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Image source: The Motley Fool. Monday, Aug. 10, 2026 at 4:30 p.m. ET Vice President of Investor Relations - Matthew Ryan Wells Executive Chairman - Corey E. Thomas CEO - Wael Mohamed CFO - Rafeal Edgar Brown Operator: Good day, everyone. My name is Kehaylani, and I will be your conference operator today. At this time, I would like to welcome you to the Q2 26 Rapid7 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time and if you have joined via the webinar, please use the raise hand icon which can be found at the bottom of your webinar app application. At this time, I would like to turn the call over to Matthew Ryan Wells, Vice President of Investor Relations. Matthew Ryan Wells: Thank you, operator. And good afternoon, everyone. Today, we will be discussing Rapid7's second quarter fiscal 26 financial results. We have distributed our earnings press release over the wire it can be accessed on our investor relations website. With me on the call are Corey E. Thomas, Executive Chairman; Wael Mohamed, CEO; and Rafeal Edgar Brown, CFO. As a reminder, all participants are in a listen-only mode and a question-and-answer session will follow our opening remarks. Before I hand the call over to Corey, I want to remind everyone that certain statements made during this conference call may be considered forward looking statements under federal securities laws. These statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 2000 and include, among other things, our outlook for the third quarter and full-year 2026 our expectations regarding fiscal periods beyond 2026, our transformation and restructuring initiatives, our strategy, priorities, and capital allocation, anticipated operational improvements, investments in our core platform and AI capabilities, and our expected growth drivers and financial performance. These forward looking statements are based on our current expectations and information currently available to us. We believe any forward looking statements we make are reasonable, actual results could differ materially due to a number of risks and uncertainties including those contained in our filings with the SEC. Reported results should not be considered indicative of future performance. We do not undertake and expressly disclaim any obligation to update or alter our forward looking statements whether as a result of new information, future events or otherwise. Except to the extent required by applicable law. Further information on these forward looking statements and risk factors are included in the filings we make with the SEC including the section titled cautionary language concerning forward looking statements in our earnings press release. Additionally, over the course of this call, we will reference non GAAP measures to describe our performance. Please review our earnings press release and filings with the SEC for our rationale behind these non GAAP measures and for a full reconciliation of these GAAP to non GAAP metrics. These documents, in addition to a replay of this call, will be available on the Rapid7 Investor Relations website. And with that, I would like to turn the call over to Corey. Corey E. Thomas: Welcome to Rapid7's Q2 26 earnings call. I join you today in a new role, but with the same passion and purpose. To ensure that organizations of all sizes can get the best results from their security operations. I work with the board and especially with Wael. Over the last year to revitalize our team, improve our execution, and fully leverage the opportunity that AI is providing. As part of that work, it was clear that we have significant opportunities but only if we tighten our focus on our core offerings sharpen our alignment and execution around those offerings, and deliver a more efficient model. The board and I recruited Wael whom I have known and respected for many years, to do exactly that. Deliver on Rapid7's full potential in the midst of 1 of the most exciting moments in technology. Many ways, Wael is accelerating a plan he helped develop. In other areas, he is providing sharper focus in leadership, as you will hear in his upcoming comments. Before I hand it over to Wael, I wanna take a moment to acknowledge the incredible work of our colleagues at Rapid7. Whose passion and care for our customers and their deep and energetic embrace of innovation continue to inspire me. With that, I turn the call over to Wael. Wael Mohamed: Wael, thank you, Corey, and good afternoon. Since this is my first earnings call as CEO of Rapid7, I want to use my time a little differently. Rafeal will take you through the quarter, the actions we announced, and our guidance. I want to focus on our strategy, the operating discipline behind it, and how I ask you to measure our progress. I have known Rapid7 for years. Long before I joined the board, I saw this company at its best, moving fast, earning customer trust, and winning in the heart of the market. Joining the board gave me a much closer view of the company its people, and its potential. The closer I got, the more I liked what I found. Rapid7 is a good company ready to be great. It is not broken. It has reached a ceiling. The issue is not our assets. It is how we focus our resources and energy. Breaking through requires clear choices, strong execution, and an operating system that can repeat success at scale. That is the work I signed up for. Transformation is not about changing everything. It is about having the discipline to change the few things that matter most. And doing so consistently over time. Over the past year, we put the leadership team in place for this next chapter. We added a proven chief financial officer to strengthen operating discipline, a chief commercial officer to help us scale and win with customers, and the chief product and technology officer to build an AI first platform. We now have our leadership team, operating model, and capital allocation aligned behind 1 direction. Since stepping into this role, I have spent my time listening to customers, our people, partners, and many of you. 3 things are clear. First, focus matters. We do not