to use AI and small language models at one time yourself. And that the organization that are going to build the best version of these models will have a combination of performance, small model infrastructure and the best-in-class context to be able to drive it. And so I've been really happy at the progress that I think our team and our organization has made in the deployment of Rubrik Agent Cloud. I'm very excited to be able to see where this goes next as we help organizations secure their AI transformation. Thank you very much, everyone.

Okay. Great. Well, thank you, Dev. Thank you, everyone. We're going to take a 5-minute break, and then we'll go into Kiran's section and then we'll do Q&A. So let's return at 1:45 Pacific, and we will finish up. Thank you, guys.

[Break]

So good afternoon, everybody. Nice job making it this far. This is the last session, and then we'll take a few minutes for Q&A. Thank you for your patience. I know we're running a few minutes late, but we should be done in the next 15 to 20 minutes with this session and then maybe a little bit Q&A to wrap up, and some of us will stick around to take further questions off-line as well.

Thank you for the investment in time and making the trip here for those in person, and hello everybody online as well. I think I know most folks in the room and several people online, but by way of introduction, Kiran Choudary, CFO at Rubrik, been at the company for almost 8 years. And hopefully the sessions you had in the morning for the last 3, 3.5 hours have been very helpful in understanding our opportunity, thinking about through our go-to-market and product strategy, our overall TAM.

And I'll spend a few minutes here giving a financial update. But really, my goal is to connect what you heard in the morning thus far to the financial model and trying to relate it as drivers for both durable growth as well as improving profitability towards our long-term model. So I'll cover 4 areas. The first, we look back over the past few years, including us as a public company to talk through our track record of execution. Second, as you have heard, we operate in 3 large markets: data, identity and AI, and we are innovating relentlessly in it. And the end result of this is multiple product categories at scale, and I'll share some data and context around that.

Next, we have a true multiproduct platform. And when you combine it with our unique GTM approach, you heard about the forward motion with the core team as well as from Mike about the lateral motion with Rubrik X. And together, they create a flywheel, which really results in rapid customer acquisition and growth, and I'll give you some data around that as well to give you some context.

Finally, I'll wrap it up here with a little deeper look at the P&L. We are coming towards the end of a very successful cloud transformation, and I want you to understand and explain to you a few trends around that and then really talk a little bit about margin drivers and long-term margin.

So with that, we reported our ninth quarter as a public company last week, Q1 fiscal '27, which finished end of April, and these are the metrics we shared. Just as a reminder, we crossed $1.5 billion in subscription ARR, which is our core top line metric, growing well at scale over 30%.

We continue to benefit from what we believe is best-in-class net new ARR of 120%, almost 3,000 customers at scale, which we define as $100,000 plus and strong gross margins as well as cash flow.

If you look back in time or a few years, and I've known many of you all from before the -- we went public and including the time we were public, we have grown well at scale. And we got through $1 billion at strong growth rate, now $1.5 billion at over 30%, and our guidance will imply strong growth ahead.

At the same time, we have improved operating leverage in the business as well. It's not growth at all costs. If you look at this chart here, which shows subscription ARR contribution margin, which is a good metric to understand our operating leverage as we go through the cloud transformation. We have made significant improvements over the years, turning positive in the year of the IPO and then continue to improve. And our guidance, the last column will indicate that we have further improvement this year.

And last but not the least, in terms of cash flow, again, if you look back at the history from where we started reporting these numbers, significant progress over the years, turning cash flow positive the year we went public and then guiding this year to almost $300 million in cash flow. Hopefully, our 9 quarters as a public company and looking at our results -- you've seen that we have grown consistently at scale, improved profitability and raised guidance in each of the 9 quarters. And hopefully, that's built trust and you see a management team which can deliver.

Moving on to the next topic I have is you heard about earlier today, the 3 large markets we operate in. It's not just sufficient being in large markets. You have to do more than that to build successful businesses in these. You have to allocate capital thoughtfully across these markets, have a rigorous prioritization process and then if you have to relentlessly execute both in terms of R&D as well as go-to-market to build meaningful businesses there. And that's just what we have done.

So going back in time, just to give you a little product history for Rubrik. We started the business in -- really became operational in 2014, and we started in the enterprise products area. That's where the market was at that time. We quickly progressed to cloud and SaaS products and then built a whole suite of data security applications around it, which really became our data pillar.

Next, we realized the importance of identity information and the importance of connecting data with identity and that really resulted in creating an identity business, which was the second pillar. And then more recently, we have made a foray into the AI market with Agentic Cyber Resilience. And together, these 3 markets you heard today are over $125 billion combined and growing nicely. And our strong execution, capital allocation in these markets has resulted in really the creation of multiple product businesses at scale. So out here in this chart, you can see how we have split up the $1.5 billion roughly in scale we delivered in the last reported quarter.

Obviously, our history, we started an enterprise products, that's our largest business, $650 million plus. Then we launched cloud, SaaS products. That's $250 million and $150 million, respectively. Our data security applications, which sits on top of our enterprise cloud and SaaS products is $400 million plus. And then identity, our business, which we started about a year or so back is $50 million plus as we reported in Q1. And then AI is obviously in a much earlier stage.

But when you look at it, you see a very diversified business. And these are just product categories. We have multiple products within these each. In enterprise, for example, you can second VMware, SQL Server, Oracle and others. In cloud, it's the big 3 clouds and more recently, Oracle as well. And then SaaS, M365, Jira and Salesforce.

So each of these product categories have a lot of depth within them as well. And then each of these product categories are now at scale. Now this is looking back at the business we have built over the last 12 years, really 10 years of selling. But if you look at the product mix, as of the most recently reported quarter and you break it up by net new ARR, 80% of our net new ARR is approximately outside the enterprise products area, which is really the data security applications, cloud, SaaS and identity, just to give you a sense of the most recent mix.

Moving on now. I talked about markets, talked about innovation and our product businesses, but let's touch upon customer adoption. What you have seen over the day, hopefully, is a true product platform, which when you combine with the GTM machine we have, which is very unique in terms of how do we preserve innovation with Rubrik X and the core sales team to scale, you come up with really a very unique land-and-expand flywheel model in this market.

Bipul touched upon this, so I won't go into detail, but it starts with one of the different product areas you can start out with and data naturally grows. You add more workloads, you add more applications, security, AI identity, and this flywheel continues. But what this really drives is a very attractive best-in-class 120% net NRR rate, which is really strong for a company which really says subscription software and not really a consumption model.

What has that resulted in? It leads to rapid customer acquisition at scale. You can see at $100,000-plus ARR customer count, which we report quarterly. It's grown about a 40% CAGR over the years, and it's almost 3,000 as of Q1. But we are still early. We are only in 40% or so of the Fortune 500, a little over 1/4 of the Global 2000. There's a lot of opportunity to sell into these accounts with the product portfolio we have, plus gain new accounts. And we are increasingly working with our partners as well as leveraging our direct sales team to open these accounts.

Next, Jesse talked quite a bit about the diversity of our business. What we do truly matters, but also it's very broadly applicable our platform. Any business or government entity or institution, which has data of any significance can be a Rubrik customer. Hence, you see this mix of diversity by industry. We talked about a few of them earlier. Financials is big for us, so is energy, health care and a few others. And we have verticalized in some of these areas, which -- because they have -- they require specific product capabilities, compliance as well as go-to-market motions, and we'll continue to verticalize where necessary to drive further growth in these areas.

Next, international has done really well for us, but still early. If you look at some of the bigger scale cybersecurity companies, close to half their business in international. So a lot of room to grow for us there. Let me talk a little bit about product adoption. You heard earlier, I shared with you a few product stats, the different product categories we have at scale.

But let's talk about how customers are adopting these products. If you go back in time, fiscal '21, about 5 years back in this data set, about 2/3 of our customers start with Rubrik at that time in one product category. Many of them were in enterprise, probably some cloud as well as SaaS. And the rest, the smaller 1/3 was multiple products.

Let's progress forward to our last fiscal year, which we finished about 5 months back. And you can see based on the bar chart on the right, over 3/4 of our business is multiproduct in terms of adoption, multiproduct category, just to make that clear, because each of these categories have multiple applications and products. And close to half have 3 or more product categories and over 20% has 4 or more product categories.

So there's quite a bit of evolution over the past 5 years in terms of the depth of product, the breadth of the platform, which has been acquired by our customers successfully. And this is for existing customers, but even in new customers, if you look at this stat, 70% plus of our new customers are landing in 2 or more product categories. And what this is doing is increasing the ASPs that land.

I think we had shared this stat with you at the time of the IPO. But right now, if you look at it as of this most recent quarter, the land ASP has more than doubled in about 8 quarters or so. So we are landing bigger. We're also acquiring more customers. Ultimately, all of these trends have resulted in growing our customers successfully with us. So we're literally raising the bar for customers to be a top Rubrik, top X customer. If you look at the bar chart on the left, that's the top 50 cohort. 5 years back to be in that cohort, you had to be at $340,000 in spend.

Today, it has $2.5 million plus in ARR, almost 8x growth. And similarly, you see growth in the 250 and 500 as well, 8 to 9x bigger. And this is the result of building a true product platform and having a very differentiated go-to-market motion. Hopefully, the last 2 sections have provided you with your sense of our overall market opportunity product strategy and the innovation we are doing on the customer journey front as well.

We are a true multiproduct platform in 3 large markets and our GTM approach with the combination of the core sales team, the forward motion as well as Rubrik X, which is a lateral motion is very unique in supporting this growth for years to come. With that background, let me now look to wrap up here. We'll go into the last topic I wanted to cover, which is a deeper look at the P&L. And I'll start out to give you an update on where we are in the cloud transformation, which we started a few years back.

So if you'll recall, especially folks who have known us for some time, about 3 years back, we made a very strategic decision at that time, it was 5 years in the making, but we launched Rubrik Security Cloud, which really provided our customers with true data portability. It basically moved the brains of Rubrik into the cloud, and what we call Rubrik Security Cloud, it allows you to secure data wherever it sits within enterprises, in your private data centers, could be in SaaS applications or could be in native cloud applications, all could be managed centrally from the cloud.

At that time, with the launch of the SaaS product, we felt the right metric to start running the business by was subscription ARR because it didn't have the impact which revenue would have from the transformation to cloud. So as you know, ARR has grown nicely at scale, but so has cloud ARR. If you look at the second and third group of bars, you see the cloud ARR scale growing. And as a percentage of the subscription ARR mix, we've grown from about 60% plus to almost 90% as the most recent quarter.

If you had asked us at the time of the IPO, I think we had shared a good long-term goal for us was to get to 80% cloud because we felt there was a meaningful business. There'd be customers which are more regulated would be more resistant to move to the cloud, but we've been surprised by the uptick in this product. And I believe we have a decent shot to get to 90% or so in the next 4 to 6 quarters, which is where it might taper off. And then we'll have a nice sized business, which is non-cloud focused on regulated industries and folks who want to kind of self-host.

Now one of the questions which I got on the call last week was around cloud net new ARR. If you just calculate the cloud net new ARR as reported by our metrics, you'll see a deceleration trend. This is what you see on the left. But that's largely because the migrations are completing because the year ago period had more migrations. So we went ahead and we shared some data on the call as well, but this bar chart should clarify things for you is we looked at cloud net new ARR without the impact of migrations, which is a much cleaner way to look at it.

And you can see here the cloud net new growth rates are continue to be very strong. Another important P&L item, which has impact from the cloud transformation is revenue. Revenue has grown at scale, but the growth rates have bounced around depending on the time of the cloud transformation. Early in the cloud transformation, revenue growth lagged subscription ARR. And towards the end of last year, it was ahead of the subscription ARR growth rates.

As we wrap up this year, and the last bar is the guidance we provided last week, the revenue growth will show about 25%. But if you normalize for the cloud transformation, particularly material rise, that's about 30% and the guided ARR was 27%. So these are all converging. And going into next year, you'll see a greater alignment between subscription ARR and total revenue as reported because we are really wrapping up the cloud transformation.

Moving on to margins. We have improved our gross margins pretty significantly over the years. We exited the commodity hardware business. We have relentlessly managed the support costs as well as cloud hosting costs. And we are actually right now above our long-term margin target of 75% to 80%. Now I will remind you that we got some benefit from material rights through last year, which has also contributed to our gross margins. But even if you remove that, we are above 80% today.

One thing going forward to think through, and I'll touch upon this on the long-term model as well. We are still early in our AI journey in terms of how our products are going to get adopted, optimization around tokens. We are still figuring out our pricing model as the adoption of our AI products grow. So I think from a -- that's one area where product mix is going to drive the margins over time, how much cloud, how much AI in the years to come.

Let me move to operating margins. Now because we went through a cloud transformation in the past 3 years, we have focused on a nontraditional metric, subscription ARR contribution margin as a proxy to operating margin because revenue was still going through a transformation in our P&L. And this is a good proxy or leading indicator for operating margin over time. And you can see here, we have grown subscription ARR margin pretty significantly over the years. But operating margin, despite the revenue transformation has also improved. And if you look at the guidance for this year for subscription ARR margin and make some assumptions, it will imply around breakeven for this year in terms of operating margin, even if you remove the impact of material rights. And that's a milestone for us. It's really an inflection point.

And one thing we'll do as we wrap up this year and going into next year, we'll likely retire subscription contribution margin as a metric and start to guide an operating margin as that will be a more relevant indicator and more traditional than what you have seen as well. But there are a number of drivers here to talk through about what could improve and grow operating margin over time. And you heard some of that earlier today, but I'll mention and reiterate them again. We continue to source talent with a high bar globally. Close to half our engineering talent is India, and they're best-in-class, as good or better in some cases than talent we had in the United States, depending on the area.

We similarly a lot of our operation folks as well we hire globally and try to optimize both talent as well as the cost leverage around it. We've talked about quite a bit earlier in earnings calls as well, but renewals is growing as a percent of business, and it's a much more efficient cost structure. And that leads to as well more natural efficiency, if you will, in our P&L.

Our international business, we had to make significant investments over the years, and we'll continue to do so. But having set up the foundation, it will scale more efficiently going forward, and that should give us leverage as well. We have been early adopters of AI in different parts of the company. We obviously build AI products, but we're also using AI aggressively in different areas of the company, starting with engineering and technical teams, but also in support and other operational teams.

As you heard Jesse talk a little bit about what they are trying in the go-to-market motions, not just in efficiency, but also how to drive growth. And that should give us leverage. Obviously, that requires an investment in the earlier period, but we are optimistic that over time, it will provide us more efficiency.

And last but not the least, we made investments to get public as a company. We've been public for a little over 2 years now, and those investments don't need to be at the same level going forward and G&A become more efficient as well. So all of these combined should give us more leverage on operating margin over time.

Next, let me touch upon cash flow. Three things drive free cash flow in our business: scale, operating leverage and billings duration. As you can know, we are growing fast. Business is becoming bigger every quarter. So scale is increasing. Just talked to you about operating leverage improving year-over-year. And those should help drive cash flow greater.

The one area I think I've talked about in the past as well, which creates some headwinds to us in terms of cash flow is the billings mix. As we sell more cloud and SaaS products and AI products, they tend to be of shorter billing durations. So that is something we'll have to overcome. But despite that, we are growing cash flow dollars year-over-year. And you can see that our guidance implied $300 million for this year.

We take profitability very seriously. We're obviously very focused on growth and we will not compromise, but we do that in a very sensible fashion in terms of investments. I'll give you a little bit of history of the past few years. That was how our P&L looked the year before we went public. Obviously, margins were pretty negative. This was one question which was raised as we went public as well. People liked our growth, but it was a little unclear in terms of the path to profit and how quickly we'll get there.

I'll just build out the slide here. And then you look at the next 2 columns, fiscal '21, we went public. We turned profitable on the subscription ARR contribution margin as well as free cash flow margins, the year we went public, 1 year or more ahead of schedule. And then this year last -- this past year, fiscal '27 -- '26, we exceeded our gross margin targets from a long-term perspective. And as I said earlier, our guidance for subscription contribution margin will imply breakeven, breakeven plus for operating margin this year. So we have worked hard to build your trust here, but we are focused on making investments in a very disciplined manner without compromising on growth.

I'll wrap up here with a look at our long-term model. The last update for this we had given at the time we went public a couple of years back. I'll start out with gross margin on the top. Our previous outlook was 75% to 80% a couple of years back. But given where we are, if you look at the left 2 columns, we have progressed past that. We do want to give ourselves some room there. That's why the range is a little broader, 77% to 82%.

And really, the goal will be to be 80% and above, but it's still early in terms of the AI product adoption. So we're going to learn more both in terms of the cost structure, the pace of adoption and our pricing models as well in the next couple of years. So that's why we wanted to give ourselves more room. We're going to lean into -- continue to lean into R&D pretty significantly. You saw the market opportunity, you saw our product footprint, the platform. We're going to do it as efficiently as possible, but we will invest and lean into R&D.

Our go-to-market motion is very human-driven. And obviously, we will use AI to optimize that in the coming years. But the ASPs are higher, the product is complex. It gives a lot of benefits to our customers over time. It's very sticky, but it does require human interactions to sell the value. And that will be in the mid-30s area.

And then G&A, as I said earlier, a lot of room to optimize there now that we have been public for a couple of years. The initial investment is done, and that will be in the 7% to 8% area. All of this leads to 20% plus operating margins and cash flow 25% plus. As I talked about, our billings duration will continue to compress a bit, and that will create some headwinds to cash flow, but we're confident we'll get past the 25% cash flow margin.

Last but not the least, now that we are on the cusp of operating profitability on a non-GAAP basis, I think the next question will be how are we looking towards GAAP profitability. The key difference, obviously, is stock-based compensation. That's the big portion, which bridges GAAP to non-GAAP operating margin. And we are focused on bringing dilution down to the low single digits. Obviously, we're going to balance hiring and retaining a great talent given what we are building. But at the same time, we'll be good stewards of investor capital, and we will work on bringing our dilution down to the low single digits. And that will help us bring SBC as a percent of revenue down, ultimately leading to GAAP profitability.

So I'll wrap up here. Just a reminder of the topics we covered. Hopefully, we have a proven track record of execution as the time we have known you, obviously, since a public company as well, and we appreciate your trust in us. We have a lot of levers for growth, as you've heard today. In 3 large growing markets, we have a true multiproduct flywheel along with our unique go-to-market approach. And then we'll continue to be disciplined and allocate capital appropriately and thoughtfully across our different product pillars and go-to-market to drive durable growth and improving profitability over the years. Thank you.

Thank you. We'll start here in the front. Saket?

Saket Kalia at Barclays. Thanks to the team for hosting this session. Super educational all around. Since we just reported earnings last week, maybe we could just start with a financial question here for you, Kiran. I think the identity business has been super successful, right? We talked about that a little bit earlier. Clearly, the fastest-growing S-curve. But on the other side of that, we got a couple of questions just about net new ARR, subscription net new ARR, not just the total subscription net new ARR. If you exclude identity, let's call that kind of core cyber resilience net new.

And what it felt like in Q1 was that maybe that core net new ARR growth slowed a little bit compared to prior quarters. I was wondering if, Kiran, maybe if you can just touch on that and whether that's the way that we should be thinking about this going forward? Does it make sense?

Yes. Thanks, Saket, and good to see you here in person. Thanks for making the trip. So yes, if you do some rough calculations and estimates on what Identity was this quarter, we didn't break it out specifically. You will see that without that, the growth rate would be slower. But as a reminder, we don't run the business with a quarterly net new ARR number. We run it on an annual basis. That's what we plan towards. That's what we invest towards.

And quarters can be lumpy because it's an ARR-based model, and you could have transactions which could influence it. We also had a very strong Q1 last year and as well, the compares could be tougher. But the product mix growth will vary quarter-to-quarter. We have a lot of different products to sell, depending on the timing of transactions, how much the pipeline is developed. Certain transactions could close in a quarter and certain product businesses could be bigger in terms of net ARR. We should really look at it on an annual basis.

Eric Heath with KeyBanc. Maybe one for Kiran, one for Bipul and the broader team here. But Kiran, I saw that the TAM that you guys had up on one of the earlier slides in the day had a 20% CAGR on the TAM opportunity. So curious to hear how you as a team are thinking about the long-term growth opportunity for the business relative to that TAM.

And then Bipul and team, one thing I thought was really interesting and a significant value add for customers is the idea of the Agentic Cyber Resilience opportunity. As these AI attacks become faster, you need to recover faster. And the Agentic opportunity just seems like it's a home run in terms of the value proposition. So curious how you're thinking about the monetization of that Agentic capabilities.

Thanks, Eric. So I'll start with we are investing towards the TAM. So I think capital is one of the most important parts of my job along the rest of the management team. But it's great to be in a position where we have multiple investment opportunity as the question of prioritizing and then executing towards it, whether or not having those opportunities.

So every year when we start our annual planning process we look at a three-year view, obviously the world is changing pretty significantly, but we are primarily investing really in the product portfolio and then the go to market. So we invest across our core products, but more importantly in our emerging products. And then in terms of capacity in the field, both in the core team as well as Rubrik X team and one is making those investments, but -- and we have to execute towards it, but how can we deliver things faster. That's a big focus been over the past year and this year as well. Can we get products out in the market faster with the use of AI? Can we enable reps faster, make them more successful, reduce the ramp time? You heard that from Jesse as well faster because that is ultimately what's going to drive faster growth and more durable growth.

Regarding Agentic Cyber Resilience opportunities, we definitely see both Rubrik as an agent to respond to AI attacks as well as you heard about agent cloud solutions around guardrails and rewind. Definitely, I mean, we feel that there's a tremendous opportunity in front of us.

In terms of monetization and how this pricing packaging will work, we are still working through it. One of the things that Mike and Dave has done as the Rubrik Agent Cloud, we are actually packaging as something that is indexed under token consumption. That's what we are kind of working through.

So our idea is that we want to always match how customers pay for our solution based on what they do on their core application or core AI and so that it makes it easier for them to understand. So if you're paying in one way for their actual agent, how do we actually Agentic Resilience is priced that is indexed on that. So there is a lot of discovery that is still in front of us. Obviously, we plan to continue to innovate, invest in innovation, and we need to monetize it.

Joe Gallo from Jefferies. This has been a great day. I want to talk through the Agentic sales motion. The product pitch and why data should win is very logical, but you're also selling to a team at the customer, who has historically leaned on other cybersecurity vendors historically. So how do you break through that? Does that add complexity to the sales process? And then what does that competitive landscape even look like? I imagine it's the Wild West today.

I'll start, and then I'll let Dev embellish. It's definitely an exciting time. It does feel like the Wild West. Over the last decade or so, Rubrik has developed a brand that is highly trusted first within the IT organization as we escalate up to relevancy with the CIO and lately on the back of cyber resilience and identity with the CISO.

The bulk of the conversations now, specifically around coding agents, the prolific agent of the day, we find ourselves interacting with VPs of engineering and CTO. That's a very different persona as you've observed. But I think the fact that we have a reputation that is strong with IT and security, and we're bringing a message to market that is both around acceleration and risk mitigation, we're having a very warm reception. Dev, anything that you would add?

The only thing that I would add is on the competitive landscape, we did try and understand what the other solutions look like in the market because we were rolling out agents ourselves last year in a heavier way. And there were -- I think while things in the monitoring and observability space do have more presence, I think the 2 places that we stand apart are #1, in the way that we do runtime security and governance, where we think about that being differentiated is just taking an AI-driven approach for which you need SLM infrastructure through the Predibase acquisition.

And then we also think that a company that builds the best model-driven approach will have the best context. We think we have the richest data and identity context for that. And that's like one core capability that I think we see ourselves kind of stand more unique on. And the second is the ability to do agent rewind and provide resilience message after an agent destructive action as well.

This is Shrenik Kothari from Baird. So Bipul, you have framed the platform as really complementary kind of network effects driven, which each additional product is adding to the value of the platform. And I mean, the team talked about S-curves ramping and now you can stack them on top of each other.

So just in light of all the initiatives around, of course, you have the Agentic Cloud, the Flex program, some of the product [ DLA ], like how should we think about the upside durability of the NRR, right, which, of course, you are best-in-class, but you have this sort of S-curve stacking and compounding. And then just broadly, new versus expansion mix, how to think about that going forward? Because it looks like there's much broader penetration that's available for both new and penetration?

I'll let Kiran answer some of the more quantitative way. But I'll say qualitatively, at our scale and as we are growing, NRR may not be the right representation because we are landing bigger and bigger deals because in the 4, 5 years ago, as you saw the customer adoption, customer will give us a very small part of their footprint because we were still newer in their environment and will grow quickly into the other workloads. Now we are landing larger and larger deals, which impacts the expansion opportunities in those accounts.

