-$2.22
$2.52
bear -$2.22
base $0.25
bull $2.52
margin of safety $0.15
market price* $112.41
Rubrik sells data-security and cyber-recovery software, mainly through its Rubrik Security Cloud subscriptions, which protect and restore customers' backup data after ransomware and other attacks. Revenue was $1.32 billion in the year ended January 31, 2026 (up from $887 million), and Subscription ARR, the annualized value of its subscriptions, grew 34% to $1.46 billion. Contracted, not-yet-recognized revenue was about $2.40 billion, and average net retention among subscription customers was above 120%. Roughly 72% of revenue comes from the Americas, 24% from Europe, the Middle East and Africa, and 4% from Asia Pacific. How we measured earning power. We started from operating cash flow ($283 million in fiscal 2026) and removed three things: the cash that came from changes in working capital (mainly a $426 million rise in customer prepayments, which reflects growth in billings rather than steady-state earnings), stock compensation ($329 million, treated as a real cost), and the capital spending needed to stand still (about $29 million). We also treated sales commissions as a cost when paid rather than adding back their non-cash amortization ($110 million), because commissions are a recurring cost of keeping the subscription base. On that basis the business lost about $333 million in fiscal 2026, or about $1.70 per share. Fiscal 2025 (a loss of about $1.11 billion) is not used as a guide because it includes a one-time catch-up of stock compensation triggered by the April 2024 IPO, and the years before the IPO are on a very different share count and with almost no stock compensation expense. The first six months of fiscal 2027 (to July 31, 2026) show a much smaller loss of about $88 million on the same basis (about $176 million annualized), with net loss down from $198 million to $104 million versus the prior-year period and revenue up 38%. Two consecutive quarters of year-over-year improvement is what we relied on to move the starting level from the fiscal 2026 loss to this run rate. Reported cash flow is positive, and we did not reconcile the gap away: it is the customer prepayments and the non-cash stock pay that the reported figure counts as cash and we do not. What the shares own. The company holds about $1.75 billion of cash and short-term investments as of July 31, 2026, against $1.15 billion of 0% convertible notes due June 2030 (convertible into shares at about $124.76; we treat them as debt because conversion is not certain). We assumed about $200 million of the cash is needed to run the business. Because the notes pay no interest, they cost less than our 6% yardstick; discounting the repayment at 6% values the debt at about $927 million. That leaves roughly $620 million of net financial resources, or about $3.00 per share on about 206 million diluted shares, before valuing the operating business. Bear case: about -$2.22 per share. The business is worth about -$1.08 billion (the fiscal 2026 loss continues to mid-2030), against $1.55 billion of usable cash and $927 million of note value, so the company would owe roughly $460 million more than it is worth. The evidence for this path: the 10-K says the revenue lift from customers using or forfeiting their Subscription Credits will fall sequentially through fiscal 2027, hosting prepayments are rising ($93 million in fiscal 2026, $54 million more than the year before), and stock compensation is still about a quarter of revenue. Cash would be about $0.3 billion when the $1.15 billion notes fall due, forcing a dilutive or expensive refinancing or a restructuring that leaves shareholders with little. Base case: about $0.25 per share. The business is worth about -$570 million (the first-half fiscal 2027 loss rate continues to mid-2030), against $1.55 billion of usable cash and $927 million of note value, leaving about $50 million. Cash would be about $0.9 billion at maturity, leaving roughly $250 million of the notes to refinance against a business with $2.4 billion of contracted revenue and 0% cost of that debt so far, which we judge financeable. After 2030 nothing we can name and evidence produces further earnings, so the operating business contributes $0. Bull case: about $2.52 per share. The loss keeps narrowing at the pace of the last year (about $157 million of improvement annualized), reaching breakeven in the second year, so the business is worth about -$100 million, against the same cash and notes. Nothing beyond breakeven is credited. What we credited and left out. We credited no revenue growth or margin expansion in any case. Rubrik's growth (Subscription ARR up 34%, net retention above 120%, 2,805 customers above $100,000) is real, but the company has only run this engine for a few years, has not been through a downturn, and has funded it with IPO and debt proceeds rather than its own profits, so it does not meet our standard for growth we can count on. If Rubrik reaches sustained profits after stock compensation, this valuation would rise materially; that is the main way we could be wrong, and the loss is already shrinking. We also could not verify from the filings how much of the $1.15 billion notes might convert to shares if the stock rose above the conversion price; capped calls covering about 9.2 million shares (cap price $175.10) would limit that dilution, but we assign them no value. Because the base case is worth about zero, the margin-of-safety price of $0.15 sits below the base case and far below the upside case.