need to win everywhere. We need to be exceptional where we can win. Our clearest right to win is in the heart of the enterprise market. Customers that need enterprise grade security. But also need fewer tools, less complexity, and faster outcomes. Our leadership in the mid market is proof of our strength It is not a limit on our technology or our market. We will continue to compete for larger enterprises. Where our platform is the right fit. These customers want fewer, better partners. Not more tools. That is where Rapid7 has earned the right to win. Second, outcomes matter more than products. For years, cybersecurity answered complexity with more complexity. More tools, more alerts, more consoles, more people. Customers do not need another dashboard. They need less risk, less complexity, and faster action. Our opportunity is to connect exposure management with detection and response. To move from finding problems to resolving them. For many customers, that outcome will be delivered as a service. Skilled security people are hard to find. They need a trusted partner that can bring the platform the expertise, and the work together. Third, the way security work gets done is changing. AI should not become another label. It should change the work. Automation helps us move faster today. Agents let us do more across more data, more steps, and at much greater scale. Attackers are moving at machine speed, Attackers only need to find the seam between an exposure and the fix. An alert and the work needed to investigate it. Or a decision and an action. Defenders need the same reach and speed with people remaining in control. People decide. Agents do. In this model, agents are not just features inside a product. They become part of the service layer, extending the reach of our security experts and helping us deliver outcomes faster, and at scale. We acquired Kenzo because AI needs a foundation not another feature. That foundation connects data, agents, and human decisions, the tools customers already use, while keeping customers in control of their data. We want AI to fit into our customers' environments not force them into ours. Building that future requires focus now. The changes we announced affect colleagues, who have contributed to Rapid7. I want to thank them for what they have given to this company. And to our customers. These actions are a focused reset We are not shrinking our way to the future. We are reshaping the company so we can invest more behind the parts of the business that will define it. We are simplifying the company, aligning our cost structure with the core, and creating room to invest. We are concentrating our growth investment behind detection and response, exposure management, and the AI foundation that connects them. We will continue to support customers using our other products. This is not simply a cost action. We will reinvest a meaningful portion of the savings in our core platform, the people building it, and the AI foundation behind the next generation of our products. 70 days is not enough to complete a transformation. It is enough to set direction, and show how we will operate. With speed, clarity, and accountability. Operating discipline creates choices. As Rafeal will explain, the actions we announced put us on a path to exit the year at approximately 20% non GAAP operating margin. That is not the destination. It is evidence that we are building a healthier company. 1 with more capacity to invest, innovate, and generate durable returns over time. In the second quarter, we came in slightly above the guidance we provided. Detection and response continued to perform well. At the same time, total ARR declined. Exposure management is not yet where it needs to be. And other parts of the portfolio continued to pressure our results. The current direction of ARR is not good enough. We are acting on it. This is a multi quarter transformation. We are changing the path of the company toward durable growth. Not managing for 1 quarter. As we sharpen our focus, some parts of the business may face pressure before the benefits become visible. At times, we may need to simplify before we can accelerate. Let me leave you with the framework I ask you to use when measuring rapid over the coming quarters. First, look at the cash generated. Cash is not the finish line. Durable growth is. But cash tells you whether the operating model is becoming healthier and whether we have the capacity to keep investing. Second, measure this transformation over several quarters. Not 1. Look for stronger execution in the core, better outcomes for customers, and meaningful improvement in exposure management. Third, watch how we reinvest. We are putting resources behind the platform, the people, and the AI foundation required to return Rapid7 to durable growth. We have hard work ahead but we also have what matters most, strong customer trust, deep security expertise, a clear place to win, and a team that cares deeply about our mission. I have believed in Rapid7 for years. The more time I have spent with its people, its customers, and its technology, the stronger that belief has become. We know this transformation will take time. We will not ask you to judge us by promise. Judge us by execution. Judge us by whether quarter after quarter, this company becomes more focused, more disciplined, and more capable of delivering durable growth. That is how we intend to earn your confidence. Rafeal, over to you. Rafeal Edgar Brown: Thank you, Wael. Good afternoon, everyone. As a quick reminder, unless otherwise noted, all numbers except revenue and balance sheet items mentioned during my remarks today are non GAAP. Please refer to our earnings release and SEC filings for additional details regarding the presentation of our results and guidance metrics. In the second quarter of 26, I am pleased to report that we exceeded expectation across all guided metrics. We ended the second quarter with total ARR of $824 million. We reported non GAAP operating income of $28.9 million, Free cash flow came in strong at $31.9 million with collections healthily exceeding our internal expectations. As of