Nasdaq:RPD
Rapid7, Inc.
A premier cybersecurity analytics platform provider delivering integrated visibility and control for enterprise risk management.
Key Metrics
Investment Thesis
Bull Case
Investors should consider RPD as a compelling buy due to its demonstrated ability to generate positive net income after years of investment, signaling a mature and sustainable business model in the high-growth cybersecurity sector. The company's strong cash flow generation from operations provides ample liquidity to fund future innovation and potential strategic acquisitions without diluting shareholders through excessive equity issuance. Given the critical nature of cybersecurity for enterprise infrastructure, Rapid7 is well-positioned to capture increased market demand as organizations expand their security footprints in cloud environments.
Bear Case
Skeptics may avoid this stock due to the company's historically high retained earnings deficit of $964.7M which suggests lingering pressure from past aggressive growth strategies and heavy R&D expenditures that have yet to fully normalize. The significant cash outflow from investing activities totaling $209.4M indicates substantial capital allocation to intangible assets or acquisitions that may not immediately translate into proportional revenue growth. Additionally, the reliance on subscription renewals creates recurring revenue recognition risks if customer churn rates increase during periods of economic uncertainty.
About Rapid7, Inc.
Rapid7, Inc. (RPD) is a leading cybersecurity analytics platform provider serving enterprise customers globally with its Insight Platform. The company offers comprehensive solutions including vulnerability management, threat detection, and security orchestration across cloud and on-premises environments. Rapid7's revenue streams are driven by subscription-based licensing of its core software suites such as InsightVM, InsightAppSec, and InsightIDR.
Analysis
Management Discussion
Recent financial performance highlights a resilient return to profitability with net income of $23.4M in 2025 following a loss in 2024, driven by strong operating cash flow of $153.8M despite significant investing outflows for acquisitions and asset growth. The company successfully managed its working capital changes which resulted in a slight net decrease in cash while maintaining healthy levels of current assets at $737.3M against current liabilities of $575.4M. Operating expenses of $593.2M were balanced by gross profit margins that allowed the business to cover R&D investments of $190.7M and marketing spend of $317.7M.
Industry Overview
The cybersecurity industry is characterized by rapid technological evolution and increasing regulatory scrutiny as cyber threats become more sophisticated and pervasive across global enterprises. Market leaders compete intensely on platform completeness, ease of integration, and the depth of their threat intelligence networks to secure multi-billion dollar enterprise contracts. Regulatory mandates in sectors like finance and healthcare are driving mandatory spending increases that favor established vendors with proven track records in compliance and risk reduction.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $685.1M | $777.7M | $844.0M | $859.8M |
| Cost of Revenue | $214.3M | $231.7M | $251.0M | $255.0M |
| Gross Profit | $470.7M | $546.0M | $593.0M | $604.8M |
| Operating Expenses | $582.3M | $626.7M | $557.9M | $593.2M |
| Operating Income | $-111.6M | $-80.7M | $35.0M | $11.6M |
| R&D | $190.0M | $176.8M | $173.1M | $190.7M |
| G&A | $85.0M | $84.3M | $86.0M | $84.9M |
| Marketing | $307.4M | $312.6M | $298.8M | $317.7M |
| Stock-Based Comp | $119.9M | $108.1M | $108.0M | $104.3M |
| D&A | $41.0M | $45.9M | $44.9M | $45.4M |
| Depreciation | $13.6M | $14.0M | $11.1M | $9.8M |
| Amortization | $27.5M | $31.9M | $33.8M | $35.7M |
| Other OpEx | $0 | $53.0M | $0 | $0 |
| Non-Operating Income | $-10.7M | $-69.0M | $6.4M | $18.6M |
| Interest Expense | $11.0M | $64.7M | — | — |
| Interest Income | $1.8M | $10.2M | $21.1M | $23.0M |
| Pre-Tax Income | $-122.3M | $-149.8M | $41.5M | $30.2M |
| Income Tax | $2.4M | $-518.0K | $15.9M | $6.8M |
