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What changed in Rapid7, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Rapid7, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+341 added−321 removedSource: 10-K (2026-02-19) vs 10-K (2025-02-28)

Top changes in Rapid7, Inc.'s 2025 10-K

341 paragraphs added · 321 removed · 264 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

67 edited+30 added−19 removed24 unchanged
Biggest changeThe code-to-cloud protection also includes continuous web-app scanning and expanded risk coverage. 5 Table of Contents • Surface Command is the most accessible Cyber Asset Attack Service Management (“CAASM”) solution in the market providing customers a 360° attack surface view they can trust to detect and prioritize security issues from endpoint to cloud. • Vector Command is a continuous red-teaming service that validates the external attack surface exposures and tests defenses with continuous red team operations to provide trusted insights into the exposures that matter. • InsightCloudSec is a cloud risk and compliance management solution that provides Cloud-Native Application Protection Platform (“CNAPP”) capabilities and enables organizations to securely accelerate cloud adoption with continuous security and compliance throughout the software development lifecycle. • InsightVM is a Vulnerability Management (“VM”) solution that provides visibility across on-premise and remote endpoints, enabling security teams to evaluate the business risk of vulnerabilities and configurations and share with their IT counterparts for remediation. • InsightAppSec is a Dynamic Application Security Testing (“DAST”) tool, delivered via the cloud, that combines powerful application crawling and attack capabilities, flexibility in scan and scheduling, and accuracy in results with a modern user interface, intuitive workflows, and sensible data organization. • Managed VM offloads day-to-day VM operations to experts and extends coverage across the attack surface. • Managed AppSec provides guidance from a dedicated security advisor and AppSec experts to validate application test results, reduce noise for the AppSec team assessing results, and save time for developers remediating issues. • Penetration Testing is professional services that assess the modern attack surface for exposures with offerings covering internal and external networks, web applications, mobile applications, Internet of Things, wireless network testing, social engineering and red team attack simulation.
Biggest changeOther Capabilities and Services • Rapid7 Application Security is a Dynamic Application Security Testing (“DAST”) tool, delivered via the cloud, that combines powerful application crawling and attack capabilities, flexibility in scan and scheduling, and accuracy in results with a modern user interface, intuitive workflows, and sensible data organization. 3 Table of Contents • Managed Vulnerability Management offloads day-to-day VM operations to experts and extends coverage across the attack surface. • Managed Application Security ("MAS") provides guidance from a dedicated security advisor and AppSec experts to validate application test results, reduce noise for the AppSec team assessing results, and save time for developers remediating issues. • Penetration Testing is professional services that assess the modern attack surface for exposures with offerings covering internal and external networks, web applications, mobile applications, Internet of Things, wireless network testing, social engineering and red team attack simulation.
“Never Done” is one of our core values, and our employees take advantage of a myriad of opportunities for continuous learning, both through internal training and development experiences, on-demand learning modules, and access to a content-specific curriculum based on need and interest.
“Never Done” is one of our core values, and our employees take advantage of a myriad of opportunities for continuous learning, both through internal training and development experiences, on-demand learning modules, and access to content-specific curriculum based on need and interest.
This single agent enables a number of impactful use cases across the platform, including next-generation antivirus (“NGAV”), vulnerability scanning, endpoint detections, investigation and forensic search capabilities, and threat containment. • Rapid7 Insight Network Sensor: Our lightweight Insight Network Sensor passively analyzes raw end-to-end network traffic to increase visibility into user activity, pinpoint real threats, and accelerate investigations with granular detail of attacker movement. • Rapid7 Cloud Event Data Harvesting: Given the scale, complexity, and rapid evolution of modern dynamic cloud environments, real-time detection of risks and threats is paramount.
This single agent enables a number of impactful use cases across the platform, including next-generation antivirus (“NGAV”), vulnerability scanning, endpoint detections, investigation and forensic search capabilities, and threat containment. • Rapid7 Network Sensor: Our lightweight Network Sensor passively analyzes raw end-to-end network traffic to increase visibility into user activity, pinpoint real threats, and accelerate investigations with granular detail of attacker movement. • Rapid7 Cloud Event Data Harvesting: Given the scale, complexity, and rapid evolution of modern dynamic cloud environments, real-time detection of risks and threats is paramount.
Our platform products are available globally and reduce the need for customers to manage a large, complex, data infrastructure. Customers can add expertise via our managed services delivered out of our SOCs located in the U.S., Ireland, Australia and the Czech Republic.
Our platform products are available globally and reduce the need for customers to manage a large, complex, data infrastructure. Customers can add expertise via our managed services delivered out of our SOCs located in the U.S., Ireland, India, Australia and the Czech Republic.
These experiences align with our core values and promote the leadership skills and behaviors we believe are critical to the success of our mission, customers, and the development of our people. As a supporter of internal career growth, we actively mentor and invest in the pipeline of our future leaders.
These experiences align to our core values and promote the leadership skills and behaviors we believe are critical to the success of our mission, customers, and development of our people. As a supporter of internal career growth, we actively mentor and invest in the pipeline of our future leaders.
Threat Intelligence and Detections Engineering Rapid7’s threat content library leverages unique raw threat from our open source communities, as well as expertly vetted third- party intelligence, and insights from across our platform, to provide customers with a curated repository of detections and emergent threat coverage.
Threat Intelligence and Detections Engineering Rapid7’s threat content library leverages unique raw threat data from our open source communities, as well as expertly vetted third party intelligence, and insights from across our platform, to provide customers with a curated repository of detections and emergent threat coverage.
Available Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are made available free of charge on or through our website at investors.rapid7.com as soon as reasonably practicable after such reports are filed with, or furnished to, the SEC. 11 Table of Contents
Available Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are made available free of charge on or through our website at investors.rapid7.com as soon as reasonably practicable after such reports are filed with, or furnished to, the SEC. 9 Table of Contents
Our cloud architecture utilizes a combination of native collection technologies and application programming interfaces as well as third-party event sources to scale in alignment with the digital transformation occurring within our customers’ organizations. • Rapid7 Insight Agent: Our universal endpoint agent, the Insight Agent, is a lightweight, software-based agent which can be installed on assets across on-premises and cloud environments to centralize and monitor data on our platform.
Our cloud architecture utilizes a combination of native collection technologies and application programming interfaces as well as third-party event sources, to scale in alignment with the digital transformation occurring within our customers’ organizations. • Rapid7 Agent: Our universal endpoint agent, the R7 Agent, is a lightweight, software-based agent which can be installed on assets across on-premises and cloud environments to centralize and monitor data on our platform.
Additionally, new employees engage in our 90-day onboarding experience which is intended to support the embodiment of our core values, and shorten their time to create impact.
Additionally, new employees engage in our global 90-day onboarding experience, which is intended to support the embodiment of our core values and shorten their time to create impact.
Additionally, we believe gathering in person allows our people to foster stronger relationships and trust, and helps to contribute to our great work culture, evidenced by Rapid7’s thirteen consecutive years of recognition as a Best Place to Work in Boston and achieving similar recognition in other locations where we operate.
Additionally, we believe gathering in person allows our people to foster stronger relationships and trust, and helps to contribute to our great work culture, evidenced by Rapid7’s fourteen consecutive years of recognition as a Best Place to Work in Boston and achieving similar recognition in other locations where we operate.
Our open source projects that serve the community and enrich our offerings include: • Metasploit: Our Metasploit framework has an active community of contributors and users, including security researchers who contribute modules to the Metasploit Framework that serve as a resource about real-world attacker techniques.
Our open source projects that serve the community and enrich our offerings are: • Metasploit: Our Metasploit framework has an active community of contributors and users, including security researchers who contribute modules to the Metasploit Framework that serve as a resource about real-world attacker techniques.
Our revenue is not concentrated with any individual customer, and no customer represented more than 1% of our revenue in 2024, 2023 or 2022. Our Competition The markets we operate in are highly competitive, fragmented, and subject to technology change and innovation.
Our revenue is not concentrated with any individual customer, and no customer represented more than 1% of our revenue in 2025, 2024 or 2023. Our Competition The markets we operate in are highly competitive, fragmented, and subject to technology change and innovation.
For further discussion of the risks related to AI, please see below under “Risks Related to Intellectual Property, Litigation and Government Regulation." Government Regulations We are subject to various federal, state and international laws and regulations that affect our business, including those relating to the privacy and security of customer and employee personal information and export or import of our products to certain countries, governments or entities.
For further discussion of the risks related to AI, please see below under “Risks Related to Intellectual Property, Litigation and Government Regulation." 6 Table of Contents Government Regulations We are subject to various federal, state and international laws and regulations that affect our business, including those relating to the privacy and security of customer and employee personal information and export or import of our products to certain countries, governments or entities.
This library is leveraged by our Rapid7 MDR services as well as within our InsightIDR technology, meaning alerts are vetted in the field by our security experts, offering a feedback loop and ensuring strong signal-to-noise alerting.
This library is leveraged by our Rapid7 MDR services as well as within our SIEM technology, meaning alerts are vetted in the field by our security experts, offering a feedback loop and ensuring strong signal-to-noise alerting.
In addition to their base salary, eligible employees are compensated for their contributions to the Company’s goals with short-term incentives and long-term equity awards tied to the value of our stock price.
In addition to their base salary, eligible employees are compensated for their contributions to Rapid7’s goals with short-term incentives and long-term equity awards tied to the value of our stock price.
Detection and Response • Managed Threat Complete (“MTC”) is our flagship offering that unifies Managed Detection and Response (“MDR”) and the robust exposure management of Managed Vulnerability Management (“MVM”) delivered via a shared agent to prevent attacks across the kill chain, pinpoint advanced threats wherever they are, and respond confidently with unlimited incident response from an always-on MDR.
Detection and Response • Managed Threat Complete (“MTC”) is our flagship offering and unifies our leading detection and response behind MDR and the robust exposure management of Managed Vulnerability Management (“MVM”) delivered via a shared agent to prevent attacks across the kill chain, pinpoint advanced threats wherever they are, and respond confidently with unlimited incident response from an always-on MDR.
In addition, we expect that there is likely to be continued consolidation in our industry that could 8 Table of Contents lead to increased price competition and other forms of competition. With the introduction of new technologies, the evolution of our offerings and new market entrants, we expect competition to intensify in the future.
In addition, we expect that there is likely to be continued consolidation in our industry that could lead to increased price competition and other forms of competition. With the introduction of new technologies, the evolution of our offerings and new market entrants, we expect competition to intensify in the future.
We have over two hundred and fifty issued patents and a numb er of registered and unregistered trademarks. The standard length of our patents is 20 years and while the grant dates of our patents vary, we believe that the duration of our issued patents is sufficient when considering the expected lives of our products.
We have over three hundred issued patents and a numb er of registered and unregistered trademarks. The standard length of our patents is 20 years and while the grant dates of our patents vary, we believe that the duration of our issued patents is sufficient when considering the expected lives of our products.
We intend to continue to increase investments in our sales and marketing efforts and foster the growth of our channel relationships to enable acquisition of these customers. • Upsell and cross-sell to our existing customer base: We see significant opportunities to deepen our relationship with our existing customers.
We intend to continue investing in our sales and marketing efforts and foster the growth of our channel relationships to enable acquisition of these customers. • Upsell and cross-sell to our existing customer base: We see significant opportunities to deepen our relationship with our existing customers.
With a strong focus on customer experience, satisfaction, and the value proposition of our platform, we intend to expand customers' usage of products they own (upsell) and help them adopt additional products 6 Table of Contents (cross-sell).
With a strong focus on customer experience, satisfaction, and the value proposition of our platform, we intend to expand customers' usage of products they own (upsell) and help them adopt additional products (cross-sell).
Item 1. Business Overview Rapid7 is a global cybersecurity software and service provider on a mission to create a safer digital world by making cybersecurity simpler and more accessible. For more than twenty years, Rapid7 has partnered with enterprises across the globe representing a diverse range of industries to improve the efficacy and productivity of their security operations (“SecOps”).
Item 1. Business Overview Rapid7 is a global cybersecurity operations software and service provider on a mission to create a safer digital world by making cybersecurity simpler and more accessible. For twenty-five years, Rapid7 has partnered with customers across the globe representing a diverse range of industries and sizes to improve the efficacy and productivity of their security operations (“SecOps”).
Our customers span a wide variety of industries including technology, energy, financial services, healthcare and life sciences, manufacturing, media and entertainment, retail, education, real estate, transportation, government and professional services, with customers in the manufacturing industry representing our largest industry in 2024 at 15% of our revenue.
Our customers span a wide variety of industries including technology, energy, financial services, healthcare and life sciences, manufacturing, media and entertainment, retail, education, real estate, transportation, government and professional services, with customers in the services industry representing our largest industry in 2025 at 18% of our revenue.
In 2024, 43% of our revenue was generated from enterprises, which we define as organizations that have either annual revenue greater than $1.0 billion or more than 2,500 employees, and the balance was generated from middle-market and small organizations.
In 2025, 39% of our revenue was generated from enterprises, which we define as organizations that have either annual revenue greater than $1.0 billion or more than 2,500 employees, and the balance was generated from middle-market and small organizations.
In addition, we offer deployment and training services related to our platform to further help customers operationalize and customize their platform experience. By accessing our security talent, we help organizations develop an approach and road map to further mature and strengthen their security programs.
In addition, we offer deployment and training services related to our platform, to further help customers operationalize and customize their platform experience. By accessing our 5 Table of Contents security talent, we help organizations develop an approach and road map to further mature and strengthen their security programs.
We define a customer as any entity that has an active Rapid7 recurring revenue contract as of the specified measurement date, excluding customers of only InsightOps or Logentries that have a contract value of less than $2,400 per year.
We define a customer as any entity that has an active Rapid7 recurring revenue contract as of the specified measurement date, excluding InsightOps and Logentries only customers with a contract value of less than $2,400 per year.
As of December 31, 2024, over 90% of our employees were eligible to participate in the ESPP.
As of December 31, 2025, over 90% of our employees were eligible to participate in the ESPP.
We primarily compete with established and emerging security product vendors, including the following: • large companies that incorporate security products into their products; • XDR and SIEM vendors; • cloud security vendors; • vulnerability risk management vendors; • application security vendors; • threat intelligence vendors; and • legacy security, systems management, MSSPs, and other IT vendors.
We primarily compete with established and emerging security product vendors, including the following: • large companies that incorporate security products into their products; • security platform providers; • managed detection and response service providers; • XDR and SIEM vendors; • cloud security vendors; • exposure management vendors; • vulnerability risk management vendors; • application security vendors; • threat intelligence vendors; and • legacy security, systems management, MSSPs, and other IT vendors.
Diversity, Equity and Inclusion Fostering a culture that values the principles of diversity, equity, and inclusion is an essential and fundamental aspect of who we are. We strive to create an environment where every individual, regardless of their background, feels valued and empowered.
Inclusion and Belonging Fostering a culture that values the principles of inclusion and belonging is an essential and fundamental aspect of who we are. We strive to create an environment where every individual, regardless of their background, feels valued and empowered. Inclusion and belonging are key drivers of creativity and innovation.
In today's rapidly evolving IT environment, customers are encountering escalating challenges due to the widening spectrum of attackers and techniques, including the proliferation of cyberattacks leveraging artificial intelligence (“AI”) and targeted automation. We empower security professionals to manage a modern attack surface through our trusted AI infused technology, leading-edge research, and broad, strategic expertise.
In today's rapidly evolving IT environment, customers are encountering escalating challenges due to the widening spectrum of attackers and techniques, including the proliferation of cyberattacks leveraging AI. We empower security professionals to manage a modern attack surface through our best-in-class AI-driven technology, leading-edge research, and broad, strategic expertise.
In addition to cash and equity compensation, we also offer employees a wide array of benefits such as life and health (medical, dental and vision) insurance, travel benefits, paid time off and retirement benefits for all eligible full-time employees.
In addition to cash and equity compensation, we also offer employees a wide array of benefits such as life and health (medical, dental and vision) insurance, travel benefits, paid time off and retirement benefits for all eligible full-time employees. We also provide emotional well-being services through our Employee Assistance Program.
We partner with a variety of STEM and inclusion-focused programs to promote technology education for all. Beyond contributions of cash, we encourage employee volunteerism at all our locations. In 2021, we formed the Rapid7 Cybersecurity Foundation (the “Foundation”).
We partner with a variety of STEM and inclusion-focused programs to promote technology education for all. Beyond contributions of cash, we encourage employee volunteerism at all our locations.
The information contained on our website or information that may be accessed through links on our website is not incorporated by reference into this Annual Report on Form 10-K.
The information contained on our website or information that may be accessed through links on our website is not incorporated by reference into this Annual Report on Form 10-K. Our website address is included in this Annual Report on Form 10-K solely as an inactive textual reference.
We believe our investment in these resources, along with flexible working environments, will support our employees in their pursuit of lifelong learning. We believe we will positively impact the experience of our customers by focusing on the development and engagement of our employees.
Certifications include: Certified Information Systems Security Professional, Global Information Assurance Certification and Certified Professional Hacker. We believe our investment in these resources, along with flexible working environments, will support our employees in their pursuit of lifelong learning. We believe we will positively impact the experience of our customers by focusing on the development and engagement of our employees.
This community-driven platform empowers security professionals to exchange information about vulnerabilities so they can better understand the impact and likelihood of being exploited. • Project Lorelei: Project Lorelei began in 2014 to understand what attackers, researchers, and organizations are doing in, across, and against cloud environments and gain deeper insights into the tactics, techniques, and procedures employed by both bots and human attackers. • Project Sonar: We conduct internet-wide scans across many services and protocols to gain insight into global exposures and vulnerabilities and collect data for platform analytics and preparation of core research reports.
This community-driven platform empowers security professionals to exchange information about vulnerabilities so they can better understand the impact and likelihood of being exploited. • Project Lorelei: Project Lorelei began in 2014 to understand what attackers, researchers, and organizations are doing in, across, and against cloud environments and gain deeper insights into the tactics, techniques, and procedures employed by both bots and human attackers.
We remain committed to investing in partnerships that align with our corporate values and advance our mission of building multidimensional teams reflective of the global population we support. 10 Table of Contents Community Involvement & The Rapid7 Cybersecurity Foundation We give back to the communities where we live and work, and believe that this commitment helps in our efforts to attract and retain employees.
Our commitment remains to invest in partnerships that align with our corporate values and advance our mission of building multidimensional teams reflective of the global population we support. Community Involvement We continue to give back to the communities where we live and work, and believe that this commitment aids our efforts to attract and retain exceptional employees.
