The Six Five team discusses Rubrik Files S-1 To Go Public.
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Transcript:
Daniel Newman: There is an… Pat, there’s been very little IPO activity in enterprise software for some time. Rubrik, Bipul Sinha, our friends over there were advisors over there. They filed an S-1 to go public.
Patrick Moorhead: Yeah, they did. And it’s pretty exciting. Like you said, it’s a clear message that the IPO market is getting better and one company coming out doesn’t make a trend, we saw Reddit go out. There’s even rumors of Cerberus putting together potential filing soon. So I’m thinking we’re back on that front. There’s estimates that put the company at around $7 billion of value and gross margins, the S-1 showed that they look pretty good. It’s 77% up from 70%. The revenue based revenue, I know I was reading was a little bit of a concern, but Dan, as we’ve seen moving from licenses to SaaS, there is a rocky process to go and drive ARR. So there is no free cash flow, right? For 2023, it was negative 15 billion. The company’s not making money, which by the way, it’s been a while since I’ve seen a company come out and list when they had net income so this is no different.
Now I think the company is hitting at the right time too. When you look at all of the AI related data investments, Dan, you and I both have came early to the conclusion that data management and part of that data protection and data security and resiliency is going to be a key part of any company’s ability to put together a proper AI strategy. And that’s the business that Rubrik is essentially in, which is to back that up, to protect that data and when somebody does come in, nefarious folks come in and try to destroy the data, getting that data back and online very quickly. So congratulations to Bipul and the senior management team at the company.
Daniel Newman: Yeah, Pat, it’s really interesting because there’s not a ton to cover. I like that you called that out. I do not understand. I cannot for the life of me understand this kind of continued propensity to put companies out as public companies that don’t make money. So that’s my criticism. It’s nothing against Rubrik, it’s just the sort of standard that it’s become. Pat, you and I have had some interesting conversations about valuation over the years and it’s really hard. I do understand companies grow and they grow into it and you need liquidity and liquidity enables scale. And scale creates massive valuated companies and that’s how VCs get their returns. And I mean that’s what has to happen. And I mean the growth there, the 47% year-on-year growth is impressive. You want to know what was more impressive to me though, was the fact that in 1.5 seconds, Gemini Pro was able to create a Rubrik S-1 analysis that had a –
Patrick Moorhead: You love that man, don’t you?
Daniel Newman: I do. I want to talk about that, only because you did such a good job of covering it. I just wanted to talk about whether or not the equities analyst, the junior analyst, the junior wood choppers over at the big banks that come up and spend weeks and weeks digging out data to figure out how to position an IPO or an investment to their community can do that. Now I do want to call out the fact that I was publicly critical about the fact that… Publicly critical about the fact that I thought the recommendations that the system actually made were pretty amateur. So while it did come up with a pretty good swat, the recommendations are where I think the money is to be made. That’s why companies trust people like you to advise them. They can do this background stuff, they can do the search, they can find the basics, but then what do you do?
So the long story short, Pat, is I do believe this is a growing field data protection. I do believe things like RAG will be beneficial from having the access to all the data we heard what Cohesity is doing. We know that Rubrik’s doing something similar. I think Bipul and his team made a really nice pivot on cybersecurity and not being over-focused on just the data protection part. I think cybersecurity will be maybe the second most important trend line behind AI because as AI enables more scale of data, it also creates a whole lot of threats across the market space. Pat, I think people are longing for enterprise software IPOs, I’m betting you, this thing will be heavily oversubscribed. The value will come out a lot higher and I like it a lot better than Reddit. If you want my market comparative to the most recent cool IPO, I like it a lot better than Reddit.
I like this space. It’ll be interesting by the way to watch the Rubrik and kind of this whole Cohesity, Veritas comparison because Rubrik’s coming out going public, getting big liquidity, trying to go fast to market. Cohesity and Veritas are going to get a little bit bigger, more density, and then my guess is the IPO will follow that. So that’ll be something to watch somewhat critically Pat. But yeah, I mean look-
Patrick Moorhead: Isn’t it crazy how much excitement there is in this part of the market? I mean, let’s not forget about Commvault, Veeam, what Dell is doing in these spaces as well. It’s super interesting and I can’t help, but I do think that these are great standalone businesses, but I also think that companies like Dell seem like acquiring a Rubrik or a Cohesity would make a whole lot of sense. I know Dell has things like backup and restore and some resiliency features, but what I don’t think anybody’s picked up on is the fact that all of this data from different data sources, literally whether it’s HRM, HCM, ERP, Outlook, it’s all going in to these solutions and it’s like, well, while the data’s there, why don’t we activate this using generative AI?
And we saw features from Cohesity and Rubrik to do that, and by the way, the data is already secure. Now the usability of that data based on security posture and who should have access to this, it’s not an end-to-end data platform. But wow, Dan, imagine all the data is in there to begin with and query it and I think it’s kind of this Trojan horse. You combine that with RAG and you’ve got something that’s pretty big.
Daniel Newman: Absolutely. And by the way, I had meant to mention this and just since we’re talking IPOs, and you’d mentioned about Apple earlier making acquisitions and you just mentioned something else about Dell making big acquisitions. Isn’t it interesting the whole inflection AI deal? We’re not going to dive into this right now, but just as a kind of a little mini sidebar, Pat, that did we just see right under our nose of brand new structure for doing an acquisition that requires no regulatory approval? I don’t know, I don’t know what happened there. Anyways, I’m sure if that doesn’t meet any scrutiny we could see a whole lot more of the, we’re just going to invest in all the people.
Patrick Moorhead: Exactly.
Daniel Newman: And we’ll license all the IP and we don’t own anything.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