the end of the quarter, we had total cash, cash equivalents, and short-term investments of $702.6 million. I want to begin by taking a closer look at our ARR as of the end of the quarter. As a quick reminder, our long term strategy is focused on our core platform solutions, comprised of our detection and response business which includes MDR and our exposure management business. Our core platform solutions represent over 80% of overall ARR and grew approximately 1% on a year over year basis. Led by our detection and response business, which at approximately 55% of total ARR, grew approximately 5% on a year over year basis. While our overall exposure management business offsets some of the growth of our D&R business within the exposure management segment of our core offerings, continue to see healthy adoption of our Exposure Command solution driven by both new customers and customers upgrading from our older vulnerability management solutions. In contrast, our noncore products as a reminder, are less than 20% of total ARR, declined in the quarter driving the sequential decline we saw in total ARR as we focus our resources toward growing our core products. As we plan for the remainder of 2026 and beyond, we see opportunities to optimize margins for these standalone, noncore solutions as well as opportunities to migrate customers to core platform offerings. As Wael mentioned, our organization is undergoing a significant transformation. Our new chief product and technology officer, Dejan Deklich, just 2 months into his role, is making changes and investments across the and engineering organization. We expect these investments to strengthen our core platform solutions, accelerate innovation, and deliver meaningful product capabilities throughout 2027. We expect, however, that these efforts will take time to translate into ARR growth. Returning now to our financial statements. Total revenue of $210.9 million declined approximately 1.5% year over year. Reflecting the declines in non core product ARR we saw earlier this year. We finished the quarter with over 11.5 thousand customers and an average ARR per customer of approximately $70 thousand. Turning to second quarter profitability. Total non GAAP gross margins of 71.7% were down approximately 215 basis points year over year, consistent with our expectations, driven by year over year increases in staffing of our global security operation centers, and increased cloud usage for product improvements. We reported non GAAP operating income of $28.9 million or a margin of 13.7%. Favorable to our guidance. This upside to profitability drove non GAAP earnings per share of $0.44 per diluted share. Free cash flow totaled $31.9 million in the second quarter driven by strong collections. And from a balance sheet perspective, we ended the second quarter with $703 million in cash, cash equivalents, and short-term investments. Combined with our continued free cash flow generation, and a $200 million undrawn credit facility, we are well positioned to repay our $600 million convertible notes due in March 2027. Turning to the restructuring announced earlier today. This restructuring marks a strategic shift in our business operations to drive efficiency and focus across the organization, aligning resources and investments to our core platform solutions. We are also creating capacity to increase our investments in cutting edge AI driven solutions that will improve customer experience, and increase competitiveness in the marketplace. In terms of approach, we first eliminated non headcount spend wherever possible. Unfortunately, approximately 12% of our workforce has been notified that their roles are impacted by the restructuring. From a financial perspective, as a result of the efficiency gains already underway, as well as the impact of the restructuring announced today, we expect to deliver 20% non-GAAP operating margins in Q4 of 26, compared to 13.7% in the second quarter. Fulfilling our commitment to improve our cost run rate as we exit 2020 We expect to incur restructuring charges of a approximately $10 million to $11 million, the majority of which will be paid throughout the third and fourth quarters of 26. These restructuring charges will be excluded from our non GAAP p and l results. The cash expenditures will, however, be reflected in our operating and free cash flow results. As such, for the remainder of the year, the cash benefit of reduced headcount will largely be offset by the associated severance related costs as well as targeted reinvestments into our product and engineering organization. Therefore, while weighted toward the fourth quarter, we are maintaining our expectation of approximately $130 million in free cash flow for the full-year 2026. We believe this restructuring will allow us to improve free cash flow in 2027 over our 2026 guide, despite a lower ARR base as we enter 2027 investments we are making to modernize our products and SDLC process, and the reduction of our interest income that will occur once we use our cash to repay our March 2027 convertible bonds. This brings us to third quarter 26 guidance. We expect to end the third quarter with ARR of approximately $812 million And on a sequential basis, we expect ending ARR for our combined core platform solutions of DNR and exposure management, will be approximately flat quarter on quarter. With the expected sequential ARR decline coming from our noncore offerings. For the third quarter, we expect total revenue in the range of $208 million to $210 million or down approximately 4% at the midpoint on a year over year basis. Non GAAP operating income is expected to be in the range of $34 million to $36 million or a margin of 16.7% at the midpoint. Non GAAP earnings per diluted share are expected to be in the range of $0.44 to $0.47 on approximately 80 million fully diluted shares. Updating our full year fiscal 26 guidance, we expect total revenue in the range of $837 million to $841 million, a year on year decline of approximately 2% at the midpoint. We are raising non GAAP operating income guidance for 2026 to a range of $129 million to $133 million or a full