Rubrik (NYSE:RBRK) is scheduled to report its first quarter results this week, with investors looking for signs that demand for the company's cyber resilience and data protection offerings remains strong despite concerns about rising memory costs affecting enterprise technology spending, according to Jefferies analysts.
The analysts expect Rubrik to deliver a strong quarter, pointing to momentum in cyber resilience and identity security products, favorable channel feedback, and what they described as a relatively easy year-over-year comparison.
Investor expectations have risen ahead of the report, with some forecasting first-quarter incremental annual recurring revenue (ARR) of approximately $105 million to $110 million, above the company's guidance range. Jefferies said that target appears achievable based on recent industry checks and survey data.
The firm estimates first-quarter subscription ARR of about $1.55 billion, representing roughly 31% year-over-year growth. The analysts said strong execution and potential deal pull-forwards could help offset any near-term impact from higher memory prices, which some investors have worried could delay customer purchasing decisions.
Memory costs have become a key topic for investors because many Rubrik deployments rely on integrated appliances that could become more expensive as component prices rise. While Rubrik does not directly sell those appliances, higher total ownership costs for customers could eventually affect sales cycles or pressure margins.
Jefferies, however, does not expect memory-related headwinds to have a material impact during the first half of the fiscal year, though it noted there are early signs of modest deal delays in parts of the market. Feedback gathered at Veeam's customer conference in May suggested some customers have adjusted purchasing timelines due to hardware costs, but analysts said cyber resilience remains a high-priority spending category.
Margins will also be closely watched. Rubrik previously guided for first-quarter subscription ARR contribution margin of approximately 10% to 11%, which would represent year-over-year improvement. Jefferies expects that stronger-than-expected ARR growth could support results, although margin upside may be limited if rising hardware costs lead to customer concessions or discounts.
Recent channel survey data cited by the firm indicated improving demand trends. Rubrik posted the strongest average performance versus plan among cyber resilience vendors tracked in Jefferies' survey, while more than half of surveyed value-added resellers identified SaaS and cloud data protection as a top growth driver.
Rubrik shares have gained roughly 94% since early April, significantly outperforming broader software benchmarks and raising expectations heading into earnings. Despite the rally, Jefferies believes that the stock's valuation remains attractive relative to several large software peers, including CrowdStrike, Datadog and Snowflake.
The firm recently raised its price target on Rubrik to $100 while maintaining a positive view on the shares. Shares traded down more than 3% at about $82 on Tuesday.