Core Insights - Rapid7, Inc. has been recognized as a Leader in the IDC MarketScape: Worldwide Exposure Management 2025 Vendor Assessment, highlighting its strong position in the threat detection and exposure management market [1][7] Company Overview - Rapid7 is focused on creating a safer digital world by simplifying cybersecurity and making it more accessible, serving over 11,000 global customers [6] - The company offers a comprehensive security solution that integrates cloud risk management with threat detection and response [6] Product Highlights - The Command Platform, an AI-powered security operations platform, is central to Rapid7's offerings, providing unified solutions for exposure management and threat detection [2][3] - Exposure Command enables organizations to detect and prioritize exposures across hybrid environments, offering full visibility into their attack surface and risk-based vulnerability prioritization [3][4] Market Positioning - The IDC MarketScape report emphasizes the importance of prioritization for security teams, noting that Rapid7 connects visibility, asset classification, and prioritization effectively [4][7] - Rapid7's capabilities include a normalized view of the attack surface, real-world risk prioritization, accelerated remediation, and scalability to complex environments [7]

BOSTON, Aug. 19, 2025 (GLOBE NEWSWIRE) -- Rapid7, Inc. (NASDAQ: RPD), a leader in threat detection and exposure management, today announced the launch of Vector Command Advanced. The new offering adds to its continuous red teaming and exposure validation service to now help organizations meet compliance requirements with internal penetration and segmentation testing on top of validating the effectiveness of internal controls and lateral movement protections. *Source: Gartner, Inc. Market Guide for Adversari ...

Summary of Rapid7 (RPD) FY Conference Call - August 12, 2025 Company Overview - **Company**: Rapid7 (RPD) - **Industry**: Cybersecurity and Managed Detection Response (MDR) Key Takeaways Financial Performance and Customer Activity - The company reported solid results with a healthy quarter, indicating stability in the macro environment and strong customer activity [3][4] - There was a concentration of larger deals that had previously been hesitant, showing steady momentum in the pipeline overall [3][4] - The detection response business is a significant growth area, now over $400 million, growing in the mid-teens percentage [6][7] Product Portfolio and Market Position - Rapid7 has shifted from a mid-market player to a key expense for mid to larger enterprises, leading to longer deal cycles with higher Average Selling Prices (ASPs) [4][5] - The detection response business is over half of the company's revenue, with plans to expand into compliance and risk management [7][10] - The company is focusing on integrating AI into its security operations to enhance efficiency and effectiveness [11][20] AI and Automation in Security - AI is seen as a double-edged sword; while it benefits bad actors, it also offers significant productivity gains for security teams [17][20] - Rapid7 is in the early stages of leveraging AI to improve security operations, with tools like incident command to automate and organize investigations [21][24] - The company emphasizes the importance of human oversight in automated processes, advocating for a balanced approach to AI integration [22][24] Managed Services and Gross Margins - Rapid7 has one of the best gross margin profiles in the market, with managed services being critical for resource-light organizations [26][27] - The company believes AI can help improve gross margins over time while addressing increasing security compliance requirements [27][28] - The strategy involves unlocking addressable markets while maintaining healthy gross margins [28][30] Talent Acquisition and Global Presence - The talent market has improved significantly, with Boston being a strong source of skilled professionals [32][34] - Rapid7 is expanding its presence in Pune, India, to tap into a growing talent pool and improve cost structures [53][55] Market Outlook and Guidance - The company is experiencing a dislocation in public market valuations, with a belief that the stock is undervalued based on the performance of its MDR business [45][46] - Rapid7 aims to be the leading managed security AI partner, focusing on scaling security operations while providing high-quality outcomes at reasonable costs [56][57] Future Vision - The long-term vision includes becoming the leading managed security AI partner, enhancing services in detection response, risk management, and compliance [56][57] Additional Insights - The company is adjusting its guidance to reflect the larger deal cycles and ASPs, indicating a cautious but optimistic outlook [39][40] - There is a recognition of the need for a strategic approach to customer engagement, focusing on providing high-value solutions [48][49]

Initial access brokers are selling more than just a way in; Rapid7 calls for unified detection, intelligence, and automation to disrupt these cyberattacks earlyBOSTON, Aug. 12, 2025 (GLOBE NEWSWIRE) -- Rapid7, Inc. (NASDAQ: RPD), a leader in threat detection and exposure management, today released its 2025 Access Brokers Report, a new research analysis of illicit underground marketplaces where cybercriminals buy and sell access to corporate networks. Drawing on six months of threat intelligence from dark we ...

