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]

Company Performance - Rapid7 reported quarterly earnings of $0.48 per share, missing the Zacks Consensus Estimate of $0.50 per share, and down from $0.72 per share a year ago, representing an earnings surprise of -4% [1] - The company posted revenues of $216.26 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.89%, compared to year-ago revenues of $205.27 million [2] - Over the last four quarters, Rapid7 has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Outlook - Rapid7 shares have lost about 5.7% since the beginning of the year, while the S&P 500 has gained 3.2% [3] - The company's earnings outlook is mixed, with a current Zacks Rank of 3 (Hold), indicating expected performance in line with the market in the near future [6] - The current consensus EPS estimate for the coming quarter is $0.56 on revenues of $213.74 million, and $2.34 on revenues of $879.82 million for the current fiscal year [7] Industry Context - The Internet - Software industry, to which Rapid7 belongs, is currently in the top 29% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor decisions [5]

Financial Performance - Annualized recurring revenue (ARR) reached $840 million, a 4% increase year-over-year[4] - Full-year revenue totaled $844 million, up 9% year-over-year, with product subscriptions revenue at $809 million, also up 9%[4] - Free cash flow for the year was $154 million, compared to $84 million in the previous year, marking an 83% increase[5] - Non-GAAP income from operations for the full year was $163.5 million, significantly up from $102.2 million in the prior year[5] - Total revenue for Q4 2024 was $216.3 million, a 5.8% increase from $205.3 million in Q4 2023[38] - Product subscriptions revenue reached $206.3 million, up from $194.8 million year-over-year, representing a 5.7% growth[38] - Net income for Q4 2024 was $2.2 million, a decrease from $19.1 million in Q4 2023, indicating challenges in profitability[38] - The company reported a total gross profit of $150.4 million for Q4 2024, compared to $145.4 million in Q4 2023, showing a slight improvement[38] - Operating expenses for the year decreased to $557.9 million from $629.9 million in the previous year, indicating cost management efforts[38] - For the year ended December 31, 2024, GAAP net income was $25.526 million, a significant improvement from a loss of $152.815 million in 2023[47] - Adjusted EBITDA for the year ended December 31, 2024, was $188.450 million, up from $126.661 million in 2023, reflecting a growth of approximately 48.8%[47] Customer Growth - The number of customers increased to 11,727, representing a 2% growth from the previous year[3] - The number of customers with active recurring revenue contracts increased, contributing to the annual recurring revenue (ARR) metric[32] Future Projections - The company anticipates ARR for Q1 2025 to be between $870 million and $890 million, reflecting a year-over-year growth of 4% to 6%[8] - Revenue guidance for full-year 2025 is projected to be between $860 million and $870 million, indicating a growth of 2% to 3%[8] - Anticipated non-GAAP net income for full-year 2025 is projected to be between $127 million and $137 million, with diluted non-GAAP net income per share expected to be between $1.72 and $1.85[50] - The company expects a GAAP net loss for the first quarter of 2025 to be between $11 million and $9 million, with anticipated stock-based compensation expense of $28 million[50] - The anticipated free cash flow for full-year 2025 is projected to be $135 million[51] Cash Flow and Liquidity - Net cash provided by operating activities for the year ended December 31, 2024, was $171,670,000, an increase of 64.5% compared to $104,278,000 in 2023[41] - Cash, cash equivalents, and restricted cash at the end of Q4 2024 totaled $342,101,000, up from $214,127,000 at the end of Q4 2023, marking a 59.8% increase[42] - Total cash used in investing activities for the year ended December 31, 2024, was $(46,522,000), a significant improvement from $(178,754,000) in 2023[41] - The company experienced a net increase in cash of $111,993,000 in Q4 2024, compared to an increase of $30,912,000 in Q4 2023, representing a growth of 262.5%[41] Stock-Based Compensation - Stock-based compensation expense for Q4 2024 was $27,412,000, up from $24,177,000 in Q4 2023, reflecting a rise of 9.1%[44] - Stock-based compensation expense for the year ended December 31, 2024, was $107.961 million, slightly down from $111.636 million in 2023[47] Operational Developments - Rapid7's Managed Extended Detection & Response expanded to include Microsoft security telemetry, enhancing threat detection capabilities[7] - The company achieved the In Process Designation from FedRAMP for its InsightGovCloud Platform, indicating progress towards federal authorization[11] - Rapid7 won "Security Vendor of the Year" at the CRN Channel Awards 2024, recognizing its contributions to the IT channel[7] Financial Position - Total assets increased to $1.65 billion as of December 31, 2024, compared to $1.51 billion in 2023, reflecting growth in the company's financial position[36] - Non-GAAP gross profit for Q4 2024 was $157,902,000, up from $152,265,000 in Q4 2023, reflecting a growth of 3.4%[44] - Non-GAAP gross margin for Q4 2024 was 73.0%, slightly down from 74.2% in Q4 2023[44] - The company reported a GAAP loss from operations of $35,035,000 for the year ended December 31, 2024, compared to a loss of $84,288,000 in 2023, showing a reduction of 58.3%[44] Corrections and Adjustments - An immaterial correction resulted in an increase of approximately $3.6 million in additional paid-in capital as of December 31, 2023, without affecting net cash provided by operating activities[52]

