Rapid7(RPD)2025-02-13 03:33Financial Data and Key Metrics Changes - Rapid7 ended 2024 with 844 million, which is a 9% increase from the previous year [10][36][39] - Operating income for the year was 150 million, with a free cash flow margin of 18%, an increase of over 800 basis points from the previous year [41] Business Line Data and Key Metrics Changes - The detection and response business generated over 72,000, indicating continued customer expansion within the platform [38] 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 [42] - The company noted a shift in the vulnerability management landscape, with traditional VM facing secular decline due to increased cloud migration [26][78] Company Strategy and Development Direction - The company is focusing on innovation in its detection and response offerings and expanding its partner ecosystem, with 80% to 90% of new ARR booked through channels [14][25] - Rapid7 aims to establish a new SOC and innovation center in India to accelerate investments and improve operational efficiency [34] - The strategy is to consolidate exposure management and managed detection response, positioning the company to compete effectively for VM and cloud security budgets [27][112] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the foundational work completed in 2024, which positions the company for more consistent execution and sustainable growth in 2025 and beyond [17][21] - The company expects ARR growth of 4% to 6% in 2025, primarily driven by the detection and response business [32][46] - Management acknowledged potential challenges from resource-constrained customers, particularly in healthcare and local government sectors [100] Other Important Information - The company identified a stock-based compensation error that required a correction but did not affect ARR, reported revenue, or free cash flow metrics [51] - Rapid7 plans to host an Analyst Day later in the year to provide deeper insights into its business and strategy [34] Q&A Session Summary Question: Clarification on ARR for detection and response - Management confirmed that the detection and response business is growing in the mid-teens, with the remainder of ARR coming from a mix of cloud, VM, and legacy products [55][56] Question: Margin outlook for Managed D&R - Management indicated that overall product gross margins will remain stable in the mid-70s range, but managed services will have lower gross margins due to labor components [59][60] Question: Value proposition in cloud security - Management emphasized the focus on integrated exposure management to reduce complexity and provide a comprehensive view of the attack surface, targeting under-adopted cloud security technologies [64][66] Question: Competitive environment and pricing - Management acknowledged traditional VM as a competitive pressure but noted strong early conversion rates for Exposure Command, indicating robust demand [90][92] Question: Factors influencing net new ARR growth - Management highlighted a stronger pipeline entering 2025 and the potential for upsell opportunities within the existing customer base as key drivers for net new ARR growth [102][104]