year non GAAP operating margin of 15.6% at the midpoint. As I mentioned earlier, this implies a 20% non-GAAP operating margin in the fourth quarter. Non GAAP earnings per share are expected to be in the range of $1.78 to $1.83 per share on approximately 79 million fully diluted shares. We expect free cash flow of approximately $130 million for the full year, in line with prior year performance and a free cash flow margin of approximately 15.5%. In conclusion, our solid execution in the second quarter combined with our focus and prioritization efforts to improve our core product offerings, as well as our commitment to manage costs and expand operating margins positions Rapid7 well for the transformation ahead. And with that, I would like to turn the call over to the operator for Q&A. Operator: We will now move to our question-and-answer session. If you have joined via the webinar please use the raise hand icon which can be found at the bottom of your webinar application. When you are called on, please unmute your line and ask your question. We kindly ask that you limit yourself to 1 question and 1 follow-up. Our first question comes from Rob Owens with Piper Sandler. Please unmute. Till ask your question. Rob Owens: Grant. Good afternoon and thank you guys for taking my question. As you look across the product set, and in particular, your exposure management, platform, and I know you said that you know, things will get better from here, and you are looking at adding to the portfolio. Or adding to the capability. When you when you focus on that, is this a function of coverage or is it lacking functionality that your customers were looking for? Just trying to understand directionally where you hope to take this technology and I will just ask the follow-up right away. In terms of customers that have not moved to your more comprehensive capability, especially given the threat environment that we are in right now? What is your sense as to what customers are doing here? Thanks. Wael Mohamed: Thanks, Rob. Very good question. First of all, it is it is nice to actually be here. And I look forward to work with all of you. it is been little bit over 2 months. When I was on the board, and as you know, I actually started a year ago, over a year ago, was Corey on the board. And I looked at the overall business It was very clear that there was part core and noncore. And as I actually got on the seat, it was very clear to me that most of the decline happened in the non core. Nonetheless, there is a lot of work we needed to do on the core side. So the restructure that actually we have talked about was to shift some of our focus to the core and making sure that we have our weight on it because we have really good position. We have a lot of customers that use on us. We have the right to win. And most importantly, you are invited every single day. I set a lot of customer calls in the last 2 months, and I can see that we actually in a better position. But to answer your question on the exposure management, there is definitely some work to do on focus. We will spread very thin, try to be able to address all our portfolio. And now we are basically shifting our focus on the core side and making sure that we are actually also making some investments so we can get our fair share in that market. We are invited which is good. We are shortlisted because we are 1 of the leaders. Nonetheless, we can increase our win rate by having more focus and, obviously, having the right investment. And I am very excited about the addition of Dan since Dan is actually is working very hard to making sure that not only new features, but the AI first methodologies implemented in all our product line. The second question was The migration path. What are customers doing in this environment? Yeah. When I talk to customers, they actually they talk about how can you not only find things but actually fix it. And I am very excited that we play in these 2 subcategories. The exposure management as well as the detection and response. And I do believe that AI first basically, structure will allow us to be able to provide that for customers But customers actually buying every single day. They are not waiting and wait and see. that is what I thought when I came in. It would be a wait and see. They are waiting for the AI They are they are actually they just wanna make sure that the right vendors are moving in the right direction and they are looking for solution that not only help them to identify what is going on, but also fix it and take them through that journey. Grant. Well, good to connect again, and thank you for taking my questions. Thank you, Rob. Operator: Thank you. Your next question comes from the line of Jonathan Ho William Blair. Please unmute to ask your question. Jonathan Ho: Hi. Just wanted to understand, first of all, you know, while I really appreciate the detail that you are providing, can you help us all, appreciate that providing, can understand the opportunities to reaccelerate growth, like you know, where do you specifically see, you know, sort of these know, ability to focus know, paying off. And, you know, it is it is always been challenging to show operating leverage while trying to reaccelerate growth at the same time. Can you can you help us understand sort of the balance, you know, between these 2? Wael Mohamed: Thank you, Jonathan. And it is a very good question, and I always ask myself when I when I basically before I started, the most question I ask myself are we in a categories that it is big enough and is growing fast enough? To be able to get us the growth we are looking for. And you cannot buy that. And we are very fortunate that we are in 2 big categories. And, even in the vulnerability management and basically the migration into exposure, it is it is almost like feel like it has a refuel of interest again. So there is 2 categories that we have very strong position. We are we are definitely a leader. We have the right to win, and we are invited to participate, and that is itself extremely important. How can we basically find growth? The way I look at it is a sequence. This is not gonna