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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 has been negatively impacted by weak FY26 guidance, citing longer and less predictable sales cycles, pipeline execution issues, and limited visibility following go-to-market changes. The company's annualized recurring revenue (ARR) growth has stalled, and its main growth engine, Managed Detection and Response (MDR) services, faces margin pressure. According to Marketbeat Ratings, 22 brokerages have a consensus "Reduce" rating on the stock, with three sell ratings and 17 hold ratings. Additionally, the company's weak outlook implies declining earnings despite stable revenue.

1.c. Company Highlights

2. Rapid7's Q4 2025 Earnings: A Closer Look

Rapid7 reported total revenue of $217.4 million for Q4 2025, a 0.5% year-over-year growth, with product revenue reaching $209.1 million, a 1.4% increase. The company's non-GAAP operating income was $30.1 million, or 13.9% of revenue, slightly ahead of expectations. Earnings per share (EPS) came in at $0.44, beating estimates of $0.4. The company's ARR stood at $839.9 million, relatively flat year over year.

Publication Date: Feb -17

📋 Highlights
  • ARR Growth: Ended fiscal 2025 with ARR of $840 million (flat YoY) and total revenue of $860 million, exceeding guidance.
  • Q4 Revenue: Q4 2025 revenue was $217.4 million (0.5% YoY growth), with product revenue at $209.1 million (+1.4% YoY).
  • Non-GAAP Operating Income: Q4 2025 non-GAAP operating income reached $30.1 million (13.9% margin), ahead of expectations.
  • 2026 Guidance: Projects total revenue of $835–$843 million (2% YoY decline at midpoint) and free cash flow of $125–$135 million.
  • Detection Response Growth: ARR growth of 7% in Q4 2025, driven by high-single-digit MDR ARR growth and a shift toward AI-enhanced offerings.

Financial Performance and Guidance

For 2026, Rapid7 expects total revenue to range from $835 to $843 million, representing a 2% decline year over year at the midpoint. Non-GAAP operating income is projected to be between $108 and $116 million, with a non-GAAP operating income margin of 13.3% at the midpoint. The company anticipates EPS to be between $1.50 and $1.60 per share. Free cash flow is expected to be in the range of $125 to $135 million, relatively flat compared to the previous year.

Valuation and Growth Prospects

With a P/E Ratio of 20.16 and an EV/EBITDA of 12090.47, the market seems to be pricing in significant growth expectations. However, analysts estimate revenue growth at 0.7% for the next year, indicating a potential disconnect between the company's growth prospects and its current valuation. The ROE of 22.0% suggests that the company is generating strong returns on equity.

Operational Highlights and AI-Driven Initiatives

Rapid7 is focusing on operationalizing its strengths to drive growth, with a particular emphasis on AI-driven initiatives. The company is shifting significant portions of its operational services work to its AI layer and redeploying its expert talents towards higher-value customer engagement. As Corey Thomas mentioned, "the increase in pace and sophistication of attacks is driving a meaningful shift in how security budgets are allocated," and Rapid7 is well-positioned to capitalize on this trend.

Managed Detection and Response (MDR) Growth

The company's MDR business is expected to drive growth, with ARR growth of 7% driven by MDR ARR growth in the high single digits. Rapid7 is positioning itself to take share as the MDR market evolves, and the company is confident that its investments in AI and other changes will bring efficiency gains as the year progresses.

3. NewsRoom

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RPD Fund Doubles Down on ZoomInfo, Buys Another $16 Million in Stock

Mar -23

Source: fool.com

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Rapid7, Inc. (NASDAQ:RPD) Receives Consensus Recommendation of “Reduce” from Analysts

Mar -20

Source: defenseworld.net

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RPD Fund Opens Hefty $100 Million Position in Nice Stock Amid AI Worries

Mar -19

Source: fool.com

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Rapid7 Advances Exposure Command with New Cloud Security Capabilities for Runtime Validation and Data Security Posture Management

Mar -19

Source: globenewswire.com

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Rapid7: Cheap For A Reason As Growth Stalls And Turnaround Looks Uncertain

Mar -16

Source: seekingalpha.com

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OneMedNet (NASDAQ:ONMD) vs. Rapid7 (NASDAQ:RPD) Head-To-Head Survey

Feb -20

Source: defenseworld.net

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Rapid7 Announces 2026 Partner of the Year Award Winners

Feb -11

Source: globenewswire.com

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Rapid7, Inc. (RPD) Q4 2025 Earnings Call Transcript

Feb -11

Source: seekingalpha.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

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DigitalOcean

A-Score: 5.2/10

Value: 5.2

Growth: 9.2

Quality: 7.2

Yield: 0.0

Momentum: 7.5

Volatility: 2.0

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Marqeta

A-Score: 4.6/10

Value: 5.1

Growth: 7.4

Quality: 3.4

Yield: 0.0

Momentum: 8.0

Volatility: 3.7

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MongoDB

A-Score: 4.2/10

Value: 4.0

Growth: 7.9

Quality: 4.4

Yield: 0.0

Momentum: 7.0

Volatility: 2.0

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Tenable

A-Score: 4.2/10

Value: 4.3

Growth: 7.7

Quality: 5.5

Yield: 0.0

Momentum: 1.0

Volatility: 6.7

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HashiCorp

A-Score: 4.1/10

Value: 4.2

Growth: 4.4

Quality: 3.7

Yield: 0.0

Momentum: 7.0

Volatility: 5.0

1-Year Total Return ->

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Rapid7

A-Score: 3.5/10

Value: 3.8

Growth: 8.6

Quality: 4.4

Yield: 0.0

Momentum: 0.0

Volatility: 4.0

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

6.33$

Current Price

6.33$

Potential

-0.00%

Expected Cash-Flows