Rapid7 enables the Security Operations Center (“SOC”) to understand their fragmented attack surface with attacker perspective, allowing them to proactively secure their attack surface and better detect and respond to threats.
Rapid7 enables the Security Operations Center (“SOC”) to understand their fragmented attack surface through an attacker's perspective, thereby allowing them to proactively reduce exposures and better detect and respond to threats.
Under the ESPP, employees may set aside up to 15% of their gross earnings, on an after-tax basis, to purchase our common shares at a discounted price, which is calculated at 85% of the lesser of: (i) the market value of our common stock at the beginning of each offering period and (ii) the market value of our common stock on the applicable purchase date.
Under the ESPP, employees may set aside up to 15% of their gross earnings, on an after-tax basis, to purchase our common shares at a discounted price, which is calculated at 85% of the lesser of: (i) the market value of our common stock at the beginning of each offering period and (ii) the market value of our common stock on the applicable purchase date. 7 Table of Contents We have evolved to a hybrid-first model, in which our employees who are assigned to an office can divide their time between the office and home.
Our Customers As of December 31, 2024, we had more than 11,700 customers in 147 countries, including 43% of the organizations in the Fortune 100.
Our Customers As of December 31, 2025, we had more than 11,500 customers in 150 countries, including 36% of the organizations in the Fortune 100.
We also provide emotional well-being services through our Employee Assistance Program. 9 Table of Contents All high performing employees globally are eligible to receive equity under our 2015 Equity Incentive Plan (the “2015 Plan”). Additionally, all employees in the United States, United Kingdom, Ireland, Canada, Australia, Germany and Israel may participate in our Employee Stock Purchase Plan (“ESPP”).
All high performing employees globally are eligible to receive equity under our 2015 Equity Incentive Plan (the “2015 Plan”). Additionally, all employees in the United States, United Kingdom, Ireland, Canada, Australia, Germany, the Czech Republic and Israel may participate in our Employee Stock Purchase Plan (“ESPP”).
To supplement our internal learning experiences, as well as provide opportunities for independent study, employees have access to online education tools, including a digital library, to build the necessary skills to pursue additional certifications related to one’s role.
To supplement our internal learning experiences, as well as provide opportunities for independent study, employees have access to online education tools, including an online learning platform to build the necessary skills to grow and develop in one’s role.
As of December 31, 2024, we had 2,413 full-time employees, including 452 in product and service delivery and support, 852 in sales and marketing, 779 in research and development and 330 in general and administrative. As of December 31, 2024, we had 1,241 full-time employees in the U.S. and 1,172 full-time employees internationally.
As of December 31, 2025 , we had 2,613 full-time employees, including 382 in product and service delivery and support, 986 in sales and marketing, 888 in research and development and 357 in general and administrative. As of December 31, 2025 , we had 1,180 full-time employees in the U.S. and 1,433 full-time employees internationally.
These include investments in infrastructure, sales and marketing, and strategic partnerships. • Strategic M&A: We have and may continue to make acquisitions that enhance the value of our Command Platform and bolster our ability to solve emerging customer challenges, allowing us to deliver on the vision of becoming the SecOps leader.
These include investments in infrastructure, sales and marketing, and strategic partnerships. • Strategic M&A: We have and may continue to make acquisitions that enhance the value of our Command Platform and bolster our ability to solve emerging customer challenges, allowing us to deliver on the vision of becoming the SecOps leader. 4 Table of Contents Research & Development We also invest substantial resources in research and development to enhance our core technology platform and products, develop new end market-specific solutions and applications, and conduct product and quality assurance testing.
Exposure Management • Exposure Command is an exposure management offering that provides attack surface visibility with proactive exposure mitigation and remediation prioritization optimized for hybrid environments. Customers with advanced cloud security use cases can purchase Exposure Command Advanced to provide strong security for workloads leveraging real-time visibility, identity analysis, and automated remediation.
Exposure Command Essentials provides complete attack surface management and on-premises vulnerability management. Customers with advanced cloud security use cases can purchase Exposure Command Advanced or Ultimate to provide strong security for workloads leveraging real-time visibility, identity analysis, and automated remediation.
This includes regular threat reports, common vulnerabilities and exposures, and skunkworks research to spotlight specific security concerns. This focus and intentionality around understanding the attacker mindset is a big part of our Rapid7 culture and is infused into our product development and engineering ethos.
This focus and intentionality around understanding the attacker mindset is a big part of our Rapid7 culture and is infused into our product development and engineering ethos.
By utilizing our powerful proprietary analytics to assess and understand the context and relationships related to users, IT assets and cyber threats within a customer’s environment, our solutions make it faster and easier for teams to identify and remediate vulnerabilities, monitor for misconfigurations and malicious behavior, investigate and shutdown attacks, and automate operations. 4 Table of Contents Endpoint to Cloud Data Collection and Sharing In response to our customers’ expanding digital footprints, we have invested in our capacity to gather, standardize, enrich, and correlate diverse telemetry within our platform.
By utilizing our powerful proprietary analytics to assess and understand the context and relationships related to users, IT assets and cyber threats within a customer’s environment, our solutions make it faster and easier for teams to identify and remediate vulnerabilities, monitor for misconfigurations and malicious behavior, investigate and shutdown attacks, and automate operations.
Our research and development teams are located in Boston, Massachusetts; Austin, Texas; Arlington, Virginia; Dublin and Galway, Ireland; Belfast, Northern Ireland; Tel Aviv, Israel; and Prague, Czech Republic, providing us with exposure to worldwide engineering talent. Rapid7 Labs: Open Source Community Our industry-leading attack experts analyze vulnerabilities, misconfigurations, and threat data to offer proactive guidance for organizations’ security programs.
Our research and development teams are located in Boston, Massachusetts; Austin, Texas; Arlington, Virginia; Dublin and Galway, Ireland; Belfast, Northern Ireland; Tel Aviv, Israel; Prague, Czech Republic; and Pune, India providing us with exposure to worldwide engineering talent.
It provides you with the ability to more effectively respond to a wide range of digital forensic and cyber-incident response investigations and data breaches. • AttackerKB: The AttackerKB was created in 2020 as a forum for the security community to discuss, analyze, and prioritize threats.
It provides users with the ability to more effectively respond to a wide range of digital forensic and cyber incident response investigations and data breaches.
Revenue has increased from $411.5 million in 2020 to $844.0 million in 2024, representing a 20% compound annual growth rate. In 2024, 2023 and 2022 recurring revenue, defined as revenue from term software licenses, content subscriptions, managed services, cloud-based subscriptions and maintenance and support, was 96%, 95% and 94%, respectively, of total revenue.
In 2025, 2024 and 2023 recurring revenue, defined as revenue from term software licenses, content subscriptions, managed services, cloud-based subscriptions and maintenance and support, was 96%, 96% and 95%, respectively, of total revenue.
Customers are also able to add NGAV which delivers high-fidelity prevention against both known static threats and suspicious behavior, or Managed Digital Risk Protection (“MDRP”), which searches for potential threats from stolen or leaked data and phishing attempts. • Threat Complete unifies InsightIDR (“InsightIDR”) and InsightVM (“InsightVM”) to provide vulnerability management and threat coverage in a single offering.
Customers are also able to add NGAV which delivers high-fidelity prevention against both known static threats and suspicious behavior before they execute, or Managed Digital Risk Protection (“MDRP”), which searches for potential threats from stolen or leaked data and phishing attempts. MDR delivers end-to-end threat detection and response, encompassing 24x7 monitoring for incident containment and breach response.
The Metasploit community also provides us with visibility into new cyber attacks as they occur and a deeper understanding of attacker behaviors. • Velociraptor: Velociraptor is a unique, advanced open-source endpoint monitoring, digital forensic and cyber response platform.
The Metasploit community also provides us with visibility into the methods deployed by threat actors giving us a unique insight into the threat landscape. • Velociraptor: Velociraptor is a unique, advanced open-source endpoint monitoring, digital forensic and cyber response platform.
Our Platform Rapid7’s Command Platform is a unified threat exposure, detection and response platform that allows SecOps teams to integrate their critical security data by providing a unified view of vulnerabilities, exposures, and threats from endpoint to cloud to close security gaps and prevent attacks.
We achieved net income of $23.4 million and $25.5 million in 2025 and 2024, respectively, and incurred a net loss of $152.8 million in 2023, as we continued to invest for long-term growth. 1 Table of Contents Our Platform Rapid7’s Command Platform is a unified threat exposure, detection and response platform that allows SecOps teams to integrate their critical security data by providing a unified view of vulnerabilities, exposures, and threats from endpoint to cloud to close security gaps and prevent attacks.
Our Command Platform is delivered via integrated technology, managed services, threat intelligence, and threat-aware risk context, enabling us to anticipate, detect, and promptly respond to threats once identified.
By providing the means to confidently discover, identify, prioritize and remediate exposures, detect threats, and respond effectively, the fully-integrated, AI-driven platform gives SecOps teams greater visibility they can trust. Our Command Platform is delivered via integrated technology, managed services, threat intelligence, and threat-aware risk context, enabling us to anticipate, detect, and promptly respond to threats once identified.
We employ product, engineering and research professionals with a diverse skill set that includes data collection and analytics, AI, SaaS delivery, cloud-native development, and deep security expertise, and research capabilities. Our experienced research team regularly reviews trending insights from our Platform and broader open source community to prepare industry reports and resources.
We partner with leading universities near our key centers to propel research and innovation and build a talent pipeline. We employ product, engineering and research professionals with a diverse skill set that includes data collection and analytics, AI, SaaS delivery, cloud-native development, and deep security expertise, and research capabilities.
As the threat landscape continues to grow in complexity, customers are demonstrating demand for integrated expertise to support them in effectively managing their security technologies. The convergence of these key trends – security consolidation, integrated cloud security, and expertise driven outcomes – are the foundation of what our customers require for the modern SOC.
The convergence of these key trends – security consolidation, AI-enabled SOC capabilities, integrated cloud security, and expertise driven outcomes – forms the foundation of what our customers require for the modern SOC.
When analyzed against the diverse telemetry data, this content 7 Table of Contents enables us to pinpoint threats across endpoints, network, users, cloud, and customers’ wider ecosystem.
With a combination of proprietary AI-driven detections and indicators of compromise mapped to the MITRE framework, our detection content spans both known and unknown threats across the threat life cycle. When analyzed against the diverse telemetry data, this content enables us to pinpoint threats across endpoints, network, users, cloud, and customers’ wider ecosystem.
Electronic certificates can be published to an employee’s LinkedIn professional profile, and the Continuing Professional Education (“CPEs”) associated with the exam and learning materials help cybersecurity professionals maintain their minimum “continuing development” points for their professional certifications such as Certified Information Systems Security Professional, Global Information Assurance Certification and Certified Professional Hacker.
Additionally, employees have access to a platform that includes the most recent product training materials, as well as makes certification exams available at zero cost. Electronic certificates can be published to an employee’s LinkedIn professional profile, and the CPEs associated with the exam and learning materials help cybersecurity professionals maintain their minimum “continuing development” points for their professional certifications.
Recent technology alliances that drive this experience include ServiceNow, Microsoft, AWS, GCP and Palo Alto Networks. • Channel Partners: We maintain a global channel partner network that complements our sales organization, particularly in Europe, the Middle East and Africa (“EMEA”), and Asia Pacific (“APAC”).
Recent technology alliances that drive this experience include ServiceNow, Microsoft, AWS, GCP and Palo Alto Networks. • Channel Partners: We maintain a global channel partner network that complements our sales organization. We have established strong co-sell relationships with strategic channel partners, who provide additional leverage through customer acquisition, deal execution and providing value in securing renewals.
The main drivers of our growth strategy are: • Continued investments in product innovation: We intend to continue to invest in our product development to enhance our platform and deliver additional features to meet customer demand and grow our addressable markets. • Expand our partner ecosystem • Strategic Partnerships: By expanding our strategic partnerships with system integrators we enable our customers to succeed with our technology and platform in their ecosystem and deliver more value from their security operations program.
The main drivers of our growth strategy are: • Continued investments in product development: We intend to continue to invest in our product development to enhance our platform and deliver additional features to meet customer demand and grow our addressable markets. • Grow our customer base: We believe we have a strong opportunity to address the security needs of resource constrained organizations of any size.
Our platform consolidation offerings are helping our customers maximize their budgets and giving them command of their attack surface, becoming our most dominant customer acquisition and expansion motions. • Strengthen our customer renewal rate: We intend to continue to drive customer satisfaction and renewals by offering professional services, support, and strong investments in customer success functions.
Our platform consolidation offerings are helping our customers maximize their budgets and giving them command of their attack surface, becoming our most dominant customer acquisition and expansion motions. • Expand our partner ecosystem • Strategic Partnerships: By expanding our strategic technology partnerships, we enable our customers to succeed with our technology and platform in their ecosystem and deliver more value from their security operations program.
By integrating native cloud, on premises and security monitoring data and correlating it with an organization’s ecosystem of IT and business data, the Command Platform provides visibility of a customer’s attack surface. By providing the means to confidently discover, identify, prioritize and remediate risk, detect threats, and respond, the fully-integrated, AI-enabled platform gives SecOps teams greater visibility they can trust.
By integrating native cloud, on premises and security monitoring data and correlating it with an organization’s ecosystem of third-party security, cloud, IT and business data, the Command Platform provides actionable visibility into a customer’s attack surface that has long been elusive.
Rapid7’s comprehensive security solutions help our global customers unite exposure management with threat detection and response to reduce attack surfaces and eliminate threats with speed and precision. Our Command Platform is anchored on our cloud security, security information and event management (“SIEM”), advanced detection and response, and vulnerability management offerings.
Rapid7’s comprehensive security solutions, including our market-leading managed detection and response ("MDR") services, next-gen security information and event management ("SIEM"), and exposure management help our global customers unify exposure management with threat detection and response to prioritize and reduce material risk, and eliminate threats with greater speed, precision, and consistency.
Leveraging threat intelligence from our free and open-source projects, we continuously enhance our products and services to improve the customer experience.
Rapid7 Labs: Open Source Community Our industry-leading attack experts analyze vulnerabilities, misconfigurations, and threat data that includes tracking threat groups, to offer proactive guidance for organizations’ security programs. Leveraging threat intelligence from multiple sources including our free and open-source projects, we continuously enhance the detection stack for our products and services to improve the customer experience.
We have established strong co-sell relationships with strategic channel partners, who provide additional leverage through customer acquisition, deal execution and providing value in securing renewals. We are focused on expanding our public cloud marketplace motion to support our customers’ move to those models.
We are focused on expanding our public cloud marketplace motion to support our customers’ move to those models.
Using a shared agent, customers receive clarity and higher-efficacy detection coverage around priority vulnerabilities, enabling them to eliminate risks and threats faster across their environments. • InsightIDR is a next-generation Security Information and Event Management (“ SIEM”) and Extended Detection and Response (“XDR”) solution with high-fidelity detections that eliminate alert noise to pinpoint incidents and accelerate response with expert recommendations and automation. • Incident Response Services are proactive and responsive professional services to help customers prepare and respond to potential breaches.
Incident Command provides high fidelity detections that eliminate alert noise to pinpoint incidents and accelerate response with expert recommendations and automation. • Incident Response Services are proactive and responsive professional services to help customers prepare and respond to potential breaches. • Threat Intelligence on the Rapid7 Command Platform is provided by Intelligence Hub, which delivers curated, high-confidence threat intelligence directly within the Rapid7 platform.
Our focus is to be the leading provider of integrated security operations solutions by providing exposure and threat management that leverages our ability to give customers command of their attack surface. As of December 31, 2024, we had more than 11,700 customers that rely on Rapid7 technology, services, and research to improve security outcomes and securely advance their organizations.
As of December 31, 2025, we had more than 11,500 global customers that rely on Rapid7 technology, services, and research to improve security outcomes and securely advance their organizations. Revenue has increased from $535.4 million in 2021 to $859.8 million in 2025, representing a 13% compound annual growth rate.
To further invest in the future of cybersecurity and to deliver on our company mission, we created a platform that includes the most recent product training materials and makes certification exams available at zero cost.
To further invest in the future of cybersecurity and to deliver on our company mission, we made available an online learning platform that accelerates learning across key roles in information technology, engineering, and data and analytics. These licenses prepare employees for certification exams and provide access to development environments.
As we have shifted our strategic focus to SecOps consolidation, we are focused on continuing to drive innovation across our core products and capabilities to accelerate customer value and provide a frictionless and integrated cloud security experience.
As we continue to execute on our SecOps consolidation strategy, we are advancing innovation across our core platform capabilities and managed services to accelerate customer value and deliver a frictionless, integrated security operations experience. As the threat landscape continues to grow in complexity, customers are demonstrating demand for integrated expertise to support them in effectively managing their security technologies.
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Enriched by years of managed services expertise, our integrated security operations platform enables SecOps teams to move away from a reactive approach, reduce their attack surface, and enhance response efficiency with a deep contextual understanding of their environment. In the past few years, we have observed the industry undergoing a customer-driven shift to consolidated security platforms.
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We believe that Rapid7 is poised to expand the capabilities of today's SecOps teams through our integrated, open data security operations platform which is powered by our AI enabled detection and response, automation, and exposure management capabilities.
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As part of this transition, customers are moving away from cloud security as a specialized function towards cloud security as an integrated capability for SecOps teams.
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Enriched by years of industry-leading risk research and managed services expertise, our integrated AI-driven platform replaces reactive security with a preemptive, risk-aware approach that reduces attack surfaces and enables faster, more confident response through contextually rich insights and deep operational visibility.
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We view this as a demand driver for integrated SecOps, and believe that we have an opportunity to be a leader in delivering integrated risk and threat management across on-premise, cloud, and external attack surfaces.
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In recent years, security leaders have increasingly prioritized consolidating fragmented point products into unified security operations platforms to improve visibility, operational efficiency, and risk outcomes. In 2022, Gartner reported that approximately 75% of organizations were pursuing security vendor consolidation as part of their SecOps strategies.
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We achieved net income of $25.5 million in 2024 and incurred net losses of $152.8 million and $124.7 million in 2023 and 2022, respectively, as we continued to invest for long-term growth.
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This shift reflects mounting challenges associated with managing expanding attack surfaces, disconnected exposure data, escalating alert volume, and the need to continuously prioritize and respond to risk across complex environments.
