Rapid7 (RPD) AI Stock Analysis

• Market Cap: $1.34B
• Dividend Yield: N/A
• Average Volume (3M): 897.81K
• Price to Earnings (P/E): 49.6
• Beta (1Y): 1.01
• Revenue Growth: 4.67%
• EPS Growth: N/A
• Country: US
• Employees: 2,413
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 0.58
• Shares Outstanding: 64,745,950
• 10 Day Avg. Volume: 716,537
• 30 Day Avg. Volume: 897,812
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.46
• Enterprise Value/Revenue: 2.28
• Enterprise Value/Gross Profit: 3.23
• Enterprise Value/Ebitda: 19.27
• 1Y Price Target: $24.31
• Price Target Upside: 20.53% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 22

• Rating: 52 Neutral
• Price Target: $22.00 ▲(9.07% Upside)

Rapid7's overall score is driven by strong revenue growth and cash flow generation, but is tempered by high leverage and valuation concerns. The earnings call provided mixed signals, with strategic investments and product launches offering potential upside, yet slower ARR growth and extended deal cycles pose risks.

Positive Factors

Financial Performance

Rapid7 delivered a solid quarter with billings, revenue, and pro forma EPS outpacing consensus estimates.

Management Strategy

Management has high conviction they can apply the same focus in Detection and Response to the rest of the business to drive an increase in overall consolidated growth.

Operational Expansion

Management highlighted significant room to expand global operations, particularly in Pune, India, leveraging strong talent pools and favorable cost dynamics.

Negative Factors

Financial Guidance

The company lowered the high end of ARR guidance by $15 million to reflect greater uncertainty from the timing of larger deals.

Growth Challenges

The company appears to be stuck in low single digit growth territory for the foreseeable future.

Market Conditions

Management continues to see a mixed spending environment with longer sales cycles, most pronounced in North American mid-market segment.

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 generates revenue primarily through subscription-based models for its software solutions, which include its Insight platform and associated services. The company offers tiered pricing plans that cater to businesses of different sizes, driving consistent recurring revenue. Key revenue streams include subscription fees from its cloud-based services, professional services such as consulting and training, and maintenance and support for its products. Additionally, Rapid7 has formed significant partnerships with other technology firms and integrates its products with various third-party applications, enhancing its value proposition and customer reach, which further contributes to its overall earnings.

Rapid7 Financial Statement Overview

Summary

Rapid7 shows strong revenue growth and improving profitability metrics, but faces challenges with high leverage and low equity. The company has improved its cash flow generation, enhancing financial stability.

Income Statement

Rapid7 has demonstrated strong revenue growth, with a notable increase from $411.5 million in 2020 to $849.2 million in TTM (Trailing-Twelve-Months). The gross profit margin remains robust at approximately 70.3% in TTM. However, the net profit margin is modest at 3.0% due to high operating expenses, although it has improved from negative margins in previous years. EBIT and EBITDA margins have also shown positive trends, indicating improved operational efficiency.

Balance Sheet

The company's balance sheet shows a high debt-to-equity ratio due to significant leverage, with total debt at $1.01 billion against a relatively low stockholders' equity of $52.7 million in TTM. The equity ratio is low at 3.2%, indicating heavy reliance on debt financing. However, the return on equity has improved to 48.1% in TTM, reflecting better profitability on equity.

Cash Flow

Rapid7's cash flow statement reflects strong operating cash flow, with a TTM figure of $170.4 million. Free cash flow has grown significantly, with a 88.8% increase from 2020 to TTM. The operating cash flow to net income ratio is healthy at 6.7, indicating efficient cash generation relative to net income. The company has improved its free cash flow position, which supports financial flexibility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	855.36M	844.01M	777.71M	685.08M	535.40M	411.49M
Gross Profit	603.91M	592.97M	545.97M	470.73M	366.46M	289.97M
EBITDA	101.31M	97.31M	-39.14M	-70.28M	-88.12M	-50.09M
Net Income	25.52M	25.53M	-149.26M	-124.72M	-146.33M	-98.85M
Balance Sheet
Total Assets	1.65B	1.65B	1.51B	1.36B	1.30B	913.12M
Cash, Cash Equivalents and Short-Term Investments	511.74M	521.71M	383.17M	291.45M	223.43M	312.46M
Total Debt	967.65M	1.02B	1.02B	914.34M	912.56M	463.94M
Total Liabilities	1.56B	1.63B	1.62B	1.48B	1.42B	841.59M
Stockholders Equity	90.45M	17.71M	-118.18M	-120.07M	-126.00M	71.54M
Cash Flow
Free Cash Flow	176.08M	168.25M	84.03M	40.68M	35.05M	-15.04M
Operating Cash Flow	185.04M	171.67M	104.28M	78.20M	53.92M	4.89M
Investing Cash Flow	-132.26M	-46.52M	-178.75M	-39.99M	-325.38M	-156.29M
Financing Cash Flow	-40.17M	5.58M	79.60M	7.42M	264.13M	200.93M

Rapid7 Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 20.17
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: 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 20.17 is below the 20-day moving average (MA) of 20.34, below the 50-day MA of 21.89, and below the 200-day MA of 29.33, indicating a bearish trend. The MACD of -0.34 indicates Negative momentum. The RSI at 43.89 is Neutral, neither overbought nor oversold. The STOCH value of 40.31 is Neutral, 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	74 Outperform	$4.90B	27.05	39.53%	―	9.69%	9.50%
VRNS	72 Outperform	$6.61B	―	-25.73%	―	14.29%	-14.42%
CRWD	65 Neutral	$106.33B	721.64	-8.99%	―	23.46%	-270.07%
TENB	63 Neutral	$3.74B	―	-12.60%	―	11.41%	33.76%
Sector *	61 Neutral	$35.45B	8.20	-10.08%	1.91%	8.56%	-9.51%
RPD	52 Neutral	$1.34B	49.58	155.46%	―	4.67%	―
SAIL	49 Neutral	$11.49B	―	-11.15%	―	23.05%	-23.69%

Rapid7 Corporate Events

Rapid7 Establishes $200 Million Credit Facility

On June 25, 2025, Rapid7, Inc. entered into a credit agreement establishing a senior secured revolving credit facility of up to $200 million. This facility is intended to finance working capital, capital expenditures, and other corporate purposes, with borrowings subject to customary conditions and interest rates based on the SOFR or alternate base rate. The agreement includes various covenants and conditions, with potential implications for the company’s financial flexibility and operational strategy.

Rapid7 Appoints New Chairman at Annual Meeting

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.