Rapid7 Inc (NASDAQ:RPD) Q4 2021 Earnings Conference Call February 9, 2022 4:30 PM ET Company Participants Sunil Shah - Head of IR Corey Thomas - CEO Tim Adams - CFO Conference Call Participants Rob Owens - Piper Sandler Saket Kalia - Barclays Matt Hedberg - RBC Capital Markets Brian Essex - Goldman Sachs Fatima Boolani - Citi Jonathan Ho - William Blair Michael Turits - KeyBanc Jonathan Ruykhaver - Baird Brad Reback - Stifel Operator Good day, and thank you for standing by. Welcome to the Rapid7 Fourth Quar ...

Rapid7 Inc. (NASDAQ:RPD) Q3 2021 Earnings Conference Call November 3, 2021 4:30 PM ET Company Participants Sunil Shah - IR Corey Thomas - CEO Jeff Kalowski - CFO Conference Call Participants Rob Owens - Piper Sandler Matt Hedberg - RBC Capital Markets Saket Kalia - Barclays Eric Heath - KeyBanc Capital Jonathan Ho - William Blair Brian Essex - Goldman Sachs Jonathan Ruykhaver - Robert W. Baird Brad Reback - Stifel Gregg Moskowitz - Mizuho Hamza Fodderwala - Morgan Stanley Shebly Seyrafi - FBN Securities Ope ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited financial statements show significant asset and liability growth driven by acquisitions and debt issuance, alongside a widening net loss despite increased revenue [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Balance Sheet Highlights (in thousands USD) | Balance Sheet Highlights (in thousands) | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $227,104 | $173,617 | | Goodwill | $515,297 | $213,601 | | Total assets | $1,260,880 | $913,122 | | **Liabilities & Stockholders' Equity** | | | | Deferred revenue, current portion | $316,045 | $278,585 | | Convertible senior notes, non-current | $811,068 | $378,586 | | Total liabilities | $1,365,883 | $841,586 | | Total stockholders' equity (deficit) | ($105,003) | $71,536 | - Total assets increased to **$1.26 billion**, driven by a Goodwill increase to **$515.3 million** from recent acquisitions[9](index=9&type=chunk) - Total liabilities rose to **$1.37 billion** due to increased convertible senior notes, resulting in a stockholders' deficit of **$105.0 million**[9](index=9&type=chunk) [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Statement of Operations (in thousands USD) | Statement of Operations (in thousands) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $139,894 | $105,075 | $383,766 | $298,327 | | Total gross profit | $96,424 | $74,047 | $264,698 | $210,504 | | Loss from operations | ($34,315) | ($17,916) | ($79,358) | ($53,468) | | Net loss | ($37,700) | ($25,541) | ($101,709) | ($69,931) | | Net loss per share, basic and diluted | ($0.67) | ($0.50) | ($1.86) | ($1.38) | - Q3 2021 revenue grew **33.1% YoY** to **$139.9 million**, while nine-month revenue increased **28.6% YoY** to **$383.8 million**[11](index=11&type=chunk) - Q3 2021 operating expenses rose to **$130.7 million**, increasing the loss from operations to **$34.3 million**[11](index=11&type=chunk) - Net loss for the first nine months widened to **$101.7 million**, with net loss per share increasing to **$1.86**[11](index=11&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (in thousands USD) | Cash Flow Summary (in thousands) | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $49,229 | $4,305 | | Net cash used in investing activities | ($307,887) | ($90,469) | | Net cash provided by financing activities | $313,420 | $202,300 | | Net increase in cash, cash equivalents and restricted cash | $53,913 | $116,296 | - Cash flow from operations significantly improved to **$49.2 million** for the first nine months of 2021[21](index=21&type=chunk) - Investing activities used **$307.9 million**, primarily for business acquisitions totaling **$358.4 million**[21](index=21&type=chunk) - Financing activities provided **$313.4 million**, mainly from the issuance of **$585.0 million** in convertible senior notes[21](index=21&type=chunk) [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - Revenue is primarily generated from subscriptions, perpetual software licenses, and professional services[32](index=32&type=chunk) - The company acquired IntSights Cyber Intelligence Ltd. for **$322.2 million**, adding **$260.9 million** to goodwill[46](index=46&type=chunk)[48](index=48&type=chunk) - In March 2021, the company issued **$600.0 million** of 0.25% convertible senior notes due 2027[80](index=80&type=chunk)[87](index=87&type=chunk) Revenue by Type (in thousands USD) | Revenue by Type (in thousands) | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Subscriptions | $129,157 | $353,338 | | Perpetual software licenses | $1,840 | $5,990 | | Professional services | $8,745 | $24,185 | | **Total revenue** | **$139,894** | **$383,766** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strong revenue growth driven by organic expansion and acquisitions, alongside increased operating losses from strategic investments in R&D and sales [Overview](index=29&type=section&id=Overview) - Rapid7 provides security solutions through its Insight Platform, focusing on visibility, analytics, and automation[125](index=125&type=chunk) - The company aims to close the "Security Achievement Gap" by simplifying complex security problems[127](index=127&type=chunk) - As of September 30, 2021, Rapid7 served over **9,900 customers** in 144 countries, including **39% of the Fortune 100**[130](index=130&type=chunk) [Key Metrics](index=31&type=section&id=Key%20Metrics) Key Metrics as of September 30 | Key Metric | As of Sep 30, 2021 | As of Sep 30, 2020 | YoY Growth | | :--- | :--- | :--- | :--- | | Number of customers | 9,909 | 8,442 | 17% | | Annualized Recurring Revenue (ARR) | $550,044 thousand | $398,725 thousand | 38.0% | Key Metrics for the Three Months Ended September 30 | Key Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Total revenue | $139,894 thousand | $105,075 thousand | | Year-over-year revenue growth | 33.1% | 26.4% | | Free cash flow | $14,327 thousand | $6,449 thousand | [Results of Operations](index=38&type=section&id=Results%20of%20Operations) - Q3 2021 revenue increased by **$34.8 million (33.1%) YoY**, driven by **$31.0 million** in organic growth and **$3.8 million** from the IntSights acquisition[174](index=174&type=chunk) - Total cost of revenue for Q3 2021 increased by **40.1% YoY**, causing total gross margin to decrease from **70.5% to 68.9%**[177](index=177&type=chunk) - Research and Development expense for Q3 2021 rose **53.9% YoY** to **$15.4 million**, largely due to increased personnel costs[179](index=179&type=chunk) - Sales and Marketing expense for Q3 2021 increased **30.1% YoY**, driven by higher personnel and commission costs[180](index=180&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) - As of September 30, 2021, the company had **$227.1 million** in cash and cash equivalents and **$82.5 million** in investments[200](index=200&type=chunk)[201](index=201&type=chunk) - Key cash flow activities in the first nine months of 2021 include **$49.2 million** from operations, **$307.9 million** used in investing, and **$313.4 million** from financing[202](index=202&type=chunk)[208](index=208&type=chunk)[210](index=210&type=chunk)[212](index=212&type=chunk) - In 2021, the company completed three acquisitions: IntSights (**$322.2 million**), Alcide (**$50.5 million**), and Velocidex (**$3.0 million**)[203](index=203&type=chunk)[204](index=204&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from foreign currency exchange rates, interest rate fluctuations, and inflation, but does not consider the potential impact to be material - The company's primary market risks are foreign currency exchange fluctuations, interest rate changes, and inflation[220](index=220&type=chunk)[221](index=221&type=chunk)[225](index=225&type=chunk) - While most revenue is in USD, the company uses forward contracts to hedge foreign currency exposure on expenses[220](index=220&type=chunk) - A hypothetical **10% change** in interest rates is not expected to have a material impact on its financial position[222](index=222&type=chunk)[224](index=224&type=chunk) [Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2021, with no material changes identified during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of September 30, 2021[228](index=228&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that are reasonably likely to **materially affect** these controls[230](index=230&type=chunk) [PART II. OTHER INFORMATION](index=50&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) The company is contesting a patent infringement lawsuit filed by Finjan, Inc, with an uncertain final outcome, and is party to other non-material litigation - In October 2018, Finjan, Inc filed a patent infringement complaint against Rapid7, seeking unspecified damages[233](index=233&type=chunk) - Rapid7 intends to **vigorously defend** against the Finjan lawsuit, but the final outcome and potential liability are uncertain[233](index=233&type=chunk) [Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) The company faces numerous risks including the COVID-19 pandemic's impact, a history of losses, intense competition, and reliance on customer renewals - The **COVID-19 pandemic** could materially and adversely affect business operations and financial results[236](index=236&type=chunk)[239](index=239&type=chunk) - The company has a **history of net losses** and may not achieve or maintain profitability due to continued heavy investment[253](index=253&type=chunk) - Business growth is substantially dependent on customers **renewing their subscriptions**[236](index=236&type=chunk)[255](index=255&type=chunk) - The company faces **intense competition** and potential reputational harm from security breaches of its own systems[236](index=236&type=chunk)[261](index=261&type=chunk)[330](index=330&type=chunk) - A significant amount of **debt from convertible senior notes** may decrease business flexibility and increase borrowing costs[240](index=240&type=chunk)[355](index=355&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities, use of IPO proceeds, or issuer purchases of equity securities were reported for the period - There were **no unregistered sales** of equity securities, use of IPO proceeds, or issuer purchases of equity securities reported for the period[378](index=378&type=chunk)[379](index=379&type=chunk)[380](index=380&type=chunk) [Exhibits](index=76&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, acquisition agreements, and required officer certifications - The exhibits filed include **certifications from the Principal Executive Officer and Principal Financial Officer** as required by the Sarbanes-Oxley Act[387](index=387&type=chunk) - The **Stock Purchase Agreement** for the acquisition of IntSights Cyber Intelligence Ltd is included by reference as an exhibit[387](index=387&type=chunk)

August 4, 2021 Company Overview 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) and growth, ARR growth per customer, revenue growth, non-GAAP operating margin expansion, and our other non-GAAP measures, our business stra ...

