Rapid7 (NASDAQ:RPD) Issues Earnings Results, Beats Expectations By $0.14 EPS

Key Points

• Rapid7 reported $0.60 in earnings per share, beating the $0.46 consensus estimate by $0.14, and revenue of $212.4 million, above expectations of $209.05 million.
• Despite beating guidance, total ARR declined about 2% year over year; management expects core ARR to remain roughly flat in Q4 and forecasts revenue to fall about 4% year over year at the midpoint.
• Rapid7 reaffirmed its approximately $130 million full-year free cash flow outlook and plans to use cash on hand to repay $600 million of convertible notes due in March 2027, while directing investment toward its core platform and AI services.

Rapid7 (NASDAQ:RPD - Get Free Report) posted its quarterly earnings data on Wednesday. The technology company reported $0.60 earnings per share for the quarter, beating the consensus estimate of $0.46 by $0.14, FiscalAI reports. The business had revenue of $212.40 million for the quarter, compared to analysts' expectations of $209.05 million. Rapid7 had a return on equity of 27.89% and a net margin of 2.35%.

Here are the key takeaways from Rapid7's conference call:

• Rapid7 beat Q3 guidance, with ARR of $820 million, non-GAAP operating income of $46.2 million and free cash flow of $26.5 million. However, total ARR declined about 2% year over year as growth in detection and response was offset by declines in exposure management and non-core products.
• Core ARR was flat sequentially, and the company expects it to remain approximately flat in Q4; total ARR is forecast to fall to about $812 million, with continued declines in non-core offerings. Q4 revenue is projected to decline about 4% year over year at the midpoint.
• Rapid7 reaffirmed its full-year free cash flow outlook of approximately $130 million and expects to exit 2026 at roughly 20% non-GAAP operating margin. With $732 million in cash and investments, it plans to use cash on hand to repay its $600 million convertible notes due in March 2027.
• The company is directing investment toward its core platform and an AI-first services model, including development of its Autonomous SOC, with a first generally available release targeted around RSAC 2027. Management expects AI compute and product-development costs to increase near term, while efficiency benefits are expected to emerge over time.
• Rapid7 has ended sales of selected standalone non-core products and is evaluating the best long-term path for those businesses. Management said the non-core ARR drag is expected to continue in the near term, but did not provide a timeline for resolving the portfolio review.

Rapid7 Price Performance

Shares of Rapid7 stock traded up $0.20 on Wednesday, reaching $15.04. The company's stock had a trading volume of 1,941,431 shares, compared to its average volume of 2,099,894. The company has a market capitalization of $1.01 billion, a P/E ratio of 48.52 and a beta of 0.90. The stock has a 50-day moving average price of $13.01 and a 200-day moving average price of $9.54. The company has a quick ratio of 0.80, a current ratio of 0.80 and a debt-to-equity ratio of 1.50. Rapid7 has a 52-week low of $4.97 and a 52-week high of $18.56.

Analyst Ratings Changes

RPD has been the topic of a number of recent research reports. Royal Bank Of Canada upped their price objective on shares of Rapid7 from $11.00 to $12.00 and gave the stock a "sector perform" rating in a report on Tuesday, August 11th. Citigroup restated a "neutral" rating on shares of Rapid7 in a research report on Wednesday, August 12th. Raymond James Financial restated an "outperform" rating and set a $15.00 price target on shares of Rapid7 in a report on Tuesday, August 11th. Scotiabank increased their price objective on shares of Rapid7 from $7.00 to $10.15 and gave the company a "sector perform" rating in a research note on Tuesday, August 11th. Finally, DA Davidson increased their price target on Rapid7 from $5.25 to $9.00 and gave the company an "underperform" rating in a research note on Tuesday, August 11th. One investment analyst has rated the stock with a Buy rating, seventeen have issued a Hold rating and five have assigned a Sell rating to the company's stock. According to MarketBeat.com, the stock presently has a consensus rating of "Reduce" and a consensus price target of $12.09.

Rapid7 Company Profile

Rapid7, Inc NASDAQ: RPD is a cybersecurity company that provides technology and services to help organizations identify, assess and manage security risk across their IT environments. Its offerings are designed to support security operations, vulnerability management, cloud security, application security and incident response.

The company's product portfolio includes the Insight platform and solutions such as InsightVM for vulnerability risk management, InsightIDR for security detection and response, InsightCloudSec for cloud security and compliance, and InsightAppSec for application security testing.

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