Rapid7 (RPD) AI Stock Analysis

• Market Cap: $407.88M
• Dividend Yield: N/A
• Average Volume (3M): 2.00M
• Price to Earnings (P/E): 42.1
• Beta (1Y): 1.02
• Revenue Growth: 3.08%
• EPS Growth: -54.07%
• Country: US
• Employees: 2,413
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 0.44
• Shares Outstanding: 65,893,110
• 10 Day Avg. Volume: 1,891,089
• 30 Day Avg. Volume: 2,004,398
• PEG Ratio: -3.45
• Price to Book (P/B): 6.36
• Price to Sales (P/S): 1.14
• P/FCF Ratio: 6.81
• Enterprise Value/Market Cap: 2.92
• Enterprise Value/Revenue: 1.38
• Enterprise Value/Gross Profit: 1.97
• Enterprise Value/Ebitda: 13.82
• 1Y Price Target: $9.89
• Price Target Upside: 59.77% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 21
• EPS Forecast (FY): 1.55
• Revenue Forecast (FY): $838.73M

• Rating: 49 Neutral
• Price Target: $6.00 ▼(-3.07% Downside)
• Action: Reiterated Date: 02/11/26
• Date: Action: Reiterated 02/11/26

The score is held back primarily by weak technicals (price far below key moving averages and negative MACD) and elevated balance-sheet risk from high leverage. Earnings-call guidance also weighs on the outlook (expected FY2026 revenue decline and limited ARR visibility). Offsetting these are improving profitability and solid recent free cash flow generation.

Positive Factors

Consistent free cash flow

Rapid7 has shifted to durable cash generation with positive operating and free cash flow in recent years and FCF that tracks reported earnings (~1x in 2023–2024 and TTM). Reliable cash conversion supports reinvestment, debt servicing, and strategic optionality over the medium term.

High gross margins & profitability turnaround

Sustained ~70% gross margins and a multi-year shift from losses to positive net results provide structural leverage: the business can fund R&D and GTM while preserving core economics. Even with thin net margins, consistent gross profitability underpins long-term margin expansion potential.

Product momentum & partner strategy

Investments in AI-enabled SOC, expanded MDR offerings, and deeper Microsoft integrations, plus partner program updates, strengthen distribution and product stickiness. These structural moves deepen ecosystem ties and scalable channel routes for recurring subscription growth over multiple quarters.

Negative Factors

Elevated leverage and thin equity

A capital structure with high debt versus modest equity reduces financial flexibility and raises refinancing and covenant risk over the medium term. Elevated leverage limits ability to pursue M&A or aggressive investments and increases sensitivity to cash flow variability or macro shocks.

Guided top-line contraction

Management's guidance for modest ARR and revenue declines signals structural near-term demand pressure or execution drag. A shrinking top line complicates ARR expansion, limits operating leverage, and makes sustainable subscription growth an open execution task over the next several quarters.

Sales execution & pipeline complexity

Persistent conversion issues from complex, larger deals and constrained delivery capacity impede steady customer acquisition and cross-sell. Fixing go-to-market alignment and delivery scale is a medium-term execution challenge that affects ARR stability and growth cadence.

Rapid7 Business Overview & Revenue Model

Company Description

Rapid7, Inc. provides cyber security solutions. The company offers a cloud-native insight platform that enables customers to create and manage analytics-driven cyber security risk management programs. Its platform includes InsightIDR, an incident detection and response solution; InsightCloudSec, a solution that integrates posture management, workload protection, infrastructure entitlements management, infrastructure-as-code security, and Kubernetes protection; InsightVM, a vulnerability risk management solution that is designed to provide a way to collect vulnerability data, prioritize risk, and automate remediation; InsightAppSec, which provides application security testing that analyzes web applications for security vulnerabilities; and InsightConnect, a security orchestration and automation response solution that is used by security professionals. The company's other products include DivvyCloud, a cloud security posture management solution; Nexpose, an on-premises version of company's vulnerability risk management solution; AppSpider, an on-premises version of company's application security testing solution; and Metasploit, a penetration testing software solution, as well as professional services. It offers its products through term or perpetual software licenses, cloud-based subscriptions, and managed services. The company serves customers in a range of industries, including technology, energy, financial services, healthcare and life sciences, manufacturing, media and entertainment, retail, education, real estate, transportation, government, and professional services industries through sales teams, and indirect channel partner relationships, as well as directly in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company was incorporated in 2000 and is headquartered in Boston, Massachusetts.

How the Company Makes Money

Rapid7 primarily makes money by selling subscriptions to its cybersecurity software and cloud services. Revenue is largely generated from recurring subscription contracts for access to its security platforms and modules (e.g., capabilities for vulnerability risk management, detection and response, and security operations workflows), typically priced based on factors such as usage, assets/endpoints, data volume, or feature tier depending on the product. The company also generates revenue from professional services associated with deployment, configuration, and advisory/consulting support, which are generally non-recurring and complement subscription sales. Rapid7 sells through a mix of direct sales and channel partners (including resellers and managed service providers), where partner-led transactions can influence customer acquisition and distribution. Material additional monetization beyond subscriptions and professional services is null.

