Rubrik: Microsoft-backed startup prices IPO at $32 per share to raise $752m

Rubrik Inc., a cloud and data security startup backed by Microsoft Corp., priced its initial public offering above a marketed range and slightly expanded it to raise a total of $752 million.

Rubrik: Microsoft-backed startup prices IPO at $32 per share to raise $752m

Rubrik, which had planned to sell 23 million shares for $28 to $31 each, instead sold them for $32, according to a statement. The company also added 500,000 shares to the IPO late Wednesday, according to a filing with the US Securities and Exchange Commission.

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At the IPO price, Rubrik would has a market value of about $5.6 billion, based on the outstanding shares listed in its filings. Including stock options and restricted share units, the company’s fully diluted valuation of more than $6.6 billion.

Rubrik’s offering had received about 20 times as many orders as there were shares available and the company was considering selling them for as much as $34 apiece, Bloomberg News reported earlier.

Rubrik, which secures its corporate customers’ data across enterprise, cloud and software-as-a-service applications, is only the second sizable US IPO by an enterprise software startup in the past two years. Shopify Inc.-backed marketing and data automation provider Klaviyo Inc. ended the drought in September with a $659 million offering.

AI Wave

The company is riding a wave of technology IPOs in 2024. They include Reddit Inc., semiconductor equipment maker Astera Labs Inc. and software marketing firm Ibotta Inc., which made its public debut last week.

Surging demand for exposure to the AI boom has spurred optimism for tech firms such as Reddit whose touting of revenue from licensing data for AI model training helped make its $860 million IPO a success. AI has also prompted industry giants like Salesforce Inc. to bet on a new cycle of tech investment. That could benefit companies like Rubrik, which hasn’t turned a profit yet, after contract spending in the software sector has declined.

Rubrik was founded in 2013 and released its first product in 2016. It said it now has more than 6,100 customers, including Goldman Sachs Group Inc., Barclays Plc and Citigroup Inc. Its clients include governments and universities, as well as an array of companies such as Home Depot Inc., PepsiCo Inc., Illumina Inc., Fiserv Inc. and the National Football League’s Denver Broncos.

Microsoft Stake

Microsoft made an equity investment in Rubrik in 2021 in a financing round that valued the startup at $4 billion, Bloomberg News reported. Rubrik, whose backers also include Bain Capital Ventures, Lightspeed Venture Partners, Greylock Partners and Khosla Ventures, has raised $1.18 billion to date, according to data provider PitchBook.

Rubrik Chief Executive Officer and Chairman Bipul Sinha, who is also one of the company’s co-founders, currently owns 7.6% of the Class B shares. Co-founder and Chief Technology Officer Arvind Nithrakashyap owns a 6.7% stake. Those shares will have 20 votes each, compared with one each for the Class A shares sold in the IPO.

Through its alliance with Microsoft, Rubrik has committed to spend $220 million over the course of up to 10 years for the use of Azure, Microsoft’s cloud computing platform. Rubrik will use Azure for its data security solutions and preferentially offer public cloud functionality for Azure to its customers, according to its filings.

Rubrik recorded a $354 million in net loss in the year ended January 31, and $24.5 million in negative free cash flow, despite growing its subscription annual recurring revenue by 47%, according to its filings.

IPO Rebound

One advantage Rubrik may be able to count on is that the buoyant market for IPOs may help with sentiment. Debuting in 2023’s uncertain environment for new listings, Klaviyo has spent much of its time as a public company below its offer price. By contrast, Rubrik is set to begin trading amid a broad rebound in the US IPO market.

Since the beginning of the year, companies have raised more than $12.2 billion on US exchanges, more than twice as much as in the same period in 2023, according to data compiled by Bloomberg. Two dozen offerings over $100 million were completed this year, spanning sectors from sporting goods to safety testing.

Rubrik’s offering is being led by Goldman Sachs, Barclays, Citigroup and Wells Fargo & Co. The company’s shares are expected to begin trading Thursday on the New York Stock Exchange under the symbol RBRK.

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