So what we are focused on is how do we transform our customers with multiple products to start with. And that's what is driving higher average deal size. If you look at 70% of our customers landing more than 2 products, these are all indicators of how Rubrik is maturing and as any large scale mature companies, dynamics would evolve over time. Anything to add?

Yes, I'll just add that if you look at the components of the NRR, we continue to have a very strong gross retention rate, and that's very stable, has been for many years. And that's really the foundation for NRR. And on top of that, if you look at all the 3 vectors you've talked about in the past, whether it's data growth, workload growth -- organic data growth, workload growth or the additional applications we sell on that, security identity and now AI as well.

They are all healthy levers for growth, but we are also not a consumption based pricing model per se. We have a little bit of it. It's more a subscription oriented. And if you look at that in that context, close to 120 is pretty high there, unlike consumption models where it can spike up and down. We have much more stability there.

At the same time, we have a lot of room to grow and new. You heard about it today, we have more that 50% of the Fortune 500 left, 75% of the Global 2000 plus a lot of more product to sell at land time as well. So the lands are becoming bigger and that will have a actual tension on the NRR. So we obviously want to do both, and there will be a tension of each other, but ultimately the goal is to keep growing.

Matt Martino from Goldman Sachs. Bipul, I wanted to zoom out for a moment. If you look at Methos, the model basically proved that the window between finding a vulnerability and exploiting it has collapsed dramatically, and it doesn't seem like any patching cycle can really keep up with that. So what I'm trying to understand is what does that do to Rubrik's role? Does resilience start moving up the security budget, less the insurance policy you buy last, more of the first platform decisions that CISO makes? And does that increasingly put you in the conversation alongside some of these traditional infrastructure security platforms as opposed to more downstream of them?

If you look at Gartner's most recent advisory to the customers, they say that cyber resiliency is a must and customers would explore preemptive technology for patching and recovery. So if you think about it, obviously, if you have a house, you have to close the windows and doors and set an alarm, but that's basic. But that's not your strategy. That's basic.

My contention is that in the age of mythos and AI frontier models, cyber's resilience is the only cybersecurity strategy. Everything else is basic. And what does cyber resiliency mean in a broader context? Ability to patch without human in the loop, if it is a known issue and ability to recover at AI speed. And you cannot recover at AI speed if you don't have preemptive processes. And that's what Rubrik's preemptive recovery engine comes in because we are doing the work in peace time to be able to recover at AI speed and what time.

And this is where the world is going. At the end of the day, the security used to be incidental things outside of operations and recovery used to be the same thing. But if attacks are going to be continuous because there is no detection and there is no prevention, then the recovery has to be continuous. So at any time in your process, you should be able to recover at machine speed, AI speed and keep going. So our belief is that cyber resilience is going to be not incidental, but fundamental to your operations. And this is the only cybersecurity strategy that has any meaning in the world in the age of Mythos.

Thank you, guys. Question for Mike and Kiran. So first of all, great first Analyst Day. Congratulations. I really learned a lot. So thank you for that. So the question for you guys is, you talked about, obviously, AI transforming the pace at which you develop products. You've got a product suite you're selling between AI, data and identity. You also have new ways to go to market, accelerate your go-to-market. When you put those 3 things together, and there is effectively infinite white space ahead of you, make the case for why your growth should be in the 20s. Because it seems to me if you do some basic math on this, there's no reason for your overall business revenue scale to accelerate. So that's the first question I have. Like why do we think there's deceleration in the model? So that's the first question.

Second question is, Kiran, I saw your last slide on long-term margins. I'm going to challenge you on this because that seems to be the last generation software company, right? 80% margins, [ pop up ], 25% free cash flow margins. If you, as Bipul just said a few minutes ago, you drink your own champagne in the company, you're agent defying your entire business model, paint the case for why Rubrik is not the case study for what the long-term unit economics of an agentic software company looks like, which probably results in north of 35% free cash flow margins. Those are the 2 questions for you guys.

Yes. Let me start with the second one, and then Mike and I can do the first one. So the way we look at long-term margins is it's not forever, right? I think about it as maybe 3 to 5 years out. We are definitely very much in investment mode towards driving that durable growth. We have multiple levers for investments, multiple areas we want to invest in, right? It's still very early in the AI age around gross margins. A lot of companies are figuring it out, right, model cost, token costs.

I think right now, it's a badge of honor to use tokens, but quickly, it is like what are you producing with the tokens, right? And our pricing models also evolve. So we are trying to be prudent there, give ourselves more room there for the range you see in the gross margin. And definitely, over the next few years, we want to invest pretty significantly in R&D.

The product we sell is complex, as you see, right? The depth of the product, the value has to be sold today very much in humans. It's not a consumer application, you put it out there and you'll just start scaling, right? You don't have that kind of transaction sizes the reach in the Fortune 500. Our customers selling $10 million plus unless you build the product depth or the [indiscernible] we have build and that requires human based selling.

So that is why will require the sales and marketing expense, which we have outlined as well. And we have 2 teams, so the taller team is the Rubrik RX team. It still requires kind of some overlay there. so we are trying to be prudent there, giving ourselves some room, but yes, I think there could be upside obviously in the years beyond that.

What was first question on this?

Do you want to start it, I miss the key piece of it.

I think it was about growth re-acceleration.

[indiscernible]

We should be growing fast here?

I mean our goal is, if you hear Bipul and Mike talk about it, right? But it also requires the art of stacking curves, which we have done in the past, and we'll have to do it at scale. So that's obviously the challenge and opportunity for us. Again, I'll remind you that we are not a traditional consumption model that some quarter, things just spike up. We're much more of a subscription SaaS business. So that will require it is more steady, but it requires -- it will -- you won't see growth accelerating or [ deals ] accelerating. You will see it more stable. But yes, that's the opportunity and challenge for us is could we accelerate growth given the product footprint we have.

Okay. We're going to take one last question.

I'm happy to donate that question. Okay. Fatima Boolani from Citi. Kiran, the question is for you. It's a little bit of a riff on the prior question. The Flex model, very interesting. I think many of us in the room have a lot of experience with companies going down this path. Just so you can make yourselves that much easier to do business with.

So that's great. But how should we think about what you've contemplated in Flex adoption in your guidance? So how does that change the complexion of revenue, the complexion of billings? ARR probably is accepted, but does RPO become a more important metric? And is there an element of ramped accounting mechanics that we should consider again, just so we are sort of well positioned to think about how this might create some volatility in numbers, but then also the way you're thinking about forecasting and guidance.

And just as an adjunct to that question, is this motion going to exclusively be for new customers? Or is this something you're going to start to talk to with some of your most enthusiastic existing customers who would naturally be predisposed to spending more with anyway?

Yes. No, great question. It's -- we're very excited about it. I think this is the model which other cybersecurity companies and software companies have successfully launched. But it is still early days. I did want to caveat that. We've done a couple of transactions, including the one which Jesse mentioned earlier, which is a large international transaction we had in Q1. But we have some assumptions for it in the guidance that's already assumed.

But we believe it will be a ramp. It will start out being pretty measured. It's almost the second half now through the year, and we can provide you a little bit more update as we head into next year. We do think it can become more significant over time. But at least for this year, we think it will be more selective in terms of the types of transactions, types of customers who may be -- we have a minimum size as well for customers to avail that. So we'll grow into that. I think the way you should think about the -- from an ARR perspective, it will be seen as TCV by the term length, and that's how both ARR and revenue will work.

Okay. Well, with that, I'd like to wrap up everything up, and thank you so much for spending the day with us, and we'll be around for a little bit for additional questions. Thank you.

Thank you, everybody.

Hello, everyone. Thank you for joining us, and welcome to the Rubrik First Quarter Fiscal Year 2027 Results Conference Call. [Operator Instructions]

I will now hand the conference over to Melissa Franchi, Vice President of Investor Relations. Please go ahead.

Hello, everyone. Welcome to Rubik's first quarter fiscal year 2027 financial results conference call. On the call with me today are Bipul Sinha, CEO, Chairman and Co-Founder of Rubrik, and Kiran Choudary, Chief Financial Officer. Our earnings press release was issued today after the market closed and may be downloaded from the Investor Relations page at www.ir.rubrik.com. Also on this page, you'll be able to find a slide deck with financial highlights that, along with our earnings release includes a reconciliation of GAAP to non-GAAP financial results. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP.

During this call, we will make forward-looking statements, including statements regarding our financial outlook for the second quarter and full fiscal year 2027, our expectations regarding market trends, our market position, opportunities, including with respect to generative and agentic AI, growth strategy, product initiatives and expectations regarding those initiatives and our go-to-market motion. These statements are based on what we believe today, and actual results may differ materially. These forward-looking statements are subject to risks and other factors that could affect our performance and financial results, which we discuss in detail in our filings with the SEC. Rubrik assumes no obligation to update any forward-looking statements we may make on today's call.

With that, I'll hand the call over to Bipul.

Thank you, Melissa, and thank you all for joining us today. We are off to a strong start to fiscal 2027 with a record Q1. I'm proud to announce that we have once again exceeded all guided metrics across top line and profitability. Here are the five key numbers. First, subscription ARR reached $1.57 billion, growing 32% year-over-year. Second, our subscription revenue was $374 million, growing 41% year-over-year. Third, our subscription NRR remained strong at approximately 120%. Fourth, customers with $100,000 or more in subscription ARR reached 2,946 growing 24% year-over-year. And finally, on profitability, we once again made material improvement in subscription ARR contribution margin, up over 500 basis points year-over-year. We generated $74 million in free cash flow this quarter.

Let me start with a few observations. We are now in a new era of cybersecurity. Today, AI agents are attacking us. These autonomous agents can intrude, breach and encrypt at machine speed. Mythos was a powerful breakup call for the cybersecurity industry. but it is already something of the past. Better faster model versions are already in development. Mythos has proven that attack detection is near impossible and cyber resilience is now the most fundamental cybersecurity requirement for the AI era. In fact, Mythos is driving more customer conversations around cyber resilience and recovery. And that is one of the reasons why we have raised our top line guidance for the rest of the year. And at the same time, AI agents are increasingly running business processes. Workflows that assume identities, access sensitive data and take autonomous action. Once compromised, these agents can potentially inflict 10x more damage in 1/10 of the time.

As you can see, both threat actors and business operators are now agent. This is not about instilling fear. This is about helping institutions be better prepared and putting every effort in staying ahead of the new cyber risk that could dramatically affect their operations. As I mentioned before, in this new cyber reality, prevention and detection are no longer enough. What you will need in addition is preemptive risk assessment, real-time guardrail and machine speed system remediation. In short, agentic cyber resilience. Rubik has led in cyber resilience for year delivering machine speed cyber recovery for thousands of businesses around the world. That work helped us build for AI agents and have full awareness that technology leaps like metros were on their way. While this may seem grim, we believe Rubik is and will continue to be the answer to helping institutions stay ahead.

Along these lines, Rubrik recently joined Anthropic's Project Glasswing and received early access to the Claude Mythos research review. Putting the new model to work directly to ensure we can serve our customers better when cyber, which has inevitably happened. This partnership aligns to our vision of agentic cyber resilience defending a world where AI agents are both the cyber attackers as well as the business executor. It is clear that cyber residence is now the most fundamental cybersecurity strategy for the agent era.

Let me talk about why our products are transformative. We are a multiproduct company built on a unique and differentiated platform that solves the most consequential problems across data, identity and AI. On top of this platform, we deliver two solution suites. Rubrik Security Cloud for cyber resilience and Rubrik Agent Cloud for trusted accelerated AI transformation.

Let me start with Rubik Security Cloud or RSC. Our platform has the unique ability to bring together time series data and metadata across complex enterprise environment, spanning on-premises, sovereign, cloud, SaaS and identity providers. We believe our depth and breadth of enterprise context is unmatched by other solutions in the marketplace. This architectural advantage allows us to deliver our proprietary preemptive recovery engine, which continuously precalculate clean points of recovery across data and identity before an attack occurs. The preemptive recovery engine is the backbone of Rubrik agenetic cyber resilience. Our RSC platform orchestrates resilience continuously and proactively, not reactively post breach. This is how we deliver record fast recovery when our customers have breached or agents get compromised. And this is why we continue to grow while the competition has installed.

There are many examples I can talk about, but let me just share two specific customer examples of legacy replacement in very large enterprises. First, a large U.K. public sector organization chose Rubrik this quarter to fully displace a decade-long legacy incumbent across on-premises, cloud, NAS and identical workloads. Outcompeting several legacy and new gen vendors, Rubrik was recognized for delivering comprehensive cyber resilience across every workload. With Rubrik, this customer can consolidate a fragmented environment of 400-plus legacy backup policies into a single unified platform. Second, a Global 2000 insurer chose Rubrik this quarter to displace a legacy incumbent and native cloud backup across their full enterprise footprint, including on-premises and cloud workloads. Rubrik was selected for our single pane of glass across all key workloads and for our ability to deliver demonstrable cyber readiness, unmatched by incumbent and competitive alternatives.

The cyber resilience market is consolidating around platforms, not point solutions. When CIOs and CSOs rationalize their vendor portfolios, Rubrik win because we deliver complete cyber resilience across on-premises, sovereign, cloud, SaaS and identity in a single unified architecture. This is because Rubrik is built on the principle of complementary network effects. What that means is every new product we build makes every other product on the platform more powerful. So when a customer adopts Rubrik, they are not just buying a solution, they are stepping into an ecosystem. For example, when a Rubrik data protection customer adopts Rubrik's identity resilience product, they not only achieve cyber resilience across data and identity but also gain a complete understanding of the blast radius and characteristics of a cyber attack across data and identity through the Rubrik platform. This is the additional platform value. Customers do not simply use Rubrik. They rely on it to deliver resilient minimal vial business. And the more they use it, the more indispensable it becomes. That is the value creation that endures.

Now let's talk about our Identity business. Our identity solutions continue to gain momentum as the rise in identity-based attacks has increased the need to protect both data and identity simultaneously. Identity continues to be highly successful in garnering budget from CISOs, extending Rubrik beyond our traditional CIO and CTO buying personas. We have been rapidly disrupting the identity protection market with our identity recovery and resilience products. In fact, our Identity business grew 38% in sequentially quarter-over-quarter to reach over 50 million in subscription ARR in Q1.

Let me give you a representative identity win. A large U.S. agricultural organization and existing Rubrik customers expanded into identity resilience this quarter. They added Entra ID and Okta protection after a ransom attack on their active directory environment. That attack created significant operational downtime and financial loss, while also exposing critical cyber resilience gaps. The customer chose Rubrik's identity resilience as the cornerstone of their identity modernization initiative.

Now let's talk about how Rubrik accelerates trusted AI transformation with Rubrik Agent Cloud. As we have said before, while agents promise 100x more productivity, they also introduce 100x more risk, agents breaking existing controls agents strict into leaking confidential information, agents deleting entire code bases, these kinds of events are becoming more common. If agents assume your identity, access your sensitive data and take real-world action who governs them. It's clear that while AI gives you a better, faster car, you need an intelligent autonomous driving system for control to steer, change lanes and break safely.

We believe enterprises need a comprehensive AI operations platform that can dynamically monitor, control and remediate agentic actions. You need to have visibility into what agents sanctioned or unsanctioned exist in your environment and what they are doing. You also need real-time guardrails to dynamically authorized agenetic interactions that comply with your company's policies and industry regulation. If agent get compromised or hallucinate then you need a rewind button to undue destructive actions. That is why we designed the Rubrik Agent Cloud, the comprehensive AI operations platform. This is the intelligent autonomous driving system that we provide so customers can safely drive fast with AI agents.

Our Predibase acquisition, which developed a LLM fine-tuning and inference serving platform provides the AI firepower required to dynamically govern agentic interactions. This technology underpins our Symantec AI governance engine, or SAGE, which is the industry's first AI governance engine purpose built to guardrail, autonomous agents in real time. By leveraging AI to control agentic work, agents can't leak sensitive data, can't say the wrong thing and can't take the wrong action. AI controlling AI agents is key. We believe that understanding intent is critical to controlling problastic agents at scale. In just one quarter of selling, we are already seeing early POCs convert to production deployments. The next example is a critical evidence of the customer interest in this product. A U.S. financial services firm and existing Rubrik customer committed to Rubric agent cloud this quarter.

Moving from AI experimentation to full production deployment across AWS Bedrock and Microsoft CoPilot. The customer chose RAG for its unified visibility and monitoring of AI agents across all platforms, policy-based guardrail controls and ability to remind and remediate agent actions, which they identified as the essential capability for scaling AI safely in a regulated environment.

In closing, I'll leave you with three takeaways. First, Rubrik is winning the cyber resilience market across data and identity. In the age of Mythos and Frontier AI model, cyber resilience is paramount for cybersecurity, which is why thousands of customers rely on our unique architecture and platform depth. Second, we continue to grow while the competition has installed. Our unique solution at the convergence of data, identity and AI positions us to solve cyber resilience across all three domains. Third, we are establishing Rubrik as the data and identity infrastructure platform for the AI era, with a platform for agentic operation and resilience that no competitor can match. While the world is going through the AI transformation, we are steadfast in helping our customers embrace that transformation with a greater degree of confidence. That is why we are extremely optimistic about the future of Rubrik.

Having said that, thank you to all our shareholders for your trust. We are just getting started in this new era. We look forward to seeing some of you at our Analyst Day on June 10 in Las Vegas, where we'll unpack our vision for agentic cyber resilience. And lastly, to the entire Rubrik team. Thank you. Your work made these results possible. I couldn't be happier with our first quarter results, and I'm excited about what's ahead.

With that, I'm pleased to pass it to our Chief Financial Officer, Kiran Choudary.

Thank you, Bipul. Good afternoon, everyone, and thank you for joining us today. We had a strong Q1, exceeding all of our guided metrics, and demonstrating continued execution in the large and growing cyber resilience market. We are pleased with our solid start to fiscal year 2027 and are raising our outlook for the year. Let me start by briefly recapping our first quarter fiscal 2027 financial results and key operating metrics, and then I'll provide guidance for the second quarter and full year fiscal 2027.

All comparisons, unless otherwise noted, are on a year-over-year basis. We are very pleased to have ended Q1 with subscription ARR of $1.57 billion, growing 32% year-over-year. We added $103 million in net new subscription ARR, a record for Q1. Continued adoption of Rubrik Security Cloud resulted in $1.39 billion of cloud ARR up 43%. We are at the tail end of our cloud transition with cloud ARR now representing 89% of subscription ARR as of Q1. We did not see a material impact to our business from rising hardware costs or supply constraints. As a reminder, we are in the business of selling software, either in the cloud or self-hosted.

Moving along, our differentiated land and expand model benefits from multiple avenues to gain new customers and grow our footprint after the initial contract. Expansion occurs through data growth in existing applications, securing more applications and identities, adding more security products or adding Rubrik Agent Cloud. As a result, we continue to see a strong subscription net retention rate approximately 120% in the first quarter. We are very proud of the high customer retention and expansion dynamics of our business. All vectors of expansion are healthy contributors to our highlighting the meaningful runway we have to more deeply penetrate our customer base. We ended the first quarter with 2,946 customers with subscription ARR of $100,000 or more, up 24%. These larger customers now contribute 88% of our subscription ARR, continuing to grow as we become an increasingly strategic partner to our enterprise customers. Customers with subscription ARR of $1 million or more grew over 50%. For our first quarter, subscription revenue was $374 million, up 41%. Total revenue was $387 million, up 39%. Revenue in Q1 primarily benefited from a strong ARR growth.

Material rights related to our cloud transformation, contributed approximately $8.5 million to revenue in the quarter. A substantial reduction compared to the prior quarter, reflecting the near completion of our cloud transition. Revenue normalized for material rights increased 43%.

Turning to the geographic mix of revenue. Revenue from the Americas grew 38% to $279 million. Revenue from outside the Americas grew 43% to $108 million. Before turning to gross margins, expenses and profitability, I would like to note that I'll be discussing results on a non-GAAP basis going forward. Our non-GAAP gross margin was 82.9% in the first quarter compared to 80.5% in the year ago period. Our gross measure benefited from the revenue outperformance, greater efficiency in our cloud hosting costs and the improved productivity of our customer support organization. As a reminder, we look at subscription ARR contribution margin as a key measure of operating leverage. We believe the improvement in our subscription ARR contribution margin demonstrates our ability to drive operating leverage and profitability at scale. Subscription ARR contribution margin was 13.2% in the last 12 months ended April 30 compared to 8% in the year ago period, an improvement of over 500 basis points. The improvement was driven by higher sales, the benefits of scale and improving efficiencies and cost management across the business. Free cash flow was $74 million compared to $33 million in the first quarter of fiscal 2026. The increase was driven by higher sales and improved operating leverage.

Turning to our balance sheet. We ended the first quarter in a strong cash position with $1.7 billion in cash, cash equivalents restricted cash and marketable securities and $1.1 billion in convertible debt.

Let me now provide some context on our guidance. We are confident in our outlook, fueled by our robust cyber resilience market, our differentiated technology platform and the scaling of our identical resilience and Rubrik Agent Cloud offerings. This momentum, coupled with our consistent and effective execution, positions us to achieve strong subscription area growth ahead. We plan to continue making operational investments across two key areas. First, we will continue to invest in R&D to accelerate innovation in the large but developing markets of data, security and AI. Second, we will invest in our go-to-market, specifically targeting regions and verticals that offer the most attractive ROI. These go-to-market investments will also focus on scaling our newer innovations, including our identity Resilience platform and Rubrik Agent Cloud.

Now turning to our guidance for the second quarter and full year fiscal 2027. In Q2, we expect revenue of $395 million to $397 million, up 27% to 28%. We expect material rights related to our cloud transformation to contribute $3 million to $4 million to revenue in Q2. We expect non-GAAP subscription ARR contribution margins of 11% to 12%. We expect non-GAAP EPS of $0.03 to $0.05 based on approximately 224 million weighted average shares outstanding. For the full year fiscal 2027, we expect subscription ARR in the range of $1.854 billion to $1.862 billion, reflecting a year-over-year growth rate of approximately 27%. We expect total revenue for the full year fiscal 2027 in the range of $1.638 billion to $1.648 billion. As a reminder, in fiscal 2027, the substantial reduction in material rights revenue will represent a meaningful headwind to our reported revenue growth. We expect material rights related to our cloud transformation to contribute approximately $17 million to revenue for the full year.

Revenue growth normalized for material rights is expected to outpace our subscription ARR growth rate. As we have communicated, subscription ARR is the primary top line metric to evaluate our business performance as it is not impacted by accounting dynamics related to our cloud transformation. In terms of profitability, we will continue to stay focused on taking advantage of the market opportunity in cybersecurity and while balancing growth with improved efficiency. Based on our current investment plans, we expect non-GAAP subscription ARR contribution margins of approximately 14% for the full year fiscal 2027. We expect non-GAAP EPS of $0.25 to $0.35 based on approximately 228 million weighted average shares outstanding for the full year. We expect free cash flow of $293 million to $303 million. As always, we have included additional modeling notes in our investor presentation.

In closing, we are pleased with our strong start to fiscal year 2027 and remain confident in our ability to deliver durable and efficient growth as the market leader in cyber resilience. We look forward to sharing more about our opportunity and strategy at our upcoming Analyst Day at our forward user conference.

With that, we'd like to open up the call for any questions.

[Operator Instructions] Your first question comes from the line of Saket Kalia with Barclays.

I'll keep it to one. Bipul, maybe for you. Can you just dig a little bit more into how the dynamics of the hardware market are potentially impacting customer buying behavior in the cyber resilience market. It's just been such a key question to the quarter. I'd love to get your perspective, so we're all on the same page.

Thanks, Saket. Good to hear from you. To start with, Rubrik has no real impact from the hardware market dynamics. As you might reckon, Rubrik is a software company. And moreover, the enterprise data protection part of our business is a relatively a smaller part of our business now that we have cloud, SaaS, identity, M365, a number of other solutions that Rubrik sells. And if you look at our customers, they are holistically looking at cyber resilience across all these platforms because cyber attacks are not choosing just the data center or just the cloud. So we sell a comprehensive solution. And as a software company, we have again Rubrik has no real impact on the hardware dynamics.

And just to add for what Bipul said, Saket, I wanted to emphasize that this is the same message as of last quarter to no material impact. And the sales cycles over the past few quarters have been stable even with this dynamic in the broader environment. We remain confident in our outlook based on what we see in our pipeline and our multiproduct platform motion.