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MDR delivers end-to-end threat detection and response, encompassing 24x7 monitoring to incident containment to breach response.
Added
As a result, customers are seeking platforms that unify exposure management with threat detection and response, enabling them to identify where they are most vulnerable, anticipate how attackers may exploit those exposures, and respond with speed and precision.
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These relationships also allow us to leverage MSSP expertise to further expand our customer outreach. • Grow our customer base: We believe we have a strong opportunity to address the security needs of resource constrained organizations of any size.
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At the same time, customers are increasingly relying on MDR and adjacent managed services to deliver continuous expertise, higher-fidelity detection, and faster response outcomes that extend and augment internal SOC teams.
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Research & Development We also invest substantial resources in research and development to enhance our core technology platform and products, develop new end market-specific solutions and applications, and conduct product and quality assurance testing. We partner with leading universities near our key centers to propel research and innovation and build a talent pipeline.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAlthough we expect that our current cash and cash equivalent balances, including the proceeds of our offering of convertible senior notes in September 2023, together with cash flows that are generated from operations, will be sufficient to meet our domestic and international working capital needs and other capital and liquidity requirements for at least the next 12 months, if the economic conditions of the general economy or industries in which we operate worsen from present levels, our business operations and financial results could be adversely affected. 14 Table of Contents Macroeconomic events and conditions, such as those discussed above, may also have the effect of heightening many of the other risks described in this “Risk Factors” section, including risks associated with our guidance, our customers, our potential customers, our market opportunity, renewals and sales cycle, among others.
Biggest changeAlthough we expect that our current cash and cash equivalent and investments balances, together with cash flows that are generated from operations and availability under our revolving credit facility, will be sufficient to meet our domestic and international working capital needs and other capital and liquidity requirements for at least the next 12 months, if the economic conditions of the general economy or industries in which we operate worsen from present levels, our business operations and financial results could be adversely affected.
For example, due to economic volatility as a result of inflationary pressures and other global events, we have and may continue to see delays in our sales cycle, failures of customers to renew at all or to renew the anticipated scope their subscriptions with us, requests from customers for payment term deferrals as well as pricing or bundling concessions, which, if significant, could materially and adversely affect our business, results of operations and financial condition.
For example, due to economic volatility as a result of inflationary pressures and other global events, we have and may continue to see delays in our sales cycle, failures of customers to renew at all or to renew the anticipated scope of their subscriptions with us, requests from customers for payment term deferrals as well as pricing or bundling concessions, which, if significant, could materially and adversely affect our business, results of operations and financial condition.
Our brand, reputation and ability to attract, retain and serve our customers are dependent in part upon the reliable performance of our products and network infrastructure, including our Command Platform. Our brand, reputation and ability to attract, retain and serve our customers are dependent in part upon the reliable performance of our products and network infrastructure, including our Command Platform.
Our brand, reputation and ability to attract, retain and serve our customers are dependent in part upon the reliable performance of our products and network infrastructure, including our Command Platform.
In addition, if a “make-whole fundamental change” (as defined in the indentures) occurs prior the maturity date, we will in some cases be required to increase the conversion rate of the Notes for a holder that elects to convert its Notes in connection with such make-whole fundamental change.
In addition, if a “make-whole fundamental change” (as defined in the indentures) occurs prior to the maturity date, we will in some cases be required to increase the conversion rate of the Notes for a holder that elects to convert its Notes in connection with such make-whole fundamental change.
Factors that may affect the market price of our common stock include: • actual or anticipated fluctuations in our financial condition and operating results; • variance in our financial performance from expectations of securities analysts; • changes in our projected operating and financial results; • changes in the prices of our products and service offerings; • changes in laws or regulations applicable to our products or service offerings; • announcements by us or our competitors of significant business developments, acquisitions or new offerings; • our involvement in any litigation or investigations by regulators; • our sale of our common stock or other securities in the future; 31 Table of Contents • changes in our board of directors, senior management or key personnel; • trading volume of our common stock; • price and volume fluctuations in the overall stock market; • effects of inflation and increased interest rates; • changes in the anticipated future size and growth rate of our market; • sales of shares of our common stock by us or our stockholders, including sales and purchases of any common stock issued upon conversion of our convertible senior notes; and • general economic, regulatory and market conditions and/or market speculation or rumors.
Factors that may affect the market price of our common stock include: • actual or anticipated fluctuations in our financial condition and operating results; • variance in our financial performance from expectations of securities analysts; • changes in our projected operating and financial results; • changes in the prices of our products and service offerings; • changes in laws or regulations applicable to our products or service offerings; • announcements by us or our competitors of significant business developments, acquisitions or new offerings; • our involvement in any litigation or investigations by regulators; • our sale of our common stock or other securities in the future; • changes in our board of directors, senior management or key personnel; • trading volume of our common stock; • price and volume fluctuations in the overall stock market; • effects of inflation and increased interest rates; 29 Table of Contents • changes in the anticipated future size and growth rate of our market; • sales of shares of our common stock by us or our stockholders, including sales and purchases of any common stock issued upon conversion of our convertible senior notes; and • general economic, regulatory and market conditions and/or market speculation or rumors.
Each factor above or discussed elsewhere herein or the cumulative effect of some of these factors may result in fluctuations in our operating results. This variability and unpredictability could result in our failure to meet expectations with respect to operating results, or those of securities analysts or investors, for a particular period.
Each factor above or discussed elsewhere herein or the cumulative effect of some of these factors may result in fluctuations in our operating results. This variability and unpredictability could result in our failure to meet expectations with respect to operating results, including those of securities analysts or investors, for a particular period.
Defects may cause our products to be vulnerable to attacks, fail to detect vulnerabilities or threats, or temporarily interrupt customers’ networking traffic. Any errors, defects, disruptions in service or other performance problems with our products may damage our customers’ businesses and could hurt our reputation.
Defects may cause our products to be vulnerable to attacks, cause them to fail to detect vulnerabilities or threats, or temporarily interrupt customers’ networking traffic. Any errors, defects, disruptions in service or other performance problems with our products may damage our customers’ businesses and could hurt our reputation.
Our indebtedness may: • limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general business purposes; 32 Table of Contents • limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general business purposes; • require us to use a substantial portion of our cash flow from operations to make debt service payments; • limit our flexibility to plan for, or react to, changes in our business and industry; • place us at a competitive disadvantage compared to our less leveraged competitors; and • increase our vulnerability to the impact of adverse economic and industry conditions.
Our indebtedness may: • limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general business purposes; • limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general business purposes; • require us to use a substantial portion of our cash flow from operations to make debt service payments; • limit our flexibility to plan for, or react to, changes in our business and industry; 30 Table of Contents • place us at a competitive disadvantage compared to our less leveraged competitors; and • increase our vulnerability to the impact of adverse economic and industry conditions.
An adverse outcome of a dispute may require us to: • pay substantial damages, including treble damages, if we are found to have willfully infringed a third party’s patents or copyrights; • cease making, licensing or using solutions that are alleged to infringe or misappropriate the intellectual property of others; 24 Table of Contents • expend additional development resources to attempt to redesign our solutions or otherwise develop non-infringing technology, which may not be successful; • enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies or intellectual property rights; and • indemnify our partners and other third parties.
An adverse outcome of a dispute may require us to: • pay substantial damages, including treble damages, if we are found to have willfully infringed a third party’s patents or copyrights; • cease making, licensing or using solutions that are alleged to infringe or misappropriate the intellectual property of others; • expend additional development resources to attempt to redesign our solutions or otherwise develop non-infringing technology, which may not be successful; • enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies or intellectual property rights; and • indemnify our partners and other third parties.
These laws and regulations may also impact our innovation and business drivers in developing new and emerging technologies, including those related to AI and machine learning. Noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties, injunctions or other collateral consequences.
These laws and regulations may also impact our innovation and business drivers in developing new and emerging technologies, including those related to AI. Noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties, injunctions or other collateral consequences.
Among other things, our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • authorize our board of directors to issue preferred stock without further stockholder action and with voting liquidation, dividend and other rights superior to our common stock; • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent, and limit the ability of our stockholders to call special meetings; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for director nominees; • establish that subsequent to the 2023 annual meeting, each director will hold office for a term of one year; • require the approval of the holders of a majority of the voting power of all of the then-outstanding shares of capital stock of the Company entitled to vote generally at an election of directors, voting together as a single class, to adopt, amend or repeal our amended and restated bylaws or amend or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors and the ability of stockholders to take action by written consent or call a special meeting; • prohibit cumulative voting in the election of directors; and • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum.
Among other things, our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • authorize our board of directors to issue preferred stock without further stockholder action and with voting liquidation, dividend and other rights superior to our common stock; • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent, and limit the ability of our stockholders to call special meetings; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for director nominees; • establish that subsequent to the 2023 annual meeting, each director will hold office for a term of one year; • require the approval of the holders of a majority of the voting power of all of the then-outstanding shares of capital stock of Rapid7 entitled to vote generally at an election of directors, voting together as a single class, to adopt, amend or repeal our amended and restated bylaws or amend or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors and the ability of stockholders to take action by written consent or call a special meeting; • prohibit cumulative voting in the election of directors; and 34 Table of Contents • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum.
If we are unsuccessful in sustaining our tax position in this matter, our financial condition and results of operations will be adversely affected. See Note 16, Commitments and Contingencies, in the notes to the consolidated financial statements included in Part II, Item 8, of this Annual Report on Form 10-K for further information.
If we are unsuccessful in sustaining our tax position in this matter, our financial condition and results of operations will be adversely affected. See Note 15, Commitments and Contingencies , in the notes to the consolidated financial statements included in Part II, Item 8, of this Annual Report on Form 10-K for further information.
Our new and existing offerings or product enhancements and changes to our existing offerings could fail to attain sufficient market acceptance for many reasons, including: • our failure to predict market demand accurately in terms of product functionality and to supply offerings that meet this demand in a timely fashion, including declines in demand as a result of the broader macroeconomic environment; • the failure of our consolidated platform sales approach in execution or timing or both; • real or perceived defect, errors or failures; • negative publicity about their performance or effectiveness; • delays in releasing to the market our new offerings or enhancements to our existing offerings; • introduction or anticipated introduction of competing products by our competitors; • inability to scale and perform to meet customer demands; • poor business conditions for our customers, causing them to delay IT purchases, including as a result of the COVID-19 pandemic; and • reluctance of customers to purchase cloud-based offerings.
Our new and existing offerings or product enhancements and changes to our existing offerings could fail to attain sufficient market acceptance for many reasons, including: • our failure to predict market demand accurately in terms of product functionality and to supply offerings that meet this demand in a timely fashion, including declines in demand as a result of the broader macroeconomic environment; • the failure of our consolidated platform sales approach in execution or timing or both; • real or perceived defects, errors or failures; • negative publicity about their performance or effectiveness; • delays in releasing to the market our new offerings or enhancements to our existing offerings; • introduction or anticipated introduction of competing products by our competitors; • inability to scale and perform to meet customer demands; • poor business conditions for our customers, causing them to delay IT purchases; and • reluctance of customers to purchase cloud-based offerings.
For example, in response to the Russia-Ukraine war, countries such as Canada, the United Kingdom, the European Union, the United States and other countries and organizations have implemented new and stricter sanctions and export controls against officials, individuals, regions, and industries in Russia, Ukraine and Belarus.
For example, in response to the conflict in Ukraine, countries and organizations such as Canada, the United Kingdom, the European Union, and the United States and other countries and organizations have implemented new and stricter sanctions and export controls against officials, individuals, regions, and industries in Russia, Ukraine and Belarus.
If we cannot implement and maintain a valid mechanism for cross-border personal data transfers, we may face increased exposure to regulatory actions, substantial fines and injunctions against processing (including prohibitions on transferring personal data out of the EU and UK). This may also reduce demand for our services from companies subject to European Data Protection Laws.
If we cannot implement and maintain a valid mechanism for cross-border personal data transfers, we may face increased exposure to regulatory actions, substantial fines and injunctions against processing (including prohibitions on transferring personal data out of the EU and UK). This may also reduce demand for our services from companies subject to 28 Table of Contents European Data Protection Laws.
Although we expect that current cash and cash equivalent balances and cash flows that are generated from operations will be sufficient to meet our domestic and international working capital needs and other capital and liquidity requirements for at least the next 12 months, if we are unable to obtain adequate financing or financing on terms satisfactory to us if and when we 35 Table of Contents require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business may be adversely affected.
Although we expect that current cash and cash equivalent balances and cash flows that are generated from operations will be sufficient to meet our domestic and international working capital needs and other capital and liquidity requirements for at least the next 12 months, if we are unable to obtain adequate financing or financing on terms satisfactory to us if and when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business may be adversely affected.
The adverse effect on our financial results may be particularly acute because of the significant research, development, marketing, sales and other expenses we will have incurred in connection with the new offerings or enhancements. 16 Table of Contents We face intense competition in our market, which could adversely affect our business, financial condition, and results of operations.
The adverse effect on our financial results may be particularly acute because of the significant research, development, marketing, sales and other expenses we will have incurred in connection with the new offerings or enhancements. We face intense competition in our market, which could adversely affect our business, financial condition, and results of operations.
We may be unable to rapidly and efficiently adjust our cost structure in response to significant revenue declines, which could adversely affect our operating results. 19 Table of Contents If our customers are unable to implement our products successfully or we fail to maintain high quality customer support, customer perceptions of our offerings may be impaired or our reputation and brand may suffer.
We may be unable to rapidly and efficiently adjust our cost structure in response to significant revenue declines, which could adversely affect our operating results. If our customers are unable to implement our products successfully or we fail to maintain high quality customer support, customer perceptions of our offerings may be impaired or our reputation and brand may suffer.
Significant judgment is required in evaluating our tax positions and our worldwide provision for taxes. During the ordinary course of business, there are many activities and transactions for which the ultimate tax determination is uncertain and the relevant taxing authorities may disagree with our determinations as to the income and expenses attributable to specific jurisdictions.
Significant judgment is required in evaluating our tax positions and our worldwide provision for taxes. During the ordinary course of business, there are many activities and transactions for which 24 Table of Contents the ultimate tax determination is uncertain and the relevant taxing authorities may disagree with our determinations as to the income and expenses attributable to specific jurisdictions.
If an 33 Table of Contents option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at the time under such transaction. Our exposure will depend on many factors but, generally, our exposure will increase if the market price or the volatility of our common stock increases.
If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at the time under such transaction. Our exposure will depend on many factors but, generally, our exposure will increase if the market price or the volatility of our common stock increases.
These consequences may include but are not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections and similar consequences); litigation (including class-related claims); additional reporting requirements and oversight; bans on processing personal data; orders to destroy and not to use personal data; and imprisonment of company officials.
These consequences may include but are not limited to: government 27 Table of Contents enforcement actions (e.g., investigations, fines, penalties, audits, inspections and similar consequences); litigation (including class-related claims); additional reporting requirements and oversight; bans on processing personal data; orders to destroy and not to use personal data; and imprisonment of company officials.
While presented with numerical specificity, this guidance is necessarily speculative in nature, and is inherently subject to significant business, economic and competitive 20 Table of Contents uncertainties and contingencies, many of which are beyond our control and are based upon specific assumptions with respect to future business decisions or economic conditions, some of which may change.
While presented with numerical specificity, this guidance is necessarily speculative in nature, and is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and are based upon specific assumptions with respect to future business decisions or economic conditions, some of which may change.
From time to time, there may be changes in our senior management team resulting from the termination or departure of our executive officers and key employees. Our senior management and key employees are 21 Table of Contents employed on an at-will basis, which means that they could terminate their employment with us at any time.
From time to time, there may be changes in our senior management team resulting from the termination or departure of our executive officers and key employees. Our senior management and key employees are employed on an at-will basis, which means that they could terminate their employment with us at any time.
Our current international operations and future initiatives will involve a variety of risks, including: • increased management, infrastructure and legal costs associated with having international operations; • reliance on channel partners; • trade and foreign exchange restrictions; • economic or political instability or uncertainty in foreign markets and around the world; • foreign currency exchange rate fluctuations; • greater difficulty in enforcing contracts, accounts receivable collection and longer collection periods; • changes in regulatory requirements, including, but not limited to data privacy, data protection and data security regulations; 18 Table of Contents • difficulties and costs of staffing and managing foreign operations; • the uncertainty and limitation of protection for intellectual property rights in some countries; • costs of compliance with foreign laws and regulations and the risks and costs of non-compliance with such laws and regulations; • costs of compliance with U.S. laws and regulations for foreign operations, including the U.S.
Our current international operations and future initiatives will involve a variety of risks, including: • increased management, infrastructure and legal costs associated with having international operations; • reliance on channel partners; • trade and foreign exchange restrictions; • economic or political instability or uncertainty in foreign markets and around the world, including in response to tariffs and retaliatory tariffs; • foreign currency exchange rate fluctuations; • greater difficulty in enforcing contracts, accounts receivable collection and longer collection periods; • changes in regulatory requirements, including, but not limited to data privacy, data protection and data security regulations; • difficulties and costs of staffing and managing foreign operations; • the uncertainty and limitation of protection for intellectual property rights in some countries; • costs of compliance with foreign laws and regulations and the risks and costs of non-compliance with such laws and regulations; • costs of compliance with U.S. laws and regulations for foreign operations, including the U.S.
If our products or service offerings fail to detect vulnerabilities or threats for any reason, we may incur significant costs, the attention of our key personnel could be diverted, our customers may delay or withhold payment to us or elect not to renew or other significant customer relations problems may 27 Table of Contents arise.
If our products or service offerings fail to detect vulnerabilities or threats for any reason, we may incur significant costs, the attention of our key personnel could be diverted, our customers may delay or withhold payment to us or elect not to renew or other significant customer relations problems may arise.
