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Rapid7 (RPD)
NASDAQ:RPD
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Rapid7
(NASDAQ:RPD)54Neutral
Positive Factors
Partnerships
68% of RPD's revenue came from sales through channel partners, showing a growth from previous years.
Product Development
The pipeline for Exposure Command has ramped nicely over the past two quarters and essentially no growth contribution from the product has been baked into the FY25 guidance.
Negative Factors
Financial Performance
RPD's full year revenue, non-GAAP EPS and FCF guidance was surprisingly disappointing, coming significantly below Street expectations.
Rapid7 (RPD) vs. S&P 500 (SPY)
Market Cap
$1.79B
Dividend YieldN/A
Average Volume (3M)904.23K
Price to Earnings (P/E)70.5
Beta (1Y)1.46
Revenue Growth8.53%
EPS GrowthN/A
CountryUS
Employees2,228
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)0.40
Shares Outstanding63,968,853
10 Day Avg. Volume1,004,276
30 Day Avg. Volume904,228
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.22
Price to Cash Flow (P/CF)7.30
P/FCF Ratio8.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$40.13Price Target Upside43.32% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering19
Rapid7 Business Overview & Revenue Model
Company DescriptionRapid7, Inc. is a leading provider of cybersecurity solutions and services, primarily focused on vulnerability management, incident detection and response, and application security. The company operates in the cybersecurity and information technology sectors, offering a comprehensive portfolio of products and services designed to help organizations enhance their security posture, efficiently manage risk, and achieve compliance with industry regulations. Rapid7's core offerings include its Insight Platform, which integrates various security tools and technologies to provide customers with actionable insights and automated workflows for better security outcomes.
How the Company Makes MoneyRapid7 generates revenue through a combination of subscription services, maintenance and support fees, and professional services. The primary revenue stream comes from its cloud-based subscription offerings, where customers pay for access to the Insight Platform and its suite of security solutions on a subscription basis. This model ensures a steady and recurring revenue stream. Additionally, the company offers maintenance and support services for its products, providing technical assistance and updates, which contribute to its revenue. Professional services, including consulting, implementation, and training, also play a significant role in the company's earnings, as organizations often require expert guidance to effectively deploy and manage Rapid7's solutions. Partnerships with technology vendors and resellers further amplify Rapid7's market reach and revenue potential, as these collaborations help to expand its customer base and enhance the integration of its products into broader IT ecosystems.
Rapid7 Financial Statement Overview
Summary
Rapid7 demonstrates strong revenue growth and profitability improvements, evidenced by positive EBIT and EBITDA margins. The cash flow is robust with significant free cash flow growth. However, the balance sheet reveals high leverage, posing a financial risk.Income Statement
Rapid7's income statement shows a robust revenue growth trajectory, with a 8.51% increase from 2023 to TTM (Trailing-Twelve-Months) 2024. Gross profit margin stands at 69.59%, indicating strong operational efficiency. The net profit margin improved significantly to 3.46% from a loss position in 2023. EBIT and EBITDA margins are positive, reflecting a turnaround in profitability.75
Positive
Balance Sheet
The balance sheet reveals a high debt-to-equity ratio, indicative of financial risk, due to low stockholders' equity and high total debt. However, the return on equity has improved to 164.73% in TTM 2024, showcasing increased profitability on equity. Equity ratio remains low at 1.07%, highlighting potential leverage concerns.60
Neutral
Cash Flow
Cash flow analysis shows a strong free cash flow growth rate of 87.77% from 2023 to TTM 2024, indicating improved cash generation. The operating cash flow to net income ratio of 5.89 signifies strong cash conversion. Free cash flow to net income ratio is also strong at 5.41, reflecting efficient cash management.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 844.01M | 777.71M | 685.08M | 535.40M | 411.49M | Gross Profit |
| 592.97M | 545.97M | 470.73M | 366.46M | 289.97M | EBIT |
| 35.03M | -80.73M | -111.61M | -120.06M | -74.10M | EBITDA |
| 97.31M | -39.14M | -70.28M | -88.12M | -50.09M | Net Income Common Stockholders |
| 25.53M | -149.26M | -124.72M | -146.33M | -98.85M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 521.71M | 383.17M | 291.45M | 223.43M | 312.46M | Total Assets |
| 1.65B | 1.51B | 1.36B | 1.30B | 913.12M | Total Debt |
| 1.02B | 1.02B | 914.34M | 912.56M | 463.94M | Net Debt |
