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Cybersecurity software maker Rapid7 (NASDAQ:RPD) beat analysts' expectations in Q2 CY2024, with revenue up 9.2% year on year to $208 million. The company expects next quarter's revenue to be around $210 million, in line with analysts' estimates. It made a non-GAAP profit of $0.58 per share, improving from its profit of $0.18 per share in the same quarter last year.
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Rapid7 (RPD) Q2 CY2024 Highlights:
- Revenue: $208 million vs analyst estimates of $204.1 million (1.9% beat)
- Adjusted Operating Income: $39.28 million vs analyst estimates of $36.04 million (9% beat)
- EPS (non-GAAP): $0.58 vs analyst estimates of $0.52 (12.4% beat)
- Revenue Guidance for Q3 CY2024 is $210 million at the midpoint, roughly in line with what analysts were expecting
- The company slightly lifted its revenue guidance for the full year from $833 million to $835 million at the midpoint
- Gross Margin (GAAP): 70.7%, up from 69.5% in the same quarter last year
- Free Cash Flow of $29.21 million, similar to the previous quarter
- Annual Recurring Revenue: $815.6 million at quarter end, up 8.6% year on year
- Customers: 11,484, up from 11,462 in the previous quarter
- Market Capitalization: $2.08 billion
Founded in 2000 with the idea that network security comes before endpoint security, Rapid7 (NASDAQ:RPD) provides software as a service that helps companies understand where they are exposed to cyber security risks, quickly detect breaches and respond to them.
Vulnerability ManagementThe demand for cybersecurity is growing as more and more businesses are moving their data and processes into the cloud, which along with a major increase in employees working remotely, has increased their exposure to attacks and malware. Additionally, the growing array of corporate IT systems, applications and internet connected devices has increased the complexity of network security, all of which has substantially increased the demand for software meant to protect data breaches.
Sales GrowthAs you can see below, Rapid7's revenue growth has been decent over the last three years, growing from $126.4 million in Q2 2021 to $208 million this quarter.
Rapid7's quarterly revenue was only up 9.2% year on year, which might disappoint some shareholders. However, its revenue increased $2.89 million quarter on quarter, a strong improvement from the $167,000 decrease in Q1 CY2024. This is a sign of acceleration of growth and very nice to see indeed.
Next quarter's guidance suggests that Rapid7 is expecting revenue to grow 5.6% year on year to $210 million, slowing down from the 13.1% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 6.3% over the next 12 months before the earnings results announcement.
Customer Growth Rapid7 reported 11,484 customers at the end of the quarter, an increase of 22 from the previous quarter. That's a little better customer growth than last quarter but a bit below what we've typically seen over the last year, suggesting that the company may be reinvigorating growth. Rapid7 updated its customer count methodology in Q1 2021, which is the reason for the related drop in the number of customers.
Key Takeaways from Rapid7's Q2 ResultsWe were impressed by Rapid7's strong growth in customers this quarter. We were also happy its revenue narrowly outperformed Wall Street's estimates. Overall, this quarter seemed fairly positive and shareholders should feel optimistic. The stock traded up 2.9% to $34 immediately after reporting.
