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Rapid7 (RPD)
NASDAQ:RPD
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Rapid7
(NASDAQ:RPD)
Rating:62Neutral
Price Target:
$25.00
▲(6.29%Upside)
Positive Factors
Business Growth
Rapid7's detection and response business has grown to more than half of the company’s ARR and is growing in the midteens range.
International Expansion
Go-to-market investments in international markets yielded 10% growth in business outside of the US.
Negative Factors
Competitive Pressures
Customer count has declined, and the company has faced increased competitive pressures from other vendors.
Financial Guidance
Incremental macroeconomic uncertainty ultimately led the company to lower and widen its FY25 ARR guidance.
Growth Outlook
The company's shares are expected to re-rate lower due to the low growth outlook and potential for further deceleration.
Rapid7 (RPD) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.52B
Dividend YieldN/A
Average Volume (3M)816.60K
Price to Earnings (P/E)58.9
Beta (1Y)1.11
Revenue Growth6.19%
EPS GrowthN/A
CountryUS
Employees2,413
SectorTechnology
Sector Strength79
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)0.49
Shares Outstanding64,239,296
10 Day Avg. Volume669,544
30 Day Avg. Volume816,602
Financial Highlights & Ratios
PEG Ratio0.81
Price to Book (P/B)-16.57
Price to Sales (P/S)0.00
P/FCF Ratio48.91
Enterprise Value/Market Cap1.77
Enterprise Value/Revenue0.81
Enterprise Value/Gross Profit4.52
Enterprise Value/Ebitda8.44
Forecast
1Y Price Target
$30.19Price Target Upside28.36% Upside
Rating ConsensusHold
Number of Analyst Covering20
Rapid7 Business Overview & Revenue Model
Company DescriptionRapid7, Inc. (RPD) is a leading provider of cybersecurity solutions, offering a comprehensive suite of products and services designed to enhance security operations and improve vulnerability management for organizations. The company specializes in providing cloud-native security solutions that empower IT and security professionals to detect and respond to cyber threats effectively. Rapid7's core offerings include its Insight platform, which integrates various tools for vulnerability management, application security, threat detection and response, and automation.
How the Company Makes MoneyRapid7 primarily generates revenue through the sale of its cybersecurity software solutions and services. The company's revenue model is predominantly subscription-based, with customers paying recurring fees for access to its Insight platform and other security tools. Key revenue streams include software licenses, cloud-based subscriptions, and professional services, such as consulting and training. Rapid7 also benefits from strategic partnerships and integrations with other technology providers, which enhance its product offerings and expand its market reach. The company continuously invests in research and development to innovate and maintain its competitive edge in the cybersecurity market.
Rapid7 Key Performance Indicators (KPIs)
Any
Annualized Recurring Revenue
Shows the total revenue expected from recurring sources over a year, highlighting the stability and predictability of the company’s income stream.
Shows the total revenue expected from recurring sources over a year, highlighting the stability and predictability of the company’s income stream.
Data provided by:
Main Street Data
Main Street DataRapid7 Earnings Call Summary
Earnings Call Date:May 12, 2025
(Q1-2025)
| % Change Since: -12.04%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture for Rapid7. While the company exceeded revenue and operating income expectations, driven by strong growth in the Detection and Response segment and international markets, it faced challenges with ARR growth and the Risk and Exposure Management business. The macroeconomic environment contributed to increased customer caution and extended deal cycles, leading to adjusted guidance for the full year.Q1-2025 Updates
Positive Updates
Revenue and Operating Income Exceed Expectations
Rapid7 ended the first quarter with revenue and operating income above guidance ranges, achieving $210 million in revenue, a 3% year-over-year growth.
Detection and Response Business Growth
Detection and Response (D&R) continued as the core growth driver with over half of total ARR and mid-teens growth. This segment maintained strong customer demand and expanded its market opportunity.
International Revenue Growth
International revenue grew by 10% year-over-year, representing 25% of total revenue, demonstrating strong demand outside the U.S.
