Core Insights - Rapid7 reported Q4 non-GAAP operating income of $30.1 million, achieving a 13.9% margin, which was incrementally ahead of expectations, although sequential margin decline was noted due to increased investments [1] - The company ended the year with an Annual Recurring Revenue (ARR) of $839.9 million, approximately flat year-over-year, with a significant shift towards detection and response services, now representing just over 50% of total ARR [2] - Rapid7's Q4 total revenue reached $217.4 million, a 0.5% increase year-over-year, while full-year 2025 revenue was $859.8 million, up 1.9% year-over-year [3] Financial Performance - The company finished FY2025 with ARR of $840 million and total revenue of approximately $860 million, both exceeding guidance [4] - For Q4, Rapid7 posted non-GAAP earnings of $0.44 per diluted share, aligning with the high end of guidance, and delivered a full-year non-GAAP operating income of $135.7 million, representing a 15.8% margin [7] - Free cash flow for Q4 was $32.3 million, totaling $130 million for the full year [8] Strategic Focus - Rapid7 is prioritizing AI-enabled security operations, developing "Agentic AI" workflows, and expanding its managed detection and response (MDR) offerings, which saw a 7% year-over-year growth [6][12] - The company is enhancing its partnership with Microsoft, launching "MDR for Microsoft" to provide expert monitoring and response across Microsoft Defender [13] - Rapid7's strategy is built on three pillars: a broad proprietary data foundation, AI-powered productivity, and deep services and human expertise [11] Guidance and Future Outlook - The company has pulled its full-year ARR guidance and provided conservative targets for 2026, citing near-term margin pressure from increased investment spending [5] - For Q1 2026, ARR is projected to be approximately $830 million, with revenue expected between $207 million and $209 million, reflecting a 1% year-over-year decline [18] - Full-year 2026 revenue is anticipated to be between $835 million and $843 million, down 2% year-over-year at the midpoint, with expected operating margins to expand into the mid-teens in H2 2026 [17][18] Customer Base and Market Position - Rapid7 concluded 2025 with over 11,500 customers and an average ARR per customer of about $72,000 [9] - The company is focusing on improving sales and marketing productivity while addressing customer demand for AI-driven solutions [19]

Financial Data and Key Metrics Changes - Rapid7 ended fiscal 2025 with an Annual Recurring Revenue (ARR) of $840 million and total revenue of $860 million, both exceeding guidance [7] - For Q4, total revenue was $217.4 million, growing 0.5% year-over-year, while full-year revenue reached $859.8 million, growing 1.9% year-over-year [31] - Non-GAAP operating income for Q4 was $30.1 million, with a margin of 13.9%, and full-year non-GAAP operating income was $135.7 million, or an operating margin of 15.8% [33][34] - Free cash flow for Q4 was $32.3 million, totaling $130 million for the full year [34] Business Line Data and Key Metrics Changes - Product revenue for Q4 was $209.1 million, growing 1.4% year-over-year, while professional services revenue totaled $8.2 million, down from $9.9 million in Q4 2024 [31][32] - The detection and response (DNR) business grew approximately 7% year-over-year, with the managed detection and response (MDR) portion growing in the high single digits [32] - The exposure management business showed signs of improvement, particularly with the rapid adoption of the Exposure Command offering in Q4 [32] Market Data and Key Metrics Changes - The cybersecurity market is experiencing significant disruption due to advancements in AI, leading to a reevaluation of security postures across enterprises [9][10] - The demand for comprehensive, expert-led security operations is increasing due to a more complex regulatory environment and an accelerating threat landscape [10][12] Company Strategy and Development Direction - Rapid7 is focusing on integrating AI capabilities into its offerings to enhance security operations and provide proactive security postures [16][26] - The company aims to consolidate customer environments under a unified platform and enhance its managed AI Security Operations Center (SOC) [16][18] - Strategic investments are being made to evolve and scale solutions, particularly in the DNR market, which is seen as a significant growth opportunity [17][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by the evolving software sector and emphasizes that cybersecurity is fundamentally different, positioning Rapid7 favorably [9][10] - The company is optimistic about the potential for growth in the DNR market and is focused on improving operational efficiency and customer engagement [22][24] - Management expects that investments made in 2025 will yield improvements in efficiency and operating margins as 2026 progresses [33][40] Other Important Information - Rapid7 ended 2025 with over 11,500 customers and an average ARR per customer of approximately $72,000 [34] - The company has a strong balance sheet with over $659 million in cash and equivalents, along with a $200 million undrawn revolver [35] Q&A Session Summary Question: How will the changes in marketing and sales be measured? - Management is looking for increased sales and marketing productivity and efficacy, aiming to grow faster while improving efficiency [43][44] Question: What are the core growth businesses going forward? - The primary growth area is detection and response, with a focus on mainstream enterprises and integrating exposure management into a unified offering [48][49] Question: Why is there no full-year ARR guidance? - The decision was made to provide guidance that is meetable and clear, with visibility into ARR expected to improve as new leadership settles in [54][56] Question: What is driving the ARR decline in Q1? - The decline is attributed to slower growth in parts of the business outside of DNR, with management expecting improvements as upgrades and new releases are implemented [82][84] Question: How are customer conversations regarding AI evolving? - Customers are asking for more assistance in managing complex environments and are looking for transparency in AI solutions [66][68] Question: How is customer consolidation impacting win rates? - Rapid7 is benefiting from customer consolidation trends but needs to improve the delivery and integration of its solutions to maximize this opportunity [73][75]