| 683.49M | 810.95M | 707.05M | 747.98M | 290.32M | Total Liabilities |
| 1.63B | 1.62B | 1.48B | 1.42B | 841.59M | Stockholders Equity |
| 17.71M | -118.18M | -120.07M | -126.00M | 71.54M |
| Cash Flow | Free Cash Flow | |||
| 168.25M | 84.03M | 40.68M | 35.05M | -15.04M | Operating Cash Flow |
| 171.67M | 104.28M | 78.20M | 53.92M | 4.89M | Investing Cash Flow |
| -46.52M | -178.75M | -39.99M | -325.38M | -156.29M | Financing Cash Flow |
| 5.58M | 79.60M | 7.42M | 264.13M | 200.93M |
Rapid7 Technical Analysis
Negative
28.00
Price Trends
36.31
Negative
38.57
Negative
38.18
Negative
Market Momentum
-2.54
Positive
22.19
Positive
17.70
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 28 is below the 20-day moving average (MA) of 31.89, below the 50-day MA of 36.31, and below the 200-day MA of 38.18, indicating a bearish trend. The MACD of -2.54 indicates Positive momentum. The RSI at 22.19 is Positive, neither overbought nor oversold. The STOCH value of 17.70 is Positive, 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 (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $77.88B | 44.81 | 338.74% | ― | 12.27% | 54.69% | |
78 Outperform | $15.42B | 1,777.39 | -5.91% | ― | 33.10% | -20.31% | |
76 Outperform | $115.09B | 98.20 | 23.38% | ― | 13.86% | -46.44% | |
73 Outperform | $4.65B | 27.36 | 41.09% | ― | 10.40% | 14.78% | |
73 Outperform | $29.87B | ― | -1.21% | ― | 30.77% | 79.05% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
54 Neutral | $1.79B | 70.53 | 164.75% | ― | 8.53% | ― |
* Technology Sector Average
Performance Comparison
RPD
Rapid7
28.00
-25.76
-47.92%
FTNT
Fortinet
96.04
24.70
34.62%
PANW
Palo Alto Networks
173.83
31.47
22.11%
QLYS
Qualys
125.28
-46.09
-26.90%
CYBR
CyberArk Software
312.80
48.06
18.15%
ZS
Zscaler
194.69
-6.55
-3.25%
Rapid7 Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: -23.89% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed sentiment where Rapid7 experienced growth in key areas like detection and response and international revenue, while facing challenges in traditional vulnerability management and macroeconomic uncertainties. Despite exceeding revenue and income expectations, the company is undergoing a strategic shift to address market changes.Highlights
Revenue and Operating Income Exceed Expectations
Rapid7 ended 2024 with $840 million in ARR, meeting expectations and achieving 4% growth over the prior year. Revenue and operating income exceeded guided ranges, with over $150 million in free cash flow generated for the year.
Detection and Response Business Growth
The detection and response business experienced double-digit growth in 2024, reaching over $400 million in ARR. The average ARR per DNR customer is now approximately $100,000.
Risk and Exposure Management Momentum
The risk and exposure management business showed promising momentum with over 20% year-over-year growth in total risk and exposure management pipeline generation during the fourth quarter.
Cloud Security Milestone
A significant milestone in cloud security adoption was achieved with the release of Exposure Command, validating Rapid7's integrated approach to comprehensive attack surface management.
Strong International Revenue Growth
International revenue grew 14% year-over-year, increasing to 25% of total revenue, while North America grew 3%.
Lowlights
Challenges in Vulnerability Management
The vulnerability management landscape is experiencing secular pressure, with growth deceleration and moderately increased churn in traditional VM markets.
Slower Than Expected Transition to New Products
The transition from traditional vulnerability management to integrated solutions like Exposure Command faced delays, impacting overall growth.
Higher Hosting Costs Impact Margins
Product gross margin was slightly below the prior year due to higher hosting costs.
Macroeconomic Uncertainty Affecting Certain Segments
Segments such as state, local, educational, and healthcare markets face uncertainty and disruption, impacting spending patterns.
Company Guidance
During the Rapid7 fourth quarter 2024 earnings call, the company provided financial guidance for the fiscal year 2025, expecting annual recurring revenue (ARR) growth of 4% to 6%, reaching between $870 million to $890 million by year-end. This projection is primarily driven by the detection and response business, which ended 2024 with over $400 million in ARR and is growing in the mid-teens. Rapid7 also plans to reinvest up to $30 million into strategic growth initiatives, including expanding its managed detection and response (MDR) service capabilities and enhancing its exposure management offerings. For 2025, the company forecasts total revenue of $860 million to $870 million, with an operating income of $125 million to $135 million and free cash flow of approximately $135 million. The first quarter of 2025 is expected to see total revenue of $207 million to $209 million and operating income of $23 million to $25 million.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.