Profitability and Free Cash Flow
Rapid7 demonstrated strong operational discipline with $32 million in operating income and $25 million in free cash flow generation during Q1.
Negative Updates
ARR Growth Below Expectations
ARR ended at $837 million with 4% year-over-year growth, falling short of expectations due to challenges in the Risk and Exposure Management business.
Challenges in Risk and Exposure Management
The Risk and Exposure Management business experienced continued growth deceleration, missing expectations and facing macroeconomic headwinds.
Increased Customer Caution
Customers, particularly in the North American mid-market enterprise segment, demonstrated greater scrutiny and tighter budget control, leading to extended deal cycles.
Adjusted ARR and Revenue Guidance
Full-year ARR guidance was lowered and widened to $850 million to $880 million, growth of 1% to 5%, reflecting a slower start to the year and increased market uncertainty.
Company Guidance
During Rapid7's Q1 2025 earnings call, the company provided financial guidance for the second quarter and full fiscal year 2025. The company reported an ARR of $837 million, a 4% year-over-year increase, despite some challenges. Revenue for the first quarter was $210 million, surpassing expectations, with product revenue growing by 4% to $204 million. Operating income for the quarter was $32 million, and adjusted EBITDA was $39 million. Rapid7 adjusted its full-year ARR guidance to a range of $850 million to $880 million, reflecting 1% to 5% growth, and maintained its operating income outlook of $125 million to $135 million. For Q2, the company expects revenue between $211 million and $213 million, with non-GAAP operating income projected between $30 million and $32 million. The company anticipates non-GAAP net income per share of $1.78 to $1.91 for the full year, based on approximately 76.7 million diluted weighted average shares.Rapid7 Financial Statement Overview
Summary
Rapid7 shows strong revenue growth and cash flow generation. Despite these positives, the company struggles with high leverage and low operating margins, requiring focus on cost management and debt reduction.Income Statement
Rapid7's income statement shows a strong gross profit margin of 70.3% in TTM (Trailing-Twelve-Months), reflecting efficient cost management. The net profit margin is modest at 2.99%, indicating profitability but room for improvement. Revenue growth has been consistent, with a 9.44% increase from 2023 to 2024. However, EBIT and EBITDA margins are relatively low at 2.90% and 8.38%, which suggests potential areas for operational improvement.70
Positive
Balance Sheet
The balance sheet reveals a high debt-to-equity ratio due to substantial leverage, with total debt significantly exceeding stockholders' equity. However, the company's return on equity has improved to 48.11% in TTM, indicating efficient use of shareholder funds. The equity ratio is low, suggesting a heavily leveraged capital structure that poses potential risks.60
Neutral
Cash Flow
Cash flow analysis shows robust free cash flow growth and a strong operating cash flow to net income ratio of 6.72 in TTM, highlighting solid cash generation capabilities. The free cash flow to net income ratio of 6.26 further underscores the company's ability to convert net income into cash, indicating healthy financial flexibility.75
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 849.16M | 844.01M | 777.71M | 685.08M | 535.40M | 411.49M | Gross Profit |
| 596.98M | 592.97M | 545.97M | 470.73M | 366.46M | 289.97M | EBIT |
| 24.64M | 35.03M | -80.73M | -111.61M | -120.06M | -74.10M | EBITDA |
| 71.14M | 97.31M | -39.14M | -70.28M | -88.12M | -50.09M | Net Income Common Stockholders |
