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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on RPD

Rapid7's recent performance was negatively impacted by a weaker-than-expected earnings announcement. Despite beating estimates with quarterly earnings of $0.57 per share, the company's growth appears to be slowing. However, several positive developments have occurred, including an expanded partnership with Microsoft to enhance detection and response capabilities. Additionally, Rapid7 was recognized as a Leader in the 2025 Gartner Magic Quadrant for Exposure Assessment Platforms. Acadian Asset Management LLC also increased its stake in Rapid7 by 136.7% in Q2.

1.c. Company Highlights

2. Rapid7's Q3 2025 Earnings: A Strong Performance with Room for Growth

Rapid7 reported revenue of $218 million, growing 2% year-over-year, with product subscription revenue growing 2% year-over-year to $210 million. The company's gross margin was 73%, with product gross margin at 75%. Earnings per share (EPS) came in at $0.57, beating analyst estimates of $0.45. Operating income was $37 million, and adjusted EBITDA was $44 million. Free cash flow was $30 million, bringing the year-to-date total to $98 million.

Publication Date: Nov -15

📋 Highlights
  • ARR Growth: $838M ARR, +2% YoY driven by 2% ARR per customer growth
  • Financial Performance: $218M revenue (+2% YoY), $37M operating income, $30M free cash flow
  • Product Profitability: 75% product gross margin, 73% total gross margin, 33% sales/marketing spend
  • Full-Year Guidance: $856M–$858M revenue (1–2% growth), $130M–$135M operating income (15–16% margin)
  • AI-Driven Strategy: 25% international revenue growth, AI-powered MDR margin outperforming peers, exposure management as key CISO priority

Business Momentum and Growth Drivers

The key driver of Rapid7's growth is its AI-powered security operations platform, which unifies exposure management and detection response. As Corey Thomas mentioned, "Our platform has a strong position in the market, and we're seeing adoption from mainstream customers." The company's ARR grew 2% year-over-year to $838 million, driven by 2% ARR per customer growth. Internationally, 25% of the company's revenue is growing faster than the business overall.

Valuation and Growth Expectations

Rapid7's current valuation metrics indicate a P/E Ratio of 48.56, P/B Ratio of 7.16, and EV/EBITDA of 19.15. Analysts estimate revenue growth at 1.5% for next year. Given the company's current valuation, it's essential to assess whether the market has priced in the expected growth. With a ROE of 26.06% and ROIC of 0.8%, the company's profitability is notable. The Free Cash Flow Yield is 19.16%, indicating a decent return for investors.

Managed Detection and Response (MDR) Business

Rapid7's MDR business is a significant contributor to the company's growth, with a unique value proposition that combines technology and people. The company is extending its MDR offering to managed red teaming and managed risk, with a big opportunity to help customers scale and outsource their SOC. As Corey Thomas noted, the company runs at a higher gross margin and overall profitability than the average MDR companies due to its investments in automation and AI capacity.

Outlook and Guidance

Rapid7 expects revenue in the range of $214 million to $216 million for Q4, with non-GAAP net income per share of $0.37 to $0.44. The company is tightening its full-year revenue guidance range to $856 million to $858 million, representing 1% to 2% year-over-year revenue growth. The company's operating income guidance is now $130 million to $135 million, representing an operating margin of 15% to 16%. With a strong free cash flow generation, the company reiterates its full-year free cash flow target range of $125 million to $135 million.

3. NewsRoom

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Rapid7 to Attend Raymond James TMT and Consumer Conference

Dec -01

Source: globenewswire.com

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Jana Partners' Strategic Move: Significant Addition of The Cooper Companies Inc

Nov -14

Source: gurufocus.com

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Rapid7, Inc. $RPD Shares Acquired by Acadian Asset Management LLC

Nov -14

Source: defenseworld.net

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Rapid7 Recognized as a Leader in the 2025 Gartner® Magic Quadrant™ for Exposure Assessment Platforms

Nov -12

Source: globenewswire.com

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Rapid7 (NASDAQ:RPD) Hits New 1-Year Low After Earnings Miss

Nov -05

Source: defenseworld.net

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Rapid7, Inc. (RPD) Q3 2025 Earnings Call Transcript

Nov -05

Source: seekingalpha.com

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Compared to Estimates, Rapid7 (RPD) Q3 Earnings: A Look at Key Metrics

Nov -05

Source: zacks.com

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Rapid7 (RPD) Q3 Earnings and Revenues Top Estimates

Nov -04

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.90%)

6. Segments

Product Subscriptions

Expected Growth: 9%

Rapid7's 9% growth in Product Subscriptions is driven by increasing demand for cybersecurity solutions, expansion into new markets, and strategic partnerships. The company's cloud-based offerings, such as InsightVM and InsightIDR, are experiencing high adoption rates. Additionally, the rise of remote work and digital transformation initiatives are fueling growth, as organizations prioritize vulnerability management and threat detection.