be a 1 quarter turnaround. it is gonna be a multiple quarters. And the way I think about it first the cash generated, it will be able to demonstrate how well and how precise we are running the business. Number 2, we need the non core to clear, and we already basically understand what that is, and we make it all the right structure to allow us to do that. And number 3, we need to stabilize the cord itself. Within the core, there is a lot of great assets, a good position, but there is some more work we needed to do, and that is why we are refunding part of the investment and put it behind that. And fourth, we will get back again to growth. So I believe the category we are in will allow us to do so The work we are doing will allow us to get there faster. Excellent. And just in terms of the strong margins that you guided to in the fourth quarter, I just want to better understand, I mean, is this a starting point then for 2027? Or, you know, can you can you maybe help shape what the endpoint looks like in terms of what you want to ultimately achieve? Thank you. You know, when we when I was at the board, I was actually part of the of the work on Kenzo. And I was very, very excited because it can be able allow us to do 2 things. Not only we can be able to provide services at scale, with a software like margins, but it will allow us to connect our solutions together with a common data structure. So I am I believe that, basically, the AI first work that Dan is doing, it will allow us to not only maintain the margin that we are providing today, but actually sustain it and even better. And I will pass it to Rafeal. He can share with you how we are thinking about it. We wanna run a business that is profitable, high margin, at scale. And the only way we can be able to do that in the category we are in is to be able to make sure that our gross margin is best in class. Rafeal Edgar Brown: Yeah. Jonathan, I would add just to add to that. Know, 1 of the things that I think we are we are pleased to be able to talk about today is we talked about margins as we went through 2026. You know, we are delivering on that, and I think that you know, that was an important goal for us. That balanced growth that Wael's talking about is how we really look out across the next few years, frankly, about how we are focused We wanna invest in the products so we can drive growth. That is incredibly important, and we think that will be a big driver of valuation over the longer term. We also realize that the margins on the bottom line, incredibly important. So we have taken a big step today. We are obviously not giving 2027 guidance yet, but you know, it speaks to our commitment and our focus, and I think we will you know, continue to maintain that focus on being very smart about how we invest and also keeping an eye constantly on the bottom line. Thank you. Operator: Thank you. Our next question comes from the line of Fatima Boolani with Citi. Please unmute to ask your question. Fatima Boolani: Good afternoon. Thank you so much for taking my questions. While you counted a number of ways in which you are setting the foundation for running a more streamlined business and a streamlined execution. But, specifically, I wanted to ask you on the noncore product portfolio. Is the eventual conclusion or endgame there to deprecate most of that portfolio on a stand alone basis? I think you earlier did talk about transitioning, some customers out of the noncore and providing them a bridge into the core. Was wondering if you could help us a little bit around is the entire non core portfolio eligible? To move into the core or perhaps there is an opportunity to, deprecate and or rationalize, some of what is in that portfolio under the auspices of, just, becoming more efficient as an organization? And then I have a follow-up as well, please. Wael Mohamed: Sounds good. Thank you, Fatima. And those are very good questions. The way I look at it as at the noncore certain categories that require different type of investment if you are gonna be competing with a non with the pure players. And those races are not the 1 that we are going after. We are focusing all our energy and our investment behind the 1 that we are already a leader, and we can participate and basically grow with those categories. Nonetheless, we have an incredible amount of technologies and our customer base is intertwined So some of those technologies will basically be serviced to servicing our customers from the vignettes of our platform. So we are basically looking at every opportunities to make sure that we can provide outcomes to our customers but also not to chase certain races that market already decided. And the pure play game is not gonna be our to win. There is enough for us to win. There is a big market that is pulling us. We need to put the appropriate investments so we can make sure that we can have our lion's share of those subcategories as well. As a matter of fact, I believe there is a category envy. Like the neighboring industry players they are already coming from EDR and DC. there is a lot of action in MDR. So we will see some competition coming sideways They do not have the right to win because they are not vendor neutral. Like we are. They do not really have the strength and the depth that we have We have thousands of customers relying on us every single day. So we really need to focus to make sure we defend our turf that we have earned, and that may make us deemphasize in some subcategories that we would not be able to actually chase. We have to make some choices. Fatima Boolani: Understood. Thank you. Very clear. And then you mentioned earlier that you know, the core of the portfolio was around finding things. But then being able to also fix them. Right? So this whole patch management and remediation window that has effectively vanished, against the innovation that we have seen out of the large language model providers. So I am curious just from an asset management patch management perspective, what intellectual property you have there, and why do you feel that a detection and response angle to solving that approach is the right