Financial Data and Key Metrics Changes - Rapid7 ended Q3 2025 with $838 million in ARR, a 2% year-over-year growth, with revenue for the quarter at $218 million, also reflecting a 2% year-over-year increase [5][24] - Operating income was $37 million, exceeding guidance, and free cash flow generated in the quarter was $30 million, bringing year-to-date free cash flow to $98 million [5][25] - Product subscription revenue grew 2% year-over-year to $210 million, while professional services revenue continued to decline [24] Business Line Data and Key Metrics Changes - The Managed Detection and Response (MDR) business, which constitutes over half of ARR, continues to grow at double digits [6][19] - ARR per customer increased by 2%, with an average ARR per customer of over $72,000 [24] - International revenue represented 25% of total revenue and grew 8% year-over-year [24] Market Data and Key Metrics Changes - The customer spending environment remains challenged, particularly in large deals, but there are promising signs for future growth in detection and response [23] - The demand for integrated exposure and detection programs is growing, driven by regulatory pressures for compliance and reporting [15] Company Strategy and Development Direction - Rapid7 is focusing on enhancing its AI-powered security operations platform, integrating exposure management and threat detection to improve customer outcomes [9][18] - The company is making significant organizational changes, including new leadership appointments, to accelerate growth and improve operational alignment [6][20] - The strategy includes expanding partnerships, such as with Microsoft, to enhance managed detection and response capabilities [12][56] Management's Comments on Operating Environment and Future Outlook - Management acknowledges falling short of ARR guidance and is taking actions to rebuild confidence with the investment community [8] - The company is optimistic about its roadmap and strategy, despite longer deal cycles due to platform consolidation opportunities [10][18] - The outlook for Q4 includes a flat ARR quarter-over-quarter, with tightened full-year revenue guidance of $856-$858 million, representing 1%-2% growth [26][27] Other Important Information - The company is transitioning its traditional VM customer base to an integrated exposure management model through Exposure Command [19] - The new Chief Financial Officer, Rafe Brown, is expected to drive operational excellence and scale growth in SaaS businesses [20][48] Q&A Session Summary Question: Economic model of MDR and margin dynamics - Management indicated that MDR operates at higher gross margins than average MDR companies due to investments in automation and AI capabilities [31][32] Question: International vs. domestic growth rates - International revenue is growing faster than the overall business, with a focus on aligning sales processes across regions [33] Question: Pricing pressure in the MDR business - Despite flat ARR per customer growth, management believes they can continue to grow the MDR business profitably and effectively [35][36] Question: Large deal pipeline and Q4 outlook - Management is confident in the large deal pipeline but acknowledges variability in timing and conversion rates [41][42] Question: Leadership changes and priorities for Rafe Brown - Rafe Brown is expected to enhance operational acumen and drive growth through effective pricing and packaging strategies [47][48] Question: Value of traditional VM to SIEM MDR - Management is transitioning from traditional on-premise workloads to more strategic, value-added services, focusing on managed detection and response [51][53] Question: Expectations from Microsoft partnership - The partnership is expected to grow through technology integration and potential go-to-market collaboration [56] Question: Visibility around pipeline and close rates - Management is working on standardizing processes to improve visibility and accuracy in managing larger deal cycles [58] Question: Exposure Command's performance and customer engagement - Exposure Command is showing larger deal sizes and longer deal cycles, with a focus on upgrading existing customers [61][62]