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Investing.com -- Rubrik shares are up 21% after the cybersecurity and data management firm posted quarterly earnings well above expectations and raised full-year guidance.

The stronger than expected growth in Rubrik’s core backup business and rising traction in newer security products prompted upgrade at William Blair to Outperform.

The data protection software provider is gaining share in the backup and cyber resilience market as companies adopt more cloud workloads and face rising data security needs.

It added that customers are increasingly using Rubrik as a broader platform that spans data protection, cloud workloads and identity security, which is expanding the company’s addressable market.

Rubrik’s third quarter results topped expectations across subscription annual recurring revenue, revenue and profitability. Subscription ARR rose 34%, while revenue grew 48%, helped by a one time benefit tied to customers transitioning to its cloud product.

The company posted its first non GAAP profit and generated record free cash flow of $76.9 million, supported by scale benefits in its software as a service model.

William Blair said Rubrik is showing steady beat and raise performance and expects that pattern to continue into fiscal 2027. The firm noted stronger bookings from customers replacing legacy backup vendors and a rapid build in Rubrik’s identity resilience business, which reached about $20 million in subscription ARR just three quarters after launch.

The analyst highlighted early interest in Rubrik Agent Cloud, a new suite that monitors and governs agent activity for security and operations workflows. The product remains in testing and is expected to be offered separately once commercially ready.

Fourth quarter guidance was also ahead of expectations, with Rubrik projecting 33% revenue growth and improved earnings. The firm said reported revenue growth next year will slow because of the roll off of material rights tied to its cloud shift, though underlying revenue growth should remain above subscription ARR growth.

Valuation is elevated after the stock’s surge in Friday trading but analysts view it as warranted given Rubrik’s growth profile and improving profitability.