What is the outlook for recurring subscription revenue vs. one‑time licensing revenue?

Fundamental outlook – Rubrik’s upcoming Q2 FY26 release will be the first public window into how the company is balancing its two primary revenue streams. Management has repeatedly emphasized a “cloud‑first, subscription‑driven” growth engine, and the FY25 guidance already hinted at a double‑digit YoY increase in recurring ARR (annual recurring revenue). By contrast, one‑time licensing—largely tied to legacy on‑prem deployments—has been flat to slightly declining as customers migrate to the SaaS platform. Assuming the Q2 results follow the FY25 trend, we can expect subscription revenue to outpace, and eventually dominate, the licensing side, delivering a more predictable, higher‑margin earnings profile.

Market & technical dynamics – The market has priced in this subscription shift; Rubrik’s shares have been trading in a relatively tight 20‑day range around the 70‑75 % retracement of its 2024 rally. The 200‑day moving average (≈ $68) still acts as a support level, while the RSI is hovering near 45, indicating room for upside without immediate overbought pressure. A beat‑and‑raise on subscription revenue—especially if the company flags a higher ARR conversion rate—could trigger a breakout above the $75 resistance, inviting momentum‑play buying. Conversely, a miss on licensing tailwinds (e.g., a larger‑than‑expected one‑time contract) might be viewed as a one‑off boost that lacks sustainability, capping upside.

Actionable insight – Focus on the subscription narrative. If the Q2 press release shows subscription revenue growth ≥ 10 % QoQ and a rising ARR conversion rate, consider a long position on any pull‑back to the 200‑day MA with a stop just below $66. If the results reveal stagnant or declining subscription growth, the risk/reward tilts toward a short‑side or defensive positioning, as the long‑term valuation hinges on the recurring‑revenue premium. In short, the market’s upside is tied to the strength and acceleration of recurring subscription revenue, while reliance on one‑time licensing is increasingly viewed as a non‑sustainable tail.