Summary of Rapid7 Conference Call - December 08, 2025 Company Overview - **Company**: Rapid7 (NasdaqGM:RPD) - **Industry**: Cybersecurity, specifically focusing on Managed Detection and Response (MDR) and integrated security operations platforms Key Points and Arguments 1. **Market Opportunity**: Rapid7's primary customer base consists of mid to large enterprises, particularly those with 1,000 to 20,000 employees, where security is a critical mandate. The company aims to be a premier partner for these customers by offering integrated security operations platforms that allow them to outsource security workloads [3][4][5] 2. **Growth Strategy**: The fastest-growing segment is Managed Detection and Response (MDR), which is supported by AI. Over half of Rapid7's business is derived from this segment, which is currently growing in the teens percentage-wise. The company plans to expand its AI-driven services and add more workloads over time [3][4][5][15] 3. **Leadership Transition**: Rafe Brown has recently been appointed as CFO, succeeding Tim, who is transitioning into retirement. Rafe's operational experience and ability to communicate effectively with investors were key factors in his selection [6][7][12] 4. **Growth Drivers**: Rapid7 is focusing on three main growth levers: - Expanding managed services workloads and unlocking capacity in existing workloads - Adding new workloads, with plans to introduce more in 2026 - Increasing Annual Recurring Revenue (ARR) per customer and expanding the customer base, particularly in international markets [15][16][17] 5. **Competitive Landscape**: Rapid7 competes with various companies in the DNR space, including CrowdStrike and private firms like eSentire and Arctic Wolf. The company believes its unique value proposition lies in its ability to deliver an integrated security operations service that allows customers to offload more of their security workloads [20][25][23] 6. **Profitability Improvement**: Rapid7 has improved its non-GAAP operating margin to the mid-teens, with a focus on operational efficiencies and strategic investments. The company aims to balance growth and profitability, with a focus on free cash flow generation [27][28][30][31] 7. **Cloud Security Focus**: Rapid7 is enhancing its cloud security capabilities through R&D and partnerships. The company aims to simplify security workloads and deliver them as a service, differentiating itself from competitors who prefer customers to manage their own technologies [43][44][45] 8. **Transition Challenges**: The transition to a new business model has taken longer than expected, but there is validation of the core strategy. The company emphasizes the importance of clear communication with investors regarding expectations and progress [46][47][48] 9. **Capital Structure and Liquidity**: Rapid7 is in a strong position regarding its capital structure, with sufficient cash and government securities to meet obligations. The company is open to exploring tuck-in acquisitions and investments while focusing on operational execution [54][55][56] 10. **Future Outlook**: Rapid7 is optimistic about the demand for outsourcing security workloads, driven by increasing regulatory pressures and the difficulty in hiring security staff. The company believes it is well-positioned to capitalize on these trends [37][38][62][63] Additional Important Insights - The company is focused on building a curated ecosystem of technology partners, including Microsoft, to enhance its service offerings [41][62] - Rapid7 acknowledges the need for a more systematic approach to driving ARR growth and customer expansion, which is being addressed by the new Chief Commercial Officer [17][18] - The management team is committed to transparency and effective communication with investors as they navigate the transition and growth strategy [49][51][62]