Sprry if i missed it but Could you please explain why it may/can beat its competitors? What advantages they have compared to its competitors in this space? What does this have that commvalult or cohesive doesn't?
Hi Amul, thanks for reading and for the great question.
Rubrik’s main competitive advantage over Commvault is its cloud-native architecture. Rubrik provides a single, integrated platform for backup, analytics, and data orchestration, whereas Commvault often separates these capabilities into different products, requiring additional purchases for orchestration and analytics tools. Commvault, founded in 1988 during the on-premises era, was built for a very different environment.
Rubrik’s advantages over Cohesity also center on its cloud-native design with virtually infinite scalability, while Cohesity’s linear scaling is capped at 256 nodes.
There are also plenty of detailed comparisons by tech experts online that are worth checking out if you’d like to dive deeper.
As you know I appreciate your thoughts and analysis. So apologies in advance for the somewhat critical tilt of this question which is this; How is this company different from some of the other popular software companies from a few years ago that have been absolutely murdered on a total return basis? Specifically, I'm thinking of Confluent, Elastic, Gitlab and a few others. that were darlings of the SaaS world that have continued to grow top-lines at a fast rate, but which have failed to perform on the open market.
I'm comparing Confluent specifically to Rubrik now. They both operate at a similar scale (~$1 billion LTM revenues) with similar 75% gross margins, are similarly losing about ($400-500 million per year in GAAP OP, with about 25% of sales in SBC, meaning that they are FCF profitable but with significant ongoing dilution. From a qualitative perspective, both are selling mission-critical software with a similar land-and-expand operating model increasingly to enterprise clients with a large proportion of revenues coming from clients with >100k in ARR and with similarly large DNBRs. TAM is similar too with CFLT estimating it at $50 billion as well. Lastly, they both operate in industries with seemingly long-term tailwinds in place (data mobility, and security).
The only difference I see here is that Rubrik is growing at a faster pace (+20% y/y in MRQ for CFLT vs. +50% y/y for RBRK) but that also appears to be accounted for in the valuation discrepancies (CFLT trades at 4.1x NTM Sales vs. 12.9x for RBRK). Is the thought here that RBRK's superior growth rate translates into operating leverage at a higher pace? Enough to offset the significant dilution and the potential for multiple compression?
Thank you for your comments, I always welcome challenge and pushback. I’ll start by saying that I haven’t studied either of those stocks in detail, but I can speak more broadly about what has happened to SaaS over the past five years or so.
As we know, Covid was a real shot in the arm for these types of businesses, and valuations were bid up to very elevated multiples on the expectation of sustained growth. The market seemed to extrapolate this growth far into the future. But once the world reopened and growth rates normalized, many of these stocks were crushed. One example I do have experience with is DocuSign, which I eventually sold out of. I even wrote a post-mortem article on that investment, as it was a valuable learning experience for me.
Fast forward a couple of years, and SaaS stocks are being hit again but for a different reason. Now, the market perceives an existential risk from AI. The concern is that businesses will either in-house some of these solutions or new players will emerge to disrupt incumbents.
I took a quick look at Confluent and, aside from its financials, I don’t see much similarity with Rubrik. They are very different businesses. Confluent focuses on leveraging data in motion for analytics and business operations, while Rubrik focuses on safeguarding data at rest against loss or corruption. Comparing them is like comparing a pipeline to a vault.
Rubrik operates in a segment of SaaS that I believe is insulated from the risk of in-housing, cybersecurity. Its core offering is backup, which relies on immutable, offsite, air-gapped copies. That makes third-party platforms a necessity for both security and compliance. You simply can’t in-house this process. Backup is subtractive risk management, requiring independence, whereas AI tools are additive. As Rubrik expands into broader cyber resilience, the strength of its platform will become even more apparent. For compliance reasons, you need a third party to perform backups so why not extend into adjacent capabilities rather than bringing in another vendor? Rubrik is also benefiting from counter-positioning: unlike legacy backup players built for on-prem, its architecture was designed for the cloud era.
So while the stocks you mentioned may have been crushed, I don’t think they are the right comparisons for Rubrik. If you look instead at cybersecurity peers, CrowdStrike, Palo Alto Networks, Fortinet, even Cloudflare, these companies have significantly outperformed the broader market over the past five years. Of course, starting valuations differ, but the point is that Enterprise SaaS and Cyber SaaS are very different categories. Personally, I don’t own any pure-play Enterprise SaaS right now, and the only area I feel comfortable investing in at the moment is cyber.
Nice write up. Like the quick pitch format. Definitely a name I will DD. I like the Microsoft linkage. Do you know if Microsoft retained their stake post IPO?
Thank you for the feedback on the format. Yes, Microsoft still holds their investment. Another nugget I left out is that the former CEO of Palo Alto Networks joined the board just before the IPO.
Thanks for the feedback. This level of SBC after an IPO is fairly common due to equity awards vesting. I would expect it to moderate going forward, though it’s certainly something to keep an eye on.
No, I like the format, very helpful and clear 👌. To me, RBRK seems a solid investment opportunity which I’ll be comfortable adding to given the massive and growing TAM and business fundamentals. The main risk I see is competition from prevention leaders and hyperscalers, easier for them to add resilience to their platforms than for RBRK to become a dominant cybersecurity platform.
Great read, and l love the format
Thank you for the feedback 👍
Sprry if i missed it but Could you please explain why it may/can beat its competitors? What advantages they have compared to its competitors in this space? What does this have that commvalult or cohesive doesn't?
