Financial Data and Key Metrics Changes - Rapid7 ended 2024 with $840 million in ARR, growing 4% year over year [6][22] - Full year revenue reached $844 million, a 9% increase from the previous year, exceeding guidance [24] - Operating income was $164 million, representing a 19% operating margin, an expansion of over 600 basis points from the prior year [24] - Free cash flow for the year was $154 million, with a free cash flow margin of 18%, an increase of over 800 basis points from the prior year [25] Business Line Data and Key Metrics Changes - The Detection and Response (DNR) business generated over $400 million in ARR, with managed DNR growing in the mid-teens [7][14] - The risk and exposure management business showed over 20% year-over-year growth in pipeline generation during Q4 [7] - ARR per customer grew 2% year over year to approximately $72,000 [23] Market Data and Key Metrics Changes - International revenue grew 14% year over year, accounting for 25% of total revenue, while North America grew 3% and made up 75% of the mix [26] - The total customer base increased by 2% year over year, ending 2024 with over 11,700 customers globally [23] Company Strategy and Development Direction - The company is focusing on innovation in its detection and response offerings, expanding coverage and leveraging AI capabilities [8][10] - Rapid7 is scaling its partner ecosystem, with 80% to 90% of new ARR booked through the channel [8] - The launch of Exposure Command is seen as a significant milestone, validating the integrated approach to attack surface management [9][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the foundational work completed in 2024, positioning the company for more consistent execution and sustainable growth [10][12] - The company expects ARR growth of 4% to 6% in 2025, primarily driven by the DNR business [18][29] - Management acknowledged the competitive landscape but emphasized the strategic value of their integrated security operations platform [10][90] Other Important Information - The company plans to reinvest up to $30 million into strategic growth initiatives, including expanding MDR service capabilities and establishing an innovation center in India [20][30] - An Analyst Day is planned for later in the year to provide deeper insights into the business and strategy [21] Q&A Session Summary Question: Clarification on ARR for Detection and Response - Management confirmed that the DNR business is growing in the mid-teens, with the remainder of ARR being a mix of cloud VM and legacy products [34][35] Question: Margin Outlook for Managed DNR - Management indicated that overall product gross margins will remain stable in the mid-seventies, but managed services will have lower gross margins due to labor components [39] Question: Competitive Landscape in Cloud Security - Management highlighted the focus on integrated exposure management to reduce complexity for customers, targeting a broader market [46][47] Question: Confidence in Net New ARR Growth - Management expressed confidence in the pipeline and early conversion rates, expecting improvements in net new ARR throughout the year [74][76] Question: Churn and Downsell Pressure in VM - Management noted that churn in the VM segment is stabilizing, with expectations for improved retention as customers transition to more integrated products [98][99] Question: Strategic Options for Declining ARR - Management is considering all options for the declining ARR segment, focusing on customer pain points and the complexity of managing risk [104][105]