Your next question comes from Matt Martino with Goldman Sachs.

Bipul, you described a world where AI makes everything more dangerous, more data, more agents, more surface area to cover. If that's the ark, does cyber resilience become a bigger line item in the enterprise over the next couple of years? And does Rubrik's role start shifting from an insurance policy to something more central to how companies actually run? Curious to see how resilient is evolving as the enterprise goes fully agentic?

Thanks, Matt. What I will say is Cyber security strategy has moved from being a preventive detection-oriented strategy to squarely now as a cyber resilience strategy. And what Mythos and other frontier AI models have done, they have accelerated this transformation because with Mythos, cyber detection is almost impossible. So as soon as intrusion happens, breach will happen. And as Gartner also sent out notes to all the clients that the real answer to Mythos is a cyber resilience is a must, and preemptive technologies have to be explored both for patching as well as cyber recovery. And if you look at Rubrik, call it vision, call it, luck, call it, right time, right place, 2 years ago, we launched something called Preemptive Recovery Engine, which does all the work of cyber recovery in the peace time before attack happens. So that when attack happens, you are able to recover at AI speed. In this new era of AI, Mythos and AI-powered attacks, recovery at AI speed is critical. And Rubik has a unique technology to deliver that for our customers. In fact, our vision is a tax will be continuous us and recovery has to be continuous. So at any given point in time, you have to be ready to recover at AI speed. And that's what our Preemptive Recovery Engine delivers. That's what we are educating our customers on. And if you just look at what has happened post Mythos, I have personally done 140 CIO and CISO meetings in the last quarter, that is up 50% sequentially quarter-over-quarter. Cyber Resilience is the only cybersecurity strategy that is viable for the AI era. We created the cyber resilience category, and we are taking our customers on this agentic cyber resilience journey.

Your next question comes from Brad Zelnick with Deutsche Bank.

Congrats on a really nice start to the year. Bipul, my question for you, and I know we're going to dive into it next week forward. So I'm looking for the expanded version. But maybe just for today, and it speaks to a lot of the comments you've already made. We've heard competing claims from vendors across the security and IT stack over who has the right to win as the AI control plane. Why does Rubrik stand to be a leader in this category against vendors like ServiceNow, for example, where we've heard convincing arguments that agenda control is a CMDB problem at its core.

Thanks, Brad. Here is what I'll tell you. Delivering a comprehensive agentic security and resilience requires a comprehensive platform. Just doing observability on agents is not enough. Just doing posture management on identity for agents is not enough. Just doing real-time run time, agent security guardrail is not enough. Because when all of these things fail, you need to also deliver fundamental agentic rewind, so that you can bring your systems back into a clean state and continue operating with other agents. And Rubrik has a comprehensive platform to deliver to each one of these aspects from monitoring to security controls, real-time security to agent rewind. And we believe that we have the most comprehensive solution to sell in this marketplace. And that's why we are seeing strong customer interest in our Rubrik Agent Cloud solution. Let me give you an example. A financial services company adopted Rubrik Agent Cloud this past quarter. This particular company was very slow in adopting AI because of the concerns around compliance, governance and security. And moreover, they were worried about what if the agent bypasses all of this and does real damage, how do I bring the systems back into order? With Rubric Agent Cloud, we deliver not only the fastest way and safest way to deliver security and compliance rollout. But with Rubrik Agent Rewind, saw this as a must-have capability that should the agents to skip those steps because of hallucination or otherwise, they have peace of mind that they can also deliver Agent Rewind. So I'll repeat Rubrik delivers monitoring, guardrail and security for run time as well as Agent Rewind. We have the most comprehensive solution in the marketplace unmatched by any other vendor.

Your next question comes from John DiFucci with Guggenheim Securities.

Nice job on this. I don't always say that, but really, your results here were strong and subscription ARR was what we thought you could do, which is sort of like the scenario, we sort of think maybe that you can do it. However, the mix was different than we thought we'd see. With on-prem better than what we expected in cloud a little bit below what we expected. I was just wondering if you could talk about the dynamics of that, and how we should think about it going forward?

Sure, John. This is Kiran. And I can take that. So overall, we're very pleased with the quarter. You saw the results and both pleased -- with both the cloud portion as well as the non-cloud portion. This quarter, we were at 89% cloud. I think if you're looking at the growth rates for Cloud ARR year-over-year, one thing I just want to remind that now we are nearing our end of our transition. Last Q1, we had 82% cloud as percentage of sub ARR, and we're 89%. If you actually back out the migrations, then we actually grew Cloud ARR a little bit faster than subscription ARR. So it was a very strong quarter. At the same time, non-cloud ARR also grew. You have seen that on a dollar basis, and that's because we are nearing the end of our migrations as well. So we had a strong quarter there as well. So I just wanted to clarify that.

That's actually really helpful, Kiran. How should we -- same question on the non-cloud stuff, as we think of that going forward, how should we think about that?

When we talked about over the past few quarters, there were declines quarter-over-quarter as the migrations were still continuing. But we are talking about a time at some point, it stabilizes and then there is growth from there because there's a very small, but meaningful business there of selling our software to customers who were self-hosted, especially in the fee-related agencies, government as well as regulated industries. So we're at that point right now where we expect it to grow. But obviously, there could be some quarter-to-quarter variance. There's a little bit migrations left as well. But generally, I would say with the multi-quarter period, the trend line is upward.

One thing I'll add to this, John, is what we are seeing also is an interest in Europe and Middle Eastern countries around sovereign infrastructure, and which is nothing but an environment that is controlled by the customer and call it to some non-cloud solution. So if that trend continues because of geopolitics, data locality, spent, we might see, again, increase in non-cloud portion. But as Kiran said, it will first stabilize and then it might grow.

Your next question comes from Eric Heath with KeyBanc Capital Markets.

I wanted to maybe follow up on Brad's question in a slightly different way. But all the early customers that are adopting the Rubrik Agent Cloud, who are you competing with there? I mean, as Brad kind of alluded, there's lots of vendors coming out from every angle, trying to secure agents, whether that's the identity endpoint or elsewhere. So just curious what that competitive landscape is, and why the Rubrik angle is resonating with customers thus far?

No, it's a really insightful question. Like whenever a new market or ADI starts, you have lots of different approaches that people bring. And as Brad mentioned, you have larger companies that are coming into this market from observability angles. You have a status coming into this market from identity angle, you have companies starting in this market through just giving the posture, management or some companies are looking at it from the shadow IT perspective. But what we are hearing consistently from our customers is that they do not want point solutions. They do not want to stitch together five solutions to create full agent security. And it is not dissimilar to what happened in the cloud security. Remember, in the cloud security, you have 5 or 6 different companies coming in with 5 or different parts of the market and then Palo Alto and later with consolidated with a platform solution end-to-end. And we believe that from observability to identity posture to real-time security to the rewind, which is undoing of the agentic action that is not desirable, has to be delivered in a single platform in an end-to-end solution. And that's where we see our unique advantage because of the previous acquisition, we have the best run time AI guarding agent solution combined with Rewind, which is our heritage in the Rubrik backup, plus the observability through our proxy and gateway, we believe that we have the most comprehensive solution. And because of our comprehensive nature of the solution, an end-to-end security compliance plus wind, we are winning deals.

Your next question comes from Gregg Moskowitz with Mizuho.

Nice job on the quarter. Bipul, this is perhaps not a very easy question to answer, but you have two really exciting initiatives with identity recovery and resilience, and of course, Rubrik Agent cloud. If you were to look out over the next 2 to 3 years, which opportunity do you personally think is the larger one for Rubrik?

Obviously, AI market is going to be very, very massive and agentic -- Rubrik Agent Cloud is the linchpin for our customers to succeed in delivering trusted agents at a scale. So that is definitely a massive opportunity. Having said that, identity is both a risk and enabler to enterprise agents because identity-based attacks have become the norm, the #1 attack vector. And should an agent get compromised your massive insider attack. So identity is paramount. And then on the second -- on the other side, identity and data interaction is core to agent security because agent assume identity and take action on autonomous action on sensitive data. And that is the reason that we believe Rubrik is uniquely positioned to win in this market because Rubrik's heritage is data. Now with identity, particularly identity resilience, both posture and recovery, we have created over 50 million ARR business in just 4, 5 quarters. We grew 38% sequentially between Q4 and Q1. Q1 typically is the start of the fiscal year. And because of this data and identity stronghold that Rubrik has, it uniquely positions us with the [indiscernible] acquisition to create this platform. So we are very excited about both of these opportunities. They are intertwined. They reinforce each other. And it actually enables us to have conversation outside of our traditional core, which is CTO and CIO organization to have conversations with so organization with the identity things. And as you know, agent rollout and security and compliance also sits at the intersection of CTO and CISO organization. So in many ways, we are positioned with our buyer in the right way. We have the right platform and technology to deliver the solution in the right way. And most importantly, we have the most comprehensive platform for our customers to do end-to-end agenic security compliance as well as Rewind.

Your next question comes from Jason Ader with William Blair.

So for Rubic Asian Cloud, can you talk about the sales strategy there? Is it mostly cross-sell? Is it a lot of new customers? Is there an overlay organization? Just wondering, is this the same kind of sales reps that are selling aging cloud as we're selling the security cloud.

So Jason, as you might recall, Rubrik has two teams to take our products to market. One, we call forward team, and their job is to amplify our current successes. And then we have a lateral team that incubate new products into the marketplace and scale it before handing it over to the forward team. So we have incubated data security products, our enterprise edition through this team, M365 to this team, listen cloud security through this team. Identity resilience through this team and now the same team is actually taking the Rubrik Agent Cloud into the market. So this is a separate team. They actually take new products, figure out the product market fit, figure out the messaging, get the initial customer scale, and that's the team that is focused on selling a Rubrik Agent Cloud because lingo is different. Again, what customers are buying this product for the use case is different. Many customers are interested in this product that is outside of the Rubrik core customer base. Many of our existing customers are interested in this product. This is a very exciting time for this team. Again, new product early go-to-market but there is a significant interest and market kind of awareness that without a proper agent security governance rewind platform, they can't really rollout agent with the proper permission without the confidence.

Your next question comes from Todd Coupland with CIBC.

I had an agent cloud go-to-mark question as well. to augment your incubator team, can you imagine creating partnerships with some of the larger players in this market to accelerate enterprise take-up. And on top of that, will this take as long or will it be shorter to get to that $50 million mark that you saw on the identity side. SP1 Thank you, Todd. So let me start with this question. Obviously, this -- what we are doing is to discovering all the agents that exist in the enterprise environment. And for that, we actually integrate with platforms such as Bedrock, Microsoft CoPilot, CoPilot Studio, Google and other platforms. So definitely, we believe that there's an opportunity for a deeper partnership and go to market together across all of that. And we really want to build an ecosystem because we have a platform play you're not just doing one thing, but we are creating a comprehensive solution, and it is important to have this full partnership end-to-end. In terms of like how fast it will go. I mean, I can't predict the future. We are very excited about this opportunity. We see a market, again, demand for such a product, and we are pushing as hard as possible.

Your next question comes from Junaid Siddiqui with Truist.

Bipul, as Rubrik expands beyond backup into data security, governance and AI Trust, how do you think about moving further up the security stack in a way that is differentiated from established security vendors, particularly in areas like identity, data security posture and threat response. And what specific capabilities or outcomes allow you to displace or win alongside those vendors rather than just merely augment them.

Thank you, Junai. Rubrik -- our approach has always been that we want to be a resilient platform. We are not a prevention and induction solution. And so that we partnered with CloudStrike, we partner with Palo Alto Network, we partner with Okta and all of the players that are in the business of drilling out identity or preventing and detecting attacks. We believe that the cyber resilience is a much bigger opportunity because again, Mythos and AI models are proving that resilience against the AI attacks and resilience against the agentic compromise. These two are very, very large problems to be sought, and Rubrik is uniquely positioned to solve these problems. So we'll continue to focus on resilience, both against AI attacks as well as agentic compromise or overreach, and we'll continue to build solutions around it and then partner with, again, as I said, prevent some detection, identity infrastructure companies to ensure that our customers have an end-to-end solution so that they're not having a fragmented experience.

Your next question comes from Keith Bachman with BMO.

Congratulations on the results. Bipul, I wanted to go back to the supply chain, if I could. I understand your answer is that you're not impacted by the cost of servers or storage media you're not in that business. But when customers like the Bank of Montreal, think about deploying Rubrik, it is part of the total cost of ownership. And so for instance, you can deploy on Dell servers and service have doubled in price. And when I think about storing on the cloud, HEDs, flash and DRAM have all increased by 100% or close thereabouts. And that is a cost that's borne by the solution. So when you say you're not impacted by it, is it because that if we exclude servers, even is it because you have contracts in place where you're not exposed to those costs? Or is it because it's a relatively small part of the total cost of ownership? I'm just trying to flush out why in some ways, it isn't impacting. Is it a timing issue? Or do you think it's a permanent thing whereby Rubrik won't feel the consequences, so to speak of, in particular, the cost of storage media?

So our customer -- first of all, our customers, if they are actually buying Rubrik for the data center enterprise data protection, then they are exposed to the server cost. Outside of it, they are not exposed because they are now consuming cloud, cloud service, and they have long-term contracts. And we never take the ownership of the data in the cloud environment, unless they have a SaaS application, where they don't have the infrastructure to store data. So we are purely delivering our solution in the cloud, in the customer's own environment. And the customer's own environment within their data center. Many of our customers have long-term contracts with server vendors, and we are not mandating a crazy configuration. It fits into their own configuration that they purchased in the past or will purchase in the future. So as well as the data center is a smaller part of our -- relatively a smaller part of our business because we have now so many different solutions. If you think about it, our customers are buying Rubrik solution on AWS, Azure, GCP, they're buying M365, they are buying Google Workspace. They are buying Identity Solution, Okta, they are buying Activatory Entra-ID. So Rubrik now has such a comprehensive platform. We are not like Rubrik of 10 years ago, which we were purely in the data center because our customers were in the data center. So given all the dynamics, given that we are a software company, given that our customers have contracts with the server manufacturer or they are in the cloud in both places, they have long-term contracts, the impact for us is immaterial. And that's why we believe that we have like -- we are confident about our execution, and how we are going to deliver this year. But here is the most important thing, we are selling cyber resilience. Cyber resilience is not a discretionary purchase. You have to be in the business, first and foremost, to be even able to adopt AI cyber resilience is in a higher priority for the customer than adopting AI because everybody is worried about. I remember talking to a very large transportation company CEO, and his first thing was that the cybersecurity is the #1 business risk for me. And this is the #1 businesses for almost every business. Every Board is asking that can you recover from a cyber attack versus your bounce back plan. And so we have -- it's not a discretionary product. It's the highest priority. And so if you look at all things combined, that's why we are confident about our execution. And this also demonstrates, if you look at the cybersecurity industry, we delivered the best result in the cybersecurity industry. If you look at our magnitude of net new ARR of $103 million at our scale, we are unmatched by any company that you see in the cybersecurity industry. And that is not an accident. That is purely a result of what we deliver, and we deliver peace of mind to our customers so that they can deploy AI with confidence and also have sleep easy at night, because Rubrik is watching for AI attack, not watching as in preventing, but watching as in it can bring their business back up and running. And that's why we believe we are uniquely positioned to help our customers and continue to grow our business.

Your next question comes from Joseph Gallo with Jefferies.

You made some sales leadership changes last quarter. I was just wondering if you could talk a little bit more about the go-to-market high level. Any changes expected now that Jesse has been in the seat for 3 months? Are you still hiring on the sales capacity side? And how do we think about leverage in the sales and marketing line going forward?

So Jesse has settled very, very well, as you can see from the results of our first quarter. And there is no changes that we anticipate in our sales leadership under Jesse. The team has settled well. We are executing in like high resonance. Again, we are opportunistic in terms of ROI. If we see opportunity to increase sales capacity in markets where we see high ROI we're definitely looking to invest. But one thing that we are mindful is we want to grow, and we want to take advantage of this market opportunity, but not take the approach that grow at our cost. And if you look at our cash flow and how we are -- how responsibly we are managing our business while generating a very, very high top line growth. It demonstrates the discipline and controls that we are applying in our business to create a long-term profitable growth business.

Your next question comes from Jim Fish with Piper Sandler.

This is Tim on for Jim Fish. I just was hoping that you could kind of speak to a little bit about what you're seeing in terms of the demand pipeline? Now you're really only kind of raising guide by about twice what the first quarter upside was, which is kind of what you've done historically. So any color on what you're seeing in the demand pipeline would be helpful.

We are definitely seeing a strong demand for the resilience in the marketplace. We are also seeing strong early demand for the agent security and governance in the marketplace. And also Mythos and what has happened with frontier models, it has broad the awareness on to cyber resilience. And as I said, we are seeing increased number of meetings and increased customer interest and understanding of how they can keep their businesses up and running when you have these models that can actually find toxic combination of vulnerability through reasoning and chaining and do attack very, very fast at speed. So -- and because of all of that, and this is one of the reasons that we are actually -- we have increased our outlook for the year. We have raised our outlook for the year because we are confident about the market demand and confident about our execution, and we are feeling great about finishing the year strong.

We have reached the end of the Q&A session. I will now turn the call back to Bipul Sinha, CEO, for closing remarks.

So in closing, I'll say thank you so much to all our investors and our analyst friends for their continued support for Rubrik. We see tremendous opportunity in a world where AI is attacking us, and AI is also increasingly running our business processes. The demand and the need for cyber resilience, both against AI attacker as well as agent compromise have never been higher. All of us Rubrikans are hard at work to deliver innovation on behalf of our customers at rapid speed. We are looking at both organic and inorganic opportunities in terms of teams, products, technology to add on to our platform to accelerate the road map for our customers. This is the most exciting time for Rubrik, everything that we envisioned in terms of cyber resilience and this AI agent world is coming to fruition. We were ahead of the market in terms of preemptive recovery engine and thinking through what it means to deliver cyber resilience in this era where attack detection and attack prevention is near impossible. We are, again, very encouraged by our customers' interest in Rubrik's product. So many customers are coming in our direction. We have a very exciting user conference coming up in [indiscernible]. I'm looking forward to seeing lots of you there. Thank you again for your continued support. We are just getting started. Go Rubrik.

This concludes today's call. Thank you for attending. You may now disconnect.

Good afternoon, ladies and gentlemen, and welcome to the Rubrik Fourth Quarter and Fiscal Year 2026 Results Conference Call. [Operator Instructions] The call is being recorded on Thursday, March 12, 2026.

I would now like to turn the conference over to Melissa Franchi, Vice President of Investor Relations. Please go ahead.

Hello, everyone. Welcome to Rubrik's Fourth Quarter and Fiscal Year 2026 Financial Results Conference Call. On the call with me today are Bipul Sinha, CEO, Chairman and Co-Founder of Rubrik; and Kiran Choudary, Chief Financial Officer. Our earnings press release was issued today after the market closed and may be downloaded from the Investor Relations page at www.ir.rubrik.com. Also on this page, you'll be able to find a slide deck with financial highlights that, along with our earnings release, include a reconciliation of GAAP to non-GAAP financial results. These measures should not be considered in isolation from, or as a substitute for financial information prepared in accordance with GAAP.

During this call, we will make forward-looking statements including statements regarding our financial outlook for the first quarter and full fiscal year 2027, our expectations regarding market trends, our market position, opportunities, including with respect to generative AI, growth strategy, product initiatives and expectations regarding those initiatives, and our go-to-market [indiscernible]. These statements are only predictions that are based on what we believe today, and actual results may differ materially. These forward-looking statements are subject to risks and other factors that could affect our performance and financial results, which we discuss in detail with our filings with the SEC. Rubrik assumes no obligation to update any forward-looking statements we make on today's call.

With that, I'll hand the call over to Bipul Sinha.

Thank you, Melissa, and thank you all for joining us today. Let me start by saying we ended the year with a spectacular Q4 that significantly exceeded our expectations. We accelerated net new subscription ARR growth to a record $115 million. For the full fiscal year, we generated tremendous free cash flow of about $238 million, which is more than 10x the free cash flow for the prior fiscal year. This is a clear indication that we are indeed laying the foundation of a long-term, highly profitable growth business. With that, we have once again exceeded all guided metrics across top line and profitability. There are 5 key numbers.

First, subscription ARR reached $1.46 billion, growing 34% year-over-year. Second, our subscription revenue was $365 million, growing 50% year-over-year. Third, our subscription NRR remained strong, once again above 120%. Fourth, customers with 100,000 or more in subscription ARR reached 2,805, growing 25% year-over-year. And finally, on profitability, we once again made material improvement in subscription ARR contribution margin, up over 950 basis points year-over-year. We generated $70 million in free cash flow this quarter.

Accelerating growth, while improving margins and growing free cash flow, as I stated before, at our scale is not only very impressive, but a rare combination. Now let's explain why and how we got here.

Enterprise AI and agentic work disruptions are creating significant opportunities for us, and we are leaning into it. Rubrik is a multiproduct company built on a unique and highly differentiated platform that solves the most consequential problem across data, identity and AI. We continue to deliver phenomenal results quarter after quarter because we are comprehensively winning against the competition and enabling enterprise AI acceleration. In fact, our competitive win rates have crossed 90% in Q4, as we continue to disrupt the data and identity protection market with our transformative products that deliver comprehensive cyber resilience. This is why we continue to accelerate our growth while our competition has stalled.

At the same time, Rubrik Agent Cloud aims to deliver dynamic real-time AI agent controls to accelerate enterprise AI transformation. I will talk about Rubrik Agent Cloud in a few minutes. But first, let me talk about why our products are transformative. We have built a single platform that understands data, identity and application context. On top of this platform, we delivered two solution suites, Rubrik Security Cloud for cyber resilience, and Rubrik Agent Cloud for accelerated AI transformation. Let me start with Rubrik Security Cloud.

In our platform, we have the unique ability to bring together time series data and metadata across complex enterprise environments that span on-premises, sovereign, cloud, SaaS and identity providers. We have built a single policy engine to deliver uniform policy-driven automation for complete cyber resilience, including protection, security and cyber recovery. On top of this, we have built a proprietary preemptive recovery engine that precalculate the clean points of recovery across data and identity. These make up Rubrik's true moat. This is how we deliver record fast recoveries when our customers are compromised by ransomware and identity-based attacks.

Our software architecture is hardware and platform optimized to deliver cyber resilience to thousands of our enterprise customers. This is why we are winning the cyber resilience market. Rubrik is a true platform company, and we provide multiple independent paths for our customers to get started. Whether a customer buys a single product, or the whole Rubrik Security Cloud suite, they get the same platform. In fact, our customers realize more value from our platform as they adopt more and more of our products, which is a testament of Rubrik's true platform strategy.

We were the first to recognize the need for cyber resilience and its subsequent evolution in enterprises, which is what underpins our success. The trends are clear. Enterprise agentic AI transformation promises tremendous productivity gains. However, these agents also assume your identity and act on trusted data. If agents hallucinate, or are compromised by bad actors, they can do 10x more damage in 1/10 of the time. That exposes companies to unprecedented risk. Moreover, cyber attackers are actively deploying AI to breach businesses and governments around the world.

In essence, AI has made the world more dangerous. The best metaphor we can provide is protecting your home. You can close the windows and put down the lock, but ultimately, you need a bunker underneath your house to survive the doomsday. So your cloud and AI transformation journey continues uninterrupted. Rubrik Security Cloud is that bunker for enterprises. When ransomware inevitably [indiscernible], a LLM or white cord will not recover your business, Rubrik will. We can do this because we have years of cyber resilience and enterprise customer experience built into our platform. Rubrik not only understands the complexity of enterprise data and identities, but also delivers the minimal viable services that companies need to run their digital businesses, 24/7. We help enterprises rapidly recover their services by quickly pinpointing the clean state of data and identities. All the while, isolating the threat to prevent malware reinfection.

The [ Rubrik Bunker ] delivers complete cyber resilience across on-premises, sovereign, cloud and SaaS applications. Rubrik Security Cloud is powered by a unique and proprietary system of record of last resort of data and identity. This is our secret sauce. Let me provide two specific customer examples of legacy replacement in very large enterprises.

First, Rubrik secured a major win with a Fortune 500 global hospitality company this quarter. The company chose Rubrik to enhance their cyber resilience and recovery speed from ransomware attacks, deploying our single platform across their hybrid and multi-cloud environments. This company displaced a deeply intended legacy provider and a cloud-native backup solution. And we also outcompeted several next-generation vendors. Furthermore, the move is projected to deliver multimillion dollar savings by eliminating cloud-native backup costs.