Professional Services

Expected Growth: 7%

Rapid7's Professional Services segment growth is driven by increasing demand for cybersecurity solutions, expansion of existing customer relationships, and strategic partnerships. The 7% growth rate is also fueled by the company's investments in sales and marketing, as well as its ability to provide comprehensive security services to organizations of all sizes.

Other

Expected Growth: 6%

Rapid7's 6% growth driven by increasing demand for vulnerability management and penetration testing, expansion into cloud security, and growing adoption of its InsightVM and InsightIDR products. Additionally, strategic partnerships and acquisitions, such as its purchase of DivvyCloud, have enhanced its offerings and fueled growth.

7. Detailed Products

Nexpose

A vulnerability management solution that helps identify and prioritize vulnerabilities across the network, including virtual and cloud environments.

InsightVM

A vulnerability management solution that provides real-time vulnerability scanning, configuration compliance, and risk analysis.

Metasploit

A penetration testing solution that helps simulate attacks on the network to identify vulnerabilities and weaknesses.

InsightIDR

A security information and event management (SIEM) solution that provides real-time threat detection and incident response.

InsightAppSec

A dynamic application security testing (DAST) solution that helps identify vulnerabilities in web applications.

InsightPhish

A phishing simulation and training solution that helps educate users on how to identify and avoid phishing attacks.

8. Rapid7, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Rapid7, Inc. operates in a niche market with few substitutes, but the threat of substitutes is still present due to the evolving nature of the cybersecurity industry.

Bargaining Power Of Customers

Rapid7, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products and services are often critical to customers' operations, making it difficult for them to negotiate prices or terms.

Bargaining Power Of Suppliers

Rapid7, Inc. has a diverse supplier base, and the company is not heavily dependent on any single supplier. This reduces the bargaining power of suppliers and allows Rapid7 to negotiate favorable terms.

Threat Of New Entrants

The cybersecurity industry is rapidly evolving, and new entrants can easily disrupt the market with innovative products and services. Rapid7, Inc. must continue to innovate and invest in research and development to stay ahead of new entrants.

Intensity Of Rivalry

The cybersecurity industry is highly competitive, with many established players and new entrants vying for market share. Rapid7, Inc. must differentiate its products and services and focus on customer retention to maintain its market position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 114.32%
Debt Cost 3.95%
Equity Weight -14.32%
Equity Cost 9.00%
WACC 3.22%
Leverage -798.32%

11. Quality Control: Rapid7, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Tenable

A-Score: 4.3/10

Value: 5.7

Growth: 7.7

Quality: 4.6

Yield: 0.0

Momentum: 1.0

Volatility: 6.7

1-Year Total Return ->

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Marqeta

A-Score: 4.2/10

Value: 5.4

Growth: 7.4

Quality: 3.4

Yield: 0.0

Momentum: 5.0

Volatility: 4.0

1-Year Total Return ->

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MongoDB

A-Score: 4.1/10

Value: 4.0

Growth: 7.9

Quality: 4.2

Yield: 0.0

Momentum: 6.5

Volatility: 2.0

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DigitalOcean

A-Score: 3.8/10

Value: 3.8

Growth: 9.2

Quality: 5.3

Yield: 0.0

Momentum: 2.5

Volatility: 2.0

1-Year Total Return ->

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HashiCorp

A-Score: 3.8/10

Value: 4.2

Growth: 4.4

Quality: 3.6

Yield: 0.0

Momentum: 5.5

Volatility: 5.0

1-Year Total Return ->

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Rapid7

A-Score: 3.6/10

Value: 3.7

Growth: 8.6

Quality: 4.8

Yield: 0.0

Momentum: 0.0

Volatility: 4.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

16.12$

Current Price

16.12$

Potential

-0.00%

Expected Cash-Flows