way versus a traditional, you know, asset management or patch management intellectual property. Thank you very much. Wael Mohamed: Thank you. We are in a very fortunate position over the years. We have assembled some deep technology, deep expertise, and we understand our customer environment extremely well. Sometimes we seize the alerts before they even enter, and sometimes we are integrated within the customer where we can actually work with them to be able to tackle some attacks and making sure that we respond swiftly. But what we saw in order for us do this the way the market is going, we needed to have a common data backbone that when we have a common data backbone that it allow us to leverage customers' assets instead of ask them to replace it, So from an architecture perspective, we basically had to focus on that. That also gonna be the basis for the agentic work that we are actually working towards. And with that, we can be able to do way more than what we are doing today. it is the combination between our expertise and our people and the future agents we should be able to actually close those gaps And there is gonna be many gaps in actually in the future more than today. And customers is asking us, how can you be able to help us at scale? And that is really the work that we are doing right now in the platform. And we see that customers will be coming to us asking not only to find the vulnerabilities, not only to make sure that it is exploitable, but help them to close all the gaps, all the seams, and help them to fix The ultimate answer is patching. But there is a lot of things he can be able to do if you cannot patch on time. I appreciate the detail. Thank you. Operator: Your next question comes from the line of Brian Essex with JPMorgan. Please unmute to ask your question. Brian: Grant. Thank you for taking the question, and good afternoon. Maybe first of all, Rafeal, thank you again for another good quarter. Transparency. We really appreciate the level of detail. And then maybe for a while, we would love to understand what you are seeing in the pipeline. Seems as though we are in kind of an unprecedented time here for some of the business that your core segments are exposed to. So I would love to know, are you seeing the acceleration pipeline? And if you are, it seems as though the assumptions around the core business are relatively conservative. If you could maybe kinda contextualize your outlook for that business how conversion win rates are kind of transpiring and, what your expectations might be for potential upside, downside to those expectations given what you are seeing in the environment on the customer side? And then I have got a follow-up for Corey. Wael Mohamed: Sounds great. And thank you, Brian. So the way I look at it, I just talked to some of my team members who came back from Black Hat. And the excitement and the talk around, basically, our solution it was very much notable. Nonetheless, I see customers actually now exploring more than buying as they are basically trying to figure out who are the players that they are gonna need to be putting bets behind. And they are actually asking a lot of questions about exposure management and detection of response. A lot of questions. And some of the questions is related to what type of investment do you need to make, what type of basically integration need to happen, and what is our vision and philosophy when it comes to agenda. And what do you need to basically be prepared to do? And, also, what is the connections between exposure management and detection response and how we see that? I cannot really wait for this week. It passes by. it is been a very difficult week for us. As a company where we actually had to make some major restructuring. But I am very positive that we should be able to participate. I actually participated in a lot of customers. Calls in the last few weeks. And the last couple of months. And to my surprise, the customers actually asking us for answers. We have 10 thousand plus customers who have been doing business for years. That level of confidence that we can be able to give them answers is definitely there. Nonetheless, there is some more work we need to do to sharpen our story. And connect it together. And that is gonna be my job in the next couple of months. Rafeal Edgar Brown: And, Brian, I would just add on a couple of the points you called out there. You know, I well, I think we have been very pleased as the year has been developing, you know, remember, you know, the sales leadership team was really brand new at the beginning of the year. We continued to see productivity per rep go up. The team's really done a lot of work focusing on their pipeline generation efforts. And also, frankly, as precursor to the things we are talking about now on a regular basis, you know, really directing the team's efforts so they make sure we are selling our core platform solutions. And we and we could see strong evidence of all 3 of those elements coming into play in Q2. So think Alan and the team have done a great job there. You know, it is it is part of the longer journey. it is gotta be paired with the product releases, but we look at the competitive deals that we went head to head you know, against our well known competitors, Like, we win because of great sales execution, combined with the product that is there today. So we have room to get out there and win, and I think that is always super encouraging to us as we gain momentum under new leadership on the product side. We really hope that is gonna play out in a very positive way. It may take some quarters for it to become large enough and evident enough for everybody on this call, but we are we are really encouraged by those elements, that just good execution you know, in the trenches, if you will. Brian: Got it. I really appreciate the color. Maybe a quick 1 for Corey. Just because, Corey, you are here. You know, from a from a, restructuring perspective, I mean, you guys have gone through a number of changes over the years back in 2023, I think, 18% of the workforce and as Rafeal just mentioned, you have new sales leadership