Second, a leading European financial services firm selected Rubrik as their strategic cyber resilience partner to meet a stringent DORA and ECB guidelines, replacing their multi-decade legacy incumbent. Rubrik was selected for our single unified platform, providing data protection and resilience across the entire environment, including enterprise, cloud and SaaS applications, as well as their mission-critical identity system.

Speaking of SaaS applications, our SaaS protection had a particularly strong Q4. As customers look to rubric for end-to-end risk and remediation across the mission-critical applications, including M365 and Identity services. In fact, over 50% of [ Rubrik and M365 ] bookings this quarter were attached to our identity solutions. Let me give you one representative customer examples.

A major global logistics provider expanded Rubrik to protect M365 Active Directory and Anti-ID critical systems that run their mission-critical business operations. Rubrik displays an incumbent new gen competitors because our superior identity coverage and faster recovery time across these Tier 1 applications reducing considerable business risk in case of a cyberattack or operational disruption.

Next, let's talk about our Identity business. Our Identity line of business continues to be highly successful in garnering budget from CSOs, extending Rubrik beyond our traditional CIO and CTO buying personas. We have been rapidly disrupting the identity protection market with our identity recovery and resilience products. This quarter, we announced protection for Okta identity, making Rubrik the only identity recovery platform to expand Okta, Active Directory and [indiscernible]. In just 1 quarter of selling, we have already seen notable deal activity for Okta recovery, and we are excited about what's ahead.

Let me give you two specific examples of Identity customer wins. A Fortune 500 U.S. financial services firm added Okta recovery in a significant expansion that also included Identity Resilience suite, as well as protection for unstructured data and cloud data. This customer chose Rubrik to meet a Board-mandated less than 48-hour recovery time objectives, displacing a cloud-native backup solution and a legacy protection vendor.

Second, A major U.S. health care provider also expanded their Rubrik partnership this quarter, adopting identical resilience and unstructured data protection or over 10 petabytes of data. This strategic move is expected to cut active directory and [indiscernible] ID [indiscernible] recovery time from over 30 days to under 4 hours, substantially using potential downtime losses estimated at tens of millions in revenue daily.

Now let's talk about Rubrik Agent Cloud, which accelerates AI adoption with agent guardrail controls. Rubrik's [indiscernible] is to secure and accelerate the world's AI transformation. I have already discussed the security and cyber resilience aspects of our business. Let's focus on how Rubrik accelerates AI transformation.

Agentic AI is now a business imperative. While agents promise 100x more productivity, they also introduced 100x more risk. Since agents autonomously execute business processes, the cascading impact of agent hallucinations, as well as cyber comprise will result in catastrophic damage for enterprises. While AI gives you a better, faster car, you need an intelligent autonomous driving system for control to steer, change lanes and break safely. We believe enterprise need a comprehensive AI operations platform, that can dynamically monitor, control and remediate agentic action. You need to have visibility into what agents [indiscernible] or unsanctioned exist in your environment and what they are doing. You also need real-time guardrails to dynamically authorize agenetic interaction that comply with your company's policies and industry regulations.

If agents get compromised or hallucinate, then you need a refined button to undue destructive actions. Rubrik Agent Cloud is this comprehensive AI operations platform. This is the intelligent autonomous driving system that we provide, so our customers can safely drive fast with AI agents. Our [ trade-based ] acquisition, which developed LL fine-tuning and inference serving platform provides the AI firepower required to dynamically govern agentic interactions. By leveraging AI to control agency work, agents can't leak sensitive data, can't say wrong things and can't take wrong actions. AI controlling AI agents is key. After all, you can't bring a knife to a gun fight.

[indiscernible] is now integrated into the Rubrik platform, which uniquely understands the data, identity and application layers to deliver the first of its kind enterprise control layer for managing and guard drilling AI agents. Last quarter, we shared that Rubrik agent cloud was in beta. Just a few weeks ago, we made Rubrik Agent Cloud similarly available. And we have a number of POCs ongoing across early AI adopters as well as Fortune 500 companies. While we are still in the early innings of multiyear effort to scale our Rubrik Agent cloud suite, we believe that we are building the most consequential security and AI operations company for the AI era.

We look forward to sharing more details about our tractions with Rubric Agent Cloud in the coming quarters and years. I couldn't be more happy with this quarter and annual results, and I'm excited about what's ahead. We are squarely focused on advancing our mission to secure and accelerate the world's AI transformation.

In closing, I will leave you with 3 key takeaways. First, Rubrik is winning the cyber resilience market across data and identity. Second, we have accelerated our business growth while the competition has stalled. And third, we are defining the enterprise AI market with our unique and differentiated agent control and guardrail solutions. To our shareholders, thank you for your trust. We are just getting started. And once again, to all [ Rubrikans ] around the world, I cannot be more appreciative of all the hard work and results we are creating.

With that, I'm pleased to pass it over to our Chief Financial Officer, Kiran Choudary.

Thank you, Bipul. Good afternoon, everyone, and thank you for joining us today. I'm pleased to note that we concluded this year with an exceptionally strong performance. This included record net new subscription ARR with accelerated growth and continued improvement in subscription [ convusion ] margins. This robust financial outcome demonstrates our focused execution and solidifies our leading position in the mission-critical cyber resilience market, a market that is benefiting from the ramping AI transformation. I'll start by briefly recapping our fourth quarter fiscal 2026 financial results and key operating metrics, and then I'll provide guidance for the first quarter and full year fiscal 2027. All comparisons, unless otherwise noted, are on a year-over-year basis.

We are very pleased to have ended Q4 with subscription ARR of $1.46 billion, growing 34%. We added over $115 million in net new subscription ARR, another record amount for Rubrik. Continued adoption of Rubrik Security Cloud resulted in $1.29 billion of cloud ARR up 48%. We're at the tail end of our cloud transition with cloud ARR now representing 88% of subscription ARR as of Q4. We continue to see strong subscription net retention rate, which remained 120% in fourth quarter. We are very proud of the high customer retention and expansion dynamics of our business. Expansion occurs through data growth in existing applications, securing more applications or identities or adding more security products. In fact, adoption of additional security products contributed over 45% of our subscription net retention rate in the quarter, up from 34% in the year ago period.

In the fourth quarter, we saw significant growth in our largest accounts with the number of customers contributing $100,000 or more in subscription ARR rising 25% to 2,805. These large customers now represent 87% of our subscription ARR, an increase from 84% a year ago. Furthermore, we added a record 32 customers with subscription ARR of $1 million or more, driving over 50% growth in our over $1 million subscription base.

For our fourth quarter, subscription revenue was $365 million, up 50%. Total revenue was $378 million, up 46%. Revenue in Q4 primarily benefited from our strong ARR growth. However, we again had tailwinds from our cloud transformation, resulting in higher nonrecurring revenue, which is accounted for as material [indiscernible]. Material rents contributed approximately $18 million to revenue this quarter, modestly higher than our expectation. Revenue growth normalized for material rights was approximately 43% in the quarter.

Turning to the geographic mix of revenue. Revenue from the Americas grew 45% to $268 million. Revenue from outside the Americas grew 51% to $109 million. Before turning to gross margins, expenses and profitability, I would like to note that I will be discussing results on a non-GAAP basis going forward. Our non-GAAP gross margin was 84% in the fourth quarter, compared to 80% in the year-ago period. Our gross margin benefited from the revenue outperformance, including higher nonrecurring revenue and greater efficiency and hosting costs. As a reminder, we look at subscription ARR contribution margin as a key measure of operating leverage and believe the improvement in our subscription ARR contribution margin demonstrates our ability to drive operating leverage and profitability at scale.

Subscription ARR contribution margin was 12% in the last 12 months ended January 31, compared to 2% in the year ago period. An improvement of approximately 950 basis points. When normalizing for the $23 million in employer payroll taxes associated with the IPO in the prior period, the improvement was approximately 730 basis points. The improvement in subscription area contribution margin was driven by higher sales, the benefits of scale and improving efficiencies and management of costs across the business.

Free cash flow was $70 million compared to $75 million in the fourth quarter of fiscal 2025. Free cash flow for fiscal 2026 was $238 million, compared to $22 million for fiscal 2025. This increase was driven by higher sales, improved operating leverage and optimizing our capital structure.

Turning to our balance sheet. We ended the fourth quarter in a strong cash position with $1.7 billion in cash, cash equivalents, restricted cash and marketable securities and $1.1 billion in convertible debt. Let me now provide some context on our guidance.

We are confident in our outlook, fueled by the robust cyber resilience market, our differentiated technology platform and scaling of emerging products such as identity security. This momentum, coupled with our consistent and effective execution positions us to achieve robust growth in subscription ARR. We plan to continue making operational investments across two key areas.

First, we'll continue to invest in R&D to accelerate innovation in the large but developing markets of data, security and AI. Second, we'll invest in our go-to-market, specifically targeting regions and vehicles that offer the most attractive ROI. These go-to-market investments will also focus on scaling our newer innovation, such as identity resilience platform and Rubrik Agent Cloud.

Now turning to guidance for the first quarter and full year fiscal 2027. In Q1, we expect revenue of $365 million to $367 million, up approximately 31% to 32%, or approximately 36% to 37% when normalized for material rights. We expect material rights related to our cloud transformation to contribute approximately $4 million to revenue in Q1. We expect non-GAAP subscription ARR contribution margins of 10% to 11%. We expect non-GAAP earnings per share of negative $0.04 to negative $0.02, based on approximately 204 million weighted average shares outstanding.

For the full year fiscal 2027, we expect subscription ARR in the range of $1,829 million to $1,839 million, reflecting a year-over-year growth rate of approximately 25% to 26%. We expect total revenue for the full year 2027 in the range of 1,597 million to $1,607 million, up approximately 27% to 28% when normalized for material rights. We expect material rights related to our cloud transformation to contribute approximately $10 million to revenue in fiscal year 2027. As we have always communicated, subscription ARR is the primary top line metric to evaluate our business performance as it is not impacted by accounting dynamics related to our cloud transformation.

In terms of profitability, we'll continue to stay focused on taking advantage of the market opportunity in cybersecurity and AI, while balanced growth with improved [indiscernible]. Based on our current investment plans, we expect non-GAAP subscription ARR contribution margins of approximately 13% for the full year fiscal 2027. We expect non-GAAP earnings per share of $0.07 to $0.27 based on approximately 232 million weighted average shares outstanding for the full year. We expect free cash flow of $265 million to $275 million. As always, we have included some additional modeling notes in our investor presentation.

In closing, we are pleased with our strong performance in fiscal 2026 while exceeding our financial targets across the board. Looking ahead, we're excited about the opportunities awaiting as in fiscal 2027 and beyond. We plan to share more about our ambitious vision throughout the year, including at our [ forward user ] conference in Las Vegas. Please note that our inaugural Investor Day will be held on June 10 during the conference. More details on that event will follow.

With that, we'd like to open up the call for any questions.

[Operator Instructions] Your first question comes from Matthew Martino of Goldman Sachs.

You mentioned ongoing agent bound POCs with the Fortune 500 and AI startups. Can you help us understand what those two customer sets are each trying to solve for? And whether the early pull is showing up more around the monitoring and guardrail side, or around the [indiscernible]?

Thanks, Matt. So as you would anticipate, Customer first are trying to understand how many agents do they have in the system, both sanctioned loans as well as shadow-IT unsanctioned work. So first understanding of all the agents in the platform, then they want to understand what these agents are actually doing. And then once they have understanding of this kind of monitoring observability, then the second step for them is to understand how they control it, and this is where the real-time dynamic guardrail that Rubrik has developed, which is a unique solution, we are actually demonstrating to our customers how you can stop agenting interactions in real time.

The revised [indiscernible] will be a day 2 problem, so to say, once the customers get fully operationalized at scale with agents, then they will work on like Agent Rewind and how do you undo the effect of [indiscernible] But I think the first and the second piece is a high priority right now.

Your next question comes from Fatima Boolani of Citi.

I wanted to talk to you about the sovereign cloud opportunity and the release of Rubrik [indiscernible] Cloud. We have, in principle, seen this notion of sovereignty and data [indiscernible] pop up in other buckets of software and other domains of cybersecurity. So I wanted to get to the bottom of what has been the customer impetus in order for you to formalize and really build an opportunity and a dedicated plot effort around this?

And bringing that into kind of the numbers and how we think about the incremental opportunity. What is that incremental, or new TAM that is now capturable as a result of this form factor, or flavor of [indiscernible] being available?

Thanks, Fatima. Very, very insightful question. What has really happened is, given the geopolitics of the world and how things have evolved in the last, call it, 5 to 10 years, every country is concerned about containing the supply chain, containing the economic infrastructure, which is data center compute infrastructure, and actual data within their own borders. And so they have like two kinds of requirements.

So requiring number one, is where they want the government infrastructure to be totally sovereign contained and in [indiscernible] center controlled by very high ring fans of security. That's one. And then the second one is the public cloud infrastructure located in their countries but with additional prove of what data can go out and what can come in within those infrastructure. So the two flavors of sovereign kind of infrastructure or cloud, if you can call [indiscernible].

And AI is adding a new angle to this. In many countries, they are also thinking about creating AI infrastructure in a way that they can rent it out to other countries. And that AI infrastructure will be in the -- think about like a digital embassy, and that digital embassy will run the AI infrastructure plus in a sovereign way. So is this a new space. It is fast emerging space. There is a significant product changes, development adaptation is required because of the additional control and on-premises data center nature of it. But we are engaged with a number of customers on this. We are watching this market.

TAM is still evolving. I don't have a good sense of how big the time would be. But -- and how -- if it is a net new, it is also unclear because before the sovereign concept, the customers was consuming IT services, but in a more shared way or cloud way. So it is also unclear if it is a net new. But this architectural shift will require modernization, infrastructure, maybe cloud transformation. So we believe that it's an interesting opportunity for us, and we are actively working on it.

Your next question comes from John DiFucci of Guggenheim Securities.

Bipul, I have a question for you. So I listened closely to your prepared remarks. And Rubrik, sort of, redefined its core market. Right, not only with the new modern architecture that was needed because of shifts in the IT infrastructure of the world, but you also expanded it beyond its traditional boundaries. From backup recovery to security against [indiscernible] to what became what you guys defined as cyber resilience platform. And it sounds like you're doing it again from an identity perspective.

So my question though is on AI. It's something I don't like to ask about because I think it's asked too much, and I think people talk about it too much. But -- but should we be thinking about AI as another technology shift that will need the IT infrastructure of the world to adjust, which will require something you've talked about all the time. And that's continuous innovation to address, not simply the application of old technology, which I think is sometimes what's happening out there.

I guess, in other words, is there more to come from Rubrik on this topic and even others from a technology perspective that have similar DNA to adjust to changing world? I'm sorry, for a longwinded question.

No, that's a good question, John. Thank you so much. Rubrik is not a traditional company. Rubrik is a living and reading entity that has no finish line, and we are always thinking about how do we help our customers as they adopt newer technology, they go through their own platform transition? And how do we be like 2 miles ahead of them, not 200 miles ahead of them, but positively surprised them with newer and newer solutions.

And our original vision was that natural disaster and human error doesn't happen every day, but cyber disaster is the biggest problem in our industry, and we build Rubrik to solve for cyber disaster in terms of cyber recovery and cyber resilience. And we created that market. We are dominating that market. And then we saw was that identity-based attacks had become a real problem for our customers. And if you look at the recent attacks the [indiscernible] and [indiscernible], they are attacking identity-based systems. So we built an identity solution in like most comprehensive identity recovery and identity resilience set of products. And I'm very happy to report that in Q4, we crossed 900 customers just on Identity. So in just 3, 4 quarters of selling, we have now crossed 900 customers.

In Q3, we had reported that we had crossed 400 customers. Now we have crossed 900 customers. And it is the fastest-growing product in the history of our company. But Identity we built 2 years ago. We are now building a new [indiscernible] curve in AI. Because our customers want to adopt AI. They are concerned about the risk of AI because the agents get compromised, then somebody can be controlling their business [indiscernible] in North Korea, and they don't want that. So they want agenetic guardrail, that guardrails to be in real time.

For example, even if you have [indiscernible] access to sending e-mails. You don't want them to send an email to everybody in Guggenheim all the time. So every agentic action has to be judged and stopped or allowed based on every action. So we are building a very comprehensive platform for agentic operation for management, control and revised of AI agents. And we believe our platform's unique ability around data, identity and applications gives us a very natural position to really create the most important solutions to accelerate enterprise AI adoption.

I always am a huge believer in [ nonconsensus ] ideas. And we are building the most important AI company that nobody is focused on. And we'll continue to build Rubrik into where our customers are going and where our markets are going, and will continue to be on the leading edge.

Your next question comes from Eric Heath from KeyBanc Capital Markets.

Nice [indiscernible] here in guidance as well. Kind of taking a different friction in the question here and obviously, broader outside of Rubrik [indiscernible], there's some concerns on memory pricing. So [indiscernible], I wanted to get some of your thoughts and [indiscernible] how we should think about your indirect exposure to memory pricing? Are there any risk from higher memory pricing or longer lead times affecting customers procuring Rubrik appliances through your partners, or willingness to engage in infrastructure modernization projects. So just high level, how should we think about it? And then if there's any assumptions and better guide, just curious to hear any thoughts there?

Eric, this is Kiran. I'll take that question. So we are obviously a software company, and we are in the business selling software to our customers, whether it's self-poted or in the cloud. But all software runs on [indiscernible] hardware, which requires these components, including memory. So far, we're watching the situation closely, and we haven't seen a significant impact on our business. Obviously, there's a portion of our business where customers self-host and they procure hardware. And we work with our customers where needed to ease for them. But so far, we haven't seen any material impact on our business as reflected in the results.

Now coming to your question on guidance, I can make some broad comments there beyond just the assumptions on [indiscernible] hardware. But we've been very pleased with our Q4 and fiscal year '26 results. It was a quarter of record net new dollars in terms of $115 million as well as acceleration of growth. And when you look at our guidance, the subscription ARR metric, which is the key metric in which we measure success, or momentum in our business, the net ARR growth guide was higher than the start of last year, and that's really a reflection of the momentum we see in the business.

I'll also add that we have -- we talk about our company in terms of 3 businesses. One is the largest business data protection and cyber [indiscernible] business, which is mission-critical large still growing. And we believe is largely underpenetrated, and we are very well positioned competitively there. So that's going to be a key driver for growth when you look at this year.

We talked about the Identity business earlier on the call. Lots of momentum there. That's our business where we sell products more so to the [ CISO ], and lots to build there. The assumption on an AI, while we are very excited is we have not assumed much when we talk about fiscal '27. The feedback is promising, but we'll have to see how the year goes.

We also considered the overall environment, business, macro environment as well as the hardware supply issues you mentioned and we've taken into account what we see right now, and don't see a lot of impact at this way point.

In terms of guidance, our approach has been similar. We want to put forward numbers, which -- based on all the inputs we have today, but I want to put forward something we feel really good about in terms of delivering. And as we progressed in the public markets and now entering the third year, it is natural, as well as software businesses that the results will tend to converge a little bit closer more to guidance over time, and we expect to see that as well. Hopefully, that's given you context on how we thought about guidance.

Your question comes from Brad Zelnick of Deutsche Bank.

Great. Congrats on just [indiscernible] Q4 in a phenomenal year. Kiran, I guess my question is for you. I appreciate all the reasons why the handoff and go-to-market leadership to [ Jesse Green ] should be seamless. But how should we think about the possibility of any interruption and extent you may have contemplated this in your guidance?

Brad, thank you so much for the question. Let me give you a little bit of a sense of how we thought about it. We hired [ Jesse ] almost 3 years ago. With this in mind that you will start as leader of Americas and over time will be the successor [indiscernible]. And so he has been a CRO in training for the last almost 3 years. Because he was running Americas in [ MongoDB ]. So he came to Rubrik with this kind of clear path to be the CRO. So it was a very natural and easy transition for us.

Obviously, we are always paranoid about every aspect of our business and keep thinking about what are different risks, but the transition has gone very [indiscernible]. The team is stable and in place and executing. And again, the opportunity in front of us with respect to 3 lines of business, data protection, [indiscernible] resilience and AI. All 3 are very exciting, and we have 6, 7 different ways to land our platform to our customers. Customers don't have to buy our core product or first product to start with Rubrik. They can buy because just cloud, just Identity, just on-prem. So our sellers see multiple different ways to exceed, and now they are selling a true portfolio of products, which actually creates opportunities for them and also stability in the team.

Our next question comes from Gregg Moskowitz of Mizuho.

So really terrific identity momentum and certainly an exciting opportunity ahead with [indiscernible] That being said, it in a time when seemingly every investor is questioning the durability of their software portfolios, do you have any concerns about data recovery and resilience being meaningfully automated by AI over time, potentially impacting your core business value prop or wallet share with customers over the long term? It would just be helpful to get your perspective on this.

Rubrik is a very large and complex piece of software. And it is an enterprise scale cold with about a dozen years of soaking time with thousands of customer feedback and customer use cases in a large enterprise environment that has been built into this. And so it is not something that you can wipe code [indiscernible] can solve. And we are the system of record of last resort around data and identity when a large bank or large hospital face ransomware attack. And at that time, Rubrik is there to help their business come back online and get going.

Moreover, as I said in my prepared remarks, Rubrik is a hardware optimized platform optimized software. So -- and we have 1,000 engineers working on it on a daily basis to kind of enhance it and take us some feedback and soak in time with our products. So I don't believe that we have any disruption risk at all from AI.

The second important thing is, we are also not an orchestration application software. We are a data infrastructure company. And [indiscernible] system of record data management is the most important capability you need for this AI transformation. Because if you have no data, or the integrity, or confidence in the data, or the availability of the data, then you have no AI. Data is the foundation of AI and Rubrik is the foundation data infrastructure software. We are not price our product based on number of employees in the company. We price our product based on the size and volume of the data.

So Rubrik's importance only grows with the growth of AI and AI transformation of the enterprise. And we want to accelerate that transformation. That's why we introduced Rubrik Agent Cloud. Rubrik has stated mission is to secure and accelerate world's AI transformation. Because when world goes through more AI transformation, it has more data, more software, more cyber [indiscernible], larger surface area of attack. More agents means more surface area of attack, more cyber compromise, you need more cyber resilience. You need more cyber recovery.

So we believe that our opportunity is only -- we believe that our opportunity is only growing and that is reflected in our results. If you look at our results, we delivered the most clean and complete reserves of any cybersecurity company. And that is not [indiscernible]

Your next question comes from Todd Coupland of CIBC.

You had record net new in the quarter as we think about the coming year, Any, I guess, pull forward in Q4? Looks like the Q1 guide is seasonally lower by quite a bit. Could you just talk about those dynamics and whether or not you had any pull forward in Q4?

This is Kiran, I'll take that one. So we had a very strong Q4, $115 million accelerating growth. But I would say it's a broad momentum quarter both large and small deals. And we have spoken about earlier. We'll always have some deals, which closed [indiscernible]. That's the nature of the enterprise software business. That's why we look at our business from a net [indiscernible] on an annual basis and really pleased with the 20% growth there.

And I wouldn't call out anything from Q4 impact in Q1. Just I would remind everybody that last year Q1 was fairly unique. When you look at Q4 in the previous year versus Q1, there was a small debt. So it's a tougher compare when you look at growth rate, but from an overall scale perspective, and again, if you look at it on a full year net [indiscernible] basis, the starting point for the guide is stronger than in terms of growth than last year.

Your next question comes from Junaid Siddiqui from Truist.

Your growth shows that you're continuing to take market share and making significant inroads in display these legacy vendors as you've cited. How much of a runway do you think is left in displacing that legacy base? And maybe if you could just touch upon the competitive environment in the quarter?

Thank you, Junaid. We are very early in legacy replacement. This is a very large and deep market. And as we are doing cyber resiliency transmission, specifically for the data center environment, we have a tremendous opportunity to continue to devise a legacy vendor. Our win rate against the data protection vendor across the board is north of 90% in Q4. I'll repeat north of 90%. The only deal that we are losing is the fight that we are not in.

We are figuring out how do we get them in more fights, more routes to market, more parts of the world and continue to disrupt this market. And while we are disrupting the legacy space, we are opening up markets around cloud, around M365, around [indiscernible] and with AI, this new Rubrik Agent Cloud. So not only we have disrupted the legacy backup and recovery data protection market, but we have vastly expanded this market and completely redefined it to position this towards AI. And we are leaning into that AI and agentic disruption to really create, again, as I said, the most important security and AI operations company.

