Rapid7’s fourth quarter results were met with a negative market reaction, reflecting investor concerns about the company’s stagnant sales and ongoing margin pressures. Management pointed to continued adoption of its managed detection and response (MDR) offerings and strategic investments in AI-enabled security operations as key factors supporting performance, but acknowledged that the shift in business mix and operational costs weighed on profitability. CEO Corey Thomas described the cybersecurity landscape as “a period of significant disruption,” noting that the company’s platform investments and go-to-market changes have not yet translated into accelerated growth.
Is now the time to buy RPD? Find out in our full research report (it’s free for active Edge members).
Rapid7 (RPD) Q4 CY2025 Highlights:
- Revenue: $217.4 million vs analyst estimates of $214.9 million (flat year on year, 1.2% beat)
- Adjusted EPS: $0.44 vs analyst estimates of $0.42 (5.9% beat)
- Adjusted Operating Income: $30.13 million vs analyst estimates of $27.92 million (13.9% margin, 7.9% beat)
- Revenue Guidance for Q1 CY2026 is $208 million at the midpoint, below analyst estimates of $213.4 million
- Adjusted EPS guidance for the upcoming financial year 2026 is $1.55 at the midpoint, missing analyst estimates by 21.8%
- Operating Margin: 1%, down from 3.4% in the same quarter last year
- Annual Recurring Revenue: $839.9 million vs analyst estimates of $837.9 million (flat year on year, in line)
- Billings: $247.2 million at quarter end, down 2.1% year on year
- Market Capitalization: $470.2 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Rapid7’s Q4 Earnings Call
- Mina Marshall (Morgan Stanley) questioned the expected timeline for seeing tangible benefits from sales and marketing realignment. CEO Corey Thomas emphasized a focus on sales productivity and deeper customer engagement, noting improvements are expected to build gradually.
- Jonathan Ho (William Blair) asked about prioritizing core growth businesses and the rationale for withholding full-year ARR guidance. Thomas cited a renewed focus on detection and response as the main growth driver, while CFO Rafe Brown pointed to limited long-term visibility amid ongoing organizational change.
- Rob Owens (Piper Sandler) raised concerns about ARR decline and churn acceleration. Thomas acknowledged that while MDR is growing, it isn’t yet offsetting losses in other segments, and improvements are expected mid-year as upgrades and new products gain traction.
- Grant Darling (Jefferies) inquired about customer consolidation trends and win rates. Thomas highlighted the importance of simplifying the customer proposition and deepening technology partnerships to capture more share of wallet, though no immediate improvement was assumed in guidance.
- Adam Tindle (Raymond James) pressed for clarity on the drivers behind Q1 ARR decline and margin improvement. Thomas explained that legacy business drag and slower exposure management upgrades are responsible, while Brown described cost discipline and operational investments as key to future margin gains.
Catalysts in Upcoming Quarters
Going forward, the StockStory team will be watching (1) whether Rapid7’s AI-enabled MDR and exposure management solutions can accelerate customer adoption and retention, (2) evidence that go-to-market restructuring yields higher sales productivity and conversion, and (3) signs of margin improvement as operational investments begin to pay off. The pace of legacy customer migration and progress with new product integrations will be important additional markers.
Rapid7 currently trades at $7.21, down from $10.39 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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