Core Viewpoint - Rapid7 (RPD) has experienced significant selling pressure, resulting in a 22.3% decline over the past four weeks, but analysts anticipate better earnings than previously expected, indicating a potential turnaround for the stock [1] Group 1: Technical Indicators - The Relative Strength Index (RSI) is utilized to determine if a stock is oversold, with a reading below 30 typically indicating this condition [2] - RPD's current RSI reading is 18.72, suggesting that the heavy selling may be exhausting itself and a trend reversal could be imminent [5] Group 2: Fundamental Analysis - There is a strong consensus among sell-side analysts to raise earnings estimates for RPD, with a 2.6% increase in the consensus EPS estimate over the last 30 days, which often correlates with price appreciation [6] - RPD holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a near-term turnaround [7]

PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Rapid7's unaudited condensed consolidated financial statements for Q2 2025 and year-end 2024, covering key financial statements and notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Rapid7, Inc.'s balance sheets show assets and liabilities for June 30, 2025, and December 31, 2024 | Assets (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $261,327 | $334,686 | | Short-term investments | $250,410 | $187,025 | | Accounts receivable, net | $150,683 | $168,242 | | Total current assets | $754,517 | $786,111 | | Total assets | $1,648,740 | $1,652,034 | | Liabilities and Stockholders' Equity (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Accounts payable | $15,943 | $18,908 | | Deferred revenue, current portion | $446,688 | $461,118 | | Total current liabilities | $555,941 | $630,216 | | Total liabilities | $1,558,293 | $1,634,323 | | Total stockholders' equity | $90,447 | $17,711 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Rapid7's statements of operations detail revenue, gross profit, operating income, and net income for the three and six months ended June 30, 2025 and 2024 | (in thousands, except share and per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue: | | | | | | Product subscriptions | $208,097 | $200,067 | $412,032 | $396,985 | | Professional services | $6,096 | $7,924 | $12,414 | $16,107 | | Total revenue | $214,193 | $207,991 | $424,446 | $413,092 | | Total gross profit | $151,134 | $146,999 | $301,907 | $291,106 | | Income from operations | $3,494 | $5,223 | $3,393 | $14,939 | | Net income | $8,338 | $6,538 | $10,443 | $7,944 | | Net income per share, diluted | $0.13 | $0.09 | $0.16 | $0.11 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Rapid7's statements of comprehensive income (loss) present net income and other comprehensive income (loss) for the three and six months ended June 30, 2025 and 2024 | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $8,338 | $6,538 | $10,443 | $7,944 | | Total other comprehensive income (loss) | $3,095 | $(630) | $4,719 | $(2,195) | | Comprehensive income | $11,433 | $5,908 | $15,162 | $5,749 | [Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Deficit)) Rapid7's statements of changes in stockholders' equity (deficit) detail movements in common stock, additional paid-in capital, accumulated other comprehensive loss, and accumulated deficit from December 31, 2024, to June 30, 2025 | (in thousands) | Balance, December 31, 2024 | Stock-based compensation expense | Issuance of common stock under employee stock purchase plan | Vesting of restricted stock units | Shares withheld for employee taxes | Vesting of equity awards previously classified as liabilities | Issuance of common stock upon exercise of stock options | Issuance of common stock from acquisition | Other comprehensive gain | Net income | Balance, June 30, 2025 | | :------------- | :------------------------- | :------------------------------- | :------------------------------------------ | :------------------------------- | :------------------------------- | :---------------------------------------------------------- | :---------------------------------------------------- | :--------------------------------------- | :----------------------- | :--------- | :--------------------- | | Common stock (Amount) | $635 | — | $2 | $9 | $(1) | — | $1 | — | — | — | $646 | | Additional paid-in-capital | $1,011,080 | $51,907 | $4,444 | $(9) | $(1,899) | $777 | $1,588 | $755 | — | — | $1,068,643 | | Accumulated other comprehensive loss | $(1,205) | — | — | — | — | — | — | — | $4,719 | — | $3,514 | | Accumulated deficit | $(988,034) | — | — | — | — | — | — | — | — | $10,443 | $(977,591) | | Total stockholders' equity | $17,711 | $51,907 | $4,446 | — | $(1,900) | $777 | $1,589 | $755 | $4,719 | $10,443 | $90,447 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Rapid7's statements of cash flows present net cash from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $77,299 | $63,928 | | Net cash used in investing activities | $(120,530) | $(34,795) |\ | Net cash (used in) provided by financing activities | $(42,390) | $3,361 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(80,774) | $30,418 | | Cash, cash equivalents and restricted cash, end of period | $261,327 | $244,548 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes accompanying Rapid7's unaudited condensed consolidated financial statements [Note 1. Description of Business, Basis of Presentation and Consolidation and Significant Accounting Policies](index=10&type=section&id=Note%201.%20Description%20of%20Business,%20Basis%20of%20Presentation%20and%20Consolidation%20and%20Significant%20Accounting%20Policies) Rapid7 provides security solutions; financial statements follow GAAP and SEC rules, with a corrected prior stock-based compensation error - Rapid7, Inc. advances security with visibility, analytics, and automation through platform solutions, simplifying complex security tasks for IT and development teams[22](index=22&type=chunk) - An immaterial error in stock-based compensation expense for 2023 and 2024, due to improper valuation of RSUs and PSUs, was corrected by revising previously reported comparative financial information[23](index=23&type=chunk) - The company is evaluating the effect of adopting ASU 2023-09, 'Improvements to Income Tax Disclosures,' effective for fiscal years beginning after December 15, 2024[29](index=29&type=chunk) [Note 2. Revenue from Contracts with Customers](index=11&type=section&id=Note%202.