Our operating results, including the levels of our revenue, annualized recurring revenue (“ARR”), cash flow, deferred revenue and gross margins, have historically varied from period to period, and we expect that they will continue to do so as a result of a number of factors, many of which are outside of our control, including: • the level of demand for our products and service offerings; • customer renewal rates and ability to attract new customers; • the extent to which customers purchase additional products or service offerings; • the mix of our products, as well as service offerings, sold during a period; • the ability to successfully grow our sales of our cloud-based solutions, including through the shift to a consolidated platform sales approach; • the level of perceived threats to organizations’ cybersecurity; • network outages, security breaches, technical difficulties or interruptions with our products; • changes in the growth rate of the markets in which we compete; • sales of our products and service offerings due to seasonality and customer demand; • the timing and success of new product or service introductions by us or our competitors or any other changes in the competitive landscape of our industry, including consolidation among our competit ors and initiatives that use artificial intelligence (“AI”); • the introduction or adoption of new technologies that compete with our offerings; • decisions by potential customers to purchase cybersecurity products or service offerings from other vendors; • the amount and timing of operating costs and capital expenditures related to the operations and expansion of our business; • price competition; • our ability to successfully manage and integrate any acquired businesses, including without limitation, the amount and timing of expenses and potential future charges for impairment of goodwill from acquired companies; • business disruptions in regions affecting our operations, stemming from actual, imminent or perceived outbreak or reemergence of contagious disease; • our ability to increase, retain and incentivize the channel partners that market and sell our products and service offerings; • our continued international expansion and associated exposure to changes in foreign currency exchange rates; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure; • the announcement or adoption of new regulations and policy mandates or changes to existing regulations and policy mandates that impact our business or industry; • the cost or results of existing or unforeseen litigation and intellectual property infringement; • the strength of regional, national and global economies; 12 Table of Contents • the impact of climate change, natural disasters or manmade problems, including terrorism or war (such as the Russia- Ukraine war and the ongoing conflicts in the Middle East); and • future accounting pronouncements or changes in our accounting policies or practices.
Our operating results, including the levels of our revenue, annualized recurring revenue (“ARR”), cash flow, deferred revenue and gross margins, have historically varied from period to period, and we expect that they will continue to do so as a result of a number of factors, many of which are outside of our control, including: • the level of demand for our products and service offerings; • customer renewal rates and ability to attract new customers; • the extent to which customers purchase additional products or service offerings; • the mix of our products, as well as service offerings, sold during a period; • the ability to successfully grow our sales of our cloud-based solutions, including through the shift to a consolidated platform sales approach; • the level of perceived threats to organizations’ cybersecurity; • network outages, security breaches, technical difficulties or interruptions with our products; • changes in the growth rate of the markets in which we compete; • sales of our products and service offerings due to seasonality and customer demand; • the timing and success of new product or service introductions by us or our competitors or any other changes in the competitive landscape of our industry, including consolidation among our competit ors and initiatives that use AI; • the introduction or adoption of new technologies that compete with our offerings; • decisions by potential customers to purchase cybersecurity products or service offerings from other vendors; • the amount and timing of operating costs and capital expenditures related to the operations and expansion of our business; • price competition; • our ability to successfully manage and integrate any acquired businesses, including without limitation, the amount and timing of expenses and potential future charges for impairment of goodwill from acquired companies; • business disruptions in regions affecting our operations, stemming from actual, imminent or perceived outbreak or reemergence of contagious diseases; • our ability to increase, retain and incentivize the channel partners that market and sell our products and service offerings; • our continued international expansion and associated exposure to changes in foreign currency exchange rates; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure; • the announcement or adoption of new regulations and policy mandates or changes to existing regulations and policy mandates that impact our business or industry; • the cost or results of existing or unforeseen litigation and intellectual property infringement; • the strength of regional, national and global economies; • the impact of climate change, natural disasters or manmade problems, including terrorism or war; and 10 Table of Contents • future accounting pronouncements or changes in our accounting policies or practices.
The exchange rate between the U.S. dollar and foreign currencies has fluctuated substantially in recent years and may fluctuate in the future, including as a result of geopolitical factors such as the ongoing conflicts in the Middle East including Israel and the surrounding region, which has impacted the exchange rate between the U.S. dollar and the Israeli New Shekel.
The exchange rate between the U.S. dollar and foreign currencies has fluctuated substantially in recent years and may fluctuate 20 Table of Contents in the future, including as a result of geopolitical factors such as the ongoing conflicts in the Middle East including Israel and the surrounding region, which has impacted the exchange rate between the U.S. dollar and the Israeli New Shekel.
Foreign Corrupt Practices Act, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on our ability to sell or provide our solutions in certain foreign markets, and the risks and costs of non-compliance; • heightened risks of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, and irregularities in, financial statements; • the potential for political unrest, acts of terrorism, hostilities or war; • management communication and integration problems resulting from cultural differences and geographic dispersion; • costs associated with language localization of our products; • increased exposure to climate change, natural disasters, acts of war (including the Russia-Ukraine war and the ongoing conflicts in the Middle East), terrorism, epidemics, or pandemics and other health crises; and • costs of compliance with multiple and possibly overlapping tax structures.
Foreign Corrupt Practices Act, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on our ability to sell or provide our solutions in certain foreign markets, and the risks and costs of non-compliance; • heightened risks of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, and irregularities in, financial statements; • the potential for political unrest, acts of terrorism, hostilities or war; • management communication and integration problems resulting from cultural differences and geographic dispersion; • costs associated with language localization of our products; • increased exposure to climate change, natural disasters, acts of war, terrorism, epidemics, or pandemics and other health crises; and • costs of compliance with multiple and possibly overlapping tax structures.
We may encounter challenges as a result of these restructuring efforts and our reduction in force that could prevent us from recognizing the intended benefits of the Restructuring Plan or otherwise adversely affect our business, results of operations and financial condition. As of March 31, 2024, the execution of the Restructuring Plan was completed.
We may encounter challenges as a result of these restructuring efforts that could prevent us from recognizing the intended benefits of the Restructuring Plan or otherwise adversely affect our business, results of operations and financial condition. As of March 31, 2024, the execution of the Restructuring Plan was completed.
For example, many of our customers subscribe to our vulnerability management offerings to help them comply with the security standards developed and maintained by the Payment Card Industry Security Standards Council (the “PCI Council”), which apply to companies that process, transmit or store cardholder data.
For example, many of our customers subscribe to our vulnerability management offerings to help them comply with the security standards developed and maintained by the Payment Card Industry Security Standards Council (the “PCI Council”), which apply to companies that 19 Table of Contents process, transmit or store cardholder data.
Disclosing the source code of our proprietary 25 Table of Contents software could also make it easier for cyber attackers and other third parties to discover vulnerabilities in or to defeat the protections of our products, which could result in our products failing to provide our customers with the security they expect.
Disclosing the source code of our proprietary software could also make it easier for cyber attackers and other third parties to discover vulnerabilities in or to defeat the protections of our products, which could result in our products failing to provide our customers with the security they expect.
While we intend to continue iterating our approach to 17 Table of Contents ensure we are balancing the needs of the business with the desires of our people, we may face difficulty in hiring and retaining our workforce as a result of this shift to have greater in-office attendance.
While we intend to continue iterating our approach to ensure we are balancing the needs of the business with the desires of our people, we may face difficulty in hiring and retaining our workforce as a result of this shift to have greater in-office attendance.
If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.
If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and 33 Table of Contents privileges superior to those of holders of our common stock.
We may not have sufficient cash flow from our business to pay our substantial debt when due. In May 2020, we issued $230.0 million aggregate principal amount of 2025 Notes, in March 2021, we issued $600.0 million aggregate principal amount of 2027 Notes and in September 2023, we issued $300.0 million aggregate principal amount of 2029 Notes.
We may not have sufficient cash flow from our business to pay our substantial debt when due. In March 2021, we issued $600.0 million aggregate principal amount of 2027 Notes and in September 2023, we issued $300.0 million aggregate principal amount of 2029 Notes.
If we are unable to adapt our products to changing legal and regulatory standards or other requirements in a timely manner, or if our products fail to assist with, or expedite, our customers’ cybersecurity defense and compliance efforts, our customers may lose confidence in our products and could switch 22 Table of Contents to products offered by our competitors or threaten or bring legal actions against us.
If we are unable to adapt our products to changing legal and regulatory standards or other requirements in a timely manner, or if our products fail to assist with, or expedite, our customers’ cybersecurity defense and compliance efforts, our customers may lose confidence in our products and could switch to products offered by our competitors or threaten or bring legal actions against us.
Our business and operations have experienced significant growth, and if we do not appropriately manage any future growth, or are unable to maintain and scale our infrastructure, systems and processes, our business and results of operations may be negatively affected.
Our business and operations have experienced significant growth in the past, and if we do not appropriately manage any future growth, or are unable to maintain and scale our infrastructure, systems and processes, our business and results of operations may be negatively affected.
While we have experienced significant revenue growth in recent periods and achieved profitability, we may not obtain a high enough volume of sales of our products and service offerings to sustain or increase our growth or maintain profitability in the future.
While we have experienced significant revenue growth in the past and achieved profitability, we may not obtain a high enough volume of sales of our products and service offerings to sustain or increase our growth or maintain profitability in the future.
However, for the years ended December 31, 2024, 2023 and 2022, we incurred 19%, 17% and 16%, respectively, of our expenses outside of the United States in foreign currencies, primarily the British pound sterling and euro, principally with respect to salaries and related personnel expenses associated with our sales and research and development operations.
However, for the years ended December 31, 2025, 2024 and 2023 we incurred 21%, 19% and 17%, respectively, of our expenses outside of the United States in foreign currencies, primarily the British pound sterling and euro, principally with respect to salaries and related personnel expenses associated with our sales and research and development operations.
The counterparties and/or or their respective affiliates may modify or unwind their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the applicable Notes (and are likely to do so on each exercise date of the capped call transactions, which are scheduled to occur during the applicable observation period relating to any conversion of the 2025 Notes on or after November 1, 2024, relating to any conversion of the 2027 Notes on or after December 15, 2026 or relating to any conversion of the 2029 Notes on or after December 15, 2028, in each case that is not in connection with a redemption).
The counterparties and/or or their respective affiliates may modify or unwind their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the applicable Notes (and are likely to do so on each exercise date of the capped call transactions, which are scheduled to occur during the applicable observation period relating to any conversion of the 2027 Notes on or after December 31 Table of Contents 15, 2026 or relating to any conversion of the 2029 Notes on or after December 15, 2028, in each case that is not in connection with a redemption).
Therefore, when we develop or acquire new or enhanced offerings, their introduction must achieve high levels of market acceptance in order to justify the amount of our investment in developing and bringing them to market.
Therefore, when we develop or acquire new or enhanced offerings, their introduction must achieve high levels of market 12 Table of Contents acceptance in order to justify the amount of our investment in developing and bringing them to market.
Following an acquisition, we may be subject to unforeseen liabilities arising from an acquired company’s past or present operations and these liabilities may be greater than the warranty and indemnity limitations that we negotiate. Any unforeseen liability that is greater than these warranty and indemnity limitations could have a negative impact on our financial condition.
Following an acquisition, we may be subject to unforeseen liabilities arising from an acquired company’s past or present 17 Table of Contents operations and these liabilities may be greater than the warranty and indemnity limitations that we negotiate. Any unforeseen liability that is greater than these warranty and indemnity limitations could have a negative impact on our financial condition.
Any patents 23 Table of Contents that may issue in the future from our pending or future patent applications may not provide sufficiently broad protection and may not be enforceable in actions against alleged infringers. We have registered the “Rapid7,” “Nexpose” and “Metasploit” names and logos in the United States and certain other countries.
Any patents that may issue in the future from our pending or future patent applications may not provide sufficiently broad protection and may not be enforceable in actions against alleged infringers. We have registered the “Rapid7,” “Nexpose” and “Metasploit” names and logos in the United States and certain other countries.
Any of the foregoing events could seriously harm our business, financial condition and results of operations. We may not be successful in our initiatives that utilize AI, which could adversely affect our business, reputation, or financial results.
Any of the foregoing events could seriously harm our business, financial condition and results of operations. 22 Table of Contents We may not be successful in our initiatives that utilize AI, which could adversely affect our business, reputation, or financial results.
Any of the foregoing provisions could limit the opportunity for our stockholders to receive a 36 Table of Contents premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.
Any of the foregoing provisions could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.
Further, we and our subsidiaries may incur substantial additional indebtedness in the future (some of which may be secured indebtedness), subject to the restrictions contained in any future debt instruments existing at the time.
Further, we and our subsidiaries may incur substantial additional indebtedness in the future, subject to the restrictions contained in our revolving credit facility and any future debt instruments existing at the time, some of which may be secured indebtedness.
Our hybrid working model and use of service providers with remote working arrangements also subject us to heightened operational risks.
Our hybrid working model and use of service providers with remote working arrangements also subjects us to heightened operational risks.
Additionally, for the years ended December 31, 2024, 2023 and 2022, 13%, 11% and 10%, respectively, of our revenue was generated in foreign currencies. Accordingly, changes in exchange rates may have an adverse effect on our business, operating results and financial condition.
Additionally, for the years ended December 31, 2025, 2024 and 2023, 14%, 13% and 11%, respectively, of our revenue was generated in foreign currencies. Accordingly, changes in exchange rates may have an adverse effect on our business, operating results and financial condition.
While extortion payments may alleviate the negative impact of a ransomware attack, we may be unwilling or unable to make such payments due to, for 28 Table of Contents example, applicable laws or regulations prohibiting such payments.
While extortion payments may alleviate the negative impact of a ransomware attack, we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.
Such attacks may also include exploitation of vulnerabilities in third-party or open source software code that may be incorporated into our own or our customers’ or supplier’s systems.
Such attacks may also include exploitation of vulnerabilities in third party or open source 26 Table of Contents software code that may be incorporated into our own or our customers’ or supplier’s systems.
For the years ended December 31, 2024, 2023 and 2022, we derived approximately 68%, 62% and 57%, respectively, of our revenue from sales of products and service offerings through channel partners, and the percentage of revenue derived from channel partners may increase in future periods.
For the years ended December 31, 2025, 2024 and 2023, we derived approximately 73%, 68% and 62%, respectively, of our revenue from sales of products and service offerings through channel partners, and the percentage of revenue derived from channel partners may increase in future periods.
We may have exposure to greater than anticipated tax liabilities. 26 Table of Contents We are subject to U.S. federal, state, local and sales taxes in the United States and foreign income taxes, withholding taxes and transaction taxes in numerous foreign jurisdictions.
We may have exposure to greater than anticipated tax liabilities. We are subject to U.S. federal, state, local and sales taxes in the United States and foreign income taxes, withholding taxes and transaction taxes in numerous foreign jurisdictions.
Our customers’ renewal rates may decline or fluctuate as a result of a number of factors, including their satisfaction or dissatisfaction with our new or current product offerings, our pricing, the effects of economic conditions, including due to a global economic slowdown, inflation, foreign currency exchange rate fluctuation, the Russia-Ukraine war, the ongoing conflicts in the Middle East and any global economic uncertainty and financial market disruptions, competitive offerings, our customers' perception of their exposure, or alterations or reductions in their spending levels.
Our customers’ renewal rates may decline or fluctuate as a result of a number of factors, including their satisfaction or dissatisfaction with our new or current product offerings, our pricing, the effects of economic conditions, including due to a global economic slowdown, inflation, foreign currency exchange rate fluctuation, and any global economic uncertainty and financial market disruptions, competitive offerings, our customers' perception of their exposure, or alterations or reductions in their spending levels.
For example, during the quarter ended June 30, 2024, we received an initial assessment from the Israel Tax Authority of approximately 324 million Israeli New Shekels (approximately $88 million, based upon exchange rates as of December 31, 2024 between the Israeli New Shekel and the US Dollar) in relation to the fiscal year 2021 operations of one of our subsidiaries in Israel.
For example, during the quarter ended June 30, 2024, we received an initial assessment from the Israel Tax Authority of approximately 324 million Israeli New Shekels (approximately $102 million, based upon current exchange rates between the Israeli New Shekel and the US Dollar) in relation to the fiscal year 2021 operations of one of our subsidiaries in Israel.
We cannot assure you that our expansion efforts into international markets will be successful in creating further demand for our products and service offerings or in effectively selling our products and service offerings in the international markets that we enter.
We cannot assure you that our expansion efforts into international markets will be successful in creating further demand for our products and service offerings or in effectively selling our products and service offerings in the 15 Table of Contents international markets that we enter.
This creates some uncertainty as to the effective legal frameworks and our obligations may be subject to differing applications and interpretations, which may be inconsistent or in conflict among jurisdictions. Preparation for and compliance with these obligations require us to devote significant resources (including, without limitation, financial and time- 29 Table of Contents related resources).
This creates some uncertainty as to the effective legal frameworks and our obligations may be subject to differing applications and interpretations, which may be inconsistent or in conflict among jurisdictions. Preparation for and compliance with these obligations requires us to devote significant resources (including, without limitation, financial and time-related resources).
Data Privacy 30 Table of Contents Framework (followed on October 2023 with the adoption of an adequacy decision in the UK for the UK-U.S. Data Bridge).
Data Privacy Framework (followed on October 2023 with the adoption of an adequacy decision in the UK for the UK-U.S. Data Bridge).
The occurrence of a public health crisis, climate change, natural disaster, power failure, war (including the Russia-Ukraine war and the ongoing conflicts in the Middle East) or an act of terrorism, vandalism or other misconduct, a decision by a third party to close a facility on which we rely without adequate notice, or other unanticipated problems could result in lengthy interruptions in provision or delivery of our products, potentially leaving our customers vulnerable to cyber attacks.
The occurrence of a public health crisis, climate change, natural disaster, power failure, war or an act of terrorism, vandalism or other misconduct, a decision by a third party to close a facility on which we rely without adequate notice, or other unanticipated problems could result in lengthy interruptions in provision or delivery of our products, potentially leaving our customers vulnerable to cyber attacks.
Negative conditions in the general economy in either the United States or abroad, including conditions resulting from financial and credit market fluctuations, changes in economic policy, inflation, foreign currency exchange rate fluctuations, trade uncertainty, including changes in tariffs, sanctions, international treaties, and other trade restrictions, the occurrence of a natural disaster, outbreaks of epidemics or pandemics such as COVID-19, political unrest and social strife, including acts of terrorism, armed conflicts, such as the one between Russia and Ukraine and the ongoing conflicts in the Middle East, have caused and could continue to cause a decrease in corporate spending on security offerings or information technology in general and negatively affect the rate of growth of our business.
Negative conditions in the general economy in either the United States or abroad, including conditions resulting from financial and credit market fluctuations, changes in economic policy, inflation, foreign currency exchange rate fluctuations, trade uncertainty, including changes in tariffs, sanctions, international treaties, and other trade restrictions, the occurrence of a natural disaster, outbreaks of epidemics or pandemics, political unrest and social strife, including acts of terrorism, and armed conflicts, have caused and could continue to cause a decrease in corporate spending on security offerings or information technology in general and negatively affect the rate of growth of our business.
