Rapid7 Inc (RPD) Reports Growth in Annual Recurring Revenue and Free Cash Flow
Annualized Recurring Revenue (ARR): Increased by 13% year-over-year to $806 million.
Full-Year Revenue: Grew by 14% to $778 million, with products revenue also up by 14%.
Operating Income/Loss: Full-year GAAP operating loss of $81 million; non-GAAP operating income of $102 million.
Net Cash and Free Cash Flow: Net cash provided by operating activities was $104 million; free cash flow reached $84 million.
Customer Growth: The number of customers increased by 5%, with ARR per customer growing by 7%.
Rapid7 Inc (NASDAQ:RPD) announced its financial results for the fourth quarter and full-year 2023 on February 7, 2024, revealing a year of growth despite broader economic challenges. The company, a leader in cybersecurity solutions, released its 8-K filing, detailing a 13% increase in annualized recurring revenue (ARR) to $806 million and a 14% rise in full-year revenue to $778 million. These results reflect the company's successful expansion and the increasing demand for its comprehensive security solutions.
Founded in 2000, Rapid7 has evolved from a vulnerability management provider to a diversified cybersecurity company offering a range of services including XDR, SIEM, cloud security, threat intelligence, application security, and SOAR. The Boston-based company, which went public in 2015, has continued to grow its customer base and enhance its product offerings to address the complex security needs of enterprises worldwide.
Financial Performance and Challenges
Rapid7's performance in 2023 was marked by significant achievements, including a robust 14% increase in product revenue to $740 million. The company's focus on recurring revenue streams has paid off, with ARR per customer rising to $69.9, a testament to the value Rapid7 delivers to its clients. However, the company did report a full-year GAAP operating loss of $81 million, highlighting the competitive and investment-heavy nature of the cybersecurity industry. Despite this, Rapid7's non-GAAP operating income stood at $102 million, indicating strong underlying profitability when excluding non-recurring items.
The importance of these financial achievements cannot be overstated in the software industry, where recurring revenue models are critical for sustainable growth. Rapid7's ability to increase its ARR and maintain a high gross margin of 74% on a non-GAAP basis demonstrates the company's effectiveness in scaling its operations while managing costs.
Key Financial Metrics
Investors should note the following key details from Rapid7's financial statements:
"Rapid7 delivered solid results to end the year, exceeding our guided ranges on ARR, revenue, non-GAAP operating income, and free cash flow," said Corey Thomas, Chairman and CEO of Rapid7.
Free cash flow, a critical indicator of financial health, was reported at $84 million, providing Rapid7 with the liquidity to invest in future growth initiatives. The company's balance sheet also reflects a healthy cash and cash equivalents position of $213.6 million, ensuring ample flexibility for strategic maneuvers.
Analysis and Outlook
Looking ahead, Rapid7 anticipates continued growth with an ARR forecast of $885 to $895 million for 2024, representing a year-over-year increase of 10% to 11%. The company's guidance also projects a revenue of $848 to $856 million for the full year, with non-GAAP income from operations expected to be between $150 to $158 million. This outlook underscores Rapid7's confidence in its business model and market position as it continues to invest in platform enhancements and customer experience improvements.
Rapid7's solid financial performance, combined with strategic investments in its platform and services, positions the company for durable, long-term growth. As cybersecurity threats evolve, Rapid7's comprehensive solutions and commitment to innovation will likely continue to drive demand and customer loyalty.
For more detailed information and analysis on Rapid7 Inc (NASDAQ:RPD)'s financial results, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from Rapid7 Inc for further details.
This article first appeared on GuruFocus.
