Rapid7 Reports 4% Increase in Annualized Recurring Revenue to $840 Million for Full-Year 2024

Rapid7 reports $840 million ARR, $844 million revenue; focuses on growth strategies for 2025 amidst competitive environment.

Quiver AI Summary

Rapid7, Inc. reported its financial results for 2024, demonstrating a growth in annualized recurring revenue (ARR) to $840 million, which is a 4% year-over-year increase. Total revenue for the year was $844 million, reflecting a 9% rise, with product subscriptions contributing $809 million, also up 9%. The company achieved a GAAP operating income of $35 million and a non-GAAP operating income of $164 million for the year, while net cash provided by operating activities reached $172 million, resulting in a free cash flow of $154 million. CEO Corey Thomas highlighted the company's advancements, including significant momentum in Managed Detection and Response and the introduction of the Exposure Command platform. Looking ahead, Rapid7 aims to accelerate growth and deepen customer engagement in 2025, projecting ARR between $870 million and $890 million and revenue of $860 million to $870 million for the full year.

Potential Positives

• Annualized recurring revenue (ARR) of $840 million represents a 4% year-over-year increase, indicating steady growth in the company's subscription-based revenue model.
• Full-year revenue reached $844 million, a notable 9% increase year-over-year, showcasing strong sales performance and market demand for Rapid7's products.
• Free cash flow of $154 million demonstrates effective cash generation capabilities, providing financial flexibility for future investments or strategic initiatives.
• Recent recognition as "Security Vendor of the Year" at the CRN Channel Awards 2024 reinforces Rapid7's reputation and credibility in the cybersecurity sector.

Potential Negatives

• GAAP net income for the fourth quarter decreased significantly from $19,116 in 2023 to $2,172 in 2024, indicating a major drop in profitability.
• The GAAP operating income margin decreased from 5% in 2023 to 3% in the fourth quarter of 2024, reflecting a decline in operational efficiency.
• The company reported a net loss of $152,815 for the full year 2024 compared to a net income of $25,526 in 2023, indicating significant financial challenges.

FAQ

What is Rapid7's annualized recurring revenue (ARR) for 2024?

Rapid7 reported an annualized recurring revenue (ARR) of $840 million, marking a 4% increase year-over-year.

How did Rapid7's full-year revenue change in 2024?

The full-year revenue reached $844 million, representing a 9% increase compared to the previous year.

What was Rapid7's free cash flow for 2024?

Rapid7 generated free cash flow of $154 million in 2024, reflecting strong operational performance.

Which award did Rapid7 win in 2024?

In 2024, Rapid7 won the "Security Vendor of the Year" award at the CRN Channel Awards.

What is Rapid7's financial guidance for 2025?

For 2025, Rapid7 anticipates ARR between $870 million and $890 million, with moderate revenue growth.

Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.

$RPD Insider Trading Activity

$RPD insiders have traded $RPD stock on the open market 6 times in the past 6 months. Of those trades, 0 have been purchases and 6 have been sales.

Here’s a breakdown of recent trading of $RPD stock by insiders over the last 6 months:

• COREY E. THOMAS (CEO) has made 0 purchases and 3 sales selling 150,000 shares for an estimated $5,934,345.
• REENY SONDHI has made 0 purchases and 3 sales selling 7,326 shares for an estimated $295,788.

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$RPD Hedge Fund Activity

We have seen 124 institutional investors add shares of $RPD stock to their portfolio, and 152 decrease their positions in their most recent quarter.

Here are some of the largest recent moves:

• JANA PARTNERS MANAGEMENT, LP added 931,154 shares (+34.2%) to their portfolio in Q3 2024, for an estimated $37,143,733
• NORGES BANK removed 830,778 shares (-100.0%) from their portfolio in Q4 2024, for an estimated $33,422,198
• NOMURA HOLDINGS INC added 669,249 shares (+111.3%) to their portfolio in Q3 2024, for an estimated $26,696,342
• STEPHENS INVESTMENT MANAGEMENT GROUP LLC removed 625,005 shares (-100.0%) from their portfolio in Q3 2024, for an estimated $24,931,449
• POINT72 ASSET MANAGEMENT, L.P. removed 555,495 shares (-14.6%) from their portfolio in Q3 2024, for an estimated $22,158,695
• MASSACHUSETTS FINANCIAL SERVICES CO /MA/ removed 476,642 shares (-100.0%) from their portfolio in Q3 2024, for an estimated $19,013,249
• FRED ALGER MANAGEMENT, LLC removed 444,058 shares (-89.8%) from their portfolio in Q3 2024, for an estimated $17,713,473

To track hedge funds' stock portfolios, check out Quiver Quantitative's institutional holdings dashboard.

