Rapid7(RPD) - 2025 Q4 - Annual Results

Financial Performance - Annualized recurring revenue (ARR) reached $840 million, remaining flat year-over-year[5] - Full-year revenue totaled $860 million, reflecting a 2% increase year-over-year[5] - Fourth quarter revenue was $217 million, up 1% year-over-year, with product revenue also increasing by 1% to $209 million[6] - Total revenue for Q4 2025 was $217.4 million, a slight increase from $216.3 million in Q4 2024, while total revenue for the year ended December 31, 2025, reached $859.8 million, up from $844.0 million in 2024[40] - Product subscriptions revenue for Q4 2025 was $209.1 million, compared to $206.3 million in Q4 2024, with annual product subscriptions revenue increasing to $831.3 million from $808.9 million[40] Income and Profitability - GAAP net income for the fourth quarter was $3.1 million, or $0.05 per diluted share, while non-GAAP net income was $32.1 million, or $0.44 per diluted share[6] - Net income for Q4 2025 was $3.1 million, up from $2.2 million in Q4 2024, while net income for the year was $23.4 million, down from $25.5 million in 2024[40] - The company reported a gross profit of $149.9 million for Q4 2025, slightly down from $150.4 million in Q4 2024, with total gross profit for the year at $604.8 million, compared to $593.0 million in 2024[40] - GAAP net income for the year ended December 31, 2025, was $23.381 million, compared to $25.526 million in 2024, representing a decline of about 8.4%[52] - Non-GAAP net income for the year ended December 31, 2025, was $151.756 million, down from $163.138 million in 2024, a decrease of approximately 7%[52] Cash Flow and Liquidity - Total cash, cash equivalents, and government securities amounted to $659 million as of December 31, 2025[6] - Cash and cash equivalents at the end of Q4 2025 were $246.7 million, down from $334.7 million at the end of Q4 2024[44] - Free cash flow for Q4 2025 was $32.299 million, compared to $58.842 million in Q4 2024, indicating a decline of about 45%[53] - Anticipated free cash flow for the full year 2026 is estimated to be between $125 million and $135 million[56] - Anticipated net cash provided by operating activities for the full year 2026 is projected to be between $151 million and $161 million[56] Guidance and Projections - For Q1 2026, Rapid7 anticipates ARR to be approximately $830 million, indicating a year-over-year decline of 1%[9] - Revenue guidance for Q1 2026 is projected between $207 million and $209 million, representing a year-over-year decline of 2% to 1%[9] - The company provided guidance for Q1 2026, indicating expectations for continued revenue growth and operational improvements[54] - Anticipated GAAP net loss income for Q1 2026 is projected to be between $(6) million and $(4) million, while for the full year 2026, it is expected to be between $12 million and $20 million[55] - Anticipated non-GAAP net income for Q1 2026 is estimated to be between $21 million and $23 million, and for the full year 2026, it is projected to be between $112 million and $120 million[55] Expenses and Investments - Research and development expenses for Q4 2025 were $48.6 million, compared to $46.3 million in Q4 2024, with annual R&D expenses rising to $190.7 million from $173.1 million[40] - Stock-based compensation expense for the year ended December 31, 2025, totaled $104.335 million, slightly down from $107.961 million in 2024[52] - Anticipated stock-based compensation expense for Q1 2026 is expected to be between $22 million and $22 million, and for the full year 2026, it is projected to be between $80 million and $80 million[55] - Anticipated purchases of property and equipment for the full year 2026 are expected to be $(8) million[56] - Anticipated capitalized internal-use software costs for the full year 2026 are projected to be $(18) million[56] Market Position and Product Development - In January, Rapid7 launched Managed Detection and Response (MDR) for Microsoft, enhancing its security offerings within Microsoft's ecosystem[10] - Rapid7 was recognized as a Leader in the 2025 Gartner Magic Quadrant for Exposure Assessment Platforms, highlighting its strong market position[10] - The company anticipates continued growth in cloud-based solutions and aims to enhance its consolidated platform sales approach in the upcoming quarters[35]