In addition, our facilities and those of our third-party data centers and hosting providers are vulnerable to damage or interruption from human error, intentional bad acts, pandemics, earthquakes, hurricanes, floods, fires, war (including the Russia-Ukraine war and the ongoing conflicts in the Middle East), terrorist attacks, power losses, hardware failures, systems failures, telecommunications failures and similar events.
In addition, our facilities and those of our third-party data centers and hosting providers are vulnerable to damage or interruption from human error, intentional bad acts, pandemics, earthquakes, hurricanes, floods, fires, war, terrorist attacks, power losses, hardware failures, systems failures, telecommunications failures and similar events.
Such activist stockholders frequently propose to involve themselves in the governance, strategic direction and operations of companies, including companies’ efforts regarding environmental, sustainability and governance standards. For example, JANA Partners Management, LP, an activist investor, has reported, as of December 17, 2024 that it holds an approximate 5.8% beneficial ownership interest in our outstanding common stock.
Such activist stockholders frequently propose to involve themselves in the governance, strategic direction and operations of companies, including companies’ efforts regarding environmental, sustainability and governance standards. For example, JANA Partners Management, LP, an activist investor ("JANA"), has reported, as of August 2025 that it holds an approximate 10.1% beneficial ownership interest in our outstanding common stock.
Achieving the anticipated benefits of past or future acquisitions will depend in part upon whether we can integrate acquired operations, products and technology in a timely and cost-effective manner and successfully market and sell these as new product offerings, or as new features within our existing offerings. For example, on July 3, 2024, we acquired Noetic Cyber, Inc.
Achieving the anticipated benefits of past or future acquisitions will depend in part upon whether we can integrate acquired operations, products and technology in a timely and cost-effective manner and successfully market and sell these as new product offerings, or as new features within our existing offerings.
More specifically, certain of our products, in particular our cloud-based products, are hosted on cloud providers, which provides us with computing and storage capacity.
More specifically, certain of our products, in particular our cloud-based products, are hosted on cloud providers such as Amazon Web Services, which provides us with computing and storage capacity.
As such, market acceptance of our platform solutions is critical to our continued 15 Table of Contents success.
As such, market acceptance of our platform solutions is critical to our continued success.
Since shares of our common stock were sold in our initial public offering (“IPO”), in July 2015 at a price of $16.00 per share, our stock price has ranged from an intraday low of $9.05 to an intraday high of $145.00 through February 25, 2025.
Since shares of our common stock were sold in our initial public offering (“IPO”), in July 2015 at a price of $16.00 per share, our stock price has ranged from an intraday low of $7.01 to an intraday high of $145.00 through February 13, 2026.
Additionally, we may encounter unforeseen operating expenses, difficulties, complications, delays and other unknown factors that may result in losses in future periods. If our revenue growth does not meet our expectations in future periods, our financial performance may be harmed, and we may not maintain profitability in the future. Prolonged economic uncertainties or downturns could adversely affect our business.
Additionally, we may encounter unforeseen operating expenses, difficulties, complications, delays and other unknown factors that may result in losses in future periods. If our revenue growth does not meet our expectations in future periods, our financial performance may be harmed, and we may not maintain profitability in the future.
(“Noetic”), a provider of cyber attack surface management technology. The integration of any acquisition may prove to be difficult due to the necessity of coordinating geographically separate organizations and integrating personnel with disparate business backgrounds and accustomed to different corporate cultures and business operations and internal systems.
The integration of any acquisition may prove to be difficult due to the necessity of coordinating geographically separate organizations and integrating personnel with disparate business backgrounds and accustomed to different corporate cultures and business operations and internal systems.
The market for SecOps solutions, including our Command Platform, is highly fragmented, intensely competitive and constantly evolving. We compete with an array of established and emerging security software and services vendors. With the introduction of new technologies and market entrants, we expect the competitive environment to remain intense going forward.
The market for SecOps solutions, including our Command Platform, is highly fragmented, intensely competitive and constantly evolving. With the introduction of new technologies and market entrants, we expect the competitive environment to remain intense going forward.
In August of 2023, our Board approved a restructuring plan that was designed to improve operational efficiencies, reduce operating costs and better align the Company’s workforce with current business needs, top strategic priorities, and key growth opportunities (the “Restructuring Plan”). The Restructuring Plan included the reduction of our workforce by approximately 16%.
In August of 2023, our Board approved the Restructuring Plan designed to improve operational efficiencies, reduce operating costs and better align our workforce with strategic priorities and key growth opportunities. The Restructuring Plan included the reduction of our workforce by approximately 16%.
You should not rely on our prior quarterly or annual periods performance as any indication of our future growth. 13 Table of Contents We have not been profitable historically and may not maintain profitability in the future. For the year ended December 31, 2024, we have achieved net income of $25.5 million.
You should not rely on our prior quarterly or annual periods performance as any indication of our future growth. 11 Table of Contents We may not maintain profitability in the future. For the years ended December 31, 2025 and 2024 we achieved net income of $23.4 million and $25.5 million, respectively.
The promotion of our brand requires us to make substantial expenditures, and we anticipate that the expenditures will increase as our market becomes more competitive, as we expand into new markets and as more sales are generated through our channel partners. To the extent that these activities yield increased revenues, these revenues may not offset the increased expenses we incur.
The promotion of our brand requires us to make substantial expenditures, and we anticipate that the expenditures will increase as our market becomes more competitive, as we expand into new markets and as more sales are generated through our channel partners.
We primarily compete with established and emerging security product vendors, including the large companies that incorporate security products into their products; XDR and SIEM vendors; cloud security vendors; vulnerability risk management vendors; application security vendors; threat intelligence vendors; and legacy security, systems management, MSSP, and other IT vendors.
We primarily compete with large companies that incorporate security products into their products, security platform providers, MDR service providers, XDR and SIEM vendors, cloud security vendors, exposure management vendors, vulnerability risk management vendors, application security vendors, threat intelligence vendors and legacy security, systems management, MSSP, and other IT vendors.
Export Administration Regulations and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control. Exports of these products must be made in compliance with these laws and regulations.
Like other U.S.-based IT security products, our products are subject to U.S. export control and import laws and regulations, including the U.S. Export Administration Regulations and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control. Exports of these products must be made in compliance with these laws and regulations.
These forward contracts and other hedging strategies such as options and foreign exchange swaps related to transaction exposures that we may implement to mitigate this risk in the future may not eliminate our exposure to foreign exchange fluctuations.
These forward contracts and other hedging strategies such as options and foreign exchange swaps related to transaction exposures that we may implement to mitigate this risk in the future may not eliminate our exposure to foreign exchange fluctuations. Actions that we have taken to restructure our business in alignment with our strategic priorities may not be as effective as anticipated.
Prior to 2024, we had posted a net loss in each year since inception, including net losses of $152.8 million and $124.7 million in the years ended December 31, 2023 and 2022, respectively. As of December 31, 2024, we had an accumulated deficit of $988.0 million.
Prior to 2024, we posted a net loss in each year since inception, including a net loss of $152.8 million for the year ended December 31, 2023. As of December 31, 2025, we had an accumulated deficit of $964.7 million.
In September 2023, concurrently with the issuance of the 2029 Notes, we used $201.0 million of the proceeds from the issuance of the 2029 Notes to repurchase and retire $184.0 million aggregate principal amount of the 2025 Notes.
In September 2023, concurrently with the issuance of the 2029 Notes, we used $201.0 million of the proceeds from the issuance of the 2029 Notes to repurchase and retire $184.0 million aggregate principal amount of the 2025 Notes. In addition, we may also incur indebtedness under our revolving credit facility.
Accordingly, increasing sales of our products and service offerings to government entities may be more challenging than selling to commercial organizations. Further, in the course of providing our products and service offerings to government entities, our employees and those of our channel partners may be exposed to sensitive government information.
Further, in the course of providing our products and service offerings to government entities, our employees and those of our channel partners may be exposed to sensitive government information.
We also seek to maintain excess capacity in our operations infrastructure to facilitate the rapid provision of new customer deployments. In addition, we need to properly manage our technological operations infrastructure in order to support changes in hardware and software parameters and the evolution of our products, all of which require significant lead time.
In addition, we need to properly manage our technological operations infrastructure in order to support changes in hardware and software parameters and the evolution of our products, all of which require significant lead time.
We may not be successful in implementing such initiatives, including as a result of factors beyond our control. If we are unable to realize the anticipated savings and efficiencies from our Restructuring Plan and/or accomplish our business and strategic initiatives, our business, results of operations and financial condition could be materially and adversely affected.
If we are unable to realize the anticipated savings and efficiencies from our Restructuring Plan and/or accomplish our business and strategic initiatives, our business, results of operations and financial condition could be materially and adversely affected.
For example, in connection with the Restructuring Plan, we permanently closed certain idle office spaces in Plano, Texas, Los Angeles, California and Toronto, Canada, which resulted in an impairment loss of $3.6 million recorded in 2023. These additional cash and non-cash expenditures could have the effect of reducing our operating margins.
In connection with the Restructuring Plan, we permanently closed certain idle office spaces in Plano, Texas, Los Angeles, California and Toronto, Canada, which resulted in an impairment loss of $3.6 million recorded in 2023.
These larger competitors are also often in a better position to withstand any significant reduction in spending by customers, and will therefore not be as susceptible to economic downturns.
These larger competitors are also often in a better position to withstand any significant reduction in spending by customers, and will therefore not be as susceptible to economic downturns. Customers are increasingly seeking to consolidate security vendors and standardize on integrated security operations platforms and managed services.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity program, which is managed by our information security team, includes: • efforts to comply with prevailing cybersecurity standards; • regular risk assessments, security assessments and penetration tests designed to help identify potential cybersecurity risks to our critical systems, networks, products, services, and our broader enterprise information technology environment; • a cybersecurity incident response plan and procedures for responding to cybersecurity threats and incidents; • a security operations team responsible for detection of, and response to, cybersecurity threats and incidents; • a third-party risk management process for third-party service providers, suppliers, and vendors; and • annual cybersecurity awareness training of our employees, including senior management.
Biggest changeOur cybersecurity program, which is managed by our information security team, includes: • efforts to comply with prevailing cybersecurity standards; 35 Table of Contents • regular risk assessments, security assessments and penetration tests designed to help identify potential cybersecurity risks to our critical systems, networks, products, services, and our broader enterprise information technology environment; • a cybersecurity incident response plan and procedures for responding to cybersecurity threats and incidents; • a security operations team responsible for detection of, and response to, cybersecurity threats and incidents; • a third-party risk management process for third-party service providers, suppliers, and vendors; and • annual cybersecurity awareness training of our employees, including senior management.
Management, including the CSO and our information security tea m, regularly update the Audit Committee o n the Company’s cybersecurity program, including cybersecurity vulnerabilities, risk, threats and incidents, and developments in the cybersecurity risk landscape. Despite our efforts, we cannot eliminate all risks from cybersecurity threats or incidents, or provide assurances that we have not experienced an undetected cybersecurity incident.
Management, including the CSO and our information security tea m, regularly update the Audit Committee o n Rapid7’s cybersecurity program, including cybersecurity vulnerabilities, risk, threats and incidents, and developments in the cybersecurity risk landscape. Despite our efforts, we cannot eliminate all risks from cybersecurity threats or incidents, or provide assurances that we have not experienced an undetected cybersecurity incident.
Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee oversight of cybersecurity risk management. Our Audit Committee consists of Board members with a diversity of expertise in risk management, technology, finance, and cybersecurity, including oversight of security teams.
Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee oversight of cybersecurity risk management. Our Audit Committee consists of Board members with a variety of expertise in risk management, technology, finance, and cybersecurity, including oversight of security teams.
Our cybersecurity programs are under the 37 Table of Contents direction of our Chief Security Officer (“CSO”), who receives reports from our information security team and monitors the prevention, detection, mitigation and remediation of cybersecurity incidents. Our CSO and dedicated personnel are certified and experienced information systems security professionals and information security managers with decades of experience and industry certifications.
Our cybersecurity programs are under the direction of our Chief Security Officer (“CSO”), who receives reports from our information security team and monitors the prevention, detection, mitigation and remediation of cybersecurity incidents. Our CSO and dedicated personnel are certified and experienced information systems security professionals and information security managers with decades of experience and industry certifications.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. Our corporate headquarters occupy approximately 147,000 square feet in Boston, Massachusetts under operating leases that expire in November 2029. This excludes approximately 67,000 square feet of certain idle office space that was impaired in 2023. Refer to Note 12, Leases, for further information on the impairment of long-lived assets..
Biggest changeItem 2. Properties. Our corporate headquarters occupy approximately 147,000 square feet in Boston, Massachusetts under operating leases that expire in November 2029. We have additional U.S. offices, including in Arlington, Virginia, Austin, Texas, and Tampa, Florida.
We have additional U.S. offices including in Arlington, Virginia, Austin, Texas, and Tampa, Florida. We also lease various international offices including in Belfast, Northern Ireland; Prague, Czech Republic; Dublin and Galway, Ireland; Germany; Melbourne, Australia; Reading, United Kingdom; Tel Aviv, Israel; and Singapore. We believe that our current facilities are suitable and adequate to meet our current needs.
We also lease various international offices, including in Belfast, Northern Ireland; Prague, Czech Republic; Melbourne, Australia; Reading, United Kingdom; Tel Aviv, Israel; Singapore; and Pune, India. We believe that our current facilities are suitable and adequate to meet our current needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Biggest changeRegardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Item 4. Mine Safety Disclosures. Not applicable. 36 Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock. 39 Table of Contents December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 Rapid7, Inc. $ 100.00 $ 160.94 $ 210.09 $ 60.66 $ 101.93 $ 71.81 Nasdaq Global Market Composite 100.00 147.68 109.53 51.96 50.89 51.65 Nasdaq Computer 100.00 157.33 199.80 129.82 212.86 284.38 Recent Sales of Unregistered Securities None.
Biggest changeThe comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock. 37 Table of Contents As of December 31, 2020 2021 2022 2023 2024 2025 Rapid7, Inc. $ 100.00 $ 130.53 $ 37.69 $ 63.33 $ 44.62 $ 16.86 Nasdaq Global Market Composite 100.00 74.17 35.19 34.46 34.97 36.92 Nasdaq Computer 100.00 127.00 82.52 135.30 180.76 232.70 Recent Sales of Unregistered Securities None.
Market Information Our common stock is listed on the Nasdaq Global Market under the symbol “RPD.” As of December 31, 2024, there were 30 holders of record of our common stock, including Cede & Co., a nominee for The Depository Trust Company (“DTC”), which holds shares of our common stock on behalf of an indeterminate number of beneficial owners.
Market Information Our common stock is listed on the Nasdaq Global Market under the symbol “RPD.” As of December 31, 2025, there were 26 holders of record of our common stock, including Cede & Co., a nominee for The Depository Trust Company (“DTC”), which holds shares of our common stock on behalf of an indeterminate number of beneficial owners.
The following graph shows a comparison from December 31, 2019 through December 31, 2024 of the cumulative total return for an investment of $100 in our common stock, the Nasdaq Global Market and the Nasdaq Computer Index. Data for the Nasdaq Global Market and the Nasdaq Computer Index assume reinvestment of dividends.
The following graph shows a comparison from December 31, 2020 through December 31, 2025 of the cumulative total return for an investment of $100 in our common stock, the Nasdaq Global Market and the Nasdaq Computer Index. Data for the Nasdaq Global Market and the Nasdaq Computer Index assume reinvestment of dividends.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations Year Ended December 31, 2024 2023 2022 (in thousands) Consolidated Statement of Operations Data: Revenue: Product subscriptions $ 808,906 $ 740,168 $ 647,535 Professional services 35,101 37,539 37,548 Total revenue 844,007 777,707 685,083 Cost of revenue: (1) Product subscriptions 225,547 203,140 182,212 Professional services 25,488 28,906 32,137 Total cost of revenue 251,035 232,046 214,349 Operating expenses: (1) Research and development 173,126 177,937 189,970 Sales and marketing 298,809 313,661 307,409 General and administrative 86,002 85,340 84,969 Impairment of long-lived assets — 30,784 — Restructuring — 22,227 — Total operating expenses 557,937 629,949 582,348 Income (loss) from operations 35,035 (84,288) (111,614) Interest income 21,063 10,177 1,813 Interest expense (10,963) (64,700) (10,982) Other expense, net (3,680) (14,522) (1,522) Income (loss) before income taxes 41,455 (153,333) (122,305) Provision for (benefit from) income taxes 15,929 (518) 2,412 Net income (loss) $ 25,526 $ (152,815) (124,717) (1) Cost of revenue and operating expenses include stock-based compensation expense and depreciation and amortization expense as follows: Year Ended December 31, 2024 2023 2022 (in thousands) Stock-based compensation expense: Cost of revenue $ 12,208 $ 11,005 $ 10,367 Research and development 37,566 39,183 49,940 Sales and marketing 28,718 30,350 31,217 General and administrative 29,469 31,098 28,378 Total stock-based compensation expense $ 107,961 $ 111,636 $ 119,902 49 Table of Contents Year Ended December 31, 2024 2023 2022 (in thousands) Depreciation and amortization expense: Cost of revenue $ 33,140 $ 31,447 $ 26,520 Research and development 3,312 4,217 4,133 Sales and marketing 6,707 7,801 7,742 General and administrative 1,734 2,474 2,643 Total depreciation and amortization expense $ 44,893 $ 45,939 $ 41,038 The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue: Year Ended December 31, 2024 2023 2022 Consolidated Statement of Operations Data: Revenue: Product subscriptions 95.8 % 95.2 % 94.5 % Professional services 4.2 4.8 5.5 Total revenue 100.0 100.0 100.0 Cost of revenue: Product subscriptions 26.7 26.1 26.6 Professional services 3.0 3.7 4.7 Total cost of revenue 29.7 29.8 31.3 Operating expenses: Research and development 20.5 22.9 27.7 Sales and marketing 35.4 40.3 44.9 General and administrative 10.2 11.0 12.4 Impairment of long-lived assets — 4.0 — Restructuring — 2.9 — Total operating expenses 66.1 81.1 85.0 Income (loss) from operations 4.2 (10.9) (16.3) Interest income 2.5 1.3 0.3 Interest expense (1.3) (8.3) (1.6) Other expense, net (0.4) (1.9) (0.2) Income (loss) before income taxes 5.0 (19.7) (17.8) Provision for (benefit from) income taxes 1.9 (0.1) 0.4 Net income (loss) 3.1 % (19.6) % (18.2) % Comparison of the Year Ended December 31, 2024 and 2023 Revenue Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) Revenue: Product subscriptions $ 808,906 $ 740,168 $ 68,738 9.3 % Professional services 35,101 37,539 (2,438) (6.5) % Total revenue $ 844,007 $ 777,707 $ 66,300 8.5 % Total revenue increased by $66.3 million in 2024 compared to 2023 and consisted of a $6.1 million increase in revenue from new customers and a $60.2 million increase in revenue from existing customers.
