Microsoft-Backed Rubrik Leads Debut Trio Setting Steady IPO Pace
(Bloomberg) -- Rubrik Inc. rose 16% in its trading debut after the cloud and data security startup backed by Microsoft Corp. topped its fundraising goal with a $752 million initial public offering, signaling with two other listings sustained demand for first-time share sales.
Most Read from Bloomberg
S&P 500 Falls 1% at End of Worst Month in 2024: Markets Wrap
Stocks Trade for 390 Minutes a Day. Increasingly, Only 10 Matter
Orders for Rubrik’s IPO were more than 20 times the 23.5 million shares on offer, said people familiar with the matter who asked not to be identified because the details weren’t public. Half of the shares were allocated to the top 10 long-only institutional investors, with another 20% of the shares going to 15 others, they said.
The demand allowed Rubrik to price the shares at $32 apiece, a dollar above the marketed range. The shares opened at $38.60 and rose as much as 25% from the IPO price before closing Thursday at $37, giving Rubrik a market value of $6.5 billion. Accounting for stock options and restricted share units, the company’s fully diluted valuation is about $7.7 billion.
Aerospace and defense parts maker Loar Holdings Inc. fared even better in its first day of trading, gaining 74% after pricing its IPO above the targeted range to raise $308 million. The third US debut was by UK-based financial platform Marex Group Plc, whose shares ended Thursday a penny below the $19 price in its $292 million IPO.
Triple Gain
With this week’s listings, $13.6 billion has been raised on US exchanges via IPOs this year, according to data compiled by Bloomberg. While that’s still less than a tenth of the amount raised in the all-time record set in 2021, it’s more than three times the pace at this time last year, the data show.
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.
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 before the IPO, according to data provider PitchBook.
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%, the filings show.
Rubrik Chief Executive Officer and Chairman Bipul Sinha, who is also one of the company’s co-founders, now owns 8.1% of the company’s Class B shares. Co-founder and Chief Technology Officer Arvind Nithrakashyap owns 7.1% of them, according to the filings. Those shares will have 20 votes each, compared with one each for the Class A shares sold in the IPO.
Profitability Focus
Sinha, who declined to comment on demand for the IPO shares, said in an interview that the company is focused on profitability.
“We want to create a profitable growth, but we are in a tremendous market that has a lot of opportunities, and we have a very differentiated product,” he said. “Our goal is to continue to try do organic investments and continue to build our platform.”
Sinha added that the company would be opportunistic in terms of bringing in a team technology or product to accelerate Rubik’s product roadmap and customers’ capabilities.
Rubrik’s offering was led by Goldman Sachs, Barclays, Citigroup and Wells Fargo & Co. The company’s shares are trading on the New York Stock Exchange under the symbol RBRK.
Lightspeed co-founder and partner Ravi Mhatre, who is a Rubrik board member, said going public sends the message that “Rubrik is here to stay.” He also said that the IPO proceeds could help finance deals.
“There’s more acquisitions in the company’s future,” he said, adding that they would likely be cloud-related.
Mhatre said he’s hopeful Rubrik’s success “creates an opening signal that allows other software companies to follow.”
Most Read from Bloomberg Businessweek
Modi Is $20 Trillion Short on His Grand Plan for India’s Economy
Biden Strategy to Tame Gas Prices Is in Peril as Iran Sanctions Pressure Mounts
©2024 Bloomberg L.P.