in place. I would just love to if you could just wrap some context around the changes that you are going through now how they are different than ones that you have gone through before, and what the environment is for attracting and retaining talent you know, Wael, feel free to you know, interject as well. But, Corey, just because you have that context, historical context, would love your love your insight. Corey E. Thomas: No. Absolutely. And context is important. So I think the biggest change, especially from the last time that we did this, we have a lot more clarity Keep in mind, today we enter with doing this with a completely revised leadership team that is operated at this scale, that is actually done turnarounds, that is done growth. So we iterate with a strong team. We enter it with clarity of knowing where we need to focus and, frankly, where we need to defocus. And so we do this work with more purpose in mind and more clarity about where we are going. And what we want to become. And frankly, a very inspired view of the work that we could do for our customers in the future. When Weil talks about sort of the reallocation, of focus and investment, it is something he is quite serious about, is that we are investing and building something that is not just relevant but leverages lots of the great technologies and lots of great work that we have done builds on it for our customers. So I think today we are doing it from a place of clarity and focus. And not that it was not important for. We knew the right things that we needed to do before, but we were still evolving the direction. We have a lot more clarity about where we need to actually go. And we have a team that actually has the experience doing it. I appreciate that. Thank you. Absolutely. Wael Mohamed: I am sorry. Go ahead. Yeah. Yeah. No problem. it is okay. it is just to follow on what Corey said. Is, from day 1 and my partnership with Corey on the board and as a CEO, was understanding the culture of the company, making sure that everybody understand why we are doing this, understand exactly the compositions and the options. And in the last couple of months, regularly, we have been communicating with the team the basically, the finding, the structure, and the whys. So as basically Corey said, everybody's to my surprise, actually, the leadership, the new and the existing and even the second level and the third level the embracing of the change was there. And this has all been fueled by conviction that we actually in a place where we can service customers, in a way that the customer wants to serve them, and that is really what driving all these changes. Alright. Thank you, Weil. Thanks. Operator: Your next question comes from Joseph Gallo with Jefferies. Please unmute to ask your question. Joseph Gallo: Hey, guys. Thanks for the question. You know, Wael, there is a lot of changes, and you have talked about product a lot on the call, but can you just talk a little bit more about go to market refinement? Any more changes expected there With the 12% of jobs impact, is that also the go to market organization? And then just as part of my follow-up, Rafeal, how are you embedding all of that uncertainty and job impact into guidance? When we look at your guide, is it more prudent than the previous guides that you have given, or is the right read that, you know, ARR decline should worsen versus the past 2 quarters? Thanks. Wael Mohamed: Thank you. Know, when we actually been looking at this, we have been looking at this before I started. On the board, Corey and the team have actually looking at how we can be able to reshape our company into the future for growth. So the addition of Rafe for precision and Allen as a CCO for scale and Dan for the AI first. That was actually always from day 1 in the structure. On the go to market, I had a partnership with Alan when I was on the board and today as a CEO and made sure that any restructuring we are making, it will not impact the scale we need to be able to actually continue with our transformation. it is a it is a multiple, basically, sequence. And I believe that the way we actually did the restructuring, we tried to be very, very careful in couple of areas. Number 1 is the anything to do with customer journey. it is pre or post. We make sure that we have all the right resources that allow us to get there safely. We need to protect our customer base. We need to protect our turf. We need to show up when customer invite us, and we need to be able to have our fair share win rate. When Rafe basically mentioned many times, actually, we get invited, and we get shortlisted, and we get selected. But even when I examine the time when we do not get selected, I feel we can improve that, and we can actually increase that win rate. And Alan is laser focused on it He has done a very good job, taking our existing great go to market team, augmented it with basically done it before team members, and I think the combination will allow us to be able to navigate Rafeal? Rafeal Edgar Brown: It was on the guidance side, you know, obviously, this is something you look at when you looking across the team. As Weil mentioned, the reorganization every group participated in the reorganization to 1 extent or the other. There was and will always be a very big focus on those individuals who, frankly, touch customers or on the front lines, whether it is on the customer success side or on the new sales side. So we tried to be very, very prudent as we looked at where savings opportunities had to be taken. But, you know, it is something we considered as we are forming our guidance. Thank you. Operator: Your next question comes from Meta Marshall with Morgan Stanley. Please unmute to ask your question. Mina Marshall: Grant. Thanks. Maybe a question You noted Dan has been doing some significant work for a couple months, and I know that there has been, you know, a lot of work being done over the last year to kind of add a lot of features into the MDR product. So just you know, how do you think about you know, obviously, the product will be continuously evolving, but you know, when should we kind of think