Rapid7 (RPD) AI Stock Analysis

• Market Cap: $1.01B
• Dividend Yield: N/A
• Average Volume (3M): 1.26M
• Price to Earnings (P/E): 44.1
• Beta (1Y): 1.06
• Revenue Growth: 3.08%
• EPS Growth: -54.07%
• Country: US
• Employees: 2,413
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 0.57
• Shares Outstanding: 65,480,774
• 10 Day Avg. Volume: 1,392,496
• 30 Day Avg. Volume: 1,256,925
• PEG Ratio: -0.85
• Price to Book (P/B): 142.21
• Price to Sales (P/S): 2.98
• P/FCF Ratio: 14.97
• Enterprise Value/Market Cap: 1.76
• Enterprise Value/Revenue: 2.08
• Enterprise Value/Gross Profit: 2.96
• Enterprise Value/Ebitda: 21.56
• 1Y Price Target: $19.19
• Price Target Upside: 23.81% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 20
• EPS Forecast (FY): 2.05
• Revenue Forecast (FY): $857.44M

• Rating: 56 Neutral
• Price Target: $16.50 ▲(6.45% Upside)

Rapid7's overall stock score reflects strong revenue growth and strategic partnerships, which are offset by high leverage and valuation concerns. The company's technical indicators suggest potential short-term overbought conditions, while the earnings call provided a cautiously optimistic outlook. Addressing profitability and leverage issues will be crucial for future performance.

Positive Factors

Revenue Growth

Robust revenue growth indicates strong market demand and effective sales strategies, supporting long-term business expansion.

Strategic Partnerships

Partnerships with major tech firms like Microsoft enhance product capabilities and market reach, strengthening competitive positioning.

Cash Flow Generation

Strong cash flow generation provides financial flexibility for reinvestment in growth initiatives and debt reduction.

Negative Factors

High Leverage

High leverage increases financial risk, potentially limiting strategic options and increasing vulnerability to economic downturns.

Low Net Profit Margin

Low profitability limits internal funding for growth and may impact long-term sustainability if not improved.

ARR Growth Challenges

Slower ARR growth indicates challenges in subscription business expansion, potentially affecting future revenue stability.

Rapid7 Business Overview & Revenue Model

Company Description

Rapid7 (RPD) is a cybersecurity and data analytics company that specializes in helping organizations manage their security posture and respond to threats. With a focus on vulnerability management, application security, and incident detection and response, Rapid7 provides a suite of products that empower businesses to identify and mitigate risks in their IT environments. The company operates in sectors such as information technology, cybersecurity, and risk management, offering solutions that leverage advanced analytics and machine learning.

How the Company Makes Money

Rapid7 generates revenue primarily through subscription-based services, which include its cloud-based security solutions such as InsightVM for vulnerability management, InsightIDR for incident detection and response, and InsightAppSec for application security testing. The company also offers professional services, such as consulting and training, which contribute to its earnings. Key revenue streams include annual recurring revenue (ARR) from software subscriptions and one-time fees from professional services. Rapid7 has established partnerships with various technology vendors and resellers, enhancing its market reach and driving additional sales through integrated solutions and joint marketing efforts.

Rapid7 Financial Statement Overview

Summary

Rapid7 shows strong revenue growth and a healthy gross profit margin, indicating a competitive position. However, low net profit margins and high leverage pose financial risks. Cash flow generation is robust, but declining free cash flow growth warrants attention.

Income Statement

Rapid7 has shown a strong revenue growth rate of 38.7% in the TTM (Trailing-Twelve-Months), indicating robust top-line expansion. The gross profit margin remains healthy at 70.5%, reflecting efficient cost management. However, the net profit margin is relatively low at 2.2%, suggesting limited profitability. The EBIT and EBITDA margins are modest, indicating room for improvement in operational efficiency.

Balance Sheet

The company exhibits a high debt-to-equity ratio of 7.63 in the TTM, which poses a significant leverage risk. While the return on equity is positive at 26.1%, the equity ratio is low, indicating a heavy reliance on debt financing. This financial structure could be risky if not managed carefully.

Cash Flow

Operating cash flow is strong, with a coverage ratio of 0.34, indicating good cash generation relative to net income. However, the free cash flow growth rate is negative, suggesting a decline in cash available after capital expenditures. The free cash flow to net income ratio is high at 95.8%, reflecting efficient cash conversion.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	858.67M	844.01M	777.71M	685.08M	535.40M	411.49M
Gross Profit	602.89M	592.97M	545.97M	470.73M	366.46M	289.97M
EBITDA	82.83M	97.31M	-39.14M	-70.28M	-88.12M	-50.09M
Net Income	18.77M	25.53M	-149.26M	-124.72M	-146.33M	-98.85M
Balance Sheet
Total Assets	1.67B	1.65B	1.51B	1.36B	1.30B	913.12M
Cash, Cash Equivalents and Short-Term Investments	407.13M	521.71M	383.17M	291.45M	223.43M	312.46M
Total Debt	970.78M	1.02B	1.02B	914.34M	912.56M	463.94M
Total Liabilities	1.54B	1.63B	1.62B	1.48B	1.42B	841.59M
Stockholders Equity	127.22M	17.71M	-118.18M	-120.07M	-126.00M	71.54M
Cash Flow
Free Cash Flow	167.68M	168.25M	99.91M	57.82M	44.91M	-8.91M
Operating Cash Flow	179.62M	171.67M	104.28M	78.20M	53.92M	4.89M
Investing Cash Flow	-239.22M	-46.52M	-178.75M	-39.99M	-325.38M	-156.29M
Financing Cash Flow	-41.64M	5.58M	79.60M	7.42M	264.13M	200.93M

Rapid7 Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 15.50
• 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 15.5 is below the 20-day moving average (MA) of 15.76, below the 50-day MA of 16.25, and below the 200-day MA of 21.18, indicating a bearish trend. The MACD of -0.05 indicates Negative momentum. The RSI at 45.34 is Neutral, neither overbought nor oversold. The STOCH value of 17.23 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	78 Outperform	$5.05B	26.94	38.64%	―	9.95%	12.72%
OKTA	75 Outperform	$16.12B	81.77	2.96%	―	12.12%	―
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
RPD	56 Neutral	$1.01B	44.15	37.09%	―	3.08%	-54.07%
CYBR	52 Neutral	$23.09B	-98.56	-12.73%	―	43.26%	-1651.82%
RBRK	50 Neutral	$15.95B	-40.22	―	―	48.93%	69.39%
VRNS	48 Neutral	$4.06B	-32.79	-22.17%	―	11.37%	-34.44%

Rapid7 Corporate Events

Rapid7 Appoints Rafe Brown as New CFO

Rapid7 announced the appointment of Rafe Brown as its new Chief Financial Officer, effective December 1, 2025, succeeding Tim Adams who will retire but remain in an advisory role during the transition. This leadership change comes as Rapid7 reported its third-quarter 2025 financial results, highlighting a 2% year-over-year increase in both annualized recurring revenue and total revenue, with the company positioning itself to leverage growing demand in the security operations market.