Our next call comes from Keith Bachman of BMO.

Bipul, this is also for you. I wanted to go back to the [indiscernible] cloud. Seems like a very interesting opportunity as we look out over [indiscernible], but I wanted to get your perspective on a few things. A, who do you see as the competition? There's lots of companies that you've talked about the monitoring control plane, if you will, of agents? And therefore, who do you see as your competition for this particular sector?

And B, how do you think about how your go-to-market may transition? So for instance, at BMO, the folks who buy Rubrik cloud for our backup, they're not the same people who would be buying a tool for monitoring controlling agents. And just wondering how you think about how you might be to make the any changes to go to market? And then see, when do you think we would be in a position to talk about contribution of Agent Cloud to your results even in any kind of metrics you might be able [indiscernible]

Thank you, Keith. So let me take the first question about this market. This agent control and governance market is a new market and it's still very early days of this market. And as you can imagine, everybody with [indiscernible] is jumping into this market. And most of the cybersecurity observability, ML of durability companies are now repositioning themselves as agentic observability, agentic governance model.

My belief is that the traditional cybersecurity companies, or people in those cybersecurity companies will not be suitable for this market because traditional cybersecurity is all about rule-based platform, and they're not in the real-time control of action. This market is about dynamic control. And you need to bring an AI to control agentic actions. And AI requires model engineers. And most of the cybersecurity company, probably none of the cybersecurity company or these start-ups have any model engineering. We brought [indiscernible] to solve this problem. And we are -- which we believe we have a unique solution to control agency action with AI to really drive intent-based understanding of action and stopping it.

So again, the market is very crowded, a lot of noise. But we believe that we have a unique perspective and solution in this market. Time will tell how this develops and how we grow, but we are excited.

In terms of the buyers, again, this is a new market. Somebody under the [ IO ] organization will be the buyer [indiscernible] is our ultimate buyer for our data protection business. So we have some convergence with the ultimate buyer. Some organizations we see Chief Data Officer, Chief AI Officer, interested in this space, some organizations we see engineering team interested in this space. We'll figure out how it all develops. But we like what we see so far and we'll keep updating you as we make progress in this space.

Your next question comes from James Fish of Piper Sandler.

Bipul, for you. With the increasing [indiscernible] and data being created, are you seeing an exponential increase in the amount of data even more so than that sort of traditional workload? And how you're able to kind of compress us down to that enterprises just aren't overwhelmed with the data? And then just as a follow-up on the go-to-market side, you guys talked about how much capacity are you guys looking to add? And how did productivity goes for the year?

Thanks, James. Obviously, AI acquires data and there is definitely that data growth associated with AI. Having said that, agentic like deployment in the enterprise is still early. And the main hurdle has been governance and security. And that's the problem we are solving. So I anticipate when the enterprises get fully operational on agents, they will have again, more usage and production of data. So we are agreement very excited about this market.

In terms of like how much we are going to add from this. Again, this is early days for Rubrik Agent Cloud. We are still learning and going through our process, just like what we did for identity last year, where we went with work with the customer to understand their problems understand how tuned our solution was before actually scaling. And going through that learning [indiscernible]

Your next question comes from Shrenik Kothari from Baird.

Yes. So -- so Bipul, I know you said time will tell, but you guys have been framing these products [indiscernible] and are you feel, of course, [indiscernible] recoveries move from proof point to real growth factor? And I know you've said it reflects multiple years of work versus agent cloud still early, of course. I wanted to ask you just how to [indiscernible] where [indiscernible] sits today versus your original expectations around the [indiscernible]?

And then how should we think about the difference overall from an [ ESCO ] perspective in terms of timing, relative magnitude? And size again. I mean I know it's still early, but just curious how you are thinking about those?

Shrenik, thank you. If you look at our history, Rubrik is a multiproduct platform company. And as I said before, the value from the platform increases as our customers adopt more of Rubrik platform. And over the years, we have multiple products that we have scaled to 100 million-plus ARR in a short period of time. And as I said, Identity was the fastest growing product for us. In fact, it did exceed our expectations as how fast the product has scaled.

And also, our [indiscernible] team did a tremendous job of building an amazing product and also building amazing set of capabilities not just identity recovery but identity resilience, which is both before and during attack, plus also creating an Okta solution, which we are seeing, again, early high interest from our customer base. So we are committed to building a long-term company.

The long-term company can only be built by stacking as [indiscernible]. We are always looking over the horizon and thinking what else should we be building, how else we can serve our customer better. How do we become a long-term strategic portfolio to our customers so that we learn from them, we build for them. We serve them in a way that creates some multi-decade partnership with them.

There will be no further questions at this time. I will now turn the call back over to Bipul Sinha. Please [indiscernible]

Thank you so much, everyone, for your time today. As I said on the call, we remain very excited about opportunities in front of us. Both cyber resilience and AI resilience and AI operations remain strong opportunities in front of us. Our team is dedicated to making sure that our customers go through AI transformation in a low- risk-free manner, and really take advantage of the productivity promised by AI. Thank you so much again for your trust. See you in a quarter.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.

Hello, everyone, and welcome to the Data Recovery Summit. We are absolutely thrilled to have you with us today. I'm Alok Agrawal, Chief Solutions Officer at Rubrik. We have an incredible agenda ahead backed with new cyber recovery strategies, technical deep dives and major product announcements that we simply cannot wait to share with you.

I want to start by acknowledging something we don't say out loud enough. The role of IT has fundamentally changed. Now I'm risking oversimplification when I say this: it is no longer just about systems uptime. With the escalating threat landscape from disasters to ransomware and the looming risks of AI, the role of IT is now critical to organizational and business survival.

Security is doing everything they can to defend. They are spending record budgets on prevention but the hard truth is threat actors are still getting through.

Every time prevention fails, IT is in the spotlight. Now visualize the moment the cyber attack hits. Everyone across IT, security and compliance teams are concerned.

But amidst the chaos, the Board, the CEO and the shareholders turn to you with paralyzing questions. Can we recover the data? What is the damage? How long will it take to recover? What is the plan? And if you are the one answering those questions, you will live through 1 of the 2 contrasting outcomes. The panic mode, chaos, fumbling, lengthy disruptions, reputation damaged; or the resilience mode calm and confident execution, crisis avoided, business is online. This isn't about buying a tool. It is about deciding which of those two time lines you want to live in. It is about being the hero your organization will need in the time of crisis.

So why do so many teams end up in scenario A? It is because of the reactive trap. We tend to split cybersecurity into 2 boxes: Proactive, usually focused on preventing the attack; and reactive, often viewed as recovery unknowns that can only be figured out when an attack occurs. But when the alert goes off, uncertainty is the enemy of velocity. If you use your downtime to figure out what happened, you are not recovering. You are investigating. And every minute you spend asking what do we do next, pushes the crisis closer to a catastrophe. Your IT organization will be in the spotlight as the executive team, the Board and the customers ask: How long will it take to recover and come online? And when they ask how long? They are truly asking about your MTTR, mean time to recovery.

Now as you know, MTTR is a widely used industry term and concept. But in a cyber attack, MTTR isn't about how fast you can move bits and bytes over the wire. Speed does not matter if you're moving the wrong data. It is about precision. To shorten your recovery time, we have to break that equation down. The first is time to detect. The SOC sees the alert, the clock starts ticking. Second, the time to investigate, finding that clean point of recovery. Third, the time to restore the actual physics of moving data. And fourth, the time to validate, proving that the system actually works.

Now if you look at that equation, there is a trap. A variable that destroys your weekend, your bottom line and your reputation, that is the time to investigate. This is that investigation delay. It is the days, weeks, sometimes months that you spend paralyzed by 4 questions: What's the scope? What did they touch? And if you miss something, you will leave the back door open.

The second question, what's clean? Which backup is safe? And if you guess wrong, you take the risk of reinfecting production and starting all over again.

Third, what is the exposure risk? Did they exfiltrate the data? And if you don't know, compliance will be waiting at the door.

And fourth, can they regain access? Is there a compromised identity? And if you don't fix that, in the words of Arnold Schwarzenegger, the threat actors are going to say, "I'll be back". In an uncertain world where recovery is reactive, you answer these manually, you guess, you mount a snapshot, you scan logs, you fail, and then you try again. That is not recovery, that is just digging. To be the hero your organization needs, just restoring faster is not enough. You need to systematically reduce every delay variable in that MTTR equation. What if you did not have to wait for the attack to start the investigation? What if the investigation work was performed preemptively? To show you exactly what preemptive means and what it looks like in action, please welcome our CTO, Nithra.

Hello, everyone. I'm Arvind Nithrakashyap, Co-Founder and CTO at Rubrik, and I'm really excited to be here with you today. So Alok talked about a cyber attack scenario. So let's revisit that and see how this plays out. So usually, it begins with an alert. The SOC does confirm a cyber attack. At that point, you're walking into the Boardroom and immediately, there are questions being fired at you. How far does it spread? When can we be back online? Was there sensitive data that was compromised? And for IT teams, these are the hardest questions to answer, especially when there's a clock ticking. So you open your back-up console, you're starting at multiple recovery points across hundreds of applications. And this is when the uncomfortable truth hits you: having a backup is only the beginning. Because in the event of a cyber attack, your last backup, most likely isn't clean. So the problem is, traditional backup relies on a catalog. It's a static index. It tracks file names, sizes, dates. It tells you where the data is, but nothing about what the data is or what happened to it. And this is the uncertainty that creates days or weeks of investigation delay. And this was the piece that Alok also hinted upon.

So cyber recovery requires a change in the fundamental architecture. And this is where the Rubrik preemptive recovery engine comes in. What it does is it uses a time series data architecture to solve this. The engine just doesn't show the data, it captures a complete time series of your entire enterprise data. And unlike traditional systems that just track basic metadata, the Rubrik Preemptive Recovery Engine tracks how files change over time. It tracks permission updates, and it also tracks entropy. And what it does is it creates contextual metadata and decouples it from the data. And very often, as you know, metadata is a small fraction of the data. And this is what makes it efficient to run continuous analysis on your data without impacting production. It enables you to answer questions, those, impossible questions before they even come up.

Now let's break down how this shortens the investigation delay in the MTTR equation that Alok covered. First, anomaly detection. As data flows in, the engine applies machine learning to the metadata stream. It identifies anomalous behavior instantly. But again, it does this after learning the behavior of the system. So it detects high entropy, mass deletions, unusual file extensions, encryption spikes. For example, if you have a weekly job that modifies a ton of data, it will learn that. But if something happens in the middle of the week, that's when it will trigger. And the time series data, it spots the deviation during backup operations. It doesn't wait for you to launch an investigation. The engine is continuously identifying the latest non-anomalous recovery point.

But let's talk about threat monitoring and hunt rate. This is the hardest part within any cyber investigation. You need to find any presence of malware across the entire environment and make sure that you don't restore it. And this is where the delay comes in. So traditionally, what do you have? This is where you get stuck in a trap. You find a backup, you mount it, you scan it, you find malware. Okay. That backup doesn't work, so you have to tear it down and then you do it all over again. So you're stuck in this restore-scan-fail loop until you find a clean copy of the data.

If you have petabytes of data with frequent snapshots, you cannot scan fast enough. Let's do a simple math. Imagine 5,000 workloads, daily snapshots, 15 days of retention, that is 75,000 snapshots. Even if you scan incredibly fast, one minute per workload to mount, scan and tear it down, it would take you 50 days to scan all just to prove they're clean, 50 days of downtime. This is when you'll be thinking about whether you should pay the ransom.

Now what does Rubrik do? The Rubrik Preemptive Recovery Engine analyzes backups in line as we're taking the backup. Scanning for known indicators were compromised as [ they're ingested ]. Rubrik leverages Google Threat Intelligence, it can detect many 6,000 malware families and 500 attack tools. And this is done proactively before the attack. This means when you open the console to see what happened, you already have the insights to identify which snapshots are clean.

And even if it's a zero-day attack, think of ALPHV/BlackCat, BRICKSTORM or any new indicator of compromise that was just discovered yesterday or today, you're still covered. All the preemptive work performed at threat monitoring to create a global hash table makes scanning for a new IoC as simple as squaring the metadata index. You upload the file hash, scan up to 75,000 snapshots in 60 seconds. And that is the difference between a 50-day investigation and a 1-minute query.

And then, of course, the sensitive data exposure. While you're finding a clean point, compliance runs into another critical question. Did they exfiltrate sensitive data? You have to disclose exactly what is breached because there are regulatory requirements for many industries.

So during backup operations, Rubrik automatically classifies the data. It tags PCI, HIPAA, PII or any other kind of sensitive data that you defined. So when the attack happens, you don't just know what was encrypted, you know if it was sensitive. If you know there was exfiltration from a particular server, you know whether the sensitive data is sitting in that server. You know exactly what the regulatory exposure risk instantly.

And last but not the least, there's identity. Most attacks start with a compromised account. To restore your clean data but you leave the compromised admin account active, attacker would just log back in and lock you out again. To deliver true resilience, Rubrik tracks identity attributes and file permissions within the backup. It identifies unusual behaviors, say, like a sudden escalation in privileges and with a secure backup of active directory Entra ID and Okta, you can remediate compromised accounts. You can roll back the compromise attributes. You close the door that they came in through. This is what we mean by preemptive recovery. With the traditional architecture, the investigation starts when the attack happens. It's a race against time filled with uncertainty.

With the Rubrik Preemptive Recovery Engine, the investigation is already done, you can actually recover with confidence. And that is how you turn an existential crisis into a managed event.

This is the engine that powers our platform, Rubrik Security Cloud. And now to talk about the platform and what we're building on it, let me welcome our Chief Product Officer, Anneka Gupta.

Hello, everyone. I'm Anneka Gupta, Chief Product Officer here at Rubrik. Let's zoom out and look at the complete picture of Rubrik Security Cloud. This is the platform that secures your data, whether it lives on-prem, in the cloud or in SaaS apps, all in one place. It continuously scans for threats in your data to pinpoint the exact scope and impact of an attack. It secures and monitors your identity systems from active directory to Entra ID and Okta to detect and roll back unauthorized changes and it orchestrates a rapid recovery to a clean point so you can minimize downtime and bring your business back online.

Even with the best platform in the world, the system still relies on one critical variable: You. We've talked a lot today about the pressure you face. The threats are getting faster. The environments are getting more complex. We know you can't clone your best engineers. We know you can't manufacture more hours in the day. And frankly, the last thing you need is another tool that just gives you more alerts. So we did the next best thing. We built you a new teammate. You may know Ruby as an AI assistant. You ask questions, it gives answers. It's helpful but assistants wait for instructions. When a backup fails or a ransomware alert hits, you don't need an assistant to chat with. You need someone who can act. So today, Ruby gets a promotion. It is evolving from generative AI to agentic-AI. Ladies and gentlemen, let me introduce you to Ruby, your new AI teammate for backup and recovery operations.

Now before I show you what Ruby can do, I want to share how we built it. We obsessed over 2 things: first, design principles. We gave careful consideration to the tension between what makes IT teams nervous and what makes them excited. Anything that touches your business-critical data requires strict guardrails. So when using Ruby, we want you to decide exactly how much control to maintain. You can use it to analyze risks and provide insights or you can let it perform specific actions where it recommends a solution but waits for your approval. You'll always be in charge.

Second, the job to be done. We didn't want to build something just to fill a press release with buzzwords. We wanted to solve the actual friction in your day. We started by listening to customers, analyzing support requests to find the drudgery the work that eats up hours without creating new value. We found that in the majority of cases, valuable time is being lost to troubleshooting failures and managing routine operations. We wanted to build Ruby to solve these specific operational challenges that keep you from doing your real work.

And the first challenge we found was troubleshooting. You know the feeling, you start your day, you're in the flow, you're building something new and then interruption hits with an alert. Backup failed. You get an error code, each system holds some details but you have to stitch together the signals from different clusters, infrastructure, hypervisors and so on. Is it the network? Is it storage capacity? Is it permissions? Is it a failed drive? The fix might be simple, but root cause analysis consumes time, attention and brain power.

Let's look at fixing this issue with Ruby. The alert comes in, this time, you don't have to dig into the details. Ruby can do the root cause analysis for you. In this case, it runs deep diagnostics across logs, connectors, credentials, policies and clusters and then present a clear root cause and a remediation plan. The vCenter is disconnected. I recommend refreshing and restarting the job. And then as per the design principles, it asked for permission to take further action. You say, yes, Ruby refreshes the connection, restarts the backup, confirm success. Instant resolution. You can immediately go back to doing important work. We'll be rolling this out to customers starting next week. Let me show you where Ruby is going next.

A real teammate takes on more work, like the work that drains time and energy, fielding questions from different teams. Finance wants to know why the storage bill is suddenly spiking, leadership asks for the current backup success rate, compliance needs details for an upcoming assessment. None of these questions are unreasonable. And often, the answer is usually simple and already exists somewhere in the system but it requires pulling data from multiple views, time ranges and object types, manually gathering metrics and translating raw data into insights. It is tedious work. Any discrepancy can lead to confusion or loss of confidence during the assessment versus with Ruby, it's a straightforward prompt.

You ask Ruby "Show 7-day compliance by cluster, highlight anything under 95%." Ruby understands the intent, compliance over time, sliced by cluster and workload. It maps the request to the right data, computes the metrics using workload-specific definitions, operating strictly within the role access control of the admin. In seconds, you get a heat map and a ranked list of at-risk clusters. From there, you can drill down filter by region or schedule it as a weekly report. What used to require multiple scripts is now just a prompt way.

Finally, I want to talk about the moment where all this matters most, recovery. In the previous segment, you saw how we find the clean data. But once you find it, you face the final hurdle: orchestrating recovery. In this case, let's consider a business-critical SaaS application, Microsoft 365.

When an outage occurs, it can take an enterprise weeks or even months to get their teams back online and their data recovered. Imagine thousands of users, exchange, OneDrive, Teams, you can't snap your fingers and bring it all back instantly. So you have to choose who comes back first: The CEO, legal, finance and where is their data. In a crisis, you need to be surgical. Don't think of it as recovering data. It's about recovering people and accounts. It's about recovering the minimum viable company to address the crisis right away.

You define the core, you tell Ruby who matters, Ruby takes it from there. It analyzes access telemetry. It looks at what they actually touched, e-mails, calendars, contacts from the last 10 days, the active OneDrive files. It built a context map of the data they need to be functional right now. Ruby presents the plan, you refine it.

"Ruby exclude archived mailboxes, but ensure the Q4 financial report site is included". Ruby updates the blueprint and gives you a precise RTO. If we execute this plan, your core leadership will be online in 12 minutes. You give it permissions to recover. Your minimum viable company is back to work. Decisions are made, the company breathes again, while the massive petabyte scale recovery continues in the background. This is the difference between data recovery and business resilience. You are the architect, you set the strategy, you make the hard calls. But for the drudgery and heavy lifting, this is Ruby, your AI teammate.

While Ruby changes how you operate, we are also adding more depth and coverage to Rubrik Security Cloud. We're bringing threat monitoring and turbo threat hunting to NAS Cloud Direct. Threat monitoring proactively scans or unstructured data during ingestion to detect presence of any known indicators of compromise. And if it's a zero-day, just upload the file hash and turbo threat hunting can scan up to 80,000 snapshots in under a minute, not days or weeks to identify clean recovery points.

And we're adding even more coverage to the Rubrik Security Cloud, extending Zero Trust data security to IBM Informix databases and bringing native support for Oracle Linux Virtualization Manager and Proxmox VE. We're also expanding our peer storage partnership with 3 new capabilities, a validated reference architecture for unstructured data automatic tagging of clean flash array snapshots and native API integration to deliver trusted recovery in seconds, not hours. We have more exciting updates to share. Stick around for the panel discussion and be sure to catch the breakout sessions for more details. Thank you for your time and enjoy the rest of the show.

Hello, and welcome to the next session in the Data Recovery Summit. This session is entitled: When prevention failed, real recovery stories from the trenches. My name is John Murphy, and I have the great pleasure to be joined today by Kyle Fiehler of Rubrik Zero Labs; and Stephen Foskett, subject matter expert on all things Tech Field Day. Guys, I'll let you introduce yourself, Stephen, let's start with you.

Thanks, John. It's great to be here. Again, my name is Stephen Foskett. I'm the President of the Tech Field Day business unit at The Futurum Group, and I have focused on storage and data protection for basically my entire career. I've written books, done a lot of seminars and webinars. But more importantly, I've spent a lot of time in those data centers in the trenches trying to help companies including my own employers and others to do a better job of data protection.

Excellent. Yes, and great background. Certainly, I think those of us who have been in the industry for a really long time have seen just tremendous change. But I think one of the things that sticks out to me is that we see patterns over time. And Stephen, I'm hoping you're going to bring a lot of those patterns out as we talk about this today. Our objective really is to make this as valuable for you attendees as possible. So feel free to post questions, do follow-up work, as you will.

And Kyle, tell us a little bit about yourself, you are an integral part of the Rubrik Intelligence team here.

Yes. Thanks, John. Happy to be here. Yes, my name is Kyle Fiehler. I have about a decade of experience in the cybersecurity industry, working for mostly vendors across the endpoint network and now with Rubrik in the resilience space. So I am an analyst researcher with the Rubrik Zero Labs team. and we are sort of studying how threat actors operate and how resilience and backup data can be an essential source of threat intelligence and how it may inform operators on some of the threats that they're facing.

Excellent. Excellent. This is going to be a great session, guys. Just to level set for everyone in terms of what we're hoping to get out of this, as I've mentioned it's really meant to be for practitioners to give you practical guidance on things that work, things that don't work. And kind of to the point what happens when you get that 2 a.m. phone call? And what are the first things you should be thinking about during that phone call.

You're going to hear a lot about the fact that we think a lot of this can be done beforehand. So that phone call ends up being more of a rote memory kind of exercise than it is a quick respond and figure things out on the fly piece.

But I kind of want to start with just kind of setting the stage for what we think of in terms of availability and why that is important for this. So if you think about whose job recovery really is, it's easy to get caught in the -- well, it's security's job or maybe it's IT infrastructure's job or maybe it's the business resilience team's job. I think at the end of the day, we all recognize it's everybody's job. We're all going to play parts in that recovery. And that recovery really has huge business impact for us. Whether you mentioned -- whether you measure your success in terms of financial or mission-critical services that you provide to your customers, the bottom line is that our uptime really makes a difference in people's lives.

And if you think about one of the wanted goals for uptime is 99.999% or five nines. Well, as we talk to business folks about that, they probably don't necessarily understand what that means, but they do understand the impact, which is there's a measurable impact to individuals there, whether that's financial, a 99.999% uptime for a year still leaves you with almost 6 minutes of downtime. And most of our SaaS providers, which were becoming immensely more dependent upon only guarantee about 99% uptime which means that there's a whole lot more downtime that you might have to be prepared for.

So one of the things I want to draw out here is what's happening in the environment. And we're going to start a little bit with talking to you, Kyle, about what we see from a threat actor perspective. And what threat actors are really doing to monetize our success or our lack of preparedness depending upon what exactly is happening in the environment.

I tend to think about the bad guys in a slightly different way. I think about them as competing businesses, right? They are looking at how are we doing things today and how can we force our competitors which is all of us in the private industry to make as many mistakes as possible in the shorter term as possible.

So Kyle, with that backdrop, if you wouldn't mind, just take us through what you're seeing from the Rubrik threat intelligence perspective, Rubrik Zero Labs perspective?

Yes. I think as threat actors, your motivation is going to determine your TTT -- your TTPs, excuse me, your tactics, techniques and procedures. So you may have a financially motivated threat group who as soon as the compromise has occurred and as soon as they have access to your environment, they are going to want to let you know that they are there to maximize their leverage. So they can do this in a couple of ways. We see a lot of threat groups today, specifically targeting identity infrastructure because they know that once an organization is unable to authorize and authenticate its users, granting access to any business critical apps is extremely risky.

And so we see a lot of financially motivated threat groups that excel in compromising identity infrastructure. And so an organization's ability to reset that infrastructure to roll back any changes that may be made in terms of privilege escalation, role-based access manipulation, that's a critical capability for organizations.

Another thing we see quite frequently is the deliberate targeting of cloud-native backups. So Google's most recent Cloud Threat Horizons Report confirmed that a lot of groups like UNC2165 so, Evil Corp is another name that it goes by. These groups are deliberately targeting cloud-native backups because they know that if an organization's Plan B has been erased, the leverage has been maximized over those groups.