Financial Data and Key Metrics Changes - Rapid7 ended fiscal 2025 with an Annual Recurring Revenue (ARR) of $840 million and total revenue of $860 million, both exceeding guidance [7] - For Q4, total revenue was $217.4 million, growing 0.5% year-over-year, while full-year revenue reached $859.8 million, growing 1.9% year-over-year [31] - Non-GAAP operating income for Q4 was $30.1 million, with a margin of 13.9%, and full-year non-GAAP operating income was $135.7 million, or an operating margin of 15.8% [33][34] Business Line Data and Key Metrics Changes - The Managed Detection and Response (MDR) segment grew in the high single digits, contributing to a total ARR growth of approximately 7% in the Detection and Response (DNR) business [32][22] - Professional services revenue for Q4 totaled $8.2 million, down from $9.9 million in Q4 2024, reflecting a shift towards greater utilization of partners for service delivery [31] Market Data and Key Metrics Changes - The cybersecurity market is experiencing significant disruption due to advancements in AI, leading to a reevaluation of security postures across enterprises [9][10] - Regulatory requirements are expanding and becoming more complex globally, increasing the demand for comprehensive security operations [12] Company Strategy and Development Direction - Rapid7 is focusing on integrating AI capabilities into its offerings to enhance security operations and provide proactive security postures [16][26] - The company aims to consolidate its security solutions under a unified platform, enhancing customer experience and operational efficiency [18][19] - Strategic investments are being made to evolve the product portfolio and improve service delivery, particularly in the DNR and exposure management segments [24][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by the evolving threat landscape and the need for companies to adapt their security strategies accordingly [10][27] - The leadership team is optimistic about the growth potential in the DNR market and is focused on improving operational efficiencies and customer engagement [38][39] Other Important Information - Rapid7 ended 2025 with over 11,500 customers and an average ARR per customer of approximately $72,000 [34] - The company has a strong balance sheet with over $659 million in cash and equivalents, providing confidence in its ability to meet future obligations [35] Q&A Session Summary Question: How will the changes in marketing and sales be measured? - Management is focusing on increased sales and marketing productivity, aiming to grow faster while improving efficiency [43][44] Question: What are the core growth businesses going forward? - The primary growth area is the DNR market, with a focus on providing quality service and integrating exposure management into a unified offering [48][49] Question: Why is there no full-year ARR guidance? - The decision was made to provide guidance that is realistic and meetable, with visibility into ARR expected to improve as new leadership settles in [54][56] Question: What is driving the ARR decline in Q1? - The decline is attributed to slower growth in parts of the business outside of DNR, with management expecting improvements as new releases are implemented [82][84] Question: How is Rapid7 addressing customer demands regarding AI? - Customers are seeking more assistance in managing complex environments and expect providers to leverage AI to enhance operational efficiency [66][67] Question: How are customer consolidation trends impacting win rates? - Rapid7 is benefiting from customer consolidation but recognizes the need to simplify its value proposition to improve delivery and win rates [73][74]