Full Release

• 
  Annualized recurring revenue (“ARR”) of $840 million, an increase of 4% year-over-year
  


• 
  Full-year revenue of $844 million, up 9% year-over-year; Product subscriptions revenue of $809 million, up 9% year-over-year
  


• 
  Full-year GAAP operating income of $35 million; Full-year non-GAAP operating income of $164 million
  


• 
  Full-year net cash provided by operating activities of $172 million; Free cash flow of $154 million
  

BOSTON, Feb. 12, 2025 (GLOBE NEWSWIRE) --

Rapid7, Inc.

(Nasdaq: RPD), a leader in extended risk and threat detection, today announced its financial results for the fourth quarter and full-year 2024.

“As we reflect on 2024, I’m proud of the progress we made to position Rapid7 for long-term growth and success. We achieved $840 million in ARR and delivered over $150 million in free cash flow, while advancing our strategic priorities to innovate, scale, and empower our customers to consolidate and secure their operations more effectively. Continued momentum in Managed Detection and Response and the launch of our Exposure Command platform have further strengthened our ability to deliver measurable value for customers,” said Corey Thomas, Chairman and CEO of Rapid7.

“As we move through 2025, our focus remains on accelerating growth, deepening customer engagement, and driving innovation to solidify Rapid7 as the security operations platform of choice for organizations worldwide.”

Fourth


Quarter


2024


Financial Results and Other Metrics

For additional details on the reconciliation of non-GAAP measures and certain other business metrics to their nearest comparable GAAP measures, please refer to the accompanying financial data tables included in this press release. Certain prior periods reflect immaterial corrections. See Exhibit 1 for additional information.

Recent Business Highlights

• 
  In November, Rapid7 won “Security Vendor of the Year” at the CRN Channel Awards 2024. The award is one of the oldest and most prestigious in the UK IT channel, and acknowledges Rapid7’s overall contribution to business development within the channel.
  


• 
  In November, Rapid7’s Managed Extended Detection & Response added coverage for Microsoft security telemetry, integrating organizations' existing Microsoft telemetry into Rapid7's Command Platform for broader, faster threat detection and remediation, without additional infrastructure or complex integration requirements.
  


• 
  In November, Rapid7 expanded Exposure Command to add support for Amazon Web Services (“AWS”) Resource Control Policies, providing additional visibility, insights, and best practices to guide customers in addressing complex enterprise Identity and Access Management challenges across the modern attack surface.
  


• 
  In December, Rapid7’s Managed Extended Detection & Response added coverage for AWS environments, bringing customers deeper cloud detection and response capabilities by combining cloud native telemetry, AWS security telemetry, and enhanced detections in the Rapid7 Command Platform.
  


• 
  In December, Rapid7 achieved the In Process Designation from the Federal Risk and Authorization Management Program (“FedRAMPⓇ”) for its InsightGovCloud Platform, indicating that Rapid7 is actively working towards authorization and highlighting Rapid7’s continued commitment to partnering with federal agencies to invest in security solutions that enable continuous threat exposure management and enhance the resilience of their organizations.
  


• 
  In January, Rapid7 earned the highest possible score on the Human Rights Campaign Foundation’s 2025 Corporate Equality Index, the nation’s foremost report for measuring corporate policies and practices related to LGBTQ+ workplace equality.
  

First Quarter and Full-Year


2025


Guidance

Rapid7 anticipates ARR, revenue, non-GAAP income from operations, non-GAAP net income per share and free cash flow to be in the following ranges:

The guidance provided above is forward-looking in nature. Actual results may differ materially. See the cautionary note regarding “Forward-Looking Statements” below. Guidance for the first quarter and full-year 2025 does not include any potential impact of foreign exchange gains or losses. The guidance provided above is based on a number of assumptions, estimates and expectations as of the date of this press release and, while presented with numerical specificity, this guidance is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond Rapid7's control and are based upon specific assumptions with respect to future business decisions or economic conditions, some of which may change. Rapid7 undertakes no obligation to update guidance after this date.