And it's the same with the compromising of identities. If you cannot grant access to mission-critical applications, operations are ground to a halt. What this does is maximizes leverage over the target organization so that ransomware demands will be complied with in a speedy manner. Basically, extortion is conducted more quickly. Anything that furthers their goals, happens more quickly in that scenario.

And so there's another category of threat actor, the state-sponsored threat actor that may be more interested in conducting corporate espionage, eavesdropping or even implanting a back door that they know that they can come back to at a later time and access to compromise the organization. And so those threat actors are going to be more interested in being stealthy, evading detection, avoiding the indicators of compromise that would force a response on behalf of the target organization. And so they're going to be more interested in implanting malware in areas that maybe EDR solutions have less visibility over such as a hypervisor. We saw this with BRICKSTORM, Rubrik Zero Labs specifically saw this with BRICKSTORM in some customer environments. And that's one of the reasons why as I'll say again and again, backup data is a very critical source of telemetry for threat hunting.

Excellent. Excellent points. And obviously, for those who are watching this, Rubrik Zero Labs has done some extraordinary work recently and gotten some industry accolades for the way that we've used that backup and actually understand what threat actors are doing long before they launch an attack.

I'm going to switch for just a moment and talk a little bit about what happens when the social side of things is engaged. So couple of high-profile attacks recently that involved more social engineering than they did technical attacks. And I would wonder if you share anything from those attacks that's a key takeaway for our attendees today.

Yes. It's becoming another tired saying in infosec that threat actors no longer hack in, they log in. You hear it time and again, but like a lot of cliches, it's true. And you see groups like Scattered Spider is one that's had quite a bit of success recently partially because of facility with the English language knowing cultural savvy and the ability to -- or the chutzpah, I would say, to just call up a help desk and say, "I need you to reset my two-factor authentication." And an unfortunate number of times, that actually happens. So that's a group that's seen a lot of success with sophisticated social engineering attacks. And again, it goes back to the identity piece. You have to trust in your ability to authenticate and authorize users if you want to be granting access to business-critical apps. And so what they're doing is they're undermining that trust by hijacking legitimate credentials.

Yes, no, excellent points. Stephen, I want to pivot for a second to you. In those moments -- so we talk about when failures happen, we're talking about social engineering, but getting past all that, in those first moments when something happens, what are the things that the first, I'd say, a couple of dependencies that you have in mind that really constrain the ability to recover.

Well, I think, first off, Kyle did a great job of sort of laying out where we're at right now with cyber threats. And it's interesting to how much these things have escalated in terms of everything from the profile, the attack methods, the targets, et cetera, and yet how much has stayed the same. Because ultimately, when an attack happened in 1990 or when an attack happened in 2025, you're kind of in the same situation in terms of how are we going to recover from this and in most cases, the answer is, uh oh, am I ready? And ultimately, I think that the thing that can make people feel more confident and poised when that moment happens, is practice. It's just like anything else.

I mean there's a reason that police and military and all sorts of other first responders are constantly practicing, and that's because when the moment happens, that's not the time to think about, am I covered? Do I have my backup? Does it cover everything that I need? Do I know how to operate it? Do I know what the procedure is that all can be handled previously in preparation for the moment when it happens because the last thing you want to do is panic.

Now that all is easier said than done and has been as long as people have been trying to protect data, it's a challenge for people who are in the data protection environment to understand what is the data? Where is the data? What are the applications? What data is needed to -- what native data needs to be recovered and at what process and what pace what's more important, what's less important. All of these things are questions that can be answered but questions that have been very difficult to answer for a very long time which is why it's nice to see when products in the market are now starting to try to help people with that, try to give them a heads up if things aren't being protected, suggestions on other areas that could be and also trying to be more all encompassing.

As Kyle mentioned, identity threats are really rising in prominence and yet, until very recently, data protection products didn't even cover identity management, identity threats at all. They didn't offer any kind of ability to check that or to protect that or recover from that. So it's very exciting to see products responding to those kinds of emerging threats in a productive way. The same is true, as mentioned with cloud backups. I mean that was originally a tool that protected you and now it's an opportunity for another attack surface. And so there, again, we have to make sure that those are protected.

But ultimately, I think the thing that people need to think about is how can I be ready when this happens? And the answer to that question is always going to be the same. It is to understand your data, to understand your applications, to understand your business, and to spend a lot of time and energy preparing for that moment instead of hoping when that moment happens, that you're ready.

Yes. Great set of points. And I can tell you as a practitioner for a very long period of time, that idea of just testing until it's muscle memory, test until your eyes bleed is something that I can't say enough of because I think, to your point, it just gets all the questions out because no plan is going to survive first contact with reality intact. But the more that you test, the more things that you see are wrong with your plan, and there's no pressure at that point, right? What you're learning is free as opposed to when it's a downtime impact.

Related question for you, just to help level set and so you don't have to go into any specific -- product specifics. But help the attendees understand what we mean by things like secure vault or a clean room, if you would?

Yes. So clean room is another rising potential here. I love the idea of it. Essentially, if you have been attacked, if there's a bad actor in your environment, you can recover data to that environment. But how do you know that the bad actor is out of there? How do you know that there's not something else compromised? How do you know that they're not corrupting it or infecting it or attacking it even while you're bringing it back? The answer is to bring it back in a clean environment, a cleanroom. And this is something that has always been a goal, but it's always been very hard to achieve because, of course, the last thing you want to do, I mean, can you imagine if protecting your house from a fire meant having another house exactly like yours fitted out with all your stuff like right next door.

Sure, that would be great if there was a fire because you could just move right in. But we can't really do that in IT because essentially, we would have to build everything and that would make everything cost more. Happily, today's DevOps processes, cloud computing has all made it actually a lot easier and a lot more practical to literally automatically spin up a clean environment on demand to recover to. And that is a really powerful feature because it means that you can be sure that if I'm rolling back to before the attack, I'm rolling back in an environment that is, as we say, clean rather than risking immediate reinfection.

Kyle, what do you think?

Yes, absolutely. And I think that preventing reinfection is one of the most critical points in the recovery, and it's also one of the most difficult. So yes, having a clean environment like that, that you can restore from is absolutely critical.

Yes. And Kyle, just to pick up on that. What are the things you look for? Like what are the signals in the recovery environment that you're looking for? And how do you find them long before we ever get into the conversation of what to do in an emergency?

Yes. And I think it comes down to essentially nailing a couple of the steps in the incident response. So determining the scope of the recovery is the first step in -- often one of the lengthier steps in a recovery operation because you have to accurately determine what assets have been impacted to what extent if you are going to successfully roll them back to a prior state, prior to the infection that is. So that's absolutely one of the key steps to a clean recovery.

You have to then be able to quarantine those assets. So that you can stop things like lateral movement from occurring and threat becoming out of control in your environment which expands the scope drastically and lengthens the time of recovery. And then finally, I think you have to be able to successfully validate that recovery, and that's where things like the cleanroom come in. But in the validation process, you're scanning for things like known indicators of compromise, those may be hashes, YARA rules, but those are some of the things that you have to look for and make sure absent before confirming a clean recovery.

Excellent points. Yes. And I think certainly, you tie the idea of a vault into that. And the vault being a copy, a separate copy, whether it's physical or a logical friendly production environment, and that gives you the ability to conduct those searches without impacting production. Where, if you're a bank or if you're a financial organization, you can't afford a lot of extra traffic on your network, being able to do that actually makes a huge difference in incorporating exactly what you just said, which is preemptively scanning for those things makes a huge difference in recovery time. And Stephen, I'm sure you've got some first-hand experience with the ability to do that and the impact it potentially has?

Oh, absolutely. And it is absolutely amazing to see the amount of information that can be gleaned from data protection. It's one of those things for a long time, we were not really paying attention to. We were protecting data. We are making copies of data and then suddenly, somebody realized, wait a second, this is just a treasure trove of information for the business to figure out what data is, what the patterns are, what's happening that was then taken to the next level by these vendors who are able to do anonymized scanning and assessment in real time of the data environment and basically, like Kyle was saying, finding these threats and exposing these threats, it is really incredible what you can learn from the data. But of course, that's also a source of information for the attackers. And so we have to make sure that they're not learning the same things by scanning and examining our data.

Yes. That's a great point. And probably one of the most frustrating things, I think, for practitioners regardless of where you fit in the organization is just recognizing that they could be in your environment at any point in time and learning the same lessons or more important lessons than you were at that point.

Well, especially like Kyle mentioned, some of these threat actors are -- their goal is not to do ransom or anything. Their goal is just to be there and to be ready and to attack at some point in the future. And that's pretty scary, isn't it?

It is. Yes, it certainly is. We talk about complexity, we talk about response time and how quickly we need to be able to respond. From your perspective, Stephen, how do you handle the problem of having so many different -- too many different dashboards, so many different points of reference that it's difficult to tell what's noise and what's actually a signal that we should be paying attention to?

Well, there's a couple of factors there. One of them, of course, is the question of just the sprawl of modern IT systems. Gone are the days that there was a server that ran an application. Today, even the most simple applications span multiple servers and multiple network devices because remember that attackers are attacking storage devices as well. They're attacking databases. They're attacking all sorts of elements of the application stack. But even beyond that now, most organizations also have cloud computing environments, they've got software as a service, increasingly, they've got AI applications, AI agents, all of these things are critical business resources as well. And all of these things need to be monitored and protected.

So there's a couple of different aspects there. I mean, number one, if you are a data protection pro and you're tasked with cyber readiness, you have to understand where everything is, not just where the core servers are or where the core applications run, but you really have to understand where every business-critical application runs. And then you have to figure out how can you monitor that? How can you manage that? How can you protect that data? How can you recover that? Because that's another challenge as well. If something is off-site or with a service provider or something, how can you make sure that that's all recovered.

The good news is that products are increasingly covering more and more and trying -- I don't know that we'll ever get to the goal of a truly unified data protection platform but that is absolutely the goal of companies in the data protection space. They're trying to make sure that they cover as much as possible, they cover pretty much everything. And I really look forward to that. I get excited when I see companies covering new platforms. Even if it's not a platform that I use, having it cover all of the major SaaS or all the major cloud platforms means that it's more likely that companies are going to be cyber-ready.

Yes, excellent point. And I think the sort of the takeaway there is in that time, that preparation time when it's not a production down environment is the time to figure out which boards, which screens are you going to pay attention to most? And so just knowing that is going to save you time in response.

And that's an area where vendors can, of course, help as well by figuring out ways of monitoring and exposing those metrics.

Yes, absolutely. It's funny. The -- when I started in cyber, there were not that many tools. We were writing a lot of our own tools. And with the space of 10 years, I think we've gotten to the point where -- actually 15 years at this point, we've gotten to the point where the tools sprawl so many great products. They all solve very specific parts of bigger problems. And so trying to figure out how to bring them all together is something that we definitely need the vendor community to help with.

Kyle, I want to talk to you about recent investigations and what you've learned. How do attackers exploit the fact that sometimes we don't do a great job of making sure that we have a consistent set of backups across certain data sets that have to be joined up, let's say.

Yes. I think it goes back to what Stephen was just covering. I mean in the age of hybrid multi-cloud. I mean if you're relying on these cloud-native backup solutions, each one may have a different set of procedures for recovery. And I think part of targeting those backups is the knowledge that if you're coordinating all that -- and it's more than likely a very small team who's forced to coordinate the recovery across multiple cloud instances.

I mean, there's tremendous opportunity for human error or for something along the chain of -- the multiple steps you need to go through to recover your data to go wrong. And I think threat actors understand that and know that it tends to lengthen recovery times. So I think that's definitely one thing. And I hear people that I talked to mention it all the time about how complicated the process of, say, recovering Microsoft AD can be multipage, huge number of steps chained together, if any of them go wrong, often the process needs to be reset. So I think that's something that threat actors understand and if these processes aren't automated to the greatest extent possible, then it's going to lengthen RTO.

Yes, absolutely. So I want to pivot. We talked about technology and best practices from an execution perspective, we talked a little bit about what the most important things are that we could have from a capability perspective like vaults. Next, I want to talk about how do we evidence this, right? So you could write a book of what the Board may or may not understand about what we do when we brief them about technology. But I think the one thing that's really clear is that both boards and regulators have a different perspective than technologists do typically when it comes to this. So I'd like to ask the both of you, and I'll start with you, Kyle, if you wouldn't mind. How does SEC, NIS2, DORA how are they impacting the expectations we have around recovery assurance?

Yes. So I think we're confident in our ability to recover is no longer sufficient evidence that you are a resilient organization. Boards want to know -- boards and regulators want to know how quickly can you recover? And when did you last prove it? So we talked a lot about drilling, testing til your eyes bleed, John. That's one that I learned from you. I think that's critical. And those tests to the greatest extent possible.

Tabletops are great for understanding what sort of scenarios you may face but to really test your ability to recover to the extent that it's going to satisfy Boards and regulators at Rubrik Zero Labs, we definitely are proponents of scenario-driven, software-driven crisis simulations so that you know not only what an RTO is and whether or not you've made the cut but what processes, what phases in the recovery are taking the most time? So is scoping the issue? Is determining a clean snapshot the issue? The more granular you can get with those recovery metrics. The more you're going to be able to satisfy regulators and boards that we do have mature recovery operations, and we're working to bring that time down.

Excellent points across the board there. And Stephen, over to you just for a second. In terms of -- you've got vast experience in this world and I would love to hear from your perspective, what are the artifacts that you think are best evidence that organizations should look to produce in terms of their ability to recover -- really ability to evidence recoverability?

Well, I think that certainly practice makes perfect, like we've talked about. But I do feel like there needs to be a focus internally on proving the outcome of these tests, not simply on saying, yes, we have good protection like you mentioned. But on -- we did a test of this. We did a test of that, we did a test on the other. And interestingly, I think that a lot of people are kind of running scared because of GDPR and DORA, even though technically, GDPR really only affects personal data and DORA really only impacts the European financial industry. Those regulations tend to spill over into the rest of the world in a way that actually can help us. And I think that it seems strange to say that because for the longest time, I mean, those sorts of things are pretty scary to have regulators coming down on you and financial penalties and things like that.

But for data protection and security and storage pros, one of the challenges has always been getting the attention of the business and getting access to the resources needed to protect data. I think one of the benefits of some of these regulations and the impact that regulators can have if there are outages and security problems, is that you can finally get that attention that you need to solve these problems. So essentially being able to -- if you're in a European bank being able to go to your management team and say, "Look, we're going to get a fine that's going to be some massive amount, 2%, 3%, 4% of our global turnover if we don't have data protection demonstrably ready to go." Well, there's never been a better impetus to having a solution to this problem.

And for the rest of those out there, I think that there's an opportunity for basically the folks who are responsible for these tasks to go to management and say, look, this is not just a technical problem. This is not just an IT problem. This is a business problem. This is a -- can we move forward in the marketplace problem? And whether that's because of regulators or because of regulations and penalties or simply because of the reputational risk that can happen, if you have a major outage or lose client data, all of those escalate the importance of data protection and cyber readiness in a way that lets us really get the resources we need to tackle these problems.

Excellent points. And I think we could probably spend a whole lot more time on that. But I think you recapped it very nicely in terms of the things that organizations should be looking at. And the perspective that maybe regulators and regulatory bodies and standards actually can be our friend here in terms of justifying where do we want to dig in, and how do we want to dig and why more importantly. It's not just compliance, it's the outcome that we're all looking for, which is stability.

Great points, guys. This has been a fantastic conversation just trying to bring it home. We have a lightning round. I'm just going to hit a couple of quick questions on the way out. Before I do that, I want again, thank you all for taking a part in this conversation with us. I'm sure our attendees are going to find this immensely valuable.

So first question over to you, Stephen. What's one thing to test this month that will materially improve recovery confidence for organizations?

Go look at your authentication, look at your active directory, look at that environment and ask yourself, do I have any kind of protection or ability to monitor this at all. And if the answer is no, start there. That's the first thing that I would look at because for the longest time, there was nothing you could do about it. Now there is, go straight to identity protection.

Excellent. Yes, excellent point. Couldn't agree more. And obviously, what we see is the first step you want to take is to secure the network when you think there's a problem. But if your identity sources compromised, there's a fundamental question that it's going to take a long time to work through.

And Kyle, similar phrasing, similar situation, but from a telemetry and a validation -- a signal validation perspective, what's your advice?

Yes. I think it would be the attitude change of recognizing that your backup data is an essential source of threat telemetry, not only for -- searching for threats in areas where endpoint detection may not have visibility but also acting as a record of threats that may have been missed. If you backed up a piece of malware, chances are you've missed it somewhere along the way. And so continuously scanning snapshots and backup data for indicators of compromise is just another source, and I would argue it's an essential one.

Excellent points. All right. Last question to both of you and Kyle stay on. We'll start with you. What's one myth about backup and recovery that you want this audience to retire today?

I'll sound like I'm beating a dead horse but just that it's only valuable as a plan B. I think that -- that's one of the most pervasive ones and I think it does a disservice to security teams.

Excellent point. Stephen?

Well, I love that one, Kyle. I completely agree. Mine would be that these things are fire and forget that essentially you buy a backup solution, you implement it and you're good to go that couldn't be further from the truth. You have to continually manage, monitor, upgrade, expand, improve, test, validate, verify. This is a career. It is not a solution that you just sort of buy and turn away from.

Yes, it's a marathon, not a sprint, absolutely. Again, I want to thank you guys for taking part and sharing your vast knowledge with everyone. I want to thank everyone for attending. This is an incredible session, and there's so much more that we can learn.

Don't hesitate to take a look at Rubrik Zero Labs or reach out to your Rubrik representative if you want to learn more. And thank you again for making the time. Coming up next breakout sessions so many great things in those sessions. So stay tuned. Thanks again for joining Rubrik.

Okay. All set?

All right.

Okay. Excellent. Good morning, everyone. Welcome to day 1 of the Barclays Tech Conference. My name is Saket Kalia. I cover software here. Honored to have with us the team here from Rubrik. We've got Bipul Sinha, CEO.

It only goes downhill from here.

Bipul Sinha, CEO; as well as Kiran Choudary, CFO. We've also got Head of Investor Relations, Melissa Franchi, somewhere here in the back, there in the back. Just to frame today's time, we've got about 30 minutes together. Let's take the first 20 minutes or so and do some fireside chat, which I know is going to be fun with these guys.

But then, listen, there's a lot going on with the business. We'd love to make it interactive. If you've got any questions, just pop up your hand, and we'll get a mic runner going around. So maybe with that, Bipul, Kiran, thanks so much for being with here today. It wouldn't be a tech conference without you.

Maybe just to start off with you, Bipul. I think an increasing number of investors are familiar with Rubrik. But maybe for those that aren't, can you just give us a brief description of Rubrik's market opportunity? And Kiran, maybe just to follow up on that. Can you just give us some of the financial highlights from the last quarter that you were most proud of?

Hi, everyone. Good morning. My name is Bipul Sinha, Co-Founder, Chairman and CEO of Rubrik. I'm an engineer turned venture capitalist turned entrepreneur. There are not too many of us in Silicon Valley.

We started Rubrik with this vision to really deliver cyber resilience, cyber recovery to every company and government around the world because cyber disaster was the #1 disaster for any business, and it threatens the fundamental existence of the business. And then over time, we've evolved into a full-fledged data and identity cyber resilience platform.

And now we launched a whole new product suite, a completely new platform called Rubrik Agent Cloud, which is in beta, which is around securing and accelerating agentic work adoption within enterprises and organizations, essentially give our customer confidence that they will understand how many agents do they have sanctioned and unsanctioned in the company, what the hell are they doing, do they have guardrail with respect to what is allowed and not allowed for them and should they misbehave either because of hallucination or cyber compromise, can we undo or rewind the agentic action? So essentially, Rubrik, as of today, is the security and AI operations company. And our goal is to deliver cyber resilience as well as AI acceleration to every organization around the world.

Such a helpful starting point, Kiran, maybe some of the financial highlights that you want to make sure we all have as sort of a...

Sure, Saket. Again, thanks for having us here, and good morning, everybody. So in terms of the highlights, and we just reported last week, and we had a very strong quarter. The 2 things I wanted to highlight specifically were we had a record quarter in net new ARR, $94 million, which resulted in $1.35 billion of ARR, growing 34%, which is strong growth at scale.

And then in terms of profitability, we measure profitability in terms of subscription ARR contribution margin. We improved quarter-over-quarter and significantly year-over-year to over 10%. And then we had a record free cash flow quarter of $75 million plus this quarter, so some of the highlights there. All of this with strong net retention rate of 120% plus and strong customer growth as well.

Yes, absolutely. There was a lot to really be proud of last quarter. Bipul, I want to zoom out a little bit on the industry with you, kind of getting right into it. I mean this has been a market that's been long dominated, right, by the likes of Dell and Veritas and IBM Tivoli, which are now "legacy players" in this market.

On your last earnings call, I think one of the most interesting takeaways was you talked about the bookings from legacy displacements actually accelerating. So maybe the question is, can you dig into what's causing that? And I think relatedly, talk about how much more legacy displacement is there to go? And speaking specifically just in the cyber resilience piece, there's a lot to talk about the other pieces in the other 2 pillars, but in cyber resilience piece specifically.

I love legacy, because it's a very meaty market that you can go eat into. Because if you look at the history of Silicon Valley and history of large companies, you will be hard-pressed to find one company in the enterprise space that became massive by creating new markets. Snowflake went and replaced legacy Teradata and others. If you look at CrowdStrike, they went and replaced legacy antivirus. And that is where the large companies are created because you have existing buyers, existing budget, existing cycle and you have a magical differentiated unique product that you bring to this game.

And Rubrik has been winning because we purpose-built Rubrik Security Cloud platform to deliver complete cyber resilience. At the time when we went public, we said we are operating in a $50 billion market. This was before identity. So -- and we are just over $1 billion. So we are not even scratching the surface. We are very, very early in this market. This is a massive market because any company and any government with any application or data of any significance is a potential Rubrik customer, if not already a Rubrik customer. So it's a large market.

What happened was we really disrupted this market with this new cyber recovery, cyber resilience angle. And whenever you disrupt the market, existing players run for shelter. And what you saw in iPhone and Nokia was, Nokia was acquired by Microsoft. Same thing -- similar thing happened here where Cohesity and Veritas merged to survive. And all the customers of Veritas heard that, "Hey, we'll have 2 product line and 2 engineering teams and all your road maps will be managed and maintained," but you can't take $2.5 billion in debt, and this whole merger is to preserve and create synergy with 90% overlap, you can't maintain 2 things. So now the customers -- and this is all anecdotal, but they are now these Veritas customers and other legacy customers are realizing that's not tenable. And that's the reason that we are seeing increased pipe build and increased success in Q3 because of legacy replacement.

Excellent. Excellent. Kiran, I want to move to you for a second. I mean, we've talked about sort of Rubrik Security Cloud, or RSE, which I think makes up almost 90% of the total ARR of the business. But there's also an on-premise business here, which has been shifting to SaaS. It feels like that shift is accelerating a little bit, and you correct me there if I'm wrong. I think we saw just a little bit of a bigger decline in on-prem ARR these last couple of quarters. Maybe the question for you is, how do you think about the path of that on-prem ARR? And when does that maybe start to stabilize a bit?

Yes, absolutely. So I'll give you a little bit of background on the cloud as well. We started our cloud transformation in a significant way, if you recall, 3 years back with the launch of Rubrik Security Cloud. And the vision was really to secure all data regardless of where it's at within private data centers, cloud, native cloud application, SaaS application, unstructured data, all from the Rubrik Security Cloud platform running in the cloud.

And when we started this journey, at that time, we felt like 80% of sub ARR becoming cloud is a good long-term goal because there's obviously a healthy opportunity of customers who prefer not to be in the cloud and completely self-hosted. We were surprised by the pace of progression. And as you pointed out, we are in the high 80s as a percentage of cloud.

So one part, the significant part of the cloud growth is obviously new business from new customers or customers expanding into cloud workloads. But obviously, the non-cloud ARR also was a contributor because as customers migrated from the on-prem world to the cloud managed world, the data could still sit on-prem, but cloud-managed world, they moved into the cloud ARR bucket. So that's the reason why it's declining and continues to decline.

And we believe that it's hard to predict exactly, but it should decline for a few more quarters because we feel cloud ARR can run a bit more as a percentage of sub ARR beyond where it is right now. But at the same time, there's a healthy base of customers who prefer to still self-host. And we feel once it stabilizes, it should grow from there.