Financial Data and Key Metrics Changes - Rapid7 ended fiscal 2025 with an Annual Recurring Revenue (ARR) of $840 million and total revenue of $860 million, both exceeding guidance [5][25] - For Q4, total revenue was $217.4 million, growing 0.5% year-over-year, while full-year revenue reached $859.8 million, growing 1.9% year-over-year [25][26] - Non-GAAP operating income for Q4 was $30.1 million, with a margin of 13.9%, and full-year non-GAAP operating income was $135.7 million, or a margin of 15.8% [27][28] Business Line Data and Key Metrics Changes - The Managed Detection and Response (MDR) segment grew in the high single digits, contributing to a total DNR business growth of approximately 7% year-over-year [26][28] - Professional services revenue for Q4 totaled $8.2 million, down from $9.9 million in Q4 2024, reflecting a shift towards greater utilization of partners for service delivery [26] - The Exposure Command platform saw rapid adoption in Q4, indicating positive momentum in the exposure management business [27] Market Data and Key Metrics Changes - The cybersecurity market is experiencing significant disruption due to advancements in AI, leading to a reevaluation of security postures across enterprises [7][10] - Regulatory requirements are expanding and becoming more complex globally, increasing the demand for comprehensive security operations [10][12] - Rapid7's business model is focused on outcomes and value delivered rather than per-seat pricing, positioning it well in the evolving market [9][10] Company Strategy and Development Direction - Rapid7 is investing in AI capabilities to enhance its security offerings and consolidate customer environments under a unified platform [6][13] - The company aims to shift from reactive to proactive security postures, focusing on outcome-driven service offerings [12][22] - Strategic partnerships, such as with Microsoft, are being leveraged to enhance service delivery and expand market reach [14][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the uncertainty in the software sector due to AI advancements but believes Rapid7 is well-positioned to benefit from the evolving cybersecurity landscape [7][10] - The company anticipates that investments made in 2025 will yield dividends in 2026, particularly in improving operational efficiency and market share [22][30] - Management is focused on improving financial forecasting and accountability while expanding non-GAAP operating margins [30][34] Other Important Information - Rapid7 ended 2025 with over 11,500 customers and an average ARR per customer of approximately $72,000 [28] - The company has a strong balance sheet with over $659 million in cash and equivalents, along with a $200 million undrawn revolver [28][29] - Free cash flow for the full year 2025 was $130 million, indicating strong cash generation capabilities [28] Q&A Session Summary Question: Changes in marketing and sales effectiveness - Management is focused on increasing sales and marketing productivity and believes there is a significant opportunity to grow faster while improving efficiency [36] Question: Core growth businesses and areas of focus - The detection and response market is identified as the biggest growth area, with a focus on providing depth and quality of service [38][39] Question: Rationale for not providing full-year ARR guidance - Management decided to focus on revenue guidance due to ongoing changes in the organization and the need for clearer visibility into trends [41][42] Question: Impact of customer consolidation trends - Rapid7 is benefiting from customer consolidation but recognizes the need to simplify its delivery and storytelling to enhance win rates [50][51] Question: Drivers of ARR decline in Q1 - The decline is attributed to DNR growth not compensating for negative trends in other business areas, with management confident in improving DNR growth over the year [56][58]

Company Overview February 10, 2026 1 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), free cash flow, and our other non-GAAP measures, our business strategy, plans and objectives for future operations and expectations re ...

Core Insights - Rapid7, Inc. reported strong financial performance for Q4 and full year 2025, exceeding guidance in annual recurring revenue (ARR), revenue, and profitability metrics [2][5][6] - The company emphasizes its innovative approach to AI-powered cybersecurity operations, which is gaining traction in the market [2] Financial Highlights Fourth Quarter 2025 - Total revenue reached $217 million, a 1% increase year-over-year, with product revenue at $209 million, also up 1% [6] - GAAP operating income was $2.3 million, while non-GAAP operating income stood at $30.1 million [6] - GAAP net income was $3.1 million, or $0.05 per diluted share, with non-GAAP net income at $32.1 million, or $0.44 per diluted share [6] - Free cash flow for the quarter was $32.3 million, with net cash provided by operating activities at $37.6 million [6] Full Year Fiscal 2025 - Full-year revenue totaled $860 million, a 2% increase year-over-year, with product revenue at $831 million, up 3% [5][6] - GAAP operating income for the year was $11.6 million, while non-GAAP operating income was $135.7 million [6] - GAAP net income for the year was $23.4 million, or $0.36 per diluted share, with non-GAAP net income at $151.8 million, or $2.08 per diluted share [6] - Free cash flow for the year was $130.1 million, with net cash provided by operating activities at $153.8 million [6] Customer Metrics - Rapid7 has over 11,500 total customers, with an average ARR per customer of approximately $72,000 [6] - The company launched Managed Detection and Response (MDR) for Microsoft, enhancing its offerings within Microsoft's security ecosystem [6] Recent Business Developments - Strategic partnerships were formed with ARMO for cloud security capabilities and with HITRUST to automate cybersecurity assurance [6] - The company was recognized as a 2026 Best Place to Work by Built In, highlighting its presence in key cities [6] - Rapid7 achieved its 300th cybersecurity patent, focusing on advanced AI and machine learning technologies [6] Guidance for 2026 - For Q1 2026, Rapid7 anticipates ARR of approximately $830 million, with revenue guidance between $207 million and $209 million [8] - Full-year 2026 revenue is expected to be between $835 million and $843 million, with non-GAAP income from operations projected between $108 million and $116 million [8]