Rapid7 Financial Statement Overview

Summary

Income statement and cash flow are improving (strong gross margins, profitability turnaround, and positive recent free cash flow), but the balance sheet is a major offset with high leverage and historically thin/negative equity, increasing financial risk.

Income Statement

Revenue growth is strong across the period, with 2024 up ~9% year-over-year and margins holding consistently high at ~70% gross margin. Profitability has improved meaningfully versus 2020–2023 losses, turning positive in 2024 and remaining positive in TTM (Trailing-Twelve-Months), but net margins are still modest (low-single-digits), indicating the business is profitable yet not highly efficient at the bottom line. Overall: solid top-line and gross profitability, with improving (but still thin) net profitability.

Balance Sheet

Leverage is the key concern: debt is high relative to equity, with very elevated debt-to-equity in 2024 and still high in TTM (Trailing-Twelve-Months). Equity was negative in 2021–2023 and remains relatively small versus the debt load, which reduces financial flexibility. While returns on equity appear high in the most recent periods, the capital structure (high leverage and previously negative equity) makes the balance sheet riskier than typical for the sector.

Cash Flow

Cash generation is a relative bright spot: operating cash flow and free cash flow are positive in recent years, and free cash flow closely tracks reported earnings (near 1x in 2023–2024 and TTM), suggesting earnings quality is reasonably supported by cash. Earlier years were weaker (including negative free cash flow in 2020), and the ability of operating cash flow to cover obligations remains only moderate based on the provided coverage ratio. Overall: improving and generally solid cash conversion, but not without coverage/consistency risk.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	859.79M	844.01M	777.71M	685.08M	535.40M
Gross Profit	603.15M	592.97M	545.97M	470.73M	366.46M
EBITDA	86.05M	97.31M	-39.14M	-70.28M	-88.12M
Net Income	23.38M	25.53M	-149.26M	-124.72M	-146.33M
Balance Sheet
Total Assets	1.73B	1.65B	1.51B	1.36B	1.30B
Cash, Cash Equivalents and Short-Term Investments	474.67M	521.71M	383.17M	291.45M	223.43M
Total Debt	1.03B	1.02B	1.02B	914.34M	912.56M
Total Liabilities	1.57B	1.63B	1.62B	1.48B	1.42B
Stockholders Equity	154.73M	17.71M	-118.18M	-120.07M	-126.00M
Cash Flow
Free Cash Flow	144.53M	168.25M	99.91M	57.82M	44.91M
Operating Cash Flow	152.13M	171.67M	104.28M	78.20M	53.92M
Investing Cash Flow	-209.44M	-46.52M	-178.75M	-39.99M	-325.38M
Financing Cash Flow	-43.81M	5.58M	79.60M	7.42M	264.13M

Rapid7 Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 6.19
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RPD, the sentiment is Negative. The current price of 6.19 is below the 20-day moving average (MA) of 6.55, below the 50-day MA of 9.60, and below the 200-day MA of 16.91, indicating a bearish trend. The MACD of -0.83 indicates Negative momentum. The RSI at 30.25 is Neutral, neither overbought nor oversold. The STOCH value of 10.30 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RPD.

Rapid7 Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
QLYS	73 Outperform	$3.45B	24.22	37.83%	―	9.95%	12.72%
OKTA	64 Neutral	$13.87B	63.23	3.45%	―	12.12%	―
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
VRNS	54 Neutral	$2.88B	-38.13	-27.04%	―	11.37%	-34.44%
RBRK	54 Neutral	$10.43B	-31.60	64.45%	―	48.93%	69.39%
RPD	49 Neutral	$407.88M	42.08	22.00%	―	3.08%	-54.07%

Rapid7 Corporate Events

Rapid7 Prioritizes Profitability Amid Slower 2026 Growth Outlook

Rapid7 on February 5, 2026 disclosed that long‑time director Michael Berry will not stand for re‑election at the 2026 annual meeting, ending more than 13 years of board service, with the company emphasizing that his departure does not stem from any disagreement over its operations or governance. The move marks a governance transition but is not expected to disrupt strategic direction, as the board publicly thanked Berry for his contributions.

On February 10, 2026 the cybersecurity firm reported full‑year 2025 revenue of $860 million, up 2% year‑on‑year, annualized recurring revenue of $840 million that was flat, and GAAP net income of $23.4 million alongside strong free cash flow of $130.1 million, underscoring a pivot toward profitability despite modest top‑line growth. Rapid7 highlighted its AI‑driven security operations, 11,500‑plus customers, and a string of late‑2025 partnerships and product launches as reinforcing its competitive position, even as 2026 guidance points to slightly declining revenue and ARR, signaling a focus on efficiency and margin expansion over rapid expansion.

Recent initiatives including new Microsoft‑focused managed detection and response services, cloud and compliance partnerships, and recognition as a leader in Gartner’s 2025 Magic Quadrant for exposure assessment platforms suggest Rapid7 is deepening its presence in key security ecosystems. The accumulation of more than 300 cybersecurity patents, many in advanced AI and machine learning, further supports its strategy to differentiate on technology while tightening operational discipline, a combination that will be closely watched by customers and investors amid a slower growth outlook.

The most recent analyst rating on (RPD) stock is a Hold with a $10.50 price target. To see the full list of analyst forecasts on Rapid7 stock, see the RPD Stock Forecast page.