Non-GAAP guidance excludes estimates for stock-based compensation expense, amortization of acquired intangible assets, amortization of debt issuance costs, and certain other items such as acquisition-related expenses, impairment of long-lived assets, restructuring expense, induced conversion expense, change in the fair value of derivative assets, litigation-related expenses and discrete tax items. Rapid7 has provided a reconciliation of each non-GAAP guidance measure to the most comparable GAAP measures in the financial statement tables included in this press release. The reconciliation does not reflect any items that are unknown at this time, including, but not limited to, non-ordinary course litigation-related expenses, which we are not able to predict without unreasonable effort due to their inherent uncertainty.

Conference Call and Webcast Information

Rapid7 will host a conference call today, February 12, 2025, to discuss its results at 4:30 p.m. Eastern Time. The call will be accessible by telephone at 888-330-2384 (domestic) or +1 240-789-2701 (international) with the event code 8484206. The call will also be available live via webcast on Rapid7's website at

https://investors.rapid7.com

. A webcast replay of the conference call will be available at

https://investors.rapid7.com

.

About Rapid7

Rapid7 (Nasdaq: RPD) is on a mission to create a safer digital world by making cybersecurity simpler and more accessible. We empower security professionals to manage a modern attack surface through our best-in-class technology, leading-edge research, and broad, strategic expertise. Rapid7’s comprehensive security solutions help more than 11,000 global customers unite cloud risk management and threat detection to reduce attack surfaces and eliminate threats with speed and precision. For more information, visit our website, check out our blog, or follow us on LinkedIn or Twitter.

Non-GAAP Financial Measures and Other Metrics

To supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we provide investors with certain non-GAAP financial measures and other metrics, which we believe are helpful to our investors. We use these non-GAAP financial measures and other metrics for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We also use certain non-GAAP financial measures as performance measures under our executive bonus plan. We believe that these non-GAAP financial measures and other metrics provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making.

While our non-GAAP financial measures are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, you should review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures included below, and not rely on any single financial measure to evaluate our business.

Non-GAAP Financial Measures

We disclose the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income, non-GAAP net income per share, adjusted EBITDA and free cash flow. We also disclose non-GAAP gross margin and non-GAAP operating margin derived from these financial measures.

We define non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income and non-GAAP net income per share as the respective GAAP balances excluding the effect of stock-based compensation expense, amortization of acquired intangible assets, amortization of debt issuance costs and certain other items such as acquisition-related expenses, impairment of long-lived assets, change in the fair value of derivative assets, restructuring expense, induced conversion expense and discrete tax items. Non-GAAP net income per basic and diluted share is calculated as non-GAAP net income divided by the weighted average shares used to compute net income per share, with the number of weighted average shares decreased, when applicable, to reflect the anti-dilutive impact of the capped call transactions entered into in connection with our convertible senior notes.

We believe these non-GAAP financial measures are useful to investors in assessing our operating performance due to the following factors:

Stock-based compensation expense

. We exclude stock-based compensation expense because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact our non-cash expense. We believe that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between our operating results from period to period.

Amortization of acquired intangible assets.

We believe that excluding the impact of amortization of acquired intangible assets allows for more meaningful comparisons between operating results from period to period as the intangible assets are valued at the time of acquisition and are amortized over several years after the acquisition.

Amortization of debt issuance costs.

The expense for the amortization of debt issuance costs related to our convertible senior notes and our former revolving credit facility is a non-cash item, and we believe the exclusion of this interest expense provides a more useful comparison of our operational performance in different periods.

Induced conversion expense.

In conjunction with the third quarter of 2023 partial repurchase of our 2.25% convertible senior notes due 2025, we incurred a non-cash induced conversion expense of $53.9 million. We exclude induced conversion expense because this amount is not indicative of the performance of or trends in our business, and neither is comparable to the prior period nor predictive of future results.

Litigation-related expenses.

We exclude non-ordinary course litigation expense because we do not consider legal costs and settlement fees incurred in litigation and litigation-related matters of non-ordinary course lawsuits and other disputes to be indicative of our core operating performance. We do not adjust for ordinary course legal expenses, including legal costs and settlement fees resulting from maintaining and enforcing our intellectual property portfolio and license agreements.

Acquisition-related expenses.

We exclude acquisition-related expenses, including accretion expense associated with contingent consideration, as costs that are unrelated to the current operations and are neither comparable to the prior period nor predictive of future results.

Change in fair value of derivative assets.

The expense for the change in fair value of derivative assets related to our capped calls settlement is a non-cash item and we believe the exclusion of this other income (expense) provides a more useful comparison of our operational performance in different periods.