Core Insights - Tenable Holdings, Inc. (NASDAQ:TENB) is recognized as one of the 14 oversold value stocks to consider for investment [1] - The company reported strong fourth-quarter and full-year results, highlighting the continued adoption of Tenable One and AI-driven security solutions [2] Financial Performance - In Q4, Tenable recorded a revenue growth of 11% year-over-year (YoY) to $260.50 million, with current billings increasing by 8% to $327.80 million [3] - The non-GAAP net income for Q4 rose 13% YoY to $57.30 million, although the company reported a GAAP net loss of $0.70 million [3] - For the full year 2025, Tenable achieved revenue of $999.4 million, also up 11% YoY, with non-GAAP net income at $194.40 million and unlevered free cash flow growing to $277.00 million [4] Shareholder Returns and Guidance - During Q4, Tenable added 502 enterprise customers and expanded its share repurchase program by $150 million [3] - For 2026, the company expects revenue to be between $1.065 billion and $1.075 billion, with non-GAAP EPS projected in the range of $1.81 to $1.90 [5] - Management's optimism is based on strong platform adoption, AI integration, and operational efficiency [5] Business Focus - Tenable specializes in developing cybersecurity solutions, with a portfolio that includes tenable.io, tenable.sc, and Nessus Professional, serving various sectors such as finance, healthcare, energy, cloud, and retail [5]

Core Viewpoint - Stifel Nicolaus has set a price target of $200 for Palo Alto Networks, indicating a potential increase of about 20.48% from its current trading price of $166, despite facing challenges from competitors [1][6]. Company Overview - Palo Alto Networks is a leading cybersecurity company with a diverse stream of recurring revenue and currently holds a strong market share [2][6]. - The company has achieved a steady 16% year-over-year revenue growth and robust profitability in the first quarter of fiscal year 2026 [5]. Competitive Landscape - Increasing competition from companies like Fortinet, Microsoft, and CrowdStrike is impacting Palo Alto Networks' subscription growth and market share [2][6]. - Fortinet is gaining favor due to its strong profitability and impressive revenue growth, posing a significant challenge to Palo Alto Networks [2]. Valuation Metrics - Palo Alto Networks is trading at a premium valuation, with a forward 12-month P/E ratio of 74.26, which is higher than the Zacks Security industry's average of 73.32 [3][6]. - Competitors such as Check Point Software, Fortinet, and Okta have lower P/E multiples of 19.67, 30.76, and 23.66, respectively, indicating potential overvaluation for Palo Alto Networks [3]. Growth Concerns - There are growing concerns about Palo Alto Networks' near-term upside due to slowing revenue and Next-Generation Security (NGS) Annual Recurring Revenue (ARR) growth [4]. - The company's fiscal year 2026 guidance suggests further moderation in growth trends, with indications of deceleration in revenue and remaining performance obligations (RPO) [5]. Investment Rating - Despite recent operational strengths, Palo Alto Networks is currently rated as a sell due to concerns over soft guidance, various risk factors, and its premium valuation [5].

Core Insights - The Themes Cybersecurity ETF (NYSEARCA:SPAM) offers investors a way to gain exposure to the evolving cybersecurity sector without the need to analyze individual companies [2][3] - Launched in December 2023, SPAM is heavily weighted towards information technology at 65%, with a smaller allocation to industrials [3] - The fund holds a diversified portfolio of 36 holdings, with Akamai Technologies (NASDAQ:AKAM) being the largest at 6%, followed by Qualys (NASDAQ:QLYS) and CACI International (NYSE:CACI) [4] Fund Structure and Fees - SPAM charges a 0.35% expense ratio, which is considered middle tier for thematic ETFs, reflecting the specialized nature of cybersecurity exposure [5] - The fund currently has $2.4 million in assets under management, which may create trading friction for larger positions [5] Performance Analysis - Since its launch, SPAM has gained approximately 19.4%, which is significantly lower than the S&P 500's performance, which was nearly four times greater during the same period [6][7] - The performance gap has widened as cybersecurity stocks face challenges while the broader market continues to rise [6]

Group 1 - Cybersecurity stocks experience a rally during ransomware attacks and data breaches [1]