Biggest changeRelease of all or a portion of these valuation allowances would result in a decrease in the provision for income taxes in the period of the release. 41 Table of Contents Results of Operations The following table presents the consolidated statement of operations data (in thousands): Year Ended December 31, 2025 2024 2023 Revenue: Product subscriptions $ 831,325 $ 808,906 $ 740,168 Professional services 28,469 35,101 37,539 Total revenue 859,794 844,007 777,707 Cost of revenue (1) : Product subscriptions 230,119 225,547 203,140 Professional services 24,921 25,488 28,906 Total cost of revenue 255,040 251,035 232,046 Operating expenses (1) : Research and development 190,660 173,126 177,937 Sales and marketing 317,665 298,809 313,661 General and administrative 84,861 86,002 85,340 Impairment of long-lived assets — — 30,784 Restructuring — — 22,227 Total operating expenses 593,186 557,937 629,949 Income (loss) from operations 11,568 35,035 (84,288) Interest income 23,019 21,063 10,177 Interest expense (10,436) (10,963) (64,700) Other income (expense), net 6,030 (3,680) (14,522) Income (loss) before income taxes 30,181 41,455 (153,333) Provision (benefit) for income taxes 6,800 15,929 (518) Net income (loss) $ 23,381 $ 25,526 $ (152,815) (1) Cost of revenue and operating expenses include stock-based compensation expense and depreciation and amortization expense as follows (in thousands): Year Ended December 31, 2025 2024 2023 Stock-based compensation expense: Cost of revenue $ 9,641 $ 12,208 $ 11,005 Research and development 39,357 37,566 39,183 Sales and marketing 28,230 28,718 30,350 General and administrative 27,107 29,469 31,098 Total stock-based compensation expense $ 104,335 $ 107,961 $ 111,636 Year Ended December 31, 2025 2024 2023 Depreciation and amortization expense: Cost of revenue $ 36,059 $ 33,140 $ 31,447 Research and development 2,734 3,312 4,217 Sales and marketing 5,222 6,707 7,801 General and administrative 1,421 1,734 2,474 Total depreciation and amortization expense $ 45,436 $ 44,893 $ 45,939 42 Table of Contents The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue: Year Ended December 31, 2025 2024 2023 Revenue: Product subscriptions 96.7 % 95.8 % 95.2 % Professional services 3.3 4.2 4.8 Total revenue 100.0 100.0 100.0 Cost of revenue : Product subscriptions 26.8 26.7 26.1 Professional services 2.9 3.0 3.7 Total cost of revenue 29.7 29.7 29.8 Operating expenses : Research and development 22.2 20.5 22.9 Sales and marketing 36.9 35.4 40.3 General and administrative 9.9 10.2 11.0 Impairment of long-lived assets — — 4.0 Restructuring — — 2.9 Total operating expenses 69.0 66.1 81.1 Income (loss) from operations 1.3 4.2 (10.9) Interest income 2.7 2.5 1.3 Interest expense (1.2) (1.3) (8.3) Other income (loss), net 0.7 (0.4) (1.9) Income (loss) before income taxes 3.5 5.0 (19.7) Provision (benefit) for income taxes 0.8 1.9 (0.1) Net income (loss) 2.7 % 3.1 % (19.6) % Comparison of the Years Ended December 31, 2025 and 2024 All numbers presented below are in thousands, except for percentages.
Operating Activities Operating activities provided $171.7 million of cash and cash equivalents for the year ended December 31, 2024, which reflects continued growth in revenue partially offset by our continued investments in our operations and the timing of working capital adjustments.
Operating activities provided $171.7 million of cash and cash equivalents for the year ended December 31, 2024, which reflects continued growth in revenue partially offset by our continued investments in our operations and the timing of working capital adjustments.
Investing Activities Investing activities used $46.5 million of cash for the year ended December 31, 2024, consisting of $37.3 million of cash paid for the acquisition of Noetic, $14.2 million for capitalization of internal-use software costs, and $3.4 million in capital expenditures to purchase computer equipment and leasehold improvements, partially offset by $8.0 million in sales and maturities of investments, net of purchases and $0.4 million in proceeds from other investments.
Investing activities used $46.5 million of cash for the year ended December 31, 2024, consisting of $37.3 million of cash paid for the acquisition of Noetic, $14.2 million for capitalization of internal-use software costs, and $3.4 million in capital expenditures to purchase computer equipment and leasehold improvements, partially offset by $8.0 million in sales and maturities of investments, net of purchases and $0.4 million in proceeds from other investments.
The expense for the amortization of debt issuance costs related to our convertible senior notes and our former revolving credit facility is a non-cash item and we believe the exclusion of this interest expense provides a more useful comparison of our operational performance in different periods. • Induced conversion expense.
The expense for the amortization of debt issuance costs related to our convertible senior notes and revolving credit facility is a non-cash item and we believe the exclusion of this interest expense provides a more useful comparison of our operational performance in different periods. • Induced conversion expense.
Interest Income Interest income consists primarily of interest income on our cash and cash equivalents and our short and long-term investments. Interest Expense Interest expense consists primarily of contractual interest expense, amortization of debt issuance costs related to our convertible senior notes and our former revolving credit facility, and induced conversion expense.
Interest Income Interest income consists primarily of interest income on our cash and cash equivalents and our short and long-term investments. Interest Expense Interest expense consists primarily of contractual interest expense, amortization of debt issuance costs related to our convertible senior notes and revolving credit facility and induced conversion expense.
Provision for (Benefit from) Income Taxes Provision for (benefit from) income taxes consists of domestic and foreign taxes on income and withholding taxes. We maintain a substantially full valuation allowance for domestic and certain foreign deferred tax assets, including net operating loss carryforwards and tax credits.
Provision (Benefit) for Income Taxes Provision (Benefit) for income taxes consists of domestic and foreign taxes on income and withholding taxes. We maintain a substantially full valuation allowance for domestic and certain foreign deferred tax assets, including net operating loss carryforwards and tax credits.
Financing Activities Financing activities provided $5.6 million for the year ended December 31, 2024, which consisted primarily of $9.2 million in proceeds from the issuance of common stock purchased by employees under the Rapid7, Inc. 2015 Employee Stock Purchase Plan (“ESPP”) and $1.6 million in proceeds from the exercise of stock options, partially offset by $4.7 million in withholding taxes paid for the net share settlement of equity awards and $0.5 million in payments related to the acquisition of Noetic.
Financing activities provided $5.6 million of cash for the year ended December 31, 2024, which consisted primarily of $9.2 million in proceeds from the issuance of common stock purchased by employees under the Rapid7, Inc. 2015 Employee Stock Purchase Plan and $1.6 million in proceeds from the exercise of stock options, partially offset by $4.7 million in withholding taxes paid for the net share settlement of equity awards and $0.5 million in payments related to the acquisition of Noetic.
We monitor non-GAAP income from operations and non-GAAP operating margin, which are both non-GAAP financial measures, to analyze our financial results. We believe non-GAAP income from operations and non-GAAP operating margin are useful to investors, as supplements to U.S.
We monitor non-GAAP income from operations and non-GAAP operating margin, which are non-GAAP financial measures, to analyze our financial results. We believe non-GAAP income from operations and non-GAAP operating margin are useful to investors, as supplements to U.S.
We exclude certain discrete tax items such as income tax expenses or benefits that are not related to ongoing business operations in the current year and adjustments to uncertain tax position reserves as these charges are not indicative of our ongoing operating results, and they are not considered when we are forecasting our future results. • Anti-dilutive impact of capped call transactions.
We exclude certain discrete tax items such as income tax expenses or benefits that are not related to ongoing business operations in the current year and adjustments to uncertain tax position reserves as these charges are not indicative of our ongoing operating results, and they are not considered when we are forecasting our future results. • Anti-dilutive impact of capped call transaction.
On an if-converted basis, for the year ended December 31, 2024, the 2029 Notes, 2027 Notes and 2025 Notes were dilutive, for the year ended December 31, 2023, the 2029 Notes and 2027 Notes were dilutive and the 2025 Notes were anti-dilutive, and for the year ended December 31, 2022, the 2025 Notes were dilutive and the 2027 Notes were anti-dilutive.
On an if converted basis, for the year ended December 31, 2025, the 2029 Notes, 2027 Notes and 2025 Notes were dilutive, for the year ended December 31, 2024 the 2029 Notes, 2027 Notes and 2025 Notes were dilutive, and for the year ended December 31, 2023 the 2029 Notes and 2027 Notes were dilutive and the 2025 Notes were anti-dilutive.
Non-GAAP Financial Results To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we provide investors with certain non-GAAP financial measures, including non-GAAP gross profit, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per share, adjusted EBITDA and free cash flow.
Non-GAAP Financial Results To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we may provide investors with certain non-GAAP financial measures from time to time, including non-GAAP gross profit, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per share, adjusted EBITDA and free cash flow.
We define non-GAAP gross profit, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income (loss) and non-GAAP net income per share as the respective GAAP balances excluding the effect of stock-based compensation expense, amortization of acquired intangible assets, amortization of debt issuance costs and certain other items such as acquisition-related expenses, litigation-related expenses, impairment of long-lived assets, induced conversion expense, change in the fair value of derivative assets, restructuring expense and discrete tax items.
We define non-GAAP gross profit, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income and non-GAAP net income per share as the respective GAAP balances excluding the effect of stock-based compensation expense, amortization of acquired intangible assets, amortization of debt issuance costs and certain other items such as acquisition-related expenses, non-ordinary course litigation-related expenses, impairment of long-lived assets, induced conversion expense, change in the fair value of derivative assets, restructuring expense and discrete tax items.
Sales and Marketing Expense Sales and marketing expense consists of personnel costs for our sales and marketing team, including salaries and other payroll related costs, commissions, including amortization of capitalized commissions, bonuses and stock-based compensation. Additional expenses include marketing activities and promotional events, travel and entertainment, training costs, amortization of certain intangible assets and allocated overhead costs.
Sales and Marketing Expense Sales and marketing expense consists of personnel costs for our sales and marketing team, including salaries and other payroll related costs, commissions, including amortization of deferred commissions, bonuses and stock-based compensation. Additional expenses include marketing activities and promotional events, travel and entertainment, training costs, amortization of certain intangible assets and allocated overhead costs.
See “Non-GAAP Financial Results” below for further information on non-GAAP income from operations and a reconciliation of non-GAAP income from operations to the comparable GAAP financial measure. Free Cash Flow . Free cash flow is a non-GAAP measure that we define as cash provided by operating activities less purchases of property and equipment and capitalization of internal-use software costs.
See "Non-GAAP Financial Results" below for further information on non-GAAP income from operations and a reconciliation of non-GAAP income from operations to the comparable GAAP financial measure. Free Cash Flow . Free cash flow is a non-GAAP measure that we define as cash provided by operating activities less purchases of property and equipment and capitalization of internal-use software costs.
We believe these non-GAAP financial measures are useful to investors in assessing our operating performance due to the following factors: 43 Table of Contents • Stock-based compensation expense. We exclude stock-based compensation expense because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact our non-cash expense.
We believe these non-GAAP financial measures are useful to investors in assessing our operating performance due to the following factors: • Stock-based compensation expense. We exclude stock-based compensation expense because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact our non-cash expense.
Our revenue was not concentrated with any individual customer and no customer represented more than 1% of our revenue for the years ended December 31, 2024, 2023 or 2022.
Our revenue was not concentrated with any individual customer and no customer represented more than 1% of our revenue for the years ended December 31, 2025, 2024 or 2023.
Research and Development Expense Research and development expense consists of personnel costs for our research and development team, including salaries and other payroll related costs, bonuses and stock-based compensation. Additional expenses include third-party infrastructure costs, travel and entertainment, consulting and professional fees for third-party development resources as well as allocated overhead costs.
Research and Development Expense Research and development expense consists of personnel costs for our research and development team, including salaries and other payroll related costs, bonuses and stock-based compensation. Additional expenses include third-party infrastructure costs, 40 Table of Contents travel and entertainment, consulting and professional fees for third-party development resources as well as allocated overhead costs.
All overhead costs are allocated based on relative headcount. 47 Table of Contents Cost of Product Subscriptions Cost of product subscriptions consists of personnel and related costs for our content, support, managed service and cloud operations teams, including salaries and other payroll related costs, bonuses, stock-based compensation and allocated overhead costs.
All overhead costs are allocated based on relative headcount. Cost of Product Subscriptions Cost of product subscriptions consists of personnel and related costs for our content, support, managed service and cloud operations teams, including salaries and other payroll related costs, bonuses, stock-based compensation and allocated overhead costs.
Our Managed Threat Complete Offering is offered on a managed service basis, generally pursuant to one or multi-year agreements. In the years ended December 31, 2024, 2023 and 2022, recurring revenue, defined as revenue from term software licenses, content subscriptions, managed services, cloud-based subscriptions and maintenance and support, was 96%, 95% and 94%, respectively, of total revenue.
Our Managed Threat Complete Offering is offered on a managed service basis, generally pursuant to one or multi-year agreements. For the years ended December 31, 2025, 2024 and 2023, recurring revenue, defined as revenue from term software licenses, content subscriptions, managed services, cloud-based subscriptions and maintenance and support, was 96%, 96%, and 95% respectively, of total revenue.
We expect our gross margins to fluctuate over time depending on the factors described above. Operating Expenses Operating expenses consist of research and development, sales and marketing, general and administrative expenses, and restructuring. Operating expenses include overhead costs for depreciation, facilities, IT, information security and recruiting.
We expect our gross margins to fluctuate over time depending on the factors described above. Operating Expenses Operating expenses consist of research and development, sales and marketing, general and administrative expenses, impairment of long-lived assets, and restructuring costs. Operating expenses include overhead costs for depreciation, facilities, IT, information security and recruiting.
In addition, there are limitations in using non-GAAP financial measures 44 Table of Contents because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact upon our reported financial results.
In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact upon our reported financial results.
We expect our cost of revenue to increase on an absolute dollar basis as we continue to grow our revenue.
We expect our cost of revenue to increase on an absolute dollar basis as we continue to grow our revenue over time.
As we have shifted our strategic focus to SecOps consolidation, we are focused on continuing to drive innovation across our core products and capabilities to accelerate customer value and provide a frictionless and integrated cloud security experience.
As we have shifted our strategic focus to SecOps consolidation, we are focused on continuing to drive innovation 38 Table of Contents across our core products and capabilities to accelerate customer value and provide a frictionless and integrated cloud security experience.
These factors were offset by a $4.3 million increase in other liabilities, a $2.8 million decrease in prepaid expenses and a $2.8 million increase in accounts payable, which each had a positive impact on operating cash flow.
These factors 52 Table of Contents were offset by a $4.3 million increase in other liabilities, a $2.8 million decrease in prepaid expenses and a $2.8 million increase in accounts payable, which each had a positive impact on operating cash flow.
Our foreseeable cash needs, in addition to our recurring operating expenses, include our expected capital expenditures to support expansion of our infrastructure and workforce, office facilities lease obligations, purchase commitments, including our cloud infrastructure services, potential future acquisitions of technology businesses and any election we make to redeem our convertible senior notes, including our 2025 Notes which mature on May 1, 2025.
Our foreseeable cash needs, in addition to our recurring operating expenses, include our expected capital expenditures to support expansion of our infrastructure and workforce, office facilities lease obligations, purchase commitments, including our cloud infrastructure services, potential future acquisitions of technology businesses and any election we make to redeem our convertible senior notes.
Once SSP is established it is applied consistently to all transactions involving that product or service utilizing a portfolio approach. Deferred Contract Acquisition Costs We defer contract costs that are recoverable and incremental to obtaining customer contracts.
Once SSP is established it is applied consistently to all transactions involving that product or service. Deferred Contract Acquisition Costs We defer contract costs that are recoverable and incremental to obtaining customer contracts.
We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after necessary capital expenditures. See “Non-GAAP Financial Results” below for a reconciliation of non-GAAP free cash flow to the comparable GAAP financial measure. Annualized Recurring Revenue and Growth.
We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after necessary capital expenditures. See "Non-GAAP Financial Results" below for a reconciliation of non-GAAP free cash flow to the comparable GAAP financial measure. 46 Table of Contents Annualized Recurring Revenue and Growth.
We exclude non-ordinary course restructuring expenses related to the Restructuring Plan, which we completed during fiscal year 2024, because we do not believe these charges are indicative of our core operating performance and we believe the exclusion of the restructuring expense provides a more useful comparison of our performance in different periods. • Discrete tax items.
We exclude non-ordinary course restructuring expenses related to the Restructuring Plan because we do not believe these charges are indicative of our core operating performance and we believe the exclusion of the restructuring expense provides a more useful comparison of our performance in different periods. • Discrete tax items.
We exclude induced conversion expense because this amount is not indicative of the performance of or trends in, our business and neither is comparable to the prior period nor predictive of future results. • Litigation-related expenses.
We exclude induced conversion expense because this amount is not indicative of the performance of or trends in our business, and neither is comparable to the prior period nor predictive of future results. 47 Table of Contents • Non-ordinary course litigation-related expenses.
Our capped call transactions are intended to offset potential dilution from the conversion features in our convertible senior notes.
Our Capped Calls are intended to offset potential dilution from the conversion features in our convertible senior notes.
Our customers span a wide variety of industries such as technology, energy, financial services, healthcare and life sciences, manufacturing, media and entertainment, retail, education, real estate, transportation, government and professional services. As of December 31, 2024, we had over 11,700 customers in 147 countries, including 43% of the Fortune 100.
Our customers span a wide variety of industries such as technology, energy, financial services, healthcare and life sciences, manufacturing, media and entertainment, retail, education, real estate, transportation, government and professional services. As of December 31, 2025, we had over 11,500 customers in 150 countries, including 36% of the Fortune 100.
Operating activities provided $104.3 million of cash and cash equivalents for the year ended December 31, 2023, which reflects continued growth in revenue partially offset by our continued investments in our operations and the timing of working capital adjustments.