Rapid7, Inc. (NASDAQ:RPD) Q2 2021 Earnings Conference Call August 4, 2021 4:30 PM ET Company Participants Sunil Shah - VP-IR Corey Thomas - CEO Jeff Kalowski - CFO Conference Call Participants Rob Owen - Piper Sandler Matt Hedberg - RBC Capital Markets Saket Kalia - Barclays Brian Essex - Goldman Sachs Eric Keith - KeyBanc Jonathan Ruykhaver - Baird Gregg Moskowitz - Mizuho Brad Rebeck - Stifel Alex Henderson - Needham Hamza Fodderwala - Morgan Stanley Operator Good day, and thank you for standing by. Welco ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37496 RAPID7, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 35-2423994 (State or other ju ...

May 6, 2021 Company Overview 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) and growth, ARR growth per customer, revenue growth, non-GAAP operating margin expansion, and our other non-GAAP measures, our business strateg ...

Rapid7, Inc. (NASDAQ:RPD) Q1 2021 Earnings Conference Call May 6, 2021 4:30 PM ET Company Participants Sunil Shah – Vice President-Investor Relations Corey Thomas – Chief Executive Officer Jeff Kalowski – Chief Financial Officer Conference Call Participants Rob Owens – Piper Sandler Matt Hedberg – RBC Capital Markets Saket Kalia – Barclays Brian Essex – Goldman Sachs Jonathan Ho – William Blair Alex Frankiewicz – Raymond James Hamza Fodderwala – Morgan Stanley Alex Henderson – Needham & Company Joshua Tilto ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) The unaudited consolidated financial statements for the three months ended March 31, 2021, show a **24.5%** year-over-year increase in total revenue to **$117.5 million**, while net loss widened to **$29.8 million** from **$22.9 million** in the prior-year period, driven by increased operating expenses, and the balance sheet reflects a substantial increase in cash and total assets due to new convertible senior notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $503,804 | $173,617 | | Goodwill | $253,324 | $213,601 | | Total assets | $1,222,693 | $913,122 | | **Liabilities & Equity** | | | | Deferred revenue, current portion | $282,245 | $278,585 | | Convertible senior notes, net | $855,709 | $378,586 | | Total liabilities | $1,303,918 | $841,586 | | Total stockholders' equity (deficit) | ($81,225) | $71,536 | - The significant increase in cash and convertible senior notes is primarily due to the issuance of **$600.0 million** in **0.25%** Convertible Senior Notes due 2027 in March 2021[10](index=10&type=chunk)[72](index=72&type=chunk) - Goodwill increased by approximately **$39.7 million**, mainly from the acquisition of Alcide.IO Ltd. in January 2021[10](index=10&type=chunk)[46](index=46&type=chunk)[66](index=66&type=chunk) [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statement of Operations Highlights (in thousands, except per share data) | Account | Three Months Ended Mar 31, 2021 | Three Months Ended Mar 31, 2020 | | :--- | :--- | :--- | | Total revenue | $117,451 | $94,340 | | Total gross profit | $81,162 | $66,626 | | Total operating expenses | $104,278 | $86,446 | | Loss from operations | ($23,116) | ($19,820) | | Net loss | ($29,845) | ($22,924) | | Net loss per share, basic and diluted | ($0.56) | ($0.46) | - Total revenue grew **24.5%** year-over-year, driven by a **24.8%** increase in Products revenue[12](index=12&type=chunk)[162](index=162&type=chunk) - The net loss widened by **30.2%** year-over-year, primarily due to a **20.6%** increase in total operating expenses, which outpaced revenue growth[12](index=12&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statement of Cash Flows Highlights (in thousands) | Activity | Three Months Ended Mar 31, 2021 | Three Months Ended Mar 31, 2020 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $20,595 | ($7,215) | | Net cash (used in) provided by investing activities | ($18,444) | $85,422 | | Net cash provided by financing activities | $328,572 | $3,374 | - Cash from financing activities was primarily driven by **$587.1 million** in net proceeds from the issuance of convertible senior notes, offset by a **$182.6 million** repurchase of other notes and a **$76.0 million** purchase of capped calls[21](index=21&type=chunk) - Cash used in investing activities included **$49.7 million** for a business acquisition (Alcide), net of cash acquired[21](index=21&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - On January 1, 2021, the company early adopted ASU 2020-06, which simplifies the accounting for convertible instruments, resulting in a cumulative-effect adjustment that reclassified the equity component of existing convertible notes to debt and