%20Revenue%20from%20Contracts%20with%20Customers) Rapid7 generates revenue from product subscriptions and professional services, recognized ratably or over time - Revenue is primarily generated from product subscriptions (cloud-based, managed services, term software licenses, content subscriptions, maintenance, and support) and professional services (deployment, training, incident response, security advisory)[30](index=30&type=chunk) - For the three months ended June 30, 2025, **$187.3 million** in revenue was recognized from contract liability balances, and for the six months ended June 30, 2025, **$321.8 million** was recognized[33](index=33&type=chunk) | Estimated Revenue from Remaining Performance Obligations (in thousands) | Next Twelve Months | Thereafter | | :-------------------------------------- | :----------------- | :--------- | | Product subscriptions | $578,500 | $279,032 | | Professional services | $15,786 | $4,164 | | Total | $594,286 | $283,196 | [Note 3. Business Combinations](index=12&type=section&id=Note%203.%20Business%20Combinations) Rapid7 acquired Noetic Cyber, Inc. for $51.2 million to enhance its security platform, creating goodwill and intangible assets - Rapid7 acquired Noetic Cyber, Inc. on July 3, 2024, for **$51.2 million** to extend its security operations platform with cyber asset attack surface management[39](index=39&type=chunk) - The purchase consideration included **$38.6 million** in cash, **$0.5 million** in deferred cash payments, and **$12.1 million** in contingent consideration, which increased to **$12.8 million** by June 30, 2025[39](index=39&type=chunk)[40](index=40&type=chunk) | Purchase Price Allocation (in thousands) | Amount | | :------------------------------------- | :----- | | Fair value of total consideration transferred | $51,152 | | Total identifiable net assets assumed | $12,235 | | Goodwill | $38,917 | | Total purchase price allocation | $51,152 | - The acquisition resulted in **$38.9 million** in goodwill and an **$11.5 million** developed technology intangible asset with an estimated useful life of **7 years**[44](index=44&type=chunk)[45](index=45&type=chunk) [Note 4. Investments](index=14&type=section&id=Note%204.%20Investments) Rapid7's available-for-sale investments, primarily U.S. government agencies, totaled $338.4 million with maturities up to 18 months | Investments (in thousands) | Amortized Cost (June 30, 2025) | Fair Value (June 30, 2025) | Amortized Cost (December 31, 2024) | Fair Value (December 31, 2024) | | :------------------------- | :----------------------------- | :------------------------- | :--------------------------------- | :----------------------------- | | U.S government agencies | $338,351 | $338,422 | $224,187 | $224,299 | | Total assets | $338,351 | $338,422 | $224,187 | $224,299 | - Investments are classified as available-for-sale, primarily in U.S. government agencies, with maturities ranging from **1 to 18 months** as of June 30, 2025[48](index=48&type=chunk)[49](index=49&type=chunk) [Note 5. Fair Value Measurements](index=14&type=section&id=Note%205.%20Fair%20Value%20Measurements) Rapid7 measures financial assets and liabilities at fair value using a three-level hierarchy, including investments, derivatives, and contingent consideration | Financial Assets and Liabilities Measured at Fair Value (in thousands) | Level 1 (June 30, 2025) | Level 2 (June 30, 2025) | Level 3 (June 30, 2025) | Total (June 30, 2025) | | :--------------------------------------------------- | :---------------------- | :---------------------- | :---------------------- | :-------------------- | | Assets: | | | | | | U.S. government agencies | $338,422 | — | — | $338,422 | | Foreign currency forward contracts | — | $3,442 | — | $3,442 | | Total assets | $338,422 | $3,442 | — | $341,864 | | Liabilities: | | | | | | Contingent consideration | — | — | $12,789 | $12,789 | | Total liabilities | — | — | $12,789 | $12,789 | - The fair value of 2027 Notes was **$556.5 million** and 2029 Notes was **$265.1 million** as of June 30, 2025, classified as Level 2 measurements[53](index=53&type=chunk) - Contingent consideration, valued at **$12.8 million** as of June 30, 2025, is classified as a Level 3 measurement due to unobservable inputs[53](index=53&type=chunk) [Note 6. Property and Equipment](index=16&type=section&id=Note%206.%20Property%20and%20Equipment) Rapid7's net property and equipment decreased to $29.6 million, with depreciation expense of $2.3 million for Q2 2025 | Property and Equipment (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Computer equipment and software | $29,733 | $28,789 | | Furniture and fixtures | $11,168 | $10,960 | | Leasehold improvements | $58,318 | $57,051 | | Total | $99,219 | $96,800 | | Less accumulated depreciation | $(69,580) | $(64,555) | | Property and equipment, net | $29,639 | $32,245 | - Depreciation expense was **$2.3 million** for the three months and **$5.1 million** for the six months ended June 30, 2025[55](index=55&type=chunk) [Note 7. Goodwill and Intangibles](index=16&type=section&id=Note%207.%20Goodwill%20and%20Intangibles) Goodwill remained at $575.3 million, while total intangible assets decreased to $75.0 million, with $9.0 million amortization for Q2 2025 - Goodwill remained at **$575.3 million** as of June 30, 2025, and December 31, 2024[56](index=56&type=chunk) | Intangible Assets (in thousands) | Net Book Value (June 30, 2025) | Net Book Value (December 31, 2024) | | :------------------------------- | :----------------------------- | :--------------------------------- | | Developed technology | $43,816 | $52,662 | | Customer relationships | $333 | $1,637 | | Trade names | — | $60 | | Total acquired intangible assets | $44,149 | $54,359 | | Internal-use software | $30,832 | $31,360 | | Total intangible assets | $74,981 | $85,719 | - Amortization expense for intangible assets was **$9.0 million** for the three months and **$17.9 million** for the six months ended June 30, 2025[56](index=56&type=chunk) [Note 8. Deferred Contract Acquisitions and Fulfillment Costs](index=17&type=section&id=Note%208.%20Deferred%20Contract%20Acquisitions%20and%20Fulfillment%20Costs) Deferred contract acquisition and fulfillment costs decreased to $116.0 million, with $19.4 million capitalized and $29.2 million amortized | Deferred Contract Acquisition and Fulfillment Costs (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :----------------------------- | :----------------------------- | | Beginning balance | $125,806 | $121,609 | | Capitalization of contract acquisition and fulfillment costs | $19,397 | $27,466 | | Amortization of deferred contract acquisition and fulfillment costs | $(29,197) | $(25,502) | | Ending balance | $116,006 | $123,573 | [Note 9. Derivative and Hedging Activities](index=17&type=section&id=Note%209.%20Derivative%20and%20Hedging%20Activities) Rapid7 uses foreign currency forward contracts as cash flow hedges, with a total notional value of $57.8 million as of June 30, 2025 - Rapid7 uses foreign currency forward contracts as cash flow hedges to manage foreign currency exchange rate risk[59](index=59&type=chunk) - As of June 30, 2025, outstanding forward contracts had a total notional value of **$57.8 million**, compared to **$50.4 million** at December 31, 2024[59](index=59&type=chunk) [Note 10. Debt](index=17&type=section&id=Note%2010.