Operating Activities Operating activities provided $153.8 million of cash and cash equivalents for the year ended December 31, 2025, which reflects continued growth in revenue partially offset by our continued investments in our operations and the timing of working capital adjustments.
In conjunction with the partial repurchase of our 2025 Notes in the third quarter of 2023, we incurred a non-cash induced conversion expense of $53.9 million.
In conjunction with the third quarter of 2023 partial repurchase of our 2.25% convertible senior notes due 2025, we incurred a non-cash induced conversion expense of $53.9 million.
Our InsightIDR, InsightCloudSec, InsightVM, InsightAppSec, InsightConnect and Threat Command products are offered as cloud-based subscriptions, with an option for a one or multi-year term. • Managed services, through which we operate our products and provide our capabilities on behalf of our customers.
Our Incident Command, Exposure Command, and Threat Command products are offered as cloud-based subscriptions, with an option for a one or multi-year term. • Managed services, through which we operate our products and provide our capabilities on behalf of our customers.
Further, 53 Table of Contents in January 2025, we entered into a cloud-services agreement with a cloud services provider that contains minimum spend commitments.
Further, in January 2025, we entered into a cloud-services agreement with a cloud services provider that contains minimum spend commitments.
Cash Flows The following table shows a summary of our cash flows for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 (in thousands) Cash, cash equivalents and restricted cash at beginning of period $ 214,127 $ 207,804 $ 165,017 Net cash provided by operating activities 171,670 104,278 78,204 Net cash used in investing activities (46,522) (178,754) (39,988) Net cash provided by financing activities 5,582 79,597 7,416 Effects of exchange rates on cash, cash equivalents and restricted cash (2,756) 1,202 (2,845) Cash, cash equivalents and restricted cash at end of period $ 342,101 $ 214,127 $ 207,804 Uses of Funds Our historical uses of cash have primarily consisted of cash used for operating activities such as expansion of our sales and marketing operations, research and development activities and other working capital needs, as well as cash used for business acquisitions and purchases of property and equipment, including leasehold improvements for our facilities.
Cash Flows The following table shows a summary of our cash flows for the years ended December 31, 2025, 2024 and 2023 (in thousands): Year Ended December 31, 2025 2024 2023 Cash, cash equivalents and restricted cash at beginning of period $ 342,101 $ 214,127 $ 207,804 Net cash provided by operating activities 153,827 171,670 104,278 Net cash used in investing activities (209,439) (46,522) (178,754) Net cash (used in) provided by financing activities (45,504) 5,582 79,597 Effects of exchange rates on cash, cash equivalents and restricted cash 5,679 (2,756) 1,202 Cash, cash equivalents and restricted cash at end of period $ 246,664 $ 342,101 $ 214,127 Uses of Funds Our historical uses of cash have primarily consisted of cash used for operating activities such as expansion of our sales and marketing operations, research and development activities and other working capital needs, as well as cash used for business acquisitions and purchases of property and equipment, including leasehold improvements for our facilities.
We determine SSP of our products and services based on our overall pricing objectives using all information reasonably available to us, taking into consideration market conditions and other factors, including the geographic locations of our customers, negotiated discounts from price lists and selling method (i.e., 55 Table of Contents partner or direct).
We determine SSP of our products and services based on our overall pricing objectives using all information reasonably available to us, taking into consideration market conditions and other factors, including the geographic locations of our customers, negotiated discounts from price lists and selling method (i.e., partner or direct). When available, we use directly observable stand-alone transactions to determine SSP.
We define adjusted EBITDA as net income (loss) before (1) interest income, (2) interest expense, (3) other (income) expense, net, (4) provision for (benefit from) income taxes, (5) depreciation expense, (6) amortization of intangible assets, (7) stock-based compensation expense, (8) acquisition-related expenses, (9) litigation-related expenses, (10) impairment of long-lived assets and (11) restructuring expense.
We define adjusted EBITDA as net income before (1) interest income, (2) interest expense, (3) other (income) expense, net, (4) provision for income taxes, (5) depreciation expense, (6) amortization of intangible assets, (7) stock-based compensation expense, (8) acquisition-related expenses, and (9) restructuring expense.
When available, we use directly observable stand-alone transactions to determine SSP. When not regularly sold on a stand-alone basis, we estimate SSP for our products and services utilizing historical sales data, including discounts from list price. The historical data is aggregated and analyzed by geographic location and selling method to establish a median or average price.
When not regularly sold on a stand-alone basis, we estimate SSP for our products and services utilizing historical sales data, including discounts 53 Table of Contents from list price. The historical data is aggregated and analyzed by geographic location and selling method to establish a median or average price.
We believe these key metrics are useful to investors both because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and also because they are used by institutional investors and the analyst community to help evaluate the health of our business: Year Ended December 31, 2024 2023 2022 (dollars in thousands) Total revenue $ 844,007 $ 777,707 $ 685,083 Year-over-year growth 8.5 % 13.5 % 28.0 % Non-GAAP income from operations $ 163,508 $ 102,221 $ 30,386 Non-GAAP operating margin 19.4 % 13.1 % 4.4 % Free cash flow $ 154,083 $ 84,034 $ 40,677 As of December 31, 2024 2023 (dollars in thousands) Annualized recurring revenue (“ARR”) $ 839,819 $ 805,670 Year-over-year growth 4.2 % 12.8 % Number of customers 11,727 11,526 Year-over-year growth 1.7 % 5.5 % ARR per customer $ 71.6 $ 69.9 Year-over-year growth 2.5 % 7.0 % 42 Table of Contents Total Revenue and Growth .
We believe these key metrics are useful to investors both because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and also because they are used by institutional investors and the analyst community to help evaluate the health of our business (in thousands, except percentages): Year Ended December 31, 2025 2024 2023 Total revenue $ 859,794 $ 844,007 $ 777,707 Year-over-year growth 1.9 % 8.5 % 13.5 % Non-GAAP income from operations $ 135,732 $ 163,508 $ 102,221 Non-GAAP operating margin 15.8 % 19.4 % 13.1 % Free cash flow $ 130,122 $ 154,083 $ 84,034 As of December 31, 2025 2024 Annualized recurring revenue (“ARR”) $ 839,850 $ 839,819 Year-over-year change — % 4.2 % Number of customers 11,674 11,727 Year-over-year change (0.5) % 1.7 % ARR per customer $ 71.9 $ 71.6 Year-over-year change — % 2.5 % Total Revenue and Growth .
We exclude acquisition-related expenses, including accretion expense associated with contingent consideration, as costs that are unrelated to the current operations and are neither comparable to the prior period nor predictive of future results. • Change in fair value of derivative assets.
We exclude acquisition-related expenses that are unrelated to the current operations and neither are comparable to the prior period nor predictive of future results. • Change in fair value of derivative assets.
We define a customer as any entity that has an active Rapid7 recurring revenue contract as of the specified measurement date, excluding customers of only InsightOps or Logentries that have a contract value of less than $2,400 per year. ARR per Customer .
We define a customer as any entity that has an active Rapid7 recurring revenue contract as of the specified measurement date, excluding only InsightOps and Logentries customers with a contract value less than $2,400 per year. ARR per Customer . ARR per customer is defined as ARR divided by the number of customers at the end of the period.
The following tables reconcile GAAP gross profit to non-GAAP gross profit for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 (in thousands) GAAP total gross profit $ 592,972 $ 545,661 $ 470,734 Stock-based compensation expense 12,208 11,005 10,367 Amortization of acquired intangible assets 17,163 18,386 18,493 Non-GAAP total gross profit $ 622,343 $ 575,052 $ 499,594 Year Ended December 31, 2024 2023 2022 (in thousands) GAAP gross profit – product subscriptions $ 583,359 $ 537,028 $ 465,323 Stock-based compensation expense 10,376 8,439 7,562 Amortization of acquired intangible assets 17,163 18,386 18,493 Non-GAAP gross profit – product subscriptions $ 610,898 $ 563,853 $ 491,378 Year Ended December 31, 2024 2023 2022 (in thousands) GAAP gross profit – professional services $ 9,613 $ 8,633 $ 5,411 Stock-based compensation expense 1,832 2,566 2,805 Non-GAAP gross profit – professional services $ 11,445 $ 11,199 $ 8,216 The following table reconciles GAAP income (loss) from operations to non-GAAP income from operations for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 (in thousands) GAAP income (loss) from operations $ 35,035 $ (84,288) $ (111,614) Stock-based compensation expense 107,961 111,636 119,902 Amortization of acquired intangible assets 19,951 21,499 21,983 Acquisition-related expenses (1) 751 363 — Litigation-related expenses — — 115 Impairment of long-lived assets — 30,784 — Restructuring expense (2) (190) 22,227 — Non-GAAP income from operations $ 163,508 $ 102,221 $ 30,386 (1) For the year ended December 31, 2024, acquisition-related expenses included $0.4 million of accretion expense related to contingent consideration recorded in connection with our July 2024 acquisition of Noetic.
The following tables reconcile GAAP gross profit to non-GAAP gross profit for the years ended December 31, 2025, 2024 and 2023 (in thousands): Year Ended December 31, 2025 2024 2023 GAAP total gross profit $ 604,754 $ 592,972 $ 545,661 Stock-based compensation expense 9,641 12,208 11,005 Amortization of acquired intangible assets 17,693 17,163 18,386 Non-GAAP total gross profit $ 632,088 $ 622,343 $ 575,052 48 Table of Contents Year Ended December 31, 2025 2024 2023 GAAP gross profit – product subscriptions $ 601,206 $ 583,359 $ 537,028 Stock-based compensation expense 7,464 10,376 8,439 Amortization of acquired intangible assets 17,693 17,163 18,386 Non-GAAP gross profit – product subscriptions $ 626,363 $ 610,898 $ 563,853 Year Ended December 31, 2025 2024 2023 GAAP gross profit – professional services $ 3,548 $ 9,613 $ 8,633 Stock-based compensation expense 2,177 1,832 2,566 Non-GAAP gross profit – professional services $ 5,725 $ 11,445 $ 11,199 The following table reconciles GAAP income (loss) from operations to non-GAAP income from operations for the years ended December 31, 2025, 2024 and 2023 (in thousands): Year Ended December 31, 2025 2024 2023 GAAP income (loss) from operations $ 11,568 $ 35,035 $ (84,288) Stock-based compensation expense 104,335 107,961 111,636 Amortization of acquired intangible assets 19,296 19,951 21,499 Acquisition-related expenses (1) 533 751 363 Impairment of long-lived assets — — 30,784 Restructuring expense (2) — (190) 22,227 Non-GAAP income from operations $ 135,732 $ 163,508 $ 102,221 (1) For the years ended December 31, 2025, 2024 and 2023, acquisition-related expenses included $0.5 million, $0.8 million, and $0.4 million, respectively of accretion expense related to contingent consideration recorded in connection with our July 2024 acquisition of Noetic.
(2) For the year ended December 31, 2024, restructuring expense was recorded within general and administrative expense in our consolidated statement of operations. 45 Table of Contents The following table reconciles GAAP net income (loss) to non-GAAP net income for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 (in thousands, except share and per share data) GAAP net income (loss) $ 25,526 $ (152,815) $ (124,717) Stock-based compensation expense 107,961 111,636 119,902 Amortization of acquired intangible assets 19,951 21,499 21,983 Acquisition-related expenses 751 363 — Litigation-related expenses — — 115 Amortization of debt issuance costs 4,447 4,138 4,085 Induced conversion expense — 53,889 — Change in fair value of derivative assets — 15,511 — Impairment of long-lived assets — 30,784 — Restructuring expense (190) 22,227 — Discrete tax items 4,692 — — Non-GAAP net income $ 163,138 $ 107,232 $ 21,368 Interest expense of convertible senior notes (1) 6,285 2,667 1,500 Numerator for non-GAAP earnings per share calculation $ 169,423 $ 109,899 $ 22,868 Weighted average shares used in GAAP earnings per share calculation, basic 62,607,583 60,756,087 58,552,065 Dilutive effect of convertible senior notes (1) 11,183,611 10,429,891 5,803,831 Dilutive effect of employee equity incentive plans (2) 576,068 916,134 1,251,725 Weighted average shares used in non-GAAP earnings per share calculation, diluted 74,367,262 72,102,112 65,607,621 Non-GAAP net income per share: Basic $ 2.61 $ 1.76 $ 0.36 Diluted $ 2.28 $ 1.52 $ 0.35 (1) We use the if-converted method to compute diluted earnings per share with respect to our Notes.
(2) For the year ended December 31, 2024, restructuring expense was recorded within general and administrative expense in our consolidated statement of operations. 49 Table of Contents The following table reconciles GAAP net income (loss) to non-GAAP net income for the years ended December 31, 2025, 2024 and 2023 (in thousands): Year Ended December 31, 2025 2024 2023 GAAP net income (loss) $ 23,381 $ 25,526 $ (152,815) Stock-based compensation expense 104,335 107,961 111,636 Amortization of acquired intangible assets 19,296 19,951 21,499 Acquisition-related expenses 533 751 363 Amortization of debt issuance costs 4,211 4,447 4,138 Induced conversion expense — — 53,889 Restructuring expense — (190) 22,227 Discrete tax items — 4,692 — Non-GAAP net income $ 151,756 $ 163,138 $ 107,232 Interest expense of convertible senior notes (1) 5,595 6,285 6,462 Numerator for non-GAAP earnings per share calculation $ 157,351 $ 169,423 $ 113,694 Weighted average shares used in GAAP earnings per share calculation, basic 64,727,551 62,607,583 60,756,087 Dilutive effect of convertible senior notes (1) 10,679,754 11,183,611 10,429,891 Dilutive effect of employee equity incentive plans (2) 275,587 576,068 916,134 Weighted average shares used in non-GAAP earnings per share calculation, diluted 75,682,892 74,367,262 72,102,112 Non-GAAP net income per share: Basic $ 2.34 $ 2.61 $ 1.76 Diluted $ 2.08 $ 2.28 $ 1.58 (1) We use the if-converted method to compute diluted earnings per share with respect to our Notes.
Our Managed Vulnerability Management, Managed Detection and Response, and Managed Application Security products are offered on a managed service basis, pursuant to one or multi-year agreements. 41 Table of Contents • Licensed on-premise software, which consists of term licenses.
Our Managed Vulnerability Management, Managed Detection and Response, and Managed Application Security products are offered on a managed service basis, pursuant to one or multi-year agreements. • Licensed on-premise software consists of term licenses. When licensed on-premise software is purchased, maintenance and support and content subscriptions, as applicable, are bundled with the license for the term period.
Rapid7 enables the Security Operations Center (“SOC”) to understand their fragmented attack surface with attacker perspective, allowing them to proactively secure their attack surface and better detect and respond to threats.
Our Command Platform is anchored on our cloud security, security information and event management (“SIEM”), advanced detection and response, and vulnerability management offerings. Rapid7 enables the Security Operations Center (“SOC”) to understand their fragmented attack surface with attacker perspective, allowing them to proactively secure their attack surface and better detect and respond to threats.
Annualized Recurring Revenue (“ARR”) is defined as the annual value of all recurring revenue related to contracts in place at the end of the quarter. ARR should be viewed independently of revenue and deferred revenue, as ARR is an operating metric and is not intended to be combined with or replace these items.
ARR should be viewed independently of revenue and deferred revenue, as ARR is an operating metric and is not intended to be combined with or replace these items.
In accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality , and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements , we evaluated the errors and determined that the related impact was not material to results of operations or financial position for any historical annual or interim period.
In accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality , and SAB No. 108, C onsidering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements , we evaluated the errors and determined the related impacts were not material to our consolidated financial statements for the prior periods when they occurred, but that correcting the cumulative errors in the period detected would have been material to our results of operations for that period.
Other Income (Expense), Net 48 Table of Contents Other income (expense), net consists primarily of the change in fair value of derivative assets and unrealized and realized gains and losses related to changes in foreign currency exchange rates.
We expect interest expense in the near term to represent contractual interest expense and amortization of debt issuance costs related to our convertible senior notes. Other Income (Expense), Net Other income (expense), net consists primarily of the change in fair value of derivative assets and unrealized and realized gains and losses related to changes in foreign currency exchange rates.
(2) We use the treasury method to compute the dilutive effect of employee equity incentive plan awards. 46 Table of Contents The following table reconciles GAAP net income (loss) to adjusted EBITDA for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 (in thousands) GAAP net income (loss) $ 25,526 $ (152,815) $ (124,717) Interest income (21,063) (10,177) (1,813) Interest expense 10,963 64,700 10,982 Other expense, net 3,680 14,522 1,522 Provision for (benefit from) income taxes 15,929 (518) 2,412 Depreciation expense 11,059 14,047 13,571 Amortization of intangible assets 33,834 31,892 27,467 Stock-based compensation expense 107,961 111,636 119,902 Acquisition-related expenses 751 363 — Litigation-related expenses — — 115 Impairment of long-lived assets — 30,784 — Restructuring expense (190) 22,227 — Adjusted EBITDA $ 188,450 $ 126,661 $ 49,441 The following table reconciles net cash provided by operating activities to free cash flow for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 (in thousands) Net cash provided by operating activities $ 171,670 $ 104,278 $ 78,204 Less: Purchases of property and equipment (3,425) (4,366) (20,382) Less: Capitalized internal-use software costs (14,162) (15,878) (17,145) Free cash flow $ 154,083 $ 84,034 $ 40,677 Components of Results of Operations Revenue We generate revenue primarily from selling products and professional services through a variety of delivery models to meet the needs of our diverse customer base.
(2) We use the treasury method to compute the dilutive effect of employee equity incentive plan awards. 50 Table of Contents The following table reconciles GAAP net income (loss) to adjusted EBITDA for the years ended December 31, 2025, 2024 and 2023 (in thousands): Year Ended December 31, 2025 2024 2023 GAAP net income (loss) $ 23,381 $ 25,526 $ (152,815) Interest income (23,019) (21,063) (10,177) Interest expense 10,436 10,963 64,700 Other (income) expense, net (6,030) 3,680 14,522 Provision (benefit) for income taxes 6,800 15,929 (518) Depreciation expense 9,767 11,059 14,047 Amortization of intangible assets 35,669 33,834 31,892 Stock-based compensation expense 104,335 107,961 111,636 Acquisition-related expenses 533 751 363 Impairment of long-lived assets — — 30,784 Restructuring expense — (190) 22,227 Adjusted EBITDA $ 161,872 $ 188,450 $ 126,661 The following table reconciles net cash provided by operating activities to free cash flow for the years ended December 31, 2025, 2024 and 2023 (in thousands): Year Ended December 31, 2025 2024 2023 Net cash provided by operating activities $ 153,827 $ 171,670 $ 104,278 Less: Purchases of property and equipment (7,599) (3,425) (4,366) Less: Capitalized internal-use software costs (16,106) (14,162) (15,878) Free cash flow $ 130,122 $ 154,083 $ 84,034 Liquidity and Capital Resources As of December 31, 2025, we had $246.7 million in cash and cash equivalents, $412.1 million in investments that have maturities ranging from one to fourteen months and an accumulated deficit of $964.7 million.