adjusted additional paid-in capital and accumulated deficit[29](index=29&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) Revenue by Type (in thousands) | Revenue Type | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Subscriptions | $107,167 | $84,548 | | Perpetual software licenses | $2,114 | $2,770 | | Professional services | $8,166 | $6,791 | | **Total revenue** | **$117,451** | **$94,340** | - On January 28, 2021, the company acquired Alcide.IO Ltd. for a purchase consideration of **$50.5 million** in cash, resulting in **$39.7 million** of goodwill and **$10.4 million** of intangible assets[46](index=46&type=chunk) - In March 2021, the company issued **$600.0 million** of **0.25%** Convertible Senior Notes due 2027, using a portion of the proceeds to repurchase **$182.6 million** of the **1.25%** Convertible Senior Notes due 2023[72](index=72&type=chunk)[79](index=79&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **24.5%** year-over-year revenue growth to increased sales to both new and existing customers, with recurring revenue making up **91%** of total revenue, and despite widening GAAP loss from operations due to increased personnel costs, the company significantly strengthened its liquidity by issuing **$600 million** in new convertible notes, ending the quarter with **$503.8 million** in cash and cash equivalents [Recent Developments](index=26&type=section&id=Recent%20Developments) - Acquired Alcide.IO Ltd., a Kubernetes security provider, for **$50.5 million** on January 28, 2021[120](index=120&type=chunk) - Issued **$600.0 million** of **0.25%** convertible senior notes due 2027 on March 16, 2021, with net proceeds of approximately **$585.0 million**[121](index=121&type=chunk) - Used **$182.6 million** of the proceeds from the new notes, along with **2.2 million** shares, to repurchase an equivalent principal amount of its **1.25%** convertible senior notes due 2023[123](index=123&type=chunk) - The company continues to monitor the impact of the COVID-19 pandemic, having modified business operations like restricting travel and enabling remote work, but has not experienced significant disruptions in Q1 2021[125](index=125&type=chunk)[126](index=126&type=chunk) [Key Metrics](index=28&type=section&id=Key%20Metrics) Key Performance Metrics | Metric | As of/For Three Months Ended March 31, 2021 | As of/For Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Total revenue | $117,451 thousand | $94,340 thousand | | Year-over-year revenue growth | 24.5% | 28.9% | | Number of customers | 8,945 | 8,075 | | Annualized recurring revenue (ARR) | $455,797 thousand | $350,884 thousand | | Year-over-year ARR growth | 29.9% | 30.8% | - Recurring revenue, defined as revenue from term software licenses, content subscriptions, managed services, cloud-based subscriptions and maintenance and support, was **91%** of total revenue for Q1 2021[128](index=128&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) - Total revenue increased by **$23.1 million** (**24.5%**) YoY, driven by a **$21.9 million** increase from existing customers (renewals, upsells, cross-sells) and a **$1.2 million** increase from new customers[162](index=162&type=chunk) - Total cost of revenue increased by **$8.6 million** (**30.9%**) YoY, primarily due to a **$4.1 million** increase in cloud computing costs and a **$3.9 million** increase in personnel costs[165](index=165&type=chunk) - Research and development expense rose by **$8.9 million** (**36.7%**) YoY, mainly from an **$8.3 million** increase in personnel costs, including costs from the DivvyCloud and Alcide acquisitions[167](index=167&type=chunk) - Sales and marketing expense increased by **$6.8 million** (**14.2%**) YoY, driven by higher personnel and commission costs, partially offset by a **$1.3 million** decrease in travel expenses due to COVID-19[168](index=168&type=chunk)[169](index=169&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) - As of March 31, 2021, the company had **$503.8 million** in cash and cash equivalents and **$113.1 million** in investments[175](index=175&type=chunk) - Net cash provided by operating activities was **$20.6 million** for Q1 2021, a significant improvement from the **$7.2 million** used in Q1 2020, reflecting revenue growth and timing of working capital[177](index=177&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk) - Net cash provided by financing activities was **$328.6 million**, primarily from the net proceeds of the 2027 Notes issuance after accounting for repurchases of the 2023 Notes and the purchase of capped calls[185](index=185&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks, primarily