Hi Amul, thanks for reading and for the great question.
Rubrik’s main competitive advantage over Commvault is its cloud-native architecture. Rubrik provides a single, integrated platform for backup, analytics, and data orchestration, whereas Commvault often separates these capabilities into different products, requiring additional purchases for orchestration and analytics tools. Commvault, founded in 1988 during the on-premises era, was built for a very different environment.
Rubrik’s advantages over Cohesity also center on its cloud-native design with virtually infinite scalability, while Cohesity’s linear scaling is capped at 256 nodes.
There are also plenty of detailed comparisons by tech experts online that are worth checking out if you’d like to dive deeper.
Hey Wolf,
As you know I appreciate your thoughts and analysis. So apologies in advance for the somewhat critical tilt of this question which is this; How is this company different from some of the other popular software companies from a few years ago that have been absolutely murdered on a total return basis? Specifically, I'm thinking of Confluent, Elastic, Gitlab and a few others. that were darlings of the SaaS world that have continued to grow top-lines at a fast rate, but which have failed to perform on the open market.
I'm comparing Confluent specifically to Rubrik now. They both operate at a similar scale (~$1 billion LTM revenues) with similar 75% gross margins, are similarly losing about ($400-500 million per year in GAAP OP, with about 25% of sales in SBC, meaning that they are FCF profitable but with significant ongoing dilution. From a qualitative perspective, both are selling mission-critical software with a similar land-and-expand operating model increasingly to enterprise clients with a large proportion of revenues coming from clients with >100k in ARR and with similarly large DNBRs. TAM is similar too with CFLT estimating it at $50 billion as well. Lastly, they both operate in industries with seemingly long-term tailwinds in place (data mobility, and security).
The only difference I see here is that Rubrik is growing at a faster pace (+20% y/y in MRQ for CFLT vs. +50% y/y for RBRK) but that also appears to be accounted for in the valuation discrepancies (CFLT trades at 4.1x NTM Sales vs. 12.9x for RBRK). Is the thought here that RBRK's superior growth rate translates into operating leverage at a higher pace? Enough to offset the significant dilution and the potential for multiple compression?
Hi Jake,
Thank you for your comments, I always welcome challenge and pushback. I’ll start by saying that I haven’t studied either of those stocks in detail, but I can speak more broadly about what has happened to SaaS over the past five years or so.
As we know, Covid was a real shot in the arm for these types of businesses, and valuations were bid up to very elevated multiples on the expectation of sustained growth. The market seemed to extrapolate this growth far into the future. But once the world reopened and growth rates normalized, many of these stocks were crushed. One example I do have experience with is DocuSign, which I eventually sold out of. I even wrote a post-mortem article on that investment, as it was a valuable learning experience for me.
Fast forward a couple of years, and SaaS stocks are being hit again but for a different reason. Now, the market perceives an existential risk from AI. The concern is that businesses will either in-house some of these solutions or new players will emerge to disrupt incumbents.
I took a quick look at Confluent and, aside from its financials, I don’t see much similarity with Rubrik. They are very different businesses. Confluent focuses on leveraging data in motion for analytics and business operations, while Rubrik focuses on safeguarding data at rest against loss or corruption. Comparing them is like comparing a pipeline to a vault.
Rubrik operates in a segment of SaaS that I believe is insulated from the risk of in-housing, cybersecurity. Its core offering is backup, which relies on immutable, offsite, air-gapped copies. That makes third-party platforms a necessity for both security and compliance. You simply can’t in-house this process. Backup is subtractive risk management, requiring independence, whereas AI tools are additive. As Rubrik expands into broader cyber resilience, the strength of its platform will become even more apparent. For compliance reasons, you need a third party to perform backups so why not extend into adjacent capabilities rather than bringing in another vendor? Rubrik is also benefiting from counter-positioning: unlike legacy backup players built for on-prem, its architecture was designed for the cloud era.
So while the stocks you mentioned may have been crushed, I don’t think they are the right comparisons for Rubrik. If you look instead at cybersecurity peers, CrowdStrike, Palo Alto Networks, Fortinet, even Cloudflare, these companies have significantly outperformed the broader market over the past five years. Of course, starting valuations differ, but the point is that Enterprise SaaS and Cyber SaaS are very different categories. Personally, I don’t own any pure-play Enterprise SaaS right now, and the only area I feel comfortable investing in at the moment is cyber.
Thanks! I appreciate the thoughtful reply.
Nice write up. Like the quick pitch format. Definitely a name I will DD. I like the Microsoft linkage. Do you know if Microsoft retained their stake post IPO?
Thank you for the feedback on the format. Yes, Microsoft still holds their investment. Another nugget I left out is that the former CEO of Palo Alto Networks joined the board just before the IPO.
Thanks for sharing the analysis, I do wonder whether the directors overpaying themselves over share option might be problematic
Thanks for the feedback. This level of SBC after an IPO is fairly common due to equity awards vesting. I would expect it to moderate going forward, though it’s certainly something to keep an eye on.
Thanks, very timely - I also initiated a position last month 👍
Thanks Tom. I know it was a shorter quick pitch but anything you feel I might have overlooked?
No, I like the format, very helpful and clear 👌. To me, RBRK seems a solid investment opportunity which I’ll be comfortable adding to given the massive and growing TAM and business fundamentals. The main risk I see is competition from prevention leaders and hyperscalers, easier for them to add resilience to their platforms than for RBRK to become a dominant cybersecurity platform.