%20Debt) Rapid7 holds convertible senior notes due 2027 ($600.0 million) and 2029 ($300.0 million), redeemed 2025 notes, and established a new $200.0 million credit facility - Rapid7 has **$600.0 million** aggregate principal amount of **0.25%** convertible senior notes due March 15, 2027, and **$300.0 million** aggregate principal amount of **1.25%** convertible senior notes due March 15, 2029[60](index=60&type=chunk) - On May 1, 2025, the company paid **$46.5 million** to redeem the outstanding portion of the 2025 Notes[60](index=60&type=chunk) | Interest Expense Related to Notes (in thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--------------------------------------------- | :------------------------------- | :----------------------------- | | Contractual interest expense | $1,399 | $2,970 | | Amortization of debt issuance costs | $999 | $2,018 | | Total interest expense | $2,398 | $4,988 | - On June 25, 2025, Rapid7 entered into a **$200.0 million** revolving credit facility, with **no outstanding borrowings** as of June 30, 2025[73](index=73&type=chunk)[74](index=74&type=chunk) [Note 11. Stock-Based Compensation](index=20&type=section&id=Note%2011.%20Stock-Based%20Compensation) Total stock-based compensation expense was $27.6 million for Q2 2025, with $91.6 million unrecognized compensation for unvested awards | Stock-Based Compensation Expense (in thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :-------------------------------------------- | :------------------------------- | :----------------------------- | | Cost of revenue | $2,580 | $4,844 | | Research and development | $10,250 | $20,636 | | Sales and marketing | $7,451 | $14,692 | | General and administrative | $7,300 | $14,560 | | Total stock-based compensation expense | $27,581 | $54,732 | - As of June 30, 2025, unrecognized compensation expense for unvested RSUs and PSUs was **$91.6 million**, with a weighted-average amortization period of **1.15 years**[79](index=79&type=chunk) | Stock Option Activity (as of June 30, 2025) | Shares | Weighted Average Exercise Price | | :---------------------------------------- | :-------- | :------------------------------ | | Outstanding | 425,121 | $13.23 | | Vested and exercisable | 425,121 | $13.23 | [Note 12. Income Taxes](index=21&type=section&id=Note%2012.%20Income%20Taxes) Rapid7's effective tax rate was 19.3% for Q2 2025, influenced by foreign and state taxes, and valuation allowances on deferred tax assets | Effective Tax Rate | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Effective Tax Rate | 19.3 % | 7.6 % | 31.0 % | 54.4 % | - The primary reconciling items between the Federal statutory tax rate of **21%** and the effective rate are foreign taxes, state income taxes, and the impact of valuation allowance on deferred tax assets[85](index=85&type=chunk)[86](index=86&type=chunk) [Note 13. Net Income per Share](index=22&type=section&id=Note%2013.%20Net%20Income%20per%20Share) Basic and diluted net income per share were $0.13 for Q2 2025 and $0.16 for the six months, with convertible notes not dilutive | Net Income per Share (in thousands, except share and per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income used to calculate net income, basic | $8,338 | $6,538 | $10,443 | $7,944 | | Weighted-average common shares outstanding, basic | 64,441,000 | 62,496,289 | 64,140,087 | 62,201,182 | | Weighted-average common shares outstanding, diluted | 64,696,992 | 74,250,360 | 64,462,318 | 74,135,121 | | Net income per share, basic | $0.13 | $0.10 | $0.16 | $0.13 | | Net income per share, diluted | $0.13 | $0.09 | $0.16 | $0.11 | - The shares underlying the 2027 and 2029 Notes were **not considered** in the calculation of diluted net income per share for the three and six months ended June 30, 2025, as their effect would have been anti-dilutive[87](index=87&type=chunk) [Note 14. Commitments and Contingencies](index=22&type=section&id=Note%2014.%20Commitments%20and%20Contingencies) Rapid7 has a $660 million cloud services purchase obligation, provides product warranties, and faces an $88 million tax assessment - In January 2025, Rapid7 amended a cloud services contract, increasing its total purchase obligation to **$660 million** over **five years**, including a minimum commitment of **$125.0 million** annually[90](index=90&type=chunk) - The company received an initial assessment from the Israel Tax Authority for approximately **$88 million** related to fiscal year 2021, which it believes is unsustainable and intends to defend[96](index=96&type=chunk) - Rapid7 provides limited product warranties, with historically **immaterial payments**, and standard indemnification provisions in the ordinary course of business[92](index=92&type=chunk)[94](index=94&type=chunk) [Note 15. Segment Information and Information about Geographic Areas](index=23&type=section&id=Note%2015.%20Segment%20Information%20and%20Information%20about%20Geographic%20Areas) Rapid7 operates as a single segment, with Q2 2025 revenue of $214.2 million, $153.2 million from the US and $61.0 million internationally - Rapid7 operates in a single reportable operating segment, offering product subscriptions and professional services[97](index=97&type=chunk) | Net Revenues by Geographic Area (in thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--------------------------------------------- | :------------------------------- | :----------------------------- | | United States | $153,207 | $303,757 | | Rest of world | $60,986 | $120,689 | | Total | $214,193 | $424,446 | [Note 16. Immaterial Correction of an Error](index=24&type=section&id=Note%2016.%20Immaterial%20Correction%20of%20an%20Error) An immaterial error in 2023 and 2024 stock-based compensation expense was corrected by revising prior period financial statements - An immaterial error in stock-based compensation expense for 2023 and 2024, due to improper valuation of RSUs and PSUs, was identified and corrected by revising prior period financial statements[100](index=100&type=chunk)[101](index=101&type=chunk) [Note 17. Subsequent Events](index=25&type=section&id=Note%2017.