of judging milestones in terms of kind of the products for both exposure management, MDR kind of being where you would like closer to where you would like to see them. And then the second question, just on MDR, just any pricing commentary of what you are seeing in the market would be helpful. Thanks. Wael Mohamed: Grant. Yes. We have been actually doing a lot of work on the product. Not only in the last couple of months before then, for the for the last year. And I see that with the win rate and how we can basically win some of some of the RFPs coming our way. And we will continue to basically make the right investment On the DNR, I sat with customers, and I can see who are the competition. And most times, actually, price was never the differentiator. They are looking for a partner that can be able to help them and can be able to be there, and they are looking for a lot of references. And we have plenty of references that we can be able to furnish to those customers to give them the comfort. I have talked to some customers. And when we basically talk about the sensitivity, I did not see that the price sensitivity there is a customer that we are talking to. It was mostly about the service level, the ability to evolve into the agentic and the AI world. That was the number 1 priority for them. And then when you talk about basically the exposure management I think it is just focus. I think we just needed to put more focus and let the team know that this is definitely not only core, but it is a very much a priority. Because it will help us to complete the journey of our customers. Not only we can find things, we can be able to fix it, the connection is extremely important. There is a huge opportunity with our platform to be able to do so. So overall, I think there is a lot of work done. But there is a lot of work need to be done as well. But a modernization perspective. So the way I always talk as a team AI first, gonna be always part of our design. Vendor neutral is extremely important in what we do. Number 3, connecting basically our exposure management with our detect and response so our customer can get the highest value from our platform and a greater outcome into the future. So that is the way that Dan is actually managing his priorities and he is done a lot of progress in the last couple of months. And I see that the next quarters will see that manifest itself and then increasing our win rate as we participate in more RFPs and more customer requests. Grant. Thanks so much. Operator: The next question comes from Adam Tindle with Raymond James. Please unmute to ask your question. Adam Tindle: Okay. Thanks. Wael, you mentioned that you are asking investors to judge you on cash generated over time, you are addressing profitability now in generating cash, which is especially important with that debt instrument coming due in March, makes total sense. Then beyond this, I think you mentioned your other thing that you asked investors to judge you on was how you reinvest. And that is the part that I wanted to ask you about as we kinda squint forward You have been on the board for, you know, other initiatives that involve accelerating, hiring, Today, we are making the decision to restructure So what would be different about that period of time where you are, investing once we get to that point What have you learned and what might be different, as you enter into that phase? Wael Mohamed: When I was at the board, it was very clear that there is definitely a core and noncore component in our book. It was very clear. And making sure that we have the right categorization was very important. As I sat on the seat, I was pleasantly surprised that most of the decline happened on the noncore. So I thought I was gonna come in. I am gonna try to do some basically shifting and showing the team why we needed to be able focus on the core more and deemphasize the noncore, but it was very, very clear. And it the work was done for me when the majority of the of the decline was happening in the noncore. But the other part that was very surprising to me is the appetite of our customers to talk to us and work with us and want us to give them more. Like, I know the subcategory that we play in are attractive, And as I said, it is a there is a category envy where I saw myself in the outside endpoint players are trying to become in the MDR because they know there is projects, there is budget, and there is action. So they are trying to get in. Although they do not have the right to win, we have the right to win We are actually invited. And that made me feel stronger about accelerating the restructure that fast and redirecting our energy into these 2 important subcategories. They are growing the there are some of them are growing fast, The others will can will actually start growing faster. And we need to be ready. there is a lot of work we need to do to make sure we can really get our fair share from that upcoming growth, if you will. Grant. Thanks. Adam Tindle: Maybe just a quick follow-up, and this might be for Rafeal. I just wanted to ask for a little bit more quantification around the restructuring. If possible. What maybe hits in Q3? What is incremental in Q4? Because it is quite a ramp. On EBIT margin. I imagine there is dollars of savings to the extent that you can maybe just help us with the quantification of that, And secondly, Ray, sorry to throw 2 at you. But Sure. I would also be interested in the cash cost of the restructuring. I could not help but notice your strong cash flow guide for this fiscal 2026. So just wondering how you considered that when you looked at the $130 million I think what you guided to for, cash? Thanks. Rafeal Edgar Brown: Yeah. Thank you. I think the you know, in terms of the split of the benefit, you and you can frankly, you know, see this looking at the operating income guide between Q3 and the full year. You kinda give it to the full view. Q3 is obviously you know, it is hap the restructuring's happening partway into the quarter. You know? And, obviously, especially as we look around the world, you know, the discussions are ongoing that is you know, pursