Core Insights - Rapid7 has launched Intelligence Hub, an integrated threat intelligence solution aimed at enhancing security teams' ability to detect and respond to threats more effectively [1][2] - The solution addresses significant challenges faced by security teams, including data overload, lack of context, and prioritization of threats [2][3] Industry Challenges - Two-thirds of SOC analysts reported a significant increase in security alerts over the past three years, while 70% noted a rise in the number of security tools they utilize [2] - The top three challenges identified in IDC's survey regarding threat intelligence solutions were cost (42.2%), false positives and alert fatigue (40.0%), and data quality and reliability (39.7%) [5] Features of Intelligence Hub - Intelligence Hub provides curated intelligence that minimizes false positives and enables automated responses, integrating seamlessly with existing Command Platform tools [2][7] - The solution delivers high-fidelity intelligence from various sources, including Rapid7's honeypots and proprietary research, ensuring that security teams focus on the most relevant threats [7] - Contextualized information allows security teams to prioritize threats based on industry, geography, and specific vulnerabilities, facilitating targeted remediation [3][7] Company Overview - Rapid7 aims to create a safer digital world by simplifying cybersecurity and empowering security professionals to manage modern attack surfaces [6] - The company serves over 11,000 global customers, providing comprehensive security solutions that unite cloud risk management with threat detection and response [6]

Core Viewpoint - Rapid7, Inc. will release its first quarter 2025 financial results on May 12, 2025, after market close, and will host a conference call to discuss the results and business outlook [1] Group 1: Financial Results Announcement - The financial results for Q1 2025 will be announced on May 12, 2025 [1] - A conference call will take place on the same day at 4:30 p.m. Eastern Time to discuss the results [1] - The conference call can be accessed via telephone or through a live webcast on the company's website [2] Group 2: Company Overview - Rapid7 aims to create a safer digital world by simplifying and making cybersecurity more accessible [3] - The company provides comprehensive security solutions to over 11,000 global customers, focusing on cloud risk management and threat detection [3]

Core Insights - Rapid7, a leader in extended risk and threat detection, announced the winners of its 2025 Partner of the Year Awards, recognizing exceptional collaboration and positive customer impact among partners [1][3] - The awards program is in its 5th year and acknowledges 24 partners across 13 categories in four major geographic regions [3] Partner Program Updates - Rapid7 introduced significant updates to its global PACT partner program, which includes tailored engagement programs, a new Partner Training Academy, and an expanded partner portal [2] - The program was rolled out to the entire channel community, including resellers, distributors, systems integrators, and service providers, through various global events [2] Regional Winners - North America Partner of the Year: SHI; Canada Partner of the Year: Softchoice; Public Sector Partner of the Year: CDW•G; Best Customer Retention Partner: GuidePoint Security; Cloud Security Partner: SHI; Detection & Response Partner: CDW; Exposure Management Partner: SHI; MSSP Partner: Novawatch; Distributor of the Year: Carahsoft; Emerging Partner: The Redesign Group [8] - EMEA Partner of the Year: Softcat; Best Customer Retention Partner: TRINEXIA South Africa; Cloud Security Partner: Saepio; Detection & Response Partner: Integrity360; Exposure Management Partner: Longwall Security; MSSP Partner: MEO; Distributor of the Year: Infinigate Deutschland GmbH; Emerging Partner: Telonic GmbH [8] - APJ Partner of the Year: DGplex; Best Customer Retention Partner: CyberRisk; Detection & Response Partner: Telstra; Exposure Management Partner: Wysetek Systems Technologists; MSSP Partner: Cythera; Distributor of the Year: APTSecure Technologies; Emerging Partner: ctrl:cyber [8] Partner Quotes - SHI expressed honor in being recognized as North America Partner of the Year, highlighting the team's dedication to delivering innovative solutions [12] - Softcat emphasized the strength of its partnership with Rapid7, reflecting over a decade of collaboration [12] - DGplex noted the recognition as APJ Partner of the Year as a testament to its team's commitment to innovative cybersecurity solutions [12]

Company Overview - Rapid7, Inc. is a leader in extended risk and threat detection, focusing on cybersecurity solutions that simplify and enhance security for organizations [8] - The company serves over 11,000 global customers, providing comprehensive security solutions that unite cloud risk management and threat detection [8] Board of Directors Changes - Rapid7 announced the appointment of three new members to its Board of Directors: Wael Mohamed, Mike Burns, and Kevin Galligan, expanding the Board to 11 directors [1][2] - These appointments are expected to enhance the company's leadership and execution capabilities, aligning with its growth strategy [2][3] Strategic Goals - The company aims to accelerate its growth and enhance operational efficiency through the expertise of the new board members [2] - Rapid7 is focused on delivering cutting-edge solutions in AI-driven threat detection, cloud security, and exposure management, positioning itself for sustainable and profitable growth [2] Cooperation Agreement - Rapid7 has entered into a cooperation agreement with JANA Partners Management, LP, which includes support for all of Rapid7's director nominees at the upcoming annual shareholder meeting [1][2] Expertise of New Board Members - Wael Mohamed brings over 30 years of experience in cybersecurity and digital transformation, having held leadership roles in various technology companies [4] - Mike Burns has more than 25 years of senior leadership experience in finance and operations within high-growth public technology companies [5] - Kevin Galligan has 18 years of experience in investing and driving shareholder value, currently serving as a Partner and Director of Research at JANA Partners [6]

Core Insights - Rapid7, Inc. is expanding its operations in India by opening a new Global Capability Center (GCC) in Pune, aimed at driving AI innovation and enhancing cybersecurity operations [1][2][3] Group 1: Expansion Plans - The GCC in Pune will open in April 2025, focusing on providing 24x7 security operations coverage for global customers [2] - The new office will prioritize hiring talent to foster product and service innovation in cyber operations and build a local cybersecurity talent pipeline [2][3] Group 2: Leadership Statements - Corey Thomas, CEO of Rapid7, emphasized that the expansion into India is crucial for enhancing security operations leadership and customer-centric innovation [3] - Swami Nathan, Rapid7's country manager for India, expressed excitement about leading the new hub and the opportunities for team members to impact customer security [3] Group 3: Engagement Initiatives - Rapid7 will host three Security Day events in May 2025 in Mumbai, Delhi, and Bangalore to engage with corporate, academic, and government leaders on cybersecurity challenges and advancements [4] - These events will focus on topics such as Continuous Threat Exposure Management (CTEM) and Managed Extended Detection and Response (MXDR) [4] Group 4: Company Overview - Rapid7 is committed to creating a safer digital world by simplifying cybersecurity and empowering security professionals [6] - The company serves over 11,000 global customers, integrating cloud risk management with threat detection and response [6]

Financial Performance - For the year ended December 31, 2024, the company recorded total revenue of $844 million, an increase of 8.5% from $777.7 million in 2023[355]. - Product subscriptions revenue was $808.9 million, up from $740.2 million in 2023, representing a growth of 9.3%[355]. - The company reported a net income of $25.5 million for 2024, a significant recovery from a net loss of $152.8 million in 2023[355]. - Total gross profit for 2024 was $593 million, compared to $545.7 million in 2023, reflecting a gross margin improvement[355]. - Operating expenses decreased to $557.9 million in 2024 from $629.9 million in 2023, primarily due to lower research and development costs[355]. - The company recognized a total comprehensive income of $23 million in 2024, compared to a comprehensive loss of $150.1 million in 2023[359]. - Net income for the year ended December 31, 2024, was $25,526,000, a significant improvement from a net loss of $152,815,000 in 2023 and $124,717,000 in 2022[364]. - The company reported a loss before income taxes of $153,333,000 for the year ended December 31, 2024, compared to a profit of $41,455,000 in 2023[482]. - Total income tax expense for 2024 was $15,929,000, a significant increase from a tax benefit of $518,000 in 2023[483]. - The effective income tax rate for 2024 was 38.4%, compared to 0.3% in 2023[483]. Cash and Investments - The company reported cash and cash equivalents of $334.7 million and investments of $224.3 million as of December 31, 2024[330]. - The company’s cash and cash equivalents increased to $334.7 million as of December 31, 2024, up from $213.6 million in 2023[353]. - Total cash, cash equivalents, and restricted cash at the end of 2024 was $342,101,000, up from $214,127,000 in 2023[364]. - The company had $7.4 million of restricted cash recorded on its consolidated balance sheet as of December 31, 2024[384]. - As of December 31, 2024, Rapid7's available-for-sale investments totaled $224.3 million, with maturities ranging from 1 to 17 months[440]. Competition and Market Conditions - The company anticipates that prolonged economic uncertainties could adversely affect its business and operating results[13]. - The company faces intense competition in its market, which could negatively impact its financial condition and results of operations[13]. - The company is dependent on customers renewing and expanding their subscriptions, which is vital for future operating results[13]. - The company aims to maintain an adequate annualized recurring revenue growth, which is critical for its future operating results[12]. - The company is focused on diversifying its sources of revenue and effectively managing its growth to sustain profitability[12]. Expenses and Costs - Stock-based compensation expense for 2024 was $107,961,000, slightly down from $111,636,000 in 2023[364]. - The total amortization expense for intangible assets was $33.8 million in 2024, up from $31.9 million in 2023, indicating a year-over-year increase of 5.9%[447]. - The adjusted total cost of revenue for 2024 was $221,664 thousand, up from $202,655 thousand in 2023[510]. - Total lease costs for the year ended December 31, 2024, were $25.905 million, a decrease from $26.254 million in 2023[467]. - The company incurred fees of $0.4 million related to the Credit Agreement, which are amortized over the contractual term[465]. Acquisitions and Goodwill - Rapid7 acquired Noetic Cyber, Inc. for an aggregate fair value of $51.2 million, consisting of $38.6 million in cash, $12.1 million in contingent consideration, and $0.5 million in deferred cash payments[429]. - Rapid7 acquired Minerva Labs Ltd. for an aggregate fair value of $34.6 million, with $35.0 million paid in cash at closing[438]. - The fair value of net assets acquired from Minerva was $13.9 million, with goodwill recorded at $20.7 million and intangible assets at $12.8 million[439]. - Goodwill increased from $536.4 million as of December 31, 2023, to $575.3 million as of December 31, 2024, reflecting a growth of approximately 7.3%[447]. Tax and Regulatory Matters - The company had federal net operating loss carryforwards of $265.6 million and state NOLs of $306.0 million as of December 31, 2024[484]. - The company recorded additional research and development tax credits of $4.2 million during the fourth quarter of 2024[487]. - The company received an initial tax assessment from the Israel Tax Authority of approximately 324 million Israeli New Shekels (about $88 million) for fiscal year 2021, but has not recorded any impact in its financial statements[494]. - The company recorded $4,520 thousand in additions based on tax positions related to the current year, increasing unrecognized tax benefits to $9,876 thousand by December 31, 2024[492]. Restructuring and Operational Changes - The company completed its Restructuring Plan in Q1 2024, incurring $(0.2) million in restructuring charges[513]. - The company incurred $22.2 million in restructuring charges in 2023, which included a workforce reduction of approximately 16%[511]. - The company recorded impairment losses of $30.8 million related to idle office spaces in 2023, consisting of $22.2 million for right-of-use assets and $8.6 million for leasehold improvements[468]. Stock and Shareholder Matters - The number of shares available for grant under the Employee Stock Purchase Plan (ESPP) as of December 31, 2024, was 3,076,461[478]. - The expected volatility for the ESPP in 2024 was between 37% and 47%[481]. - As of December 31, 2024, the company had 582,638 stock options outstanding with a weighted average exercise price of $12.38 and an intrinsic value of $16,225,000[477]. - The company has not paid dividends on its common stock and does not expect to do so in the foreseeable future[480].

Core Insights - Rapid7 has announced new innovations to its Exposure Management offering, enhancing the Rapid7 Command Platform to provide improved attack surface visibility and context for organizations [1][2][3] Group 1: Innovations and Features - The new features allow organizations to continuously monitor sensitive data across multi-cloud environments, integrating AI-driven risk scoring and asset context for effective exposure prioritization and remediation [1][2] - Enhancements to the Remediation Hub align risk severity, asset context, reachability, and exploitability with recommended remediations, streamlining the remediation process for security teams [2][6] Group 2: Importance of Context and Control - Security teams require not just visibility but also context and control to enhance efficiency, which is addressed by integrating sensitive data insights and AI-driven prioritization into the platform [3][6] - The innovations aim to help organizations proactively reduce risk, expedite response times, and gain deeper visibility into their attack surface [3] Group 3: Data Protection and Compliance - The ability to discover and protect sensitive data from endpoints to the cloud is essential for organizations to comply with evolving privacy regulations [2][6] - Integration with Cloud Service Provider security services like AWS Macie and Microsoft Defender allows teams to classify and secure sensitive data from the outset, improving data hygiene [6]

Company Overview February 12, 2025 1 FINANCIAL SCALE GLOBAL SCOPE MASSIVE Opportunity to Consolidate SecOps $54bn+ Total Addressable Global Customers Market Disclaimers This presentation contains forward-looking statements. All statements contained in this presentation other than statements of historical facts, including, without limitation, statements regarding our market opportunity, demand for our product and service offerings, expectations regarding our annualized recurring revenue (ARR), free cash flow ...