Core Insights - Rapid7, Inc. reported a strong performance in 2024, achieving $840 million in Annual Recurring Revenue (ARR) and over $150 million in free cash flow, indicating solid growth and operational efficiency [2][4]. Financial Performance - ARR increased by 4% year-over-year, reaching $839.8 million as of December 31, 2024 [3][4]. - Total revenue for the year was $844 million, a 9% increase from $777.7 million in 2023 [4]. - Product subscriptions revenue also grew by 9% year-over-year, totaling $808.9 million [4]. - The company reported a GAAP operating income of $35 million for the full year, a significant recovery from a loss of $84.3 million in the previous year [4][5]. - Non-GAAP operating income for the year was $164 million, up from $102.2 million in 2023 [4][5]. Customer Metrics - The number of customers increased to 11,727, up 2% from 11,526 in 2023 [3]. - ARR per customer rose to $71.6 thousand, reflecting a 2% increase from $69.9 thousand in the prior year [3]. Profitability and Cash Flow - GAAP net income for the fourth quarter was $2.2 million, compared to $19.1 million in the same quarter of 2023 [5]. - Free cash flow for the year was $154 million, demonstrating strong cash generation capabilities [4][5]. - The company maintained a GAAP gross margin of 70% for the year, consistent with the previous year [3]. Business Highlights - Rapid7 launched its Exposure Command platform and expanded its Managed Detection and Response services, enhancing its value proposition to customers [2][7]. - The company received the "Security Vendor of the Year" award at the CRN Channel Awards 2024, highlighting its contributions to the IT security sector [7]. - Recent product enhancements included support for Microsoft security telemetry and AWS Resource Control Policies, improving threat detection capabilities [7]. Guidance for 2025 - For the first quarter of 2025, Rapid7 anticipates ARR between $870 million and $890 million, with revenue projected between $207 million and $209 million [8]. - Full-year 2025 guidance includes expected non-GAAP income from operations between $125 million and $135 million, and non-GAAP net income per share between $1.72 and $1.85 [8].

Wall Street analysts forecast that Rapid7 (RPD) will report quarterly earnings of $0.50 per share in its upcoming release, pointing to a year-over-year decline of 30.6%. It is anticipated that revenues will amount to $212.25 million, exhibiting an increase of 3.4% compared to the year-ago quarter.Over the last 30 days, there has been no revision in the consensus EPS estimate for the quarter. This signifies the covering analysts' collective reconsideration of their initial forecasts over the course of this t ...

Wall Street expects a year-over-year decline in earnings on higher revenues when Rapid7 (RPD) reports results for the quarter ended December 2024. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.The earnings report, which is expected to be released on February 12, 2025, might help the stock move higher if these key numbers are better than expect ...

BOSTON, Feb. 05, 2025 (GLOBE NEWSWIRE) -- Rapid7, Inc. (NASDAQ:RPD), a leader in extended risk and threat detection, today announced that it has launched a new PACT Partner Program to equip partners with tools, training, and resources to meet the expanding security needs of customers in an increasingly complex global threat landscape. The new PACT Program will deliver a supportive and structured program for partners to help customers take command of their attack surface. Working with the full channel commun ...

Rapid7, Inc. Is Being Investigated For Securities Law Violations And The Schall Law Firm Urges Affected Shareholders To Reach Out ...

BOSTON, Jan. 15, 2025 (GLOBE NEWSWIRE) -- Rapid7, Inc., (NASDAQ: RPD), a leader in extended risk and threat detection, has announced that it has achieved the In Process Designation from the Federal Risk and Authorization Management Program (FedRAMP®) for its InsightGovCloud Platform. The FedRAMP In Process designation indicates that Rapid7 is actively working towards authorization, making it an eligible and trusted Cloud Service Offering (CSO) for federal agencies. This new designation highlights Rapid7’s c ...