Yes, absolutely. Bipul, maybe to come back to you. I mean we've talked about cyber resilience being a big market. We've talked about sort of the legacy displacements picking up there. And that's really the first pillar of the business. I want to touch on the second pillar a little bit, which is around identity protection. I think the other interesting takeaway from the earnings call was we said that's now a $20 million ARR business, I think, just after 3 quarters of being generally available. And you correct me there if I'm wrong.

Maybe the first question is, what pain point is that solving, right? We think about the identity. We think about IDPs, right? But this isn't exactly that. This is identity protection. But relatedly, historically, the spending there has been relatively small in this identity protection space. Why do you think that's maybe changing now?

So identity has become a huge attack vector. Attackers are not hacking in anymore. They are logging in. They are behind firewall, behind VPC. And identity compromise has been -- and if you go read Scattered Spider or Brickstorm or every new attacks that are happening, it's all identity-based attacks. And these attacks are very insidious because they are bypassing traditional EDR. They are encrypting VM level. And so they're like a very smart attackers are now using identity as a vector to do massive, massive damage.

And this is a trend that we have been observing. So the ground zero for identity, your active directory, your anti-ID, your Okta and other identity systems and customers need to protect those identity systems. And that's the market that we focused on.

What is very exciting for me, as a Founder, CEO of Rubrik, is we organically built a product from scratch without any acquisition and took it to GA in December last year. So we are literally selling for 3 quarters. We are in the middle of the fourth quarter. And in 3 quarters selling, after the end of the second quarter, we said we have over 200 customers in the identity recovery business. That was the first step, the version one of the identity solution.

And then in July, we launched Identity Resilience, which is the next tier of Identity Solution above Identity Recovery. And in just Q3, we more than doubled, which means that now we have more than 400 customers in the Identity Solution overall. And the new Identity Resilience business, we sold in one quarter, 65 transactions.

And what is also very exciting is not only we are about $20 million ARR in overall Identity Solution, 40%, 4-0 of customers that adopted our Identity Solution were net new to Rubrik. And what we are running into in this market, and that's what we anticipated is there is a legacy replacement also in this market, and you'll see in my life, legacy is very important. I always love to go after markets that are understood and budget is allocated so that you can take the line item and swizzle that into something magical. And that's what we did.

So we are replacing Quest. We are replacing new-gen vendor called Semperis. There's a lot of white space because now the understanding of the identity-based attacks have become common and customers are more and more focused on identity. So overall, very early days. Obviously, a lot of work for us to do to scale this whole Identity Resilience pillar of our business, but a very, very exciting market.

Yes, it's very much early days. Kiran, I want to go back to the on-prem topic of conversation a little bit. And what you said is a little bit of this decline or a lot of the decline that we're seeing in that on-prem ARR base is conversion. Can we just talk about the economics of a conversion? Is it 1:1? Or is there an uplift as an on-prem customer moves to SaaS because open-ended, right? Is anything about those...

There's no real uplift. The goal and what we are trying to achieve when we started the cloud transformation was customers who are comfortable using the cloud, which is the vast majority of the customer base today, we want them to successfully move to the cloud and see value because that's where the most innovation from our side would be. So we didn't want to make it about a price increase and made it easy to move and reduce friction.

So if you're moving to a comparable feature set, there's no real price increase there. Obviously, if you're upgrading as part of a change, right, you've got a new license or subscription, it's an opportunity to sell more capabilities. And if that's the case, obviously, there's a price uplift because you're getting more value. But if you're moving to a similar feature set, there is no increase.

Got it.

As a philosophy, we are a premium product company. We charge premium pricing for our products, but we do not willingly charge our customers for things that doesn't create extra value for them. So if they manage their platform on SaaS, it's the same data protection solution that they are using, and we don't believe in charging for it. In fact, in many ways, from the early days of Rubrik, we never charge based on application sources for data types. So legacy platforms will charge more for Oracle database and less for VMware. We never did that because our goal is to provide our customers full understanding and predictability of their data protection posture, their identity resilience posture, simplicity, not just in the product, but in the buying process and everyday use and expansion is equally important for us.

I was going to say, right, with over 120% NRR, right, like we don't necessarily need the price. There's so much more that we can cross-sell them as well as data growth naturally, right, to kind of grow that spending. So I think that philosophy makes sense. Bipul, we talked about cyber zones. We talked about identity recovery and resilience. I want to touch on the third pillar here, which is a growing AI story. I think we announced Annapurna just about a year ago. And now we've got agent cloud for monitoring and rewinding the changes that agents can make. This is really kind of a third act, right, like that is maybe several years out. But maybe the question for you is how big of an opportunity is this, in your view, Bipul? And most importantly, why do you think Rubrik has a right to win in this space?

If you boil everything down, Rubrik is about data, identity and applications. That's what we are selling the Rubrik Security Cloud to deliver resilience for both data and identity. What we realized was that we are, by our nature, a secure data lake. So what we did was we created this Annapurna platform to give this data to our customers. But what we were realizing was that our customers are not programmers. And so giving them a technology is not very helpful to them, we need to give them a solution that they can deploy and use because we are selling into the IT department.

So we started to think about what is a great middleware solution in AI that can change the game for us. And we came across this company called Predibase, which they were doing model fine-tuning and GPU virtualization to reduce the cost of inference by multiplexing different models on the same GPU. And we saw that company and say, "Wallah, I mean, this is really a very interesting long-term strategy for us." And the whole market was confused that why are we buying a model infrastructure company.

If you look at cybersecurity industry, the whole industry, nobody has a model infrastructure or model engineers. They typically buy AI security, which is the same security software applied to AI. But fundamentally, it's rethinking operations of AI. Nobody has expertise because cybersecurity companies, you go there, authenticate, get a token and then roam around, they have no idea, cybersecurity companies, what you're actually doing. But Rubrik sits at the intersection of data and security. And that's where we saw the Predibase base being the operational platform.

So we convinced the founder, it took me 9 months to convince them to sell the company because the company was getting very interesting traction, and then bring that inside and reformulate that platform as Rubrik Agent Cloud. And Rubrik Agent Cloud is about securing and accelerating agentic adoption at scale.

What does that mean? First of all, everybody wants to understand how many agents do I have sanctioned as well as unsanctioned. So we give you the agent registry. Then we tell you what these agents are actually doing because we are in the operational path, and we are telling you what actual operations these agents are doing. So we have the observability.

The second piece is governance. So think about you hire an employee, you give them a handbook saying that, hey, don't harass people, don't go to the left side of the building because that's an executive suite. So these are like general purpose guidelines. How do they enforce a general purpose guideline across the whole agentic landscape?

And then the third layer cake is how do you enforce a specific guideline for a specific work, agentic work if somebody is in marketing, do this and not do that. So we created this whole framework about creating guardrail for agentic work. And Predibase had model fine-tuning. So if the agents are not responding with the right answer, you can actually increase the accuracy by taking data. Again, Rubrik has the data to fine-tune the model.

And then finally, agent could still misbehave because somebody sitting in North Korea could compromise your agent and run your customer refund process million times and make you bankrupt. How do you find out what is happening and undo those actions? So we provided a rewind button. So our view is that for agentic work in the enterprise, you need actually an infrastructure platform that sits at the intersection of security and operations because for every call that agents are making, you need to dynamically authorize whether it's allowed or not. And so we built this whole end-to-end platform.

So we have a very big long-term vision, very, very early days for us. We are still in the beta. Our first release is not too far in the future. We are getting a very, very positive and encouraging feedback. I'm a capitalist. I don't like encouragement. I'd like dollars. So we don't have dollars yet, but we're very, very excited about this opportunity.

Well, you're sitting with a very sympathetic crew. So Kiran, maybe for you. The sales force compensation model, I think, changed this year. I think we moved from a 6-month quota to an annual quota. Can we just touch on because that's just been a little topical and, of course, any change is something that's worth highlighting. Can you just talk about how it's changed the seasonality of net new ARR, if at all? And how we should be thinking about the seasonality going into Q4?

Yes. So obviously, we made that change earlier this year. It was a long time coming. We had looked at other companies at $1 billion-plus ARR scale. We had hired leaders who had worked to operate at that scale and our annual model is more -- is something we are more familiar with at that scale. We didn't want to do it the year we went public last year. It's a big change. So we waited that. We finished the first year, crossed $1 billion ARR and then launched it this year, and it's progressed pretty well. If you look at the 3 quarters in terms of results and how it's gone down in terms of adoption within the sales team, it's been pretty strong. But we'll have to finish the year up to have our first internal data set in terms of how it affects linearity. But so far, it's been pretty good. And really on the back of that is we raised the net new ARR guide for Q4.

Absolutely.

I'll add one thing, please. Obviously, we are a public company and quarter after quarter, everybody obsessed about how we are doing. But the way we run our company is on annual basis. So we plan net new ARR annually. And then we see how the quarters turn out because deal dynamics, things go slip, come forward, backward. And that's why we always focus on yearly ARR number. And that's one of the reasons that we switched into the yearly number for the sales team because we wanted to align how we run the business internally with how we compensate the sales team.

That's a great perspective and makes a ton of sense. I want to move to some questions just around ARR and revenue kind of broad brushes for the year. But before we do that, any questions here from the audience? One there in the back, if we can just move the mic over.

Great. Can you guys hear me okay?

We can.

Excellent. First, congrats on the good execution. It's impressive. As we sit here today and you're talking to your customers about budgetary dollars available going into '26, what is your thinking with respect to more budget about the same, less budget? Just love some high-level color.

So as I said on the earnings call or one of the interviews that I did, we are in the very unique part of the cybersecurity market, which is around cyber resilience. And we are not seeing any change in the demand environment for our product or our market. The issue is that the customers around the world have spent a lot of dollars in the prevention and detection solution. And going from one prevention detection to the next prevention detection, from one firewall to the next or one other solution to the next, maybe the best change there will be is 2%, 3%. But not having cyber resilience and not ready for cyber attacks and to recover from it and having a cyberattack recovery solution is like 10%, 20%, 30% shift in the posture of cybersecurity strategy.

So this is the most exciting market, we believe, in the cybersecurity space. We are still scratching the surface, and it's a large market with very large latent need. Obviously, our job is to continue to educate this market, educate customers, educate executives. But we believe that we have a lot of opportunity. We are not opportunity constrained, if I can say that.

Any follow-ups here? Maybe going on that point, Kiran, maybe for you. I don't want to spend the last few minutes on accounting dynamics necessarily. I think a lot of us understand the material rights point. But you've been very clear from the beginning of the year, right, that material rights impacts the revenue comp, right, for next year. It does not impact ARR. But you gave some really helpful broad brushes in this call in terms of how to think about the relative growth rates between the 2 conceptually, right? So maybe just for the benefit of everybody, can you just remind us what you've said as we sort of find fine-tune our models going into next year?

Sure, Saket. So as a reminder for everybody, we have said this many times, we run the business on subscription ARR. That's the primary metric in which we measure growth, momentum, incentivize our employees and we celebrate that as well as we cross milestones. At the same time, revenue is a key line item in the P&L. So we wanted to provide some more perspective in terms of the accounting nuances related to the late stage of the cloud transformation we have successfully progressed over the past few years.

One of the earlier questions was on the Rubrik Security Cloud launch a few years back. As part of that, we also exited the legacy commodity hardware business we were in. And we didn't build hardware. It was something from partners we would provide and package to customers to drive fast growth as a newcomer into the market. But once we started our cloud transformation, it didn't make sense for us to be in the business.

But when we exited that business, we also wanted to do right by our customers and those customers who had purchased in the past, thinking they would get some free hardware and hardware-related incentives when they were to renew at a certain term length, even though it was not a contractual obligation, we wanted to give them some credits in to make the transition or transformation more easier. And that is accounting-wise dealt with as material rights, which is basically revenue is carved out, put on your balance sheet and at the time of renewal, those credits expire or get used and the revenue is released from the balance sheet into the revenue base.

So for a while, it was a headwind to revenue growth. And then in the past 5 quarters or so, it's been a tailwind. And we have disclosed every quarter the impact we are getting from material rights, but we've been more explicit as of the recent quarter in terms of even calculating the math on the normalized growth rate without the material rights. But given there's a significant headwind -- tailwind this year because most of the release is happening, just mathematically, it will be a headwind next year. And we want to give the guardrails. We're not providing guidance this last week, but we'll provide that after the quarter ends, but we mentioned that reported revenue growth will lag ARR growth by a few points. But when you normalize, which is a clean way to look at it, as you would expect, it will be ahead of ARR growth. So just thinking about that because we were looking at, it's complicated, it's nuanced as people were modeling it from an analyst community, investor side, we want to just provide that clarity for you.

Absolutely. Take a look at our note for some of the estimates that we put around it, hopefully, if that can be helpful. In the last minute or 2 that we've got here, I want to wrap up here with Bipul. Bipul, visionary CEOs like you tend to think about, as 2 and 3 earlier than most, right? And so as we think about sitting here together again next year at this time, right, what are some of the milestones that you want to be talking about with identity, with agentic as we kind of go through the next year? Open-ended question.

We always think about a year in 3 things, right, top line growth, innovation and profitability. And these are the 3 things that are consistent for our company because you can't just grow top line and not have profitability or you can't just milk your existing product and not innovate. So we always think of this trifacta. And we are focused on that trifacta internally. We'll continue to be focused on that trifacta externally.

I couldn't think of a better way to end right there. Bipul, Kiran, thank you so much for the time. I appreciate it.

Thank you, Saket.

Thank you.

Good afternoon, ladies and gentlemen, and welcome to the Rubrik Third Quarter Fiscal Year 2026 Results Conference Call. [Operator Instructions]. This call is being recorded on Thursday, December 4, 2025.

I would now like to turn the conference over to Melissa Franchi, VP, Head of Investor Relations. Please go ahead.

Hello, everyone. Welcome to Rubrik's Third Quarter Fiscal Year 2026 Financial Results Conference Call. On the call with me today are Bipul Sinha, CEO, Chairman and Co-Founder of Rubrik, and Karen Choudary, Chief Financial Officer.

Our earnings press release was issued today after the market closed and may be downloaded from the Investor Relations page at www.ir.rubrik.com. Also on this page, you'll be able to find a slide deck with financial highlights that, along with our earnings release includes a reconciliation of GAAP to non-GAAP financial results. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP.

During this call, we will make forward-looking statements, including statements regarding our financial outlook for the fourth quarter and full fiscal year 2026. Our expectations regarding market trends, our market position, opportunities, including with respect to generative AI, growth strategies, current initiatives and expectations regarding those initiatives and are go-to-market motions. These statements are only predictions that are based on what we believe today, and actual results may differ materially.

These forward-looking statements are subject to risks and other factors that could affect our performance and financial results, which we discuss in detail in our filings with the SEC. Rubrik assumes no obligation to update any forward-looking statements we may make on today's call.

With that, I'll hand the call over to Bipul.

Thank you, Melissa, and thank you all for joining us today. Let me start by saying our third quarter results were exceptional. Every quarter for the past several quarters, we have successfully delivered in many cases, record numbers. In fact, this quarter has been our best ever. We have not only added record net new subscription ARR, but also generated tremendous free cash flow. And I'm happy to report we once again exceeded all guided metrics across top line and profitability.

Here are 5 key numbers. First, Subscription ARR reached $1.35 billion, growing 34% year-over-year. Net new subscription ARR reached a record $94 million. Second, our subscription revenue was $336 million, growing 52% year-over-year. Third, our subscription NRR remained strong once again, ever 120%. Fourth, customers with 100,000 or more in subscription ARR reached 2,638 growing 27% year-over-year. And finally, on profitability, we once again made material improvement in subscription ARR contribution margin, up about 1,400 basis points year-over-year.

We generated a record $77 million in free cash flow this quarter. This combination of top line growth and cash flow margin at our scale is best in class. We remain confident about the opportunity ahead, and thus, we are again raising our outlook for the year.

But let me begin by providing some additional context on our market opportunity as well as our areas of focus. Our mission is to lead Rubrik into our next era as the, let me repeat, the security and AI operations company. My discussions with IT and security leaders consistently reveal and assume breach mentality, which means being prepared for the inevitable reality that every enterprise will face a successful cyber breach.

This preparation includes 2 things: First, understanding the risk of a cyber breach in terms of both data content and identities. And second, the ability to remediate and recover from the breach to ensure business continuity. But the landscape in which these threats occur has dramatically evolved. Organizations are now facing a new cyber landscape with AI potentially enabling threat actors to inflect 10x more damage in 1/10 of the time.

Alongside these challenges, enterprises are also focused on modernizing the -- vehicle structure in anticipation of the impending enterprise AI transformation. While AI presents 100x more risk, the AI transformation promises 100x more opportunities, much like every big generational shift in enterprise technology. When cloud redefined IT, Rubrik ensured simple and reliable recovery. When cyber threat surged, we extended our Rubric security cloud product suite across data and identity to deliver 2 cyber resilience.

Now with the rise of AI agents, a new transformation is underway. AI transformation presents unique challenges, An agent operates within an organization enrollment runs business processes assumes identity, touches critical data and impacts mission-critical applications at unprecedented speed and scale. These agents are effectively superhuman, but organizations don't yet have the guardrails to monitor and contain what they do.

We need to think about AI agents very differently. Through this AI transformation, Rubrik's mission and his strategy remains the same, to accelerate our customers' journey to AI enterprise. I will delve deeper into our AI agent innovations later in my remarks. As companies shift deeper into cloud and AI Customers continue to turn to Rubrik for complete cyber resilience, which includes 2 key set of capabilities.

First, consistent data and identity security policy controls, and second, rapid and accurate recovery from cyber attacks. While we believe we have a tremendous opportunity in enterprise AI acceleration. We continue to focus on and when the vast cyber resilience market, which includes our core data protection solutions and identity resilience.

Let me provide some more details across our 3 businesses: data protection, identity resilience and AI operations. Our cyber resilient data protection journey remains in its early stages. Particularly as data availability and security become the most crucial element for AI. We continue to add new solutions across data center, cloud and SaaS workloads, leveraging the same underlying preemptive recovery engine to deliver complete risk and remediation capabilities. Our unique architecture consistently enables us to outperform both legacy and new gen backup vendors.

In fact, in the third quarter, bookings from legacy replacements accelerated year-on-year, surpassing the growth rates seen in the first half of the year. Let me provide 2 specific examples of legacy replacements in very large enterprises.

First, one of the largest banks in Asia and worldwide selected Rubrik as the strategic cyber resilience partner, replacing a long-standing legacy vendor. We outcompeted several new gen backup vendors for this opportunity. Rubrik's platform now provides data protection across its data center and cloud workloads for mission-critical applications. The customer also chose the Rubric identity recovery solution for over 250,000 users.

And the second, a Fortune 250 professional services firm selected Rubrik to displace its 15-year legacy backup vendor. Rubrik again outcompeted several new gen competitors for this opportunity. Rubrik will provide a unified cyber resilience platform across the customer's rapidly evolving hybrid and multi-cloud environments.

Let me now talk about the momentum we are seeing in cloud protection. Many sophisticated cyber attack inevitably occurs, organizations need to recover quickly and seamlessly, which is difficult across multiple workloads, tools and interfaces. Rubrik Security Cloud delivers complete out and SaaS protection from a single platform that understands the relationship among data, applications and identities regardless of where they live. We continue to build upon our core to cloud cyber resilience offerings, which delivers protection from the first line of code to full stack application in production across the major hyperscalers.

For example, we recently announced Rubrik DevOps protection for Azure, DevOps and GitHub. This new solution is designed to ensure our customers most valuable intellectual property and development pipeline are protected and preserved.

Now let me illustrate our momentum in cloud protection with 2 specific customer wins. A health and wellness technology company chose Rubric cloud protection to protect a multi-petabyte mission-critical workload containing user data. Rubrik offered not only cyber resilience, but also a significant cost reduction compared to cloud-native backup solutions due to our unique platform.

With Rubrik, this customer can confidently meet their minimal viable business plans with our immutable and secure data protection solution. And second, a Fortune 150 biopharmaceuticals company strengthened the partnership with Rubrik this quarter by adding cloud protection for its multi-petabyte public cloud data estate. We not only replaced native backup solutions, but also outcompeted NuGen vendors. Rubrik was selected due to the strength of our cyber resilience capabilities as well as lower TCO with an estimated 30% annual cost savings.

Next, let's talk about our Identity business. As we have discussed, our comprehensive identity resilience platform uniquely combines identity posture and recovery with the Data Security Posture Management, or DSPM to deliver complete identity risk and remediation solutions. Our Identity line of business has been highly successful in garnering budget from CSOs, extending Rubrik beyond our traditional CIO and CTO buying personas. This business has achieved significant momentum in just over 3 quarters of the first general availability, reaching about $20 million in subscription ARR.

In Q3 alone, we more than doubled the total number of identity customers. In fact, 40% of those Identity customers added in the third quarter were net new to Rubrik. As you might recall, we started our identity journey with the release of identity recovery. which provides the rapid recovery of identity services following cyber attacks or operational failures to minimize business disruption.

This quarter, we announced support for Okta Identity making Rubrik the only identity recovery solution to support Okta, Active Directory and antra-ID recovery. We also announced a new identity integration with CrowdStrike this quarter. With this integration, our customers can not only detect identity threats in real time, with Falcon Next-Gen identity security, but also surgically roll back malicious changes and restore their identity system to a safe operational state with Rubrik Security Cloud.

CSOs are increasingly turning to Rubrik for a more comprehensive identity strategy. This quarter, we launched Rubrik identity resilience a higher tier addition above identity recovery. This solution monitors and protects both human and nonhuman identities, tracks misconfigurations and high risk or malicious changes within active directory and antra-ID. It also enhances risk posture and accelerates cyber recovery by linking identity-based information such as privileged access with Rubrik's DSPM's sensitive data context and activity. In just 1 quarter of selling, we closed 65 deals for identity resilience. This early momentum makes us very excited about what's ahead for identity resilience.

Let me share 2 illustrative customer wins. Our U.K. government agency added identity resilience for its large user base, alongside cloud data protection for Azure and AWS, as they sought to bolster resilience for critical national infrastructure amid rising cyber attacks in the U.K. This agency also consolidated several disparate tools with the Rubrik platform and replaced native cloud backup solution, which proved unscalable for the customer's massive and complex data state.

And second, a U.S. state agency turned to Rubrik this quarter after the rise of cyber attacks on governments nationwide. And in particular, after a recent incident, that impacted a critical state agency, seeking to bolster its cyber strategy and reduce recovery times, the agency chose rubric identity resilience and M365 protection 40,000 users, replacing their native cloud protection and traditional data center identity backup. With Rubrik, cyber recovery times will move to mere hours compared to months with the incumbent solution.

Lastly, I will talk about our innovations in the AI space. As I mentioned earlier, Agent I can unlock significant new efficiencies for every organization. It also introduces considerable risks, including threats by bad actors and the issue of hallucinations. To help accelerate AI transformation, we recently launched Rubrik Agent Cloud, or RAC, a new product suite that enables enterprises to deploy AI agents safely and confidently at scale. With the release of Rubrik Agent Cloud, Rubrik now operates 2 complementary product suites built on the same Rubrik platform which combines application, data and identity contacts across all enterprise workloads.

First, Rubrik Security Cloud for cyber resilience and accelerated cloud adoption. And second, Rubrik Agent Cloud for AI resilience and accelerated AI agent adoption. Our competitive advantage is Rubrik's core platform that sits in the center of data application and identity.

Following the acquisition of database last quarter, we now have agent context in the mix as well. Together, this forms the Rubric Agent Cloud, the first integrated enterprise control layer for managing the AI agent life cycle. RAC answers the 3 most critical questions currently facing every CIO and CISO.

Number one, what agents do I have? And what are their capabilities and activities. Number two, what data are these agents allowed to access? And are they operating within the enterprise guardrails? And number three, if something goes wrong, can I undo it. RAC provides organization with the ability to answer these questions through its core capabilities, namely agent monitoring, agent governance and full agent remediation. This includes Rubrik Agent Rewind, which we announced last quarter, Agent Rewind helps customers undo the mistakes of AI agents, which is crucial for a scalable and secure AI adoption. We also recently announced that Rubrik Agent Cloud will integrate with Microsoft Copilot Studio and AWS Bedrock.

As we have said previously, we are still in the initial phase of a multiyear effort to scale Rubrik's AI solutions. Rubric Agent Cloud is currently in beta, but we are very excited about the early customer enthusiasm. Looking ahead, we plan to expand our capabilities and investments to enable confident enterprise AI transformation and agentic work adoption.