| Continuing Ops | $-124.7M | $-149.3M | $25.5M | $23.4M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $-124.7M | $-149.3M | $25.5M | $23.4M |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $-124.7M | $-149.3M | $25.5M | $23.4M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $510.3M | $634.5M | $786.1M | $737.3M |
| Cash & Equivalents | $207.3M | $213.6M | $334.7M | $246.7M |
| Marketable Securities | $84.2M | $169.5M | $187.0M | $228.0M |
| Prepaid Expenses | $31.9M | $41.4M | $44.0M | $47.2M |
| Other Current Assets | $187.0M | $209.9M | $220.4M | $215.4M |
| Long-Term Assets | $848.7M | $870.9M | $865.9M | $989.2M |
| PP&E (Net) | $57.9M | $39.6M | $32.2M | $32.0M |
| Intangibles | $101.3M | $94.5M | $85.7M | $65.1M |
| Goodwill | $515.6M | $536.4M | $575.3M | $575.3M |
| Operating Leases | $79.3M | $54.7M | $48.9M | $45.5M |
| LT Investments | $9.8M | $56.2M | $37.3M | $184.1M |
| Other LT Assets | $84.8M | $89.5M | $86.5M | $87.2M |
| Total Assets | $1.36B | $1.51B | $1.65B | $1.73B |
| Current Liabilities | $531.3M | $569.8M | $630.2M | $575.4M |
| Accounts Payable | $10.3M | $15.8M | $18.9M | $11.0M |
| Current Leases | $12.4M | $13.5M | $15.5M | $16.2M |
| Deferred Revenue | $426.6M | $455.5M | $461.1M | $451.2M |
| Other Current Liab | $1.7M | $536.0K | $45.9M | $0 |
| Long-Term Liabilities | $947.8M | $1.05B | $1.00B | $996.4M |
| LT Operating Leases | $85.9M | $81.1M | $68.4M | $59.9M |
| Other LT Liab | $830.8M | $940.0M | $908.6M | $906.5M |
| Total Liabilities | $1.48B | $1.62B | $1.63B | $1.57B |
| Shareholders' Equity | $-120.1M | $-118.2M | $17.7M | $154.7M |
| Paid-In Capital | $746.2M | $894.6M | $1.01B | $1.12B |
| Retained Earnings | $-860.7M | $-1.01B | $-988.0M | $-964.7M |
| AOCI | $-1.4M | $1.3M | $-1.2M | $2.5M |
| Total L&E | $1.36B | $1.51B | $1.65B | $1.73B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $-124.7M | $-149.3M | $25.5M | $23.4M |
| Non-Cash Adjustments | $109.0M | $179.8M | $142.8M | $149.7M |
| Working Capital Changes | $93.9M | $73.7M | $3.3M | $-19.3M |
| Cash from Operations | $78.2M | $104.3M | $171.7M | $153.8M |
| Capital Expenditures | $20.4M | $4.4M | $3.4M | $7.6M |
| Cash from Investing | $-40.0M | $-178.8M | $-46.5M | $-209.4M |
| Cash from Financing | $7.4M | $79.6M | $5.6M | $-45.5M |
| FX Effect | $-2.8M | $1.2M | $-2.8M | $5.7M |
| Net Change in Cash | $42.8M | $6.3M | $128.0M | $-95.4M |
| Beginning Cash | $165.0M | $207.8M | $214.1M | $342.1M |
| Ending Cash | $207.8M | $214.1M | $342.1M | $246.7M |
Frequently Asked Questions
How does Rapid7, Inc. make money?
The company's financials reflect primary revenue from its core Insight Platform subscriptions which include vulnerability management (InsightVM), application security testing (InsightAppSec), and identity/detection response (InsightIDR). Revenue growth is supported by professional services, maintenance contracts, and add-on modules that enhance the core analytics engine. The portfolio also includes cloud-native security offerings designed for hybrid and multi-cloud infrastructure protection.
What are the main risks for RPD?
Cybersecurity spending volatility remains a concern as macroeconomic headwinds force enterprises to prioritize budget cuts in non-essential technology sectors including security operations. Intense competition from hyperscalers like Microsoft and CrowdStrike could erode market share by offering bundled security features at lower price points. The company faces significant pressure from high customer acquisition costs and the need for continuous R&D investment to keep pace with evolving threat landscapes.
What is RPD's competitive advantage?
Rapid7 maintains a robust competitive moat through its extensive library of over 200 million vulnerability signatures and deep integration capabilities with major cloud providers like AWS, Azure, and Google Cloud. The company's unified data lake architecture allows customers to correlate events across disparate security tools, significantly reducing false positives and improving threat hunting efficiency. High switching costs are driven by the comprehensive nature of the platform which consolidates multiple legacy security functions into a single ecosystem.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.