Rubrik brings 2024's first software IPO

IFR 2530 - 20 Apr 2024 - 26 Apr 2024
4 min read
Anthony Hughes

Rubrik's up to US$713m NYSE IPO this week will pose the biggest test in several years for the once prolific US enterprise software new issue market, potentially determining whether bankers can soon start to whittle down a backlog of unicorns waiting for the right time to go public.

More than 18 months after it first filed confidentially, the Microsoft-backed cybersecurity company on Tuesday launched the year's first software IPO in the US and only the second of note since the tech IPO boom fizzled out in late 2021.

A 15-firm syndicate led by Goldman Sachs, Barclays, Citigroup and Wells Fargo expects to price the sale of 23m shares from a US$28–$31 range after US markets close on Wednesday.

The terms give the company a fully diluted market cap of up to US$6.45bn, or a roughly US$6.2bn enterprise value, versus US$627.9m of revenue in the year to January 31.

According to syndicate bankers, Rubrik is coming to market at a forward EV/sales multiple of 5.7 times, a three-turn discount to the blended average of a large peer group including CrowdStrike and Cloudflare.

The IPO is hoping to draw heavy demand following the strong performance of the small number of tech offerings that have emerged this year – most notably Astera Labs, Reddit and Ibotta – and on the strength of the company's AI credentials.

But Rubrik's heavy losses and the change in its business model from selling on-premise software licences to software-as-a-service/cloud subscriptions could give some investors reason for pause.

The company, founded in 2013 and now serving 6,000 customers, made a net loss of US$354.2m last year. Bankers are hoping investors will instead focus on the 47% growth in subscription revenue, but that is heavily caveated as about 60% of subscription revenue growth came from existing customers migrating from perpetual licences under the new model. Because of this, Rubrik's overall top-line grew only 5% last year.

Generative AI

The company's IPO filing includes more than 50 references to generative AI and says its software applies AI and machine learning to adapt to security threats.

Key competitors include data management and protection vendors such as Commvault Systems (which on Tuesday agreed to acquire cybersecurity specialist Appranix), Dell EMC, IBM and Cohesity, the latter a privately owned company that is also eyeing an IPO.

Rubrik is the first US software IPO since September when automation firm Klaviyo's US$576m float priced above range and then traded poorly. Klaviyo shares remain more than 20% below its IPO price, dragged down by conservative revenue guidance in November in its first quarterly report since listing.

One ECM banker said this had dealt a blow to investors' confidence in the sector, contributing to the dearth of IPOs.

As it stands, no other software IPOs of note are on file publicly.

"Everyone's waiting to see how Rubrik goes and then they will look to roll more deals out," the banker said.


Venture firm Lightspeed, which incubated Rubrik and helped it reach a US$100m revenue run-rate in just six quarters, is the company's biggest shareholder with a 23.9% stake.

Lightspeed, along with Bain Capital Ventures, Greylock Partners and Khosla Ventures, also bankrolled a private funding round in 2019, a US$261m Series E financing that valued the company at US$3.3bn.

In 2021, Rubrik forged a strategic alliance with Microsoft that included an equity investment by the software titan at a US$4bn valuation. As part of this deal, Rubrik committed to spend US$220m over a decade for the use of Microsoft's Azure cloud computing platform.

The IPO is moving ahead despite Rubrik being embroiled in a US Department of Justice probe relating to government contracts.

In October, the company received a grand jury subpoena from the DOJ requesting information about two companies it subsequently learned were "associated with an employee from one of our sales teams who is no longer with the company".