from foreign currency exchange rates, interest rate fluctuations, and inflation, managing foreign currency risk with forward contracts and noting that interest rate changes affect income from its cash and investment portfolio and the fair value of its fixed-rate convertible notes, while inflation has not had a material effect on operations - The company's primary market risks are foreign currency exchange risk, interest rate risk, and inflation risk[193](index=193&type=chunk)[194](index=194&type=chunk)[198](index=198&type=chunk) - A majority of revenue is in U.S. dollars, but expenses are incurred in foreign currencies, and the company uses forward contracts designated as cash flow hedges to mitigate foreign currency exposure[193](index=193&type=chunk) - Interest rate changes affect interest income on cash and investments and the fair value of its fixed-rate convertible senior notes, but do not impact the company's financial position or cash flows due to the fixed nature of the debt[195](index=195&type=chunk)[196](index=196&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of March 31, 2021, concluding that these controls were effective at a reasonable assurance level, with no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[201](index=201&type=chunk) - No changes to the internal control over financial reporting occurred during the quarter that materially affected or are reasonably likely to materially affect these controls[203](index=203&type=chunk) [PART II. OTHER INFORMATION](index=43&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in a patent infringement lawsuit filed by Finjan, Inc. in October 2018, alleging infringement of seven patents and seeking unspecified damages, attorneys' fees, and injunctive relief, which Rapid7 intends to vigorously contest despite the uncertain outcome - In October 2018, Finjan, Inc. filed a patent infringement complaint against Rapid7 and its subsidiary, alleging infringement of seven patents[206](index=206&type=chunk) - Rapid7 intends to vigorously contest Finjan's claims, but notes that the outcome is uncertain and litigation can be costly and divert management resources[206](index=206&type=chunk) [Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) The company identifies numerous risk factors, with the ongoing COVID-19 pandemic highlighted as a significant uncertainty, alongside business risks like variations in quarterly results, challenges of rapid growth, dependency on customer renewals, and intense market competition, operational risks such as security breaches and reliance on third-party infrastructure, and financial risks associated with a history of losses and significant debt from convertible notes - The COVID-19 pandemic is a primary risk, with potential impacts on sales cycles, customer renewals, and overall economic conditions that could adversely affect business and financial results[212](index=212&type=chunk)[214](index=214&type=chunk) - The business is highly dependent on customers renewing their subscriptions, and a decline in renewal rates due to factors like customer satisfaction, pricing, or economic conditions could harm future operating results[228](index=228&type=chunk) - The company faces intense competition from established and emerging vendors, some of whom have greater resources and broader product offerings, which could lead to pricing pressure[235](index=235&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk) - A significant amount of debt from convertible notes may decrease business flexibility, and the conditional conversion feature of the 2023 Notes has been triggered, which could affect liquidity if holders choose to convert[327](index=327&type=chunk)[332](index=332&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=70&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities in the quarter[351](index=351&type=chunk) [Exhibits](index=71&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the company's amended and restated certificate of incorporation and bylaws, the indenture for the **0.25%** Convertible Senior Notes due 2027, and various officer certifications as required by the Sarbanes-Oxley Act - Key exhibits filed include the Indenture for the new **0.25%** Convertible Senior Notes due 2027 and related purchase agreements and capped call confirmations[358](index=358&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are included[358](index=358&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________ FORM 10-K ____________________________________________________ (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-37496 ___ ...