%20Subsequent%20Events) The One Big Beautiful Bill Act (OBBBA) was signed on July 4, 2025, and Rapid7 is evaluating its impact on tax laws and financial results - On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed, changing tax laws related to corporate income taxes and deferred tax assets/liabilities[103](index=103&type=chunk) - Rapid7 is currently evaluating the impact of the OBBBA on its business, financial condition, and results of operations[103](index=103&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Rapid7's financial condition, operations, business model, key metrics, non-GAAP results, liquidity, and critical accounting estimates [Special Note Regarding Forward-Looking Statements](index=26&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) The report contains forward-looking statements subject to risks and uncertainties, which could cause actual results to differ materially from expectations - The report contains forward-looking statements subject to risks and uncertainties, which could cause actual results to differ materially from expectations[106](index=106&type=chunk)[109](index=109&type=chunk) - Key forward-looking statements concern customer acquisition and retention, economic impacts, security problems, regulatory changes, competition, business restructuring, technological adaptation, growth management, revenue diversification, acquisitions, brand awareness, future financial performance, ARR growth, employee retention, international growth, intellectual property, AI initiatives, and stock prices[106](index=106&type=chunk)[108](index=108&type=chunk) [Overview](index=27&type=section&id=Overview) Rapid7 is a global cybersecurity software and service provider focused on simplifying and making cybersecurity more accessible, leveraging AI-infused technology, research, and expertise - Rapid7 is a global cybersecurity software and service provider focused on simplifying and making cybersecurity more accessible, leveraging AI-infused technology, research, and expertise[111](index=111&type=chunk) - The company's Command Platform integrates cloud security, SIEM, advanced detection and response, and vulnerability management to help SOCs manage attack surfaces and respond to threats[112](index=112&type=chunk) - Rapid7 serves over **11,000 customers** in **151 countries**, including **40% of the Fortune 100**, across diverse industries[115](index=115&type=chunk) [Recent Developments](index=27&type=section&id=Recent%20Developments) Recent developments include a new revolving credit facility, the OBBBA tax act, and a corrected prior stock-based compensation error - On June 25, 2025, Rapid7 entered into a **$200.0 million** revolving credit facility, with **no outstanding borrowings** as of June 30, 2025[116](index=116&type=chunk)[118](index=118&type=chunk) - On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, changing tax laws, and Rapid7 is evaluating its impact[120](index=120&type=chunk) - An immaterial error in stock-based compensation for 2023 and 2024 was corrected by revising prior period comparative financial information[123](index=123&type=chunk) [Our Business Model](index=28&type=section&id=Our%20Business%20Model) Rapid7's business model focuses on cloud-based subscriptions, managed services, and licensed on-premise software, with recurring revenue - Rapid7 offers products through cloud-based subscriptions (InsightIDR, InsightCloudSec, InsightVM, InsightAppSec, InsightConnect, Threat Command), managed services (Managed Vulnerability Management, Managed Detection and Response, Managed Application Security), and licensed on-premise software (Nexpose, Metasploit)[124](index=124&type=chunk) - Consolidation offerings like Threat Complete and Cloud Risk Complete unify products and services as cloud-based subscriptions, while Managed Threat Complete is a managed service[121](index=121&type=chunk) - Recurring revenue constituted **97%** and **96%** of total revenue for the three and six months ended June 30, 2025, respectively[122](index=122&type=chunk) [Components of Results of Operations](index=29&type=section&id=Components%20of%20Results%20of%20Operations) This section details Rapid7's revenue sources, cost of revenue, operating expenses, interest, other income/expense, and income tax provision - Revenue is generated from product subscriptions (cloud-based, managed services, software licenses with maintenance/support) and professional services (deployment, training, incident response, security advisory)[126](index=126&type=chunk)[127](index=127&type=chunk) - Cost of revenue includes personnel, cloud computing, software license fees, amortization of contract fulfillment costs, and intangible assets for product subscriptions, and personnel, third-party vendors, and travel for professional services[129](index=129&type=chunk)[130](index=130&type=chunk) - Operating expenses comprise research and development, sales and marketing, and general and administrative expenses, including personnel costs, infrastructure, marketing, professional fees, and stock-based compensation[133](index=133&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - Interest income is from cash and investments; interest expense is from convertible senior notes and the revolving credit facility; other income/expense includes derivative fair value changes and foreign currency gains/losses[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) - Provision for income taxes includes domestic and foreign taxes, with a full valuation allowance maintained for domestic and certain foreign deferred tax assets[140](index=140&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) This section analyzes Rapid7's consolidated statement of operations, detailing revenue, costs, gross profit, operating income, and net income | Consolidated Statement of Operations Data (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $214,193 | $207,991 | $424,446 | $413,092 | | Total cost of revenue | $63,059 | $60,992 | $122,539 | $121,986 | | Total gross profit | $151,134 | $146,999 | $301,907 | $291,106 | | Income from operations | $3,494 | $5,223 | $3,393 | $14,939 | | Net income | $8,338 | $6,538 | $10,443 | $7,944 | - Total revenue increased by **3.0%** to **$214.2 million** for the three months ended June 30, 2025, and by **2.7%** to **$424.4 million** for the six months, driven by existing customer growth[143](index=143&type=chunk) - Total cost of revenue increased by **3.4%** for the three months and **0.5%** for the six months ended June 30, 2025, primarily due to higher cloud computing costs and amortization, partially offset by decreased personnel costs[145](index=145&type=chunk)[146](index=146&type=chunk) - Research and development expense increased by **$6.8 million** (three months) and **$13.3 million** (six months) due to higher personnel costs (including stock-based compensation) and third-party cloud infrastructure costs for new product development[148](index=148&type=chunk)[149](index=149&type=chunk) - Sales and marketing expense increased by **$1.1 million** (three months) and **$7.4 million** (six months), influenced by a shift in roles, increased commissions, and corporate event expenses[150](index=150&type=chunk)[151](index=151&type=chunk) - General and administrative expense decreased by **$2.0 million** (three months) but increased by **$1.6 million** (six months), reflecting changes in