Rapid7’s comprehensive security solutions help our global customers unite exposure management with threat detection and response to reduce attack surfaces and eliminate threats with speed and precision.
We empower security professionals to manage a modern attack surface through our trusted AI infused technology, leading-edge research, and broad, strategic expertise. Rapid7’s comprehensive security solutions help our global customers unite exposure management with threat detection and response to reduce attack surfaces and eliminate threats with speed and precision.
When licensed on-premise software is purchased, maintenance and support and content subscriptions, as applicable, are bundled with the license for the term period. Our Nexpose and Metasploit products are offered through term software licenses with an option for one or multi-year terms.
Our Nexpose and Metasploit products are offered through term software licenses with an option for one or multi-year terms.
The agreement provides for an annual commitment of $125.0 million per year over the next five years, with an additional $35.0 million obligation over the five-year period of the agreement, for an aggregate total commitment of $660.0 million. See Note 16, Commitments and Contingencies , in the Notes to our Consolidated Financial Statements for more information regarding this commitment.
The agreement provides for an annual commitment of $125.0 million per year over the next five years, with an additional $35.0 million obligation over the five-year period of the 51 Table of Contents agreement, for an aggregate total commitment of $660.0 million.
For more than twenty years, Rapid7 has partnered with customers across the globe representing a diverse range of industries and sizes to improve the efficacy and productivity of their security operations (“SecOps”).
For more than twenty years, Rapid7 has partnered with enterprises across the globe representing a diverse range of industries to improve the efficacy and productivity of their security operations (“SecOps”). In today's rapidly evolving IT environment, customers are encountering escalating challenges due to the widening spectrum of attackers and techniques, including the proliferation of cyberattacks leveraging AI and targeted automation.
To date, we have financed our operations primarily through private and public equity financings, issuance of convertible senior notes and through cash generated by operating activities. We believe that our existing cash and cash equivalents, our investments and cash generated by operating activities will be sufficient to meet our operating and capital requirements for at least the next 12 months.
Our principal sources of liquidity are cash and cash equivalents, investments, cash flow provided by operating activities and our Credit Agreement. To date, we have financed our operations primarily through private and public equity financings, issuance of convertible senior notes and through cash generated by operating activities.
However, we may release some of these valuation allowances in future periods if objective negative evidence of cumulative losses is no longer present and positive evidence, such as projection of future growth, supports the realization of such deferred tax assets.
We determined as of December 31, 2025 that it was more likely than not that these deferred tax assets will not be realized. However, we may release some of these valuation allowances in future periods if positive evidence, such as projection of sustained future growth, supports the realization of such deferred tax assets.
Provision for (Benefit from) Income Taxes Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) Provision for (benefit from) income taxes $ 15,929 $ (518) $ 16,447 NM % of revenue 1.9 % (0.1) % Provision for (benefit from) income taxes increased by $16.4 million in 2024 compared to 2023.
Provision for income taxes Year Ended December 31, Change 2025 2024 $ % Provision for income taxes $ 6,800 $ 15,929 $ (9,129) (57.3) % % of revenue 0.8 % 1.9 % Provision for income taxes decreased by $9.1M in 2025 compared to 2024.
There was no add-back of interest expense or additional dilutive shares related to the Notes where the effect was anti-dilutive. Adjustments for interest expense, if applicable, on our convertible notes for purposes of calculating non-GAAP earnings per share are made gross of any tax impact.
There was no add-back of interest expense or additional dilutive shares related to the Notes where the effect was anti-dilutive.
Cost of Revenue Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) Cost of revenue: Product subscriptions $ 225,547 $ 203,140 $ 22,407 11.0 % Professional services 25,488 28,906 (3,418) (11.8) % Total cost of revenue $ 251,035 $ 232,046 $ 18,989 8.2 % Gross margin %: Products 72.1 % 72.6 % Professional services 27.4 % 23.0 % Total gross margin % 70.3 % 70.2 % Total cost of revenue increased by $19.0 million in 2024 compared to 2023, primarily due to a $21.7 million increase in cloud computing costs related to growing cloud-based subscription and managed services revenue, and a $3.5 million increase in amortization expense for capitalized internally-developed software.
This increase in revenue was partially offset by a decline in revenue generated from new customers during the respective periods, as compared to the revenue derived from new customers in the corresponding periods of the prior year. 43 Table of Contents Cost of Revenue Year Ended December 31, Change 2025 2024 $ % Cost of revenue: Product subscriptions $ 230,119 $ 225,547 $ 4,572 2.0 % Professional services 24,921 25,488 (567) (2.2) % Total cost of revenue $ 255,040 $ 251,035 $ 4,005 1.6 % Gross margin %: Products 72.3 % 72.1 % Professional services 12.5 % 27.4 % Total gross margin % 70.3 % 70.3 % The increase in total cost of revenue for the year ended December 31, 2025 as compared to the same period in 2024 was primarily driven by an increase in cloud computing costs of $5.2 million and a $3.0 million increase in amortization expense for capitalized internally-developed software, software subscriptions of $0.7 million, and royalties of $0.3 million.
Financing activities provided $79.6 million for the year ended December 31, 2023, which consisted primarily of $292.1 million in proceeds from the issuance of the 2029 Notes, net of issuance costs paid of $7.9 million, $17.5 million in proceeds from the settlement of the 2023 Capped Calls, $11.3 million in proceeds from the issuance of common stock purchased by employees under the Rapid7, Inc. 2015 ESPP and $3.1 million in proceeds from the exercise of stock options, partially offset by $200.0 million for the repurchase and conversion of the 2025 Notes, $36.6 million for the purchase of the 2029 Capped Calls, $5.6 million in withholding taxes paid for the net share settlement of equity awards and $2.3 million in payments related to the acquisition of IntSights.
Financing Activities Financing activities used $45.5 million for the year ended December 31, 2025, which consisted primarily of $46.0 million of cash paid relating to the repayment of our 2025 convertible senior note, $4.1 million in cash paid relating to the earnout from our Noetic acquisition, and $3.0 million in withholding taxes paid for the net share settlement of equity awards, partially offset by cash provided by the purchase of stock by our employees through the employee stock purchase plan.
Investing activities used $178.8 million of cash for the year ended December 31, 2023, consisting of $126.4 million in purchases of investments, net of sales and maturities, $34.8 million of cash paid for the acquisition of Minerva, $15.9 million for capitalization of internal-use software costs, and $4.4 million in capital expenditures to purchase computer equipment and leasehold improvements, partially offset by $2.7 million in proceeds from other investments.
Investing Activities Investing activities used $209.4 million of cash for the year ended December 31, 2025, primarily driven $533.3 million in purchases of investments, which was partially offset by $351.3 million in proceeds from investment as we strategically utilize our cash to maximize return; $16.1 million for capitalization of internal-use software costs as we continue to develop new products and enhance our existing product catalog, and $7.6 million in capital expenditures to purchase computer equipment to support new and existing employees and leasehold improvements related to the new leases entered into in 2025.
Operating Expenses Research and Development Expense Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) Research and development $ 173,126 $ 177,937 $ (4,811) (2.7) % % of revenue 20.5 % 22.9 % Research and development expense decreased by $4.8 million in 2024 compared to 2023, primarily due to a $6.1 million decrease in personnel costs, inclusive of a $1.6 million decrease in stock-based compensation expense, resulting from an overall decrease in headcount primarily due to the Restructuring Plan, and a $3.0 million decrease due to a write-off of a capitalized internal-use software project in the prior period.
Operating Expenses Research and Development Expense Year Ended December 31, Change 2025 2024 $ % Research and development $ 190,660 $ 173,126 $ 17,534 10.1 % % of revenue 22.2 % 20.5 % Research and development expenses increased for the year ended December 31, 2025 as compared to the same period in 2024, primarily driven by an increase in personnel cost, inclusive of stock-based compensation, of $14.5 million, third-party cloud infrastructure costs of $2.6 million and professional fees of $1.3 million related to the development of new and enhanced products.
Other Expense, Net Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) Other expense, net $ (3,680) $ (14,522) $ 10,842 (74.7) % % of revenue (0.4) % (1.9) % Other expense, net decreased by $10.8 million in 2024 compared to 2023, due to a $15.5 million expense in the prior period for the change in fair value of derivative assets related to our settlement of the capped call transactions that we entered into in connection with the issuance of our 1.25% convertible senior notes due 2023 (“the 2023 Capped Calls”) and a decrease in realized and unrealized foreign currency gains, primarily related to the Euro and British Pound Sterling.
Other Income (Expense), Net Year Ended December 31, Change 2025 2024 $ % Other income (expense), net $ 6,030 $ (3,680) $ 9,710 (263.9) % % of revenue 0.7 % (0.4) % Other income (expense), net increased for the year ended December 31, 2025 compared to the same period due to gains on foreign currency transactions resulting in an increase in unrealized gains primarily related to the British Pound Sterling and recognition of realized gains during the period.
General and Administrative Expense Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) General and administrative $ 86,002 $ 85,340 $ 662 0.8 % % of revenue 10.2 % 11.0 % General and administrative expense increased by $0.7 million in 2024 compared to 2023, primarily due to a $1.2 million increase in professional fees related to legal and corporate advisory services, partially offset by a $0.5 million decrease in other expenses.
The increase in sales and marketing expense was additionally driven by an increase in marketing and advertising costs of $3.1 million related to external marketing events and related activities and an increase of $1.2 million related to office expenses from internal corporate events, partially offset by a decrease in amortization expense of $1.1 million. 44 Table of Contents General and Administrative Expense Year Ended December 31, Change 2025 2024 $ % General and administrative $ 84,861 $ 86,002 $ (1,141) (1.3) % % of revenue 9.9 % 10.2 % General and administrative expenses decreased for the year ended December 31, 2025 as compared to the same period in 2024, primarily driven by a decrease in hosting expenses of $1.8 million associated with enterprise softwares and cloud computing costs, a decrease in professional fees of $0.9 million from investor related expenses, and a decrease in office related expenses of $0.9 million partially offset by an increase in personnel costs of $1.6 million.
Restructuring Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) Restructuring $ — $ 22,227 $ (22,227) 100.0 % % of revenue — % 2.9 % Restructuring expense of $22.2 million was recorded in the year ended 2023 as a result of restructuring charges consisting of employee transition, notice period and severance payments and employee benefits and related facilitation costs related to our Restructuring Plan.
Restructuring Expense Restructuring expense consists of charges related to the Restructuring Plan such as employee transition, notice period and severance payments and employee benefits and related facilitation costs. For further information, refer to Note 18, Restructuring , in the Notes to our Consolidated Financial Statements.
Sales and Marketing Expense Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) Sales and marketing $ 298,809 $ 313,661 $ (14,852) (4.7) % % of revenue 35.4 % 40.3 % Sales and marketing expense decreased by $14.9 million in 2024 compared to 2023, primarily due to a $15.9 million decrease in personnel costs, inclusive of a $1.6 million decrease in stock-based compensation expense, resulting from an overall decrease in headcount primarily due to the Restructuring Plan, a decrease of $1.8 million in advertising expenses, a $1.4 million decrease 51 Table of Contents in professional fees and a $4.0 million decrease in other expenses.
Sales and Marketing Expense Year Ended December 31, Change 2025 2024 $ % Sales and marketing $ 317,665 $ 298,809 $ 18,856 6.3 % % of revenue 36.9 % 35.4 % Sales and marketing expenses increased for the year ended December 31, 2025 as compared to the same period in 2024, primarily driven by an increase in personnel costs of $14.6 million driven by a shift in the nature of certain roles and responsibilities between product delivery and sales support functions of $13.0 million.
Removed
In today's rapidly evolving IT environment, customers are encountering escalating challenges due to the widening spectrum of attackers and techniques, including the proliferation of cyberattacks leveraging artificial intelligence (“AI”) and targeted automation. We empower security professionals to manage a modern attack surface through our best-in-class AI infused technology, leading-edge research, and broad, strategic expertise.
Added
Accordingly, we revised previously reported comparative financial information presented herein for such immaterial errors .
Removed
Through our security operations platform, anchored on our cloud security, security information and event management (“SIEM”), advanced detection and response, and vulnerability management offerings, we believe that Rapid7 is poised to expand the capabilities of today's SecOps teams.
Added
Refer to Note 19, Immaterial Correction of an Error , in the notes to our consolidated financial statements for further information. 39 Table of Contents Components of Results of Operations Revenue We generate revenue primarily from selling products and professional services through a variety of delivery models to meet the needs of our diverse customer base.
Removed
As a result, we are correcting the errors by adjusting prior period financial statements in certain of the periods shown below. Refer to Note 20, Immaterial Correction of an Error , in the notes to our Consolidated Financial Statements for further information.
Added
Impairment of Long-Lived Assets Impairment of long-lived assets consists of impairment charges allocated to the carrying amount of certain operating right-of-use assets and the associated leasehold improvements when the carrying amounts exceed their respective fair values.
Removed
ARR per customer is defined as ARR divided by the number of customers at the end of the period.
Added
Revenue Year Ended December 31, Change 2025 2024 $ % Revenue: Product subscriptions $ 831,325 $ 808,906 $ 22,419 2.8 % Professional services 28,469 35,101 (6,632) (18.9) % Total revenue $ 859,794 $ 844,007 $ 15,787 1.9 % The increase in total revenue for the year ended December 31, 2025 as compared to the same period in 2024 was primarily driven by renewals, upselling activities, and cross-selling initiatives conducted with the existing customer base, reflecting sustained expansion among existing customers.
Removed
We expect interest expense in the near term to represent contractual interest expense and amortization of debt issuance costs related to our convertible senior notes.
Added
The increase was partially offset by a decrease in personnel costs of $5.8 million, driven by a shift in the nature of certain roles and responsibilities between product delivery and sales support functions of approximately $13.0 million, partially offset by an increase of $7.2 million in personnel costs primarily related to expanding D&R and managed product support.
Removed
We determined as of December 31, 2024 that it was more likely than not that these deferred tax assets will not be realized.
Added
Interest Income Year Ended December 31, Change 2025 2024 $ % Interest income $ 23,019 $ 21,063 $ 1,956 9.3 % % of revenue 2.7 % 2.5 % Interest income increased for the year ended December 31, 2025 compared to the same period in 2024, primarily due to higher average investment balances this year compared to prior year, as well as favorable market interest rates.
Removed
Release of all or a portion of these valuation allowances would result in a decrease in the provision for income taxes in the period of the release. See Note 14, Income Taxes, in the accompanying consolidated financial statements for more information.
Added
Interest Expense Year Ended December 31, Change 2025 2024 $ % Interest expense $ (10,436) $ (10,963) $ 527 (4.8) % % of revenue (1.2) % (1.3) % Interest expense remained consistent in the year ended December 31, 2025 compared to the same period in 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2024, the effect of a hypothetical 10% increase or decrease in interest rates would not have had a material impact on our financial statements. Inflation Risk As of December 31, 2024, we do not believe that inflation had a material effect on our business, financial condition or results of operations.
Biggest changeBased upon the quoted market price as of December 31, 2025, the fair values of our 2027 Notes and 2029 Notes were $565.5 million and $272.9 million, respectively. As of December 31, 2025, the effect of a hypothetical 10% increase or decrease in interest rates would not have had a material impact on our financial statements.
The effect of a hypothetical 10% adverse change in foreign currency exchange rates on monetary assets and liabilities as of December 31, 2024 would not have been material to our financial condition or results of operations.
The effect of a hypothetical 10% adverse change in foreign currency exchange rates on monetary assets and liabilities as of December 31, 2025 would not have been material to our financial condition or results of operations.
For further information, see Note 10, Derivatives and Hedging Activities , in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K. As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in foreign currency rates.
For further information, see Note 9, Derivatives and Hedging Activities , in the notes to our consolidated financial statements included in this Quarterly Report on Form 10-K. As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in foreign currency rates.
The fair values of the convertible senior notes may increase or decrease for various reasons, including fluctuations in the market price of our common stock, fluctuations in market interest rates and fluctuations in general economic conditions.
The fair values of the convertible senior notes may increase or decrease for various reasons, including fluctuations in the market price of our common stock, fluctuations in market interest rates and fluctuations in general 54 Table of Contents economic conditions.
Interest Rate Risk As of December 31, 2024, we had cash and cash equivalents of $334.7 million consisting of bank deposits and money market funds and investments of $224.3 million consisting of U.S. government agencies. Our investments are made for capital preservation purposes. We do not enter into investments for trading or speculative purposes.
Interest Rate Risk As of December 31, 2025, we had cash and cash equivalents of $246.7 million consisting of bank deposits and money market funds and investments of $412.1 million consisting of U.S. government agencies. Our investments are made for capital preservation purposes. We do not enter into investments for trading or speculative purposes.
However, because we classify our investments as available-for-sale securities, no gains or losses are recognized due to the changes in interest rates unless securities are sold prior to maturity or declines in fair value are determined to be other-than-temporary. 56 Table of Contents The fair values of our convertible senior notes are subject to interest rate risk, market risk and other factors due to the conversion features of the notes.
However, because we classify our investments as available-for-sale securities, no gains or losses are recognized due to the changes in interest rates unless securities are sold prior to maturity or declines in fair value are determined to be other-than-temporary.
If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations. 57 Table of Contents
Inflation Risk As of December 31, 2025, we do not believe that inflation had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases.
Removed
Based upon the quoted market price as of December 31, 2024, the fair values of our 2025 Notes, 2027 Notes and 2029 Notes were $45.2 million, $553.5 million and $284.1 million , respectively.
Added
The fair values of our convertible senior notes are subject to interest rate risk, market risk and other factors due to the conversion features of the notes.
Added
Our inability or failure to do so could harm our business, financial condition and results of operations. 55 Table of Contents

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