In closing, I would like to share my gratitude to my fellow Rubrikans. Rubrik continues to win the cyber resilience market. And at the same time, we are defining the AI enterprise future. Rubrikan's collective focus and disciplined execution always inspired me. Also, I extend my sincere gratitude to our customers and partners. Your confidence in us motivates our continuous effort to lead and shape the future of cybersecurity and enterprise AI.

And lastly, of course, thank you to you, our shareholders, for your continued support and trust. A number of you have mentioned to me the consistency with which we have been delivering the beat and raise cadence since our IPO. This is true. We have done so quarter after quarter. We are confident in closing out this year strong and continuing our great momentum into the next year and beyond.

With that, I'm pleased to pass it over to our Chief Financial Officer, Kiran Choudary.

Thank you, Bipul. Good afternoon, everyone, and thank you for joining us today. We had a very strong Q3 marked by record net new subscription ARR and continued improvement in profitability metrics. These results reinforce our leading position in the large and expanding cyber resilience market. We are raising our Q4 outlook as we look forward to a strong close to the fiscal year.

Let me start by briefly recapping our third quarter fiscal 2026 financial results and key operating metrics, and then I'll provide guidance for the fourth quarter and full year fiscal 2026. All comparisons, unless otherwise noted, are on a year-over-year basis.

We are very pleased to have ended Q3 with subscription ARR of $1.35 billion, growing 34%. We added $94 million in net new subscription ARR, a record amount for Rubric. We continue to drive adoption of our Rubrik Security Cloud, which resulted in $1.17 billion of cloud ARR up 53%. Our differentiated land-and-expand model benefits from multiple avenues to gain new customers and grow our footprint after the initial contract.

Expansion occurs through data growth in existing applications, securing more applications or identities or adding more security products. As a result, we continue to see a strong subscription net redemption rate, which remained over 120% in the third quarter. We are very proud of the high customer retention and expansion dynamics of our business. All vectors of expansion are healthy contributors to our NRR, highlighting the meaningful runway we have to more deeply penetrate our customer base.

Adoption of additional security products contributed over 40% of our subscription net retention rate in the quarter, up from 32% in the year ago period. In the third quarter, we saw significant growth in our largest accounts with the number of customers contributing $100,000 or more in subscription ARR rising 27% to 2,638. These large customers now represent 86% of our subscription ARR, an increase from 83% a year ago.

Furthermore, we added a record 23 new customers with subscription ARR of $1 million or more driving over 50% growth in our $1 million subscription base. For our third quarter, subscription revenue was $336 million, up 52%. Total revenue was $350 million, up 48%. Revenue in Q3 primarily benefited from a strong ARR growth. However, we again had tailwinds from our cloud transformation, resulting in higher nonrecurring revenue, which is accounted for as material rights. Material rights contributed approximately $25 million to revenue this quarter, modestly ahead of our expectation. Revenue growth normalized for material rights was approximately 36% in the quarter. Turning to the geographic mix of revenue. Revenue from the Americas grew 51% to $256 million. Revenue from outside the Americas grew [ 51% ] to $94 million.

Before turning to gross margins, expenses and profitability, I would like to note that I'll be discussing results in a non-GAAP basis going forward. Our non-GAAP gross margin was 83% in the third quarter compared to 79% in the year ago period. Our gross margin benefited from the revenue outperformance, including higher nonrecurring revenue and the improved efficiency of our customer support organization.

As a reminder, we look at subscription ARR contrition margin as a key measure of operating leverage. We believe the improvement in our subscription ARR contribution margin demonstrates our ability to drive operating leverage and profitability at scale. Subscription ARR contribution margin was positive 10% in the last 12 months ended October 31 compared to negative 3% in the year ago period, an improvement of approximately 1,400 basis points.

When normalizing for the $23 million in employee payroll taxes associated with the IPO in the prior period, the improvement was approximately 1,200 basis points. The improvement in subscription ARR contribution margin was driven by higher sales, the benefits of scale and improving efficiencies and management of costs across the business.

Free cash flow was $77 million compared to $16 million in the third quarter of fiscal 2025. This increase was driven by higher sales, improving operating leverage and optimizing our capital structure.

Turning to our balance sheet. We ended the third quarter in a strong cash position with $1.6 billion in cash, cash equivalents, restricted cash and marketable securities and $1.1 billion in convertible debt.

Let me now provide some context on our guidance. We are confident in our outlook driven by the robust cyber resins market and strong demand for our unique offerings. We expect these factors, combined with our consistent and effective execution to deliver strong subscription ARR growth ahead. We plan to continue making operational investments across 2 key areas. First, we'll continue to invest in R&D to accelerate innovation in the large but developing markets of data security and AI. Second, we will invest in our go-to-market, specifically targeting regions and verticals that offer the most attractive ROI. These go-to-market investments will also focus on achieving product market fit and scaling our newer innovations such as identity resilience platform and Rubrik agent cloud.

Now turning to guidance for the fourth quarter and full year fiscal 2026. In Q4, we expect revenue of $341 million to $343 million, up 33% or approximately 30% when normalized for material rights. We expect non-GAAP EPS of negative $0.12 to negative $0.10 based on approximately 201 million weighted average shares outstanding.

For the full year fiscal 2026, we now expect subscription ARR in the range of $1.439 billion to $1.453 billion, reflecting a year-over-year growth rate of approximately 32%. We expect total revenue for the full year fiscal 2026 in the range of $1.280 billion to $1.282 billion, up approximately 44% or 35% when normalized for material rights. We expect material rights related to our cloud transformation to contribute approximately $68 million to revenue in fiscal year 2026.

We expect non-GAAP subscription ARR contribution margins of approximately 9%. We expect non-GAAP EPS of negative $0.20 to negative $0.16 based on approximately $197 million weighted average shares outstanding for the full year. We expect free cash flow of $194 million to $202 million.

As we progress through the final stages of our successful cloud journey, our reported revenue growth has seen significant tailwinds from our cloud transformation, including material rights in fiscal 2026. In fiscal 2027, dynamics related to our successful cloud transformation and a substantial reduction in material rights revenue will represent a headwind to our reported revenue growth.

As a result, we anticipate that revenue growth on a reported basis will lack subscription ARR growth by a few percentage points in fiscal 2027. However, normalized revenue growth will be ahead of subscription ARR growth. As we have always communicated, subscription ARR is the primary top line metric to evaluate our business performance as it is not impacted by the aforementioned accounting dynamics related to our cloud transformation.

In terms of profitability, we will continue to stay focused on taking advantage of the market opportunity in cybersecurity and while balancing growth with improved efficiency. Based on our current investment plans, we expect to deliver modest improvement in our subscription ARR contribution margin and modestly higher free cash flow for the fiscal year 2027.

In addition, we included some additional modeling notes in our investor presentation. In closing, we are pleased with our strong performance in the third quarter. We look forward to finishing the year strong, given our leadership, innovation and ability to execute on a large and growing market opportunity.

With that, we'd like to open up the call for any questions.

[Operator Instructions]. Your first question comes from Saket Kalia of Barclays.

Okay. Great. Nice quarter. Bipul, maybe for you. It's very clear that you're taking share in kind of the core cyber resilience, right, the first of 3 pillars. But you're also growing other businesses like identity. And so I'm curious, how additive can identity be to an average data protection deal? And maybe relatedly, is identity replacing any established tools or is that creating new budget as you sell increasingly to CISOs?

Identity is completely additive to the deal. So it is a net new buyer for Rubrik. We are selling identity to the CISO organization to IM persona. And in some cases, we are replacing legacy or NuGen vendor, a NuGen Identity recovery vendor. In other cases, it's a white space. Nevertheless, it's a net new buyer for Rubrik, which is a CISO organization and a net new solution that we have created completely from scratch. In fact, this product went into GA -- first GA in December last year. And we are seeing 40% of new customers last quarter is net new to Rubrik. So this is very exciting.

Saket, this is Kiran. I also wanted to add that in my prepared remarks, I had mentioned that our NRR was again 120% plus for the quarter. And while all the drivers were good contributors, the security component cross and identity is one of the key components of that -- or drivers for that.

That's super helpful. I would love to squeeze in just 1 housekeeping question, Kiran, maybe if I can for you. the SaaS ARR line really speaks for itself. But I was wondering if you could just comment on the non-SaaS ARR line, right? There's an element of there that's conversion. There's also some natural churn. Can you -- since we're all together here on the call, can you just talk about how we should think about modeling that going into Q4 and then maybe into next year?

Sure, Saket. I'll add my thoughts to that. So as you know, we are predominantly a cloud SaaS business now. We are very pleased with how the cloud transformation has progressed in the last few years. This quarter, we were around 87%. Cloud ARR as a percentage of subscription and we grew 53%.

When you look at the non-cloud run, that is one of the lines which is also contributing to the cloud ARR growth, one with smaller components, but is contributing. So as a result, that declines, and that's declined now for a few quarters. And we'll continue a bit more because we believe there is more room to run in our cloud ARR. The cloud business as a percentage of subscription ARR.

Your next question comes from Matt Martino of Goldman Sachs.

Bipul, do your comment that bookings from legacy replacement accelerated year-over-year stood out to me. I guess from your perspective, what's driving the acceleration there? Is it the modernization ahead of AI that you flagged in the prepared remarks or maybe a growing recognition from CIOs that they simply can't wait to modernize due to the growing threat vectors out there.

Thanks. It's both. It's definitely preparing for AI and modernizing the infrastructure, that's a big driver. And the other driver is cyber attacks are inevitable and Rubrik has a unique platform that delivers cyber recovery, leveraging our preemptive recovery engine that is unique in the marketplace. And and our speed of recovery is the key factor in making this decision. So CIOs and CISOs are looking at their legacy landscape, including new gen vendors and saying that I'm at risk. Cyber attacks are going to come to me. And if I can't keep my business up and running, it threatens the very existence of the business, and that's what is also driving legacy replacement.

Your next question comes from Fatima Boolani of Citi.

Bipul, this one I want to direct to you. Since your IPO, there has been an absolute avalanche of new product introductions and new capabilities and you're showing and putting points on the board with respect to installed base and new customer uptake in adoption. What I wanted to ask you was just with respect to the platform having expanded so dramatically in the span of the last 18 months. I'm curious how that's influencing your overall sales strategy? And really, the spirit of the question here is what's become very involved and certainly, the companies we cover and the broader enterprise software is this notion of providing flex or consumption-oriented type vehicles to enable customers to have a more fulsome frictionless access to the full portfolio.

So a long-winded way to ask you, is that something that you would potentially consider just given how quickly and how robustly the platform's expanded? And how would you idea around that?

Thanks, Fatima. So if you look at Rubrik from day 1, our strategy has been a true platform company. And you might ask what is a platform company. Our definition of a platform company is a product when a platform when the customer adopts more than 1 product, their value from the platform goes up. I'll give you an example. When our customers buy Rubrik's Security Cloud for both data center as well as AWS or Azure cloud, if there is a threat actor in the cloud and same threat actors in the data center, we can auto correlate threat and give you the full cyber resilience intelligence and recovery on that threat actor. You don't have to pull the logs into Splunk and then try to analyze and figure out what's going on. Rubrik automatically does that for you.

Now the same platform is expanded into identity. So now you can actually see what's happening to your identity is its data when the privilege gets escalated. Now the same platform we have launched a new product suite in Rubrik Agent Cloud. So now we have 2 distinct product suite. Rubrik Security Cloud for cyber resilience, Rubrik Agent Cloud for enterprise AI acceleration.

So our strategy has always been give customer a comprehensive platform and be the strategic IT vendor for that customer for years and years to come. Obviously, we want to make it easier for our customers to consume Rubrik product, try new Rubrik product. And we don't easily lose customers because we provide a mission-critical solution and customer retention has been one of the hallmarks of Rubrik.

So we are looking at all avenues going forward to make it easier for our customers to adopt Rubrik, consume Rubrik because we are selling is only 5% of my job, 95% of my job is to ensure customer delight, the first use experience, repeated user experience, expansion experience and providing end-to-end cyber resilience.

Your next question comes from John DiFucci of Guggenheim.

This is an impressive quarter. And I just like to congratulate the extended Rubrik team beyond even those on this call. Bipul, I want to sort of go high level with you on something because you hit something that everybody is hitting now and we are just trying to figure out. It seems really early when it comes to securing AI agents. But things can move really fast. It seems that everybody in security is saying they're best positioned to serve this role, which looks like it can be huge, right? Can you explain why Rubrik is well positioned to capture this opportunity or maybe even just part of the opportunity? And if that's the case, what else do customers -- what else will they need to have beyond Rubrik to solve this problem?

Thanks, John. That's a really good question. If you take a step back, Rubrik is all about data, identity and business applications. And these are the 3 main things even to deliver AI. AI is not a purely security question. Neither it is purely operations question. AI sits at the intersection of security, which is risk management and governance, plus the operations, which is how do you deliver the accurate AI, how do you fine-tune the model? How do you create real-time operational guardrails and observability and undue action if they misbehave because of cyber compromise or hallucination. And Rubrik is squarely at the intersection of operations and security. So this is a natural place for us to deliver a complete agent operations platform, genetic management platform, if I can be so bold to call it agenetic ERP.

And what does Agentic ERP needs to deliver? 3 things. How many agents do I have, including the ones that is sanctioned as well as the ones that are on sanctions, what the hell they are doing? What do I want them to do in terms of my operational guardrail? Are they hallucinating, can I make them more accurate so that humans can be confident of the results of the AI agents. And if they misbehave, can I take -- press the rewind button and take away the effect of them of misbehaving agent. So this requires an end-to-end complete platform across monitor, govern and remediate. So this is a very natural extension to Rubrik's core strategy.

And you know what? On top of it, Rubrik is also a secure data lake. So we have additional opportunity to bring Rubrik data to do fine-tuning of the model to deliver more accuracy with ready-base acquisition, we have the ability to virtualize GPU, to reduce the cost or to multiplex, different training model to be able to deliver perfect guardrail for our customers to have confidence in the agent actions.

So we believe that we are strongly positioned to deliver this new infrastructure product suite, Rubrik Agent Cloud. And then we are integrating this across the ecosystem. You saw our announcement with Copilot Studio with AWS Bedrock, we are extending, expanding this platform across all the tools that users can use to build agents. And this is, again, a sideline opportunity just like cyber resilience across all business applications. Rubrik Agent Cloud is product suite across all agent tool builders, whether it's AWS, Azure, GCP, M365, Salesforce, agent for, no matter whether it is infrastructure as a service agent or platform as a service agent, Rubrik Agent Cloud is giving our customers the confidence to do the AI transformation, deploy agents at a scale and truly take advantage of the AI opportunity.

That is the first time I've heard anything about this described in a way that I can stand. So thank you very much.

Your next question comes from Brad Zelnick of Deutsche Bank.

Excellent. And I echo my congrats as well. What a great quarter. And my question actually follows on what John just asked about Rubrik Agent Cloud, across monitor, govern and remediate. And I reflect on the announcement this week adding Amazon Bedrock along with Copilot studio support. Bipul, how are these partnerships structured with the AI platforms. Is there a co-investment -- excuse me in go-to-market and co-innovation on product? And what are the ways you'll monetize rubric agent cloud along with the platforms.

Thanks, Brad. We have been working with hyperscalers for a number of years. And our initial -- our big partnership started with cyber resilience, and we have found tremendous success. We have hundreds, if not thousands of customers with them and joint customers where we are helping hyperscalers deliver a complete business transformation, cloud transformation with confidence of cyber resilience. And now we are expanding on that partnership to bring Rubrik agent cloud. And so the idea is if you develop your agents on AWS Bedrock or on copilot to studio, you can manage that on Rubrik agent cloud. And so we have prebuilt go-to-market partnership with hyperscalers, and we expect to leverage those existing infrastructure with the new teams that are involved on the AI side. to expand the go-to-market

And from a monetization standpoint, Bill, these are dedicated SKUs that are incremental. The strategy isn't necessarily to migrate customers up different tiers of the core product. Is there anything we should know about the way that you'll monetize?

So Rubrik, agent cloud is a completely separate product suite. It is early where the product is in beta, but we are getting very strong customer feedback. On these products. I'll give you a couple of examples, a very large health care organization said that they are slow to adopt agents because they have yet to find a platform that they can confidently operationalize agents, which means that monitor and have visibility into agents. There was another pharma company where the exec said that why are we not having a product like Rubrik Agent Cloud already. And they said that they see our vision as really enabling them to an identic future, and this is the right idea.

Obviously, all of this is very early, but we are very encouraged by the reaction and Obviously, we'll update you as we make progress, but I anticipate there to be a separate product suite that we'll sell.

Your next question comes from Eric Heath of KeyBanc.

All right. Great. Kiran, I wanted to follow up on your comments about the strong beat and raise cadence that you've acknowledged and the outlook for Q4. When I look at the guide, it's shown a seasonally stronger growth rate than 3Q, which hasn't historically been the case. So can you just talk about the dynamic there? Is that purely a function of the sales comp change this year? Is it more so a reflection of the strong pipeline you see? Or anything else to call out?

Thanks, Eric. This is Kiran. I'll take that one. So we're very pleased with the Q3 results we delivered in terms of scale and growth. That gave us the confidence to raise Q4 as well. It's about a 3% raise on the net new ARR, 3% plus based on the implied Q4 guide from the last quarter's call. But as you know, we run the business on an annual basis on net new ARR and we have spoken about that in the past as well. So we look at the total net new ARR for the year, really, that's what we plan for and look to deliver. So the annual comp plan changes have progressed really nicely, but we have to finish the year as well. and we can give you an update on that after Q4.

Your next question comes from Gregg Moskowitz of Mizuho.

And congratulations on the strong execution. I'd like to go back to Identity because Identity recovery is off to a really strong start. And by the way, the feedback was also positive at AWS Reinvent this week. Bipul, when you look ahead, so Rupert has many thousands of customers that you can potentially cross-sell into. And as you've noted, you're already landing with identity as well. So when you look at identity recovery and now I get to the resilience in addition, how are you thinking about penetration rates for this part of the platform going forward.

We believe that identity recovery is a widely applicable or dental platform in terms of the identity security strategy that we have. And going from identity recovery to identity resilience, we are really adding before and during pieces to ensure that if there is a privilege escalation, what kind of sensitive data gets exposed to. And that's where we are bringing the DSPM capabilities with identity capabilities to expose the full risk. Because if you take a step back, cyber resilience assumes that the tax will happen to you. So if you know that attacks will happen to you, you have to understand the risk of the attack and be able to remediate. And the risk of the attack, you need to understand data risk and you need to understand the identity risk. Because you can't understand the full risk without understanding data and our entity both.

And then in terms of remediation, you have to remediate both, you need to do a cyber recovery on all the data to ensure that your applications are up and running plus you have to also recover Identity system partially or fully. So we believe that for full cyber resilience, both identity and data is applicable everywhere, Obviously, these are early days. We are just over 3 quarters into it. We are just about $20 million in subscription ARR. We doubled our number of customers in Q3.

The customer excitement is very, very high. I'll give you an example. Our European consumer technology company. They were really worried about -- is scattered as spider because one of your suppliers got hit. And as you know, scattered as spider is detrimental to identity systems as well as virtual machines because they are bypassing the traditional EDR. So there is increased awareness of importance of identity systems, both full availability of the identity system plus the escalations, which are illegal and how data gets impacted. So we have a full vision to really create full cyber resilience solution.

And as we said, we are also partnering with CrowdStrike ITR solution to provide end-to-end confidence for our customers saying that taken will detect and will help roll back bad changes.

Your next question comes from Todd Coupland of CIBC.

I wanted to ask about net new. That's been a little bit lumpy the last few quarters. And I'm just wondering if the acceleration that you experienced this quarter and going into Q4, is that the new normal? Or should this still be considered an area of volatility as we think about '27?

This is Kiran. I'll take that one. So very pleased with the Q3. Net ARR was a record for the company, $94 million. But the way to look at net New really in our business is on an annual basis, and that's the number we planned for when we start a year, and there's obviously shifts between quarter-to-quarter because of deals pipeline, et cetera. So I would focus on the annual number, including the guide and then there's going to be some quarterly movements because of compared to previous years and timing.

Your next question comes from Junaid Siddiqui of Truist.

With cyber insurance requirements tightening and ran some were costs increasing, are you seeing Rubrik's platform play a role in lowering those insurance premiums for customers and do you see this convergence of identity and data security becoming a differentiator for cyber insurance and compliance frameworks.

Thank you, Nate. Absolutely, you need to have both identity resilience and cyber recovery to be able to drive complete cyber resilience. And for insulins company to underwrite, there is a symmetry of information and for them to have confidence that the customers have the right technology it is definitely attractive for them to actually recommend Rubrik.

In fact, one of the insurance companies, which is our customers actually became our reseller to their customer base. based on that same thesis. We believe that we are still in the early innings of cyber resilience as the very large segment, and I would argue that the most important segment of cybersecurity and we believe that as this market continues to expand and as we continue to lead this market into the future around full cyber resilience across data and identity, we believe that the loss of opportunities, including around insurance for us.

Your next question comes from Keith Bachman of BMO.

I wanted to go back to the agent market. The identity market seems like a tremendous opportunity in a natural adjacency. I still struggle a little bit with the opportunities associated with the agent market. And so I wanted to just ask it in maybe some different threads. Is the go-to-market going to be different for the identity that is to say, is there -- do you anticipate it being a different buyer in the -- excuse me, the agent market. It would seem to me that it's a different buyer, but I just wanted to get your perspective. And b, how do you think the competitive landscape is going to shape up. It's super early, and there's probably going to be more than 1 winner. And then finally, is there any thoughts about when you might emerge from beta to actually have production environments or it GA into the market?

So if you look at agents, they assume identity, they work on data and they operate on many applications at a scale. And as I said before, the Rubrik platform is a combination of data, identity and applications. So we are naturally positioned to take advantage of this agent opportunity. We are not building a platform for people to build agents. They have many platforms for them to build agents. We are helping our customers operationalize agents and have confidence and governance controls to be able to deliver the agentic outcome because that's the biggest inhibitor in terms of AI going into production. And that's what we are focused on.

In terms of the market, obviously, we are early. As I said, we are still in beta. We expect to go GA in not too far in the future. We'll continue to learn from this market, continue to enable our customers on this journey. So far, it feels like operations team, which is CTO, CIO organization will be responsible for agentic work transformation across line of businesses. So there is a convergence in the buying persona. But again, it's very early. We learn in the market, but we believe that we have a very strong vision for this market. And again, as this market evolves, we want to really take our customers on this agentic journey.

Your next question comes from Shrenik Kothari from Baird.

And many congrats on great execution. Bipul, of course, you mentioned we're launching the idea resilience this quarter and already noted, pretty strong early adoption. Can you speak to the uplift versus recovery? And just on that note, Kiran, highlighted that security represents over 40% now and was a major contributor to sustaining and above 120%. Just with these modules that you're adding resilience and agent cloud adding more breadth, like just how should we think about the durability of that NRR.

Kiran, do you want to take the question?

Yes. So Shrenik, this is Kiran. I'll just give you some thoughts on how to think about the -- so obviously, we've had and continue to have strong NRR [ 120% ] plus, which we see as best-in-class. And our business lends itself to strong NRR. We have a very strong gross retention, and this has been the case historically. And on top of that, we have multiple expansion vectors through different products. And that helps drive the strong NRR.

But at the same time, we are scaling as a business with the strong growth rates and $1.35 billion in subscription this quarter. So naturally, NRR tends to moderate over time at scale, but it will be as strong in or just given the drivers of the business.

And then on the question you have on Identity resilience, I would say it's early. We have just launched it. Obviously, that has got more features backed into it. So there will be a price uplift, but I think we need more data points to give you a sense for the amount of uplift.

Great. Very helpful. Thanks a lot. Congrats again.

There are no further questions at this time. I would hand over the call to Bipul Sinha for closing remarks. Please go ahead.

In closing, I would say thank you, everyone for continuing to be on Rubrik journey. As I've mentioned before, our ambition is to build the next 100-year-plus company. And that 100-year plus company will be built based on all participants in the ecosystem to our customers, to our partners, to all the Rubrikants and our ability to continue to lead the market, imagine new product, validate that vision and produce the product. I'm very excited that Rubrik is able to organically create products such as identity resilience and identity recovery and create an independent product line and business. We want to continue to be on this journey with you.

Thank you so much for your support. It's still early days for Rubrik. Look forward to talking to you soon.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.