Impairment of long-lived assets.

Impairment of long-lived assets consists of impairment charges allocated to the carrying amount of certain operating right-of-use assets and the associated leasehold improvements when the carrying amounts exceed their respective fair values and we believe the exclusion of the impairment charges provides a more useful comparison of our operational performance in different periods.

Restructuring expense.

We exclude non-ordinary course restructuring expenses related to our restructuring plan, that was completed during fiscal year 2024, because we do not believe these charges are indicative of our core operating performance and we believe the exclusion of the restructuring expenses provides a more useful comparison of our performance in different periods.

Discrete tax items.

We exclude certain discrete tax items such as income tax expenses or benefits that are not related to ongoing business operations in the current year and adjustments to uncertain tax position reserves as these charges are not indicative of our ongoing operating results, and they are not considered when we are forecasting our future results.

Anti-dilutive impact of capped call transaction.

Our capped call transactions are intended to offset potential dilution from the conversion features in our convertible senior notes. Although we cannot reflect the anti-dilutive impact of the capped call transactions under GAAP, we do reflect the anti-dilutive impact of the capped call transactions in non-GAAP net income (loss) per diluted share, when applicable, to provide investors with useful information in evaluating our financial performance on a per share basis.

Adjusted EBITDA.

Adjusted EBITDA is a non-GAAP measure that we define as net income (loss) before (1) interest income, (2) interest expense, (3) other (income) expense, net, (4) provision for (benefit from) income taxes, (5) depreciation expense, (6) amortization of intangible assets, (7) stock-based compensation expense, (8) acquisition-related expenses, (9) litigation-related expenses, (10) impairment of long-lived assets and (11) restructuring expense. We believe that the use of adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods.

Free Cash Flow.

Free cash flow is a non-GAAP measure that we define as cash provided by operating activities less purchases of property and equipment and capitalization of internal-use software costs. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after necessary capital expenditures.

Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact upon our reported financial results. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in our business and an important part of the compensation provided to our employees.

Other Metrics

ARR.

ARR is defined as the annual value of all recurring revenue related to contracts in place at the end of the period. ARR should be viewed independently of revenue and deferred revenue as ARR is an operating metric and is not intended to be combined with or replace these items. ARR is not a forecast of future revenue, which can be impacted by contract start and end dates and renewal rates, and does not include revenue reported as professional services revenue in our consolidated statement of operations.

Number of Customers.

We define a customer as any entity that has an active Rapid7 recurring revenue contract as of the specified measurement date, excluding InsightOps and Logentries only customers with a contract value of less than $2,400 per year.

ARR per Customer.

We define ARR per customer as ARR divided by the number of customers at the end of the period.

Cautionary Language Concerning Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, the statements regarding our financial guidance for the first quarter and full-year 2025, and the assumptions underlying such guidance. Our use of the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. The events described in our forward-looking statements are subject to a number of risks and uncertainties, assumptions


and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Risks that could cause or contribute to such differences include, but are not limited to, growing macroeconomic uncertainty, unstable market and economic conditions, fluctuations in our quarterly results, our ability to successfully grow our sales of our cloud-based solutions, including through the shift to a consolidated platform sales approach, effectiveness of our restructuring plan that was completed during fiscal year 2024,


failure to meet our publicly announced guidance or other expectations about our business, our ability to sustain our revenue growth rate, the ability of our products and professional services to correctly detect vulnerabilities, renewal of our customer's subscriptions, competition in the markets in which we operate, market growth, our ability to innovate and manage our growth, our sales cycles, our ability to integrate acquired companies, exposure to greater than anticipated tax liabilities, and our ability to operate in compliance with applicable laws as well as other risks and uncertainties that could affect our business and results described in our filings with the Securities and Exchange Commission (the “SEC”), including our most recent Quarterly Report on Form 10-Q filed with the SEC on November 7, 2024, particularly in the section entitled "Item 1.A Risk Factors," and in the subsequent reports that we file with the SEC. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those expressed in any forward-looking statements we may make. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.

Investor contact:

Elizabeth Chwalk


Senior Director, Investor Relations


investors@rapid7.com


(617) 865-4277

Press contact:

Alice Randall


Director, Global Corporate Communications


press@rapid7.com


(214) 693-4727

Note: Certain prior periods reflect immaterial corrections. See Exhibit 1 for additional information.

Note: Certain prior periods reflect immaterial corrections. See Exhibit 1 for additional information.