charitable contributions, personnel costs, professional fees, and bad debt expense[152](index=152&type=chunk)[153](index=153&type=chunk) - Other income (expense), net, increased by **$7.9 million** for the six months ended June 30, 2025, due to favorable market conditions, resulting in unrealized and realized gains primarily related to the British Pound Sterling[157](index=157&type=chunk) - Provision for income taxes increased by **$1.5 million** for the three months due to increased pre-tax earnings, but decreased by **$4.8 million** for the six months due to a prior period tax expense for an intercompany intellectual property sale[158](index=158&type=chunk)[159](index=159&type=chunk) [Key Metrics](index=35&type=section&id=Key%20Metrics) Key metrics include total revenue, non-GAAP income from operations, free cash flow, annualized recurring revenue (ARR), and customer count | Key Metrics (dollars in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $214,193 | $207,991 | $424,446 | $413,092 | | Year-over-year growth | 3.0 % | 9.2 % | 2.7 % | 10.6 % | | Non-GAAP income from operations | $36,348 | $39,276 | $68,701 | $79,561 | | Non-GAAP operating margin | 17.0 % | 18.9 % | 16.2 % | 19.3 % | | Free cash flow | $42,280 | $29,205 | $66,957 | $56,739 | | | As of June 30, 2025 | As of June 30, 2024 | | | | Annualized recurring revenue ("ARR") | $840,610 | $815,630 | | | | Year-over-year growth | 3.1 % | 8.6 % | | | | Number of customers | 11,643 | 11,484 | | | | Year-over-year growth | 1.4 % | 1.7 % | | | | ARR per customer | $72.2 | $71.0 | | | | Year-over-year growth | 1.7 % | 6.8 % | | | - Annualized Recurring Revenue (ARR) grew **3.1%** year-over-year to **$840.6 million** as of June 30, 2025[161](index=161&type=chunk) - The number of customers increased by **1.4%** year-over-year to **11,643** as of June 30, 2025[161](index=161&type=chunk) [Non-GAAP Financial Results](index=37&type=section&id=Non-GAAP%20Financial%20Results) Non-GAAP financial results exclude specific items like stock-based compensation, amortization of intangibles, and acquisition-related expenses - Non-GAAP financial measures exclude stock-based compensation, amortization of acquired intangible assets, amortization of debt issuance costs, acquisition-related expenses, non-ordinary course litigation, impairment of long-lived assets, change in fair value of derivative assets, restructuring expense, and discrete tax items[168](index=168&type=chunk)[169](index=169&type=chunk)[174](index=174&type=chunk) | Non-GAAP Gross Profit (in thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :----------------------------------- | :------------------------------- | :----------------------------- | | GAAP total gross profit | $151,134 | $301,907 | | Stock-based compensation expense | $2,580 | $4,844 | | Amortization of acquired intangible assets | $4,423 | $8,846 | | Non-GAAP total gross profit | $158,137 | $315,597 | | Non-GAAP Income from Operations (in thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--------------------------------------------- | :------------------------------- | :----------------------------- | | GAAP income from operations | $3,494 | $3,393 | | Stock-based compensation expense | $27,581 | $54,732 | | Amortization of acquired intangible assets | $5,090 | $10,210 | | Acquisition-related expenses | $183 | $366 | | Non-GAAP income from operations | $36,348 | $68,701 | | Non-GAAP Net Income (in thousands, except share and per share data) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :-------------------------------------------------- | :------------------------------- | :----------------------------- | | GAAP net income | $8,338 | $10,443 | | Stock-based compensation expense | $27,581 | $54,732 | | Amortization of acquired intangible assets | $5,090 | $10,210 | | Acquisition-related expenses | $183 | $366 | | Amortization of debt issuance costs | $999 | $2,018 | | Non-GAAP net income | $42,191 | $77,769 | | Non-GAAP net income per share: Diluted | $0.58 | $1.07 | | Adjusted EBITDA (in thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :----------------------------- | :------------------------------- | :----------------------------- | | GAAP net income | $8,338 | $10,443 | | Interest income | $(5,514) | $(11,272) | | Interest expense | $2,627 | $5,281 | | Other (income) expense, net | $(3,957) | $(5,759) | | Provision for income taxes | $2,000 | $4,700 | | Depreciation expense | $2,349 | $5,140 | | Amortization of intangible assets | $9,041 | $17,915 | | Stock-based compensation expense | $27,581 | $54,732 | | Acquisition-related expenses | $183 | $366 | | Adjusted EBITDA | $42,648 | $81,546 | | Free Cash Flow (in thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :---------------------------- | :------------------------------- | :----------------------------- | | Net cash provided by operating activities | $47,542 | $77,299 | | Less: Purchases of property and equipment | $(948) | $(2,309) | | Less: Capitalized internal-use software costs | $(4,314) | $(8,033) | | Free cash flow | $42,280 | $66,957 | [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) Rapid7's liquidity is supported by cash, investments, operating cash flow, and a revolving credit facility, deemed sufficient for future operations - As of June 30, 2025, Rapid7 had **$261.3 million** in cash and cash equivalents and **$338.4 million** in investments[179](index=179&type=chunk) - Principal liquidity sources include cash, investments, operating cash flow, and a **$200.0 million** revolving credit facility entered into on June 25, 2025[179](index=179&type=chunk)[180](index=180&type=chunk) - The company believes existing liquidity will be **sufficient** for at least the next **12 months**, covering operating expenses, capital expenditures, lease obligations, purchase commitments (including a **$660.0 million** cloud services agreement), and potential acquisitions[181](index=181&type=chunk) [Cash Flows](index=42&type=section&id=Cash%20Flows) This section details Rapid7's cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 | Cash Flows (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $77,299 | $63,928 | | Net cash used in investing activities | $(120,530) | $(34,795) | | Net cash (used in) provided by financing activities | $(42,390) | $3,361 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(80,774) | $30,418 | - Operating activities provided **$77.3 million** in cash for the six months ended June 30, 2025, reflecting net income and working capital adjustments[185](index=185&type=chunk) - Investing activities used **$120.5 million** for the six months ended June 30, 2025, primarily due to purchases of investments, capitalization of internal-use software, and capital expenditures[187](index=187&type=chunk) - Financing activities used **$42.4 million** for the six