| 25.37M | 25.53M | -149.26M | -124.72M | -146.33M | -98.85M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 493.47M | 521.71M | 383.17M | 291.45M | 223.43M | 312.46M | Total Assets |
| 1.64B | 1.65B | 1.51B | 1.36B | 1.30B | 913.12M | Total Debt |
| 1.01B | 1.02B | 1.02B | 914.34M | 912.56M | 463.94M | Net Debt |
| 722.91M | 683.49M | 810.95M | 707.05M | 747.98M | 290.32M | Total Liabilities |
| 1.59B | 1.63B | 1.62B | 1.48B | 1.42B | 841.59M | Stockholders Equity |
| 52.72M | 17.71M | -118.18M | -120.07M | -126.00M | 71.54M |
| Cash Flow | Free Cash Flow | ||||
| 158.69M | 168.25M | 84.03M | 40.68M | 35.05M | -15.04M | Operating Cash Flow |
| 170.36M | 171.67M | 104.28M | 78.20M | 53.92M | 4.89M | Investing Cash Flow |
| -84.04M | -46.52M | -178.75M | -39.99M | -325.38M | -156.29M | Financing Cash Flow |
| 5.95M | 5.58M | 79.60M | 7.42M | 264.13M | 200.93M |
Rapid7 Technical Analysis
Negative
23.52
Price Trends
23.66
Negative
28.05
Negative
33.66
Negative
Market Momentum
-0.10
Negative
47.97
Neutral
48.72
Neutral
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 23.52 is above the 20-day moving average (MA) of 23.36, below the 50-day MA of 23.66, and below the 200-day MA of 33.66, indicating a neutral trend. The MACD of -0.10 indicates Negative momentum. The RSI at 47.97 is Neutral, neither overbought nor oversold. The STOCH value of 48.72 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RPD.
Rapid7 Risk Analysis
Rapid7 disclosed 52 risk factors in its most recent earnings report. Rapid7 reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Rapid7 Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $118.89B | 721.64 | -5.76% | ― | 25.94% | -226.80% | |
78 Outperform | $5.11B | 28.36 | 40.23% | ― | 9.58% | 12.41% | |
64 Neutral | $5.62B | ― | -22.21% | ― | 13.34% | 13.71% | |
63 Neutral | $3.84B | ― | -12.09% | ― | 11.79% | 35.35% | |
62 Neutral | $11.97B | 10.08 | -7.46% | 2.96% | 7.37% | -8.22% | |
62 Neutral | $1.52B | 58.92 | 164.75% | ― | 6.19% | ― | |
46 Neutral | $12.54B | ― | -11.15% | ― | 23.16% | -9.81% |
* Technology Sector Average
Performance Comparison
RPD
Rapid7
23.52
-13.09
-35.76%
QLYS
Qualys
138.78
2.09
1.53%
VRNS
Varonis Systems
49.02
6.20
14.48%
TENB
Tenable Holdings
31.86
-8.25
-20.57%
CRWD
CrowdStrike Holdings
480.62
95.18
24.69%
SAIL
SailPoint, Inc.
22.61
-1.94
-7.90%
Rapid7 Corporate Events
Executive/Board ChangesShareholder Meetings
Rapid7 Appoints New Chairman at Annual Meeting
Neutral
Jun 13, 2025
On June 11, 2025, Rapid7, Inc. held its 2025 Annual Meeting of Stockholders where several key proposals were voted on, including the election of eleven directors, ratification of KPMG LLP as the independent auditor, and advisory votes on executive compensation. The stockholders approved all proposals, with the decision to hold annual advisory votes on executive compensation. Additionally, Marc Brown was appointed as the new Chairman of the Board, succeeding Corey Thomas, who remains the CEO.
The most recent analyst rating on (RPD) stock is a Hold with a $36.00 price target. To see the full list of analyst forecasts on Rapid7 stock, see the RPD Stock Forecast page.
Executive/Board ChangesBusiness Operations and Strategy
Rapid7 Expands Board with New Independent Directors
Positive
Mar 24, 2025
On March 21, 2025, Rapid7 entered into a Cooperation Agreement with JANA Partners Management, LP, resulting in the expansion of its Board of Directors from eight to eleven members. This agreement includes the appointment of Wael Mohamed, Michael Burns, and Kevin Galligan as independent directors, with these changes set to enhance Rapid7’s strategic execution and shareholder value. The appointments are part of Rapid7’s efforts to accelerate growth and operational efficiency, positioning the company for sustainable, profitable growth in the cybersecurity industry.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.