Financial Data and Key Metrics Changes - Rapid7 ended 2024 with $840 million in ARR, growing 4% year-over-year, and revenue of $844 million, which is a 9% increase from the previous year [10][36][39] - Operating income for the year was $164 million, representing a 19% operating margin, an expansion of over 600 basis points from the prior year [40] - Free cash flow for 2024 was over $150 million, with a free cash flow margin of 18%, an increase of over 800 basis points from the previous year [41] Business Line Data and Key Metrics Changes - The detection and response business generated over $400 million in ARR, showing double-digit growth in 2024 [12][23] - The risk and exposure management business is gaining momentum, with over 20% year-over-year growth in total pipeline generation during Q4 [13] - ARR per customer grew 2% year-over-year to approximately $72,000, indicating continued customer expansion within the platform [38] Market Data and Key Metrics Changes - International revenue grew 14% year-over-year, accounting for 25% of total revenue, while North America grew 3% and made up 75% of the mix [42] - The company noted a shift in the vulnerability management landscape, with traditional VM facing secular decline due to increased cloud migration [26][78] Company Strategy and Development Direction - The company is focusing on innovation in its detection and response offerings and expanding its partner ecosystem, with 80% to 90% of new ARR booked through channels [14][25] - Rapid7 aims to establish a new SOC and innovation center in India to accelerate investments and improve operational efficiency [34] - The strategy is to consolidate exposure management and managed detection response, positioning the company to compete effectively for VM and cloud security budgets [27][112] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the foundational work completed in 2024, which positions the company for more consistent execution and sustainable growth in 2025 and beyond [17][21] - The company expects ARR growth of 4% to 6% in 2025, primarily driven by the detection and response business [32][46] - Management acknowledged potential challenges from resource-constrained customers, particularly in healthcare and local government sectors [100] Other Important Information - The company identified a stock-based compensation error that required a correction but did not affect ARR, reported revenue, or free cash flow metrics [51] - Rapid7 plans to host an Analyst Day later in the year to provide deeper insights into its business and strategy [34] Q&A Session Summary Question: Clarification on ARR for detection and response - Management confirmed that the detection and response business is growing in the mid-teens, with the remainder of ARR coming from a mix of cloud, VM, and legacy products [55][56] Question: Margin outlook for Managed D&R - Management indicated that overall product gross margins will remain stable in the mid-70s range, but managed services will have lower gross margins due to labor components [59][60] Question: Value proposition in cloud security - Management emphasized the focus on integrated exposure management to reduce complexity and provide a comprehensive view of the attack surface, targeting under-adopted cloud security technologies [64][66] Question: Competitive environment and pricing - Management acknowledged traditional VM as a competitive pressure but noted strong early conversion rates for Exposure Command, indicating robust demand [90][92] Question: Factors influencing net new ARR growth - Management highlighted a stronger pipeline entering 2025 and the potential for upsell opportunities within the existing customer base as key drivers for net new ARR growth [102][104]

Core Insights - Rapid7 reported revenue of $216.26 million for the quarter ended December 2024, reflecting a year-over-year increase of 5.4% and a surprise of +1.89% over the Zacks Consensus Estimate of $212.25 million [1] - The company's EPS was $0.48, down from $0.72 in the same quarter last year, resulting in an EPS surprise of -4.00% compared to the consensus estimate of $0.50 [1] Financial Performance Metrics - Annualized recurring revenue (ARR) was reported at $839.82 million, slightly below the average estimate of $839.91 million [4] - The number of customers reached 11,727, exceeding the average estimate of 11,690 [4] - ARR per customer was $71,600, which is lower than the estimated $72,160 [4] - Revenue from professional services was $9.93 million, surpassing the estimate of $8.49 million, but showing a year-over-year decline of -4.9% [4] - Product revenue was $206.33 million, exceeding the average estimate of $203.76 million, with a year-over-year increase of +5.9% [4] - Non-GAAP gross profit from professional services was $3.51 million, above the estimate of $2.27 million [4] - Non-GAAP gross profit from products was $154.40 million, slightly below the average estimate of $155.07 million [4] Stock Performance - Over the past month, Rapid7's shares have returned -4.3%, contrasting with the Zacks S&P 500 composite's +4.3% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]