months ended June 30, 2025, mainly due to convertible senior note conversions, withholding taxes for equity awards, and debt issuance costs, partially offset by proceeds from ESPP and stock option exercises[189](index=189&type=chunk) [Contractual Obligations and Commitments](index=43&type=section&id=Contractual%20Obligations%20and%20Commitments) No additional material changes to contractual obligations and commitments were reported as of June 30, 2025, beyond the cloud services agreement discussed in Note 14 - No additional material changes to contractual obligations and commitments were reported as of June 30, 2025, beyond the cloud services agreement discussed in Note 14[191](index=191&type=chunk) [Off-Balance Sheet Arrangements](index=43&type=section&id=Off-Balance%20Sheet%20Arrangements) Rapid7 does not have relationships with unconsolidated entities or financial partnerships for off-balance sheet arrangements and does not engage in trading activities involving non-exchange traded contracts - Rapid7 does not have relationships with unconsolidated entities or financial partnerships for off-balance sheet arrangements and does not engage in trading activities involving non-exchange traded contracts[192](index=192&type=chunk) [Critical Accounting Estimates](index=43&type=section&id=Critical%20Accounting%20Estimates) The preparation of financial statements requires estimates and assumptions affecting reported amounts, with no material changes to critical accounting policies from the Annual Report - The preparation of financial statements requires estimates and assumptions affecting reported amounts, with **no material changes** to critical accounting policies from the Annual Report[193](index=193&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Rapid7 is exposed to foreign currency, interest rate, and inflation risks, managing foreign currency with hedges, with no material impact from interest rate or inflation changes [Foreign Currency Exchange Risk](index=43&type=section&id=Foreign%20Currency%20Exchange%20Risk) Rapid7 is exposed to foreign currency exchange risk, using forward contracts as cash flow hedges to mitigate fluctuations - Rapid7's results are subject to foreign currency exchange rate fluctuations, as expenses are denominated in various foreign currencies, while most customer contracts are in U.S. dollars[194](index=194&type=chunk) - The company uses forward contracts designated as cash flow hedges to manage foreign currency exchange rate risk[195](index=195&type=chunk) - A hypothetical **10% adverse change** in foreign currency exchange rates as of June 30, 2025, would not have been material to financial condition or results of operations[194](index=194&type=chunk) [Interest Rate Risk](index=43&type=section&id=Interest%20Rate%20Risk) Rapid7's cash, cash equivalents, and investments are subject to interest rate risk, but a hypothetical 10% change would not be material - As of June 30, 2025, Rapid7 had **$261.3 million** in cash and cash equivalents and **$338.4 million** in investments, primarily U.S. government agencies, held for capital preservation[197](index=197&type=chunk) - Cash, cash equivalents, and investments are subject to market risk from interest rate changes, but a hypothetical **10% increase or decrease** in interest rates would **not have a material impact** on financial statements[198](index=198&type=chunk)[200](index=200&type=chunk) - The fair values of convertible senior notes are subject to interest rate and market risk, but these changes do not impact financial position, cash flows, or results of operations due to the fixed nature of the debt[199](index=199&type=chunk) [Inflation Risk](index=44&type=section&id=Inflation%20Risk) As of June 30, 2025, inflation has not had a material effect on Rapid7's business, financial condition, or results of operations - As of June 30, 2025, inflation has **not had a material effect** on Rapid7's business, financial condition, or results of operations[201](index=201&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Rapid7's management concluded that disclosure controls were effective as of June 30, 2025, acknowledging inherent limitations and no material changes [Evaluation of Disclosure Controls and Procedures](index=44&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Rapid7's management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025 - Rapid7's management, with CEO and CFO participation, concluded that disclosure controls and procedures were **effective** at the reasonable assurance level as of June 30, 2025[203](index=203&type=chunk) [Inherent Limitations of Internal Controls](index=44&type=section&id=Inherent%20Limitations%20of%20Internal%20Controls) Management acknowledges that control systems provide only reasonable, not absolute, assurance and cannot prevent all errors or fraud due to inherent limitations - Management acknowledges that control systems provide only reasonable, not absolute, assurance and cannot prevent all errors or fraud due to inherent limitations like faulty judgments, simple errors, collusion, or management override[204](index=204&type=chunk) [Changes in Internal Control over Financial Reporting](index=44&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes in internal control over financial reporting were identified during the period covered by this Quarterly Report on Form 10-Q - **No material changes** in internal control over financial reporting were identified during the period covered by this Quarterly Report on Form 10-Q[206](index=206&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) Rapid7 is involved in ordinary course litigation and claims, which are not expected to have a material adverse effect on its financial condition - Rapid7 is a party to litigation or subject to claims incident to the ordinary course of business, but believes the final outcome will **not have a material adverse effect**[208](index=208&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported, and operations remain subject to various risks and uncertainties - **No material changes** to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024, were reported[209](index=209&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Rapid7 reported no unregistered sales of equity securities, no use of proceeds from an initial public offering of common stock, and no issuer purchases of equity securities during the period - There were **no unregistered sales** of equity securities, use of proceeds from IPO, or issuer purchases of equity securities[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) [Item 3. Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to Rapid7 for the reporting period - This item is **not applicable**[213](index=213&type=chunk) [Item 4. Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Rapid7 for the reporting period - This item is **not applicable**[214](index=214&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) Rapid7's Chief Accounting Officer and Chief Financial Officer adopted Rule 10b5-1 equity trading plans during Q2 2025 - Scott Murphy, Chief Accounting Officer, adopted a Rule 10b5-1 trading plan on May 20, 2025, for a maximum of **17,644 shares**, expiring **June 1, 2026**[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk) - Tim Adams, Chief Financial Officer, adopted a Rule 10b5-1 trading plan on June 18, 2025, for a maximum of **28,974 shares**, expiring **September 30, 2026**[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, equity incentive plans, credit agreements, certifications, and XBRL-related documents - The exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, Amendment No. 1 to the 2015 Equity Incentive Plan, a Letter Agreement with Christina Luconi, a Cooperation Agreement with JANA Partners Management, LP, a Credit Agreement, the Non-Employee Director Compensation Policy, certifications, and Inline XBRL documents[219](index=219&type=chunk) [Signatures](index=49&type=section&id=Signatures) The report is duly signed on behalf of Rapid7, Inc. by Corey E. Thomas, Chief Executive Officer, and Tim Adams, Chief Financial Officer, on August 8, 2025 - The report was signed by Corey E. Thomas, Chief Executive Officer, and Tim Adams, Chief Financial Officer, on **August 8, 2025**[225](index=225&type=chunk)

Company Performance - Rapid7 reported quarterly earnings of $0.58 per share, exceeding the Zacks Consensus Estimate of $0.44 per share, with an earnings surprise of +31.82% [1] - The company posted revenues of $214.19 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.06%, compared to $207.99 million in the same quarter last year [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 declined approximately 50.3% since the beginning of the year, contrasting with the S&P 500's gain of 7.9% [3] - The current consensus EPS estimate for the upcoming quarter is $0.45 on revenues of $217.09 million, and for the current fiscal year, it is $1.85 on revenues of $858.43 million [7] Industry Context - The Internet - Software industry, to which Rapid7 belongs, is currently ranked in the top 28% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Rapid7's stock performance [5]

Financial Data and Key Metrics Changes - Rapid7 ended Q2 2025 with $841 million in ARR, growing 3% year over year, and revenue of $214 million, also up 3% year over year, exceeding guidance [6][22] - Free cash flow for the quarter was $42 million, bringing year-to-date free cash flow to $67 million [25] - Product subscription revenue grew 4% year over year to $208 million, while professional services revenue declined due to a focus on higher-margin services [22][24] Business Line Data and Key Metrics Changes - Detection and response (D&R) business continues to be a core growth driver, representing over half of ARR and growing in the mid-teens year over year [6][22] - The exposure management business is transitioning customers from traditional vulnerability management to a unified risk and exposure management solution, which is integrated into the command platform [17][18] Market Data and Key Metrics Changes - International revenue accounted for 25% of total revenue and grew 10% year over year [23] - The customer base expanded to 11,643 globally, with an average ARR per customer of $72,000 [22] Company Strategy and Development Direction - The company is focused on enhancing go-to-market capabilities and accelerating revenue growth, particularly through the command platform strategy [7][31] - Investments in AI tools and capabilities are aimed at capitalizing on increasing customer demand for integrated security operations [6][12] - The long-term strategy emphasizes scaling the AI-driven security operations platform, integrating various data sources into a single system for risk and response [13][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing customer spending scrutiny but expressed optimism about the strategic deals being pursued [10][19] - The updated ARR guidance for the full year is narrowed to $850 million to $865 million, reflecting a prudent approach given macroeconomic uncertainties [26][27] - Management remains confident in the ability to achieve revenue growth and maintain a strong pipeline for Q4 [41][42] Other Important Information - Tim Adams, the CFO, intends to retire, and Alan Peters has been appointed as the new Chief Commercial Officer to drive go-to-market efforts [29][30] - The company is ramping up its India SOC to enhance operational capabilities and support larger enterprise use cases [16][73] Q&A Session Summary Question: Update on MDR demand trends - Management confirmed strong demand trends in the MDR space, emphasizing ongoing investments in AI technology to manage complex security operations [35][39] Question: Confidence in Q4 performance - Management expressed confidence in achieving the guided range for Q4, citing a healthy pipeline and strategic deal momentum [40][41] Question: Progress on Exposure Command platform - Management reported positive feedback from partners and noted that the Exposure Command platform is leading to larger deals than initially expected [48][50] Question: Near-term and medium-term priorities for growth - Focus on product and service investments, operationalizing the expansion engine, and educating the market about the company's capabilities [56][58] Question: Federal opportunity post-FedRAMP achievement - Management sees robust demand in the federal sector and expects to start seeing benefits from this market in 2026 [93][95] Question: Impact of Zscaler's acquisition of Red Canary - Management believes the acquisition does not significantly change the competitive landscape, as the MDR market remains highly fragmented [100][102] Question: Pricing and packaging strategy for the command platform - Management acknowledged the need to improve pricing and packaging strategies to facilitate easier customer adoption and drive revenue growth [108][111]

1 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, and our other non-GAAP measures, our business strategy, plans and objectives for future operations and expectations regarding non-GAAP targets, our futur ...

"Our Detection and Response business remains a consistent growth engine, and we are encouraged by growing customer interest in our Command Platform strategy," said Corey Thomas, CEO of Rapid7. "As security teams face increasing complexity, they are turning to integrated solutions that provide unified visibility, expert-guided AI, and better security outcomes. We remain focused on delivering against these needs with urgency and discipline." Second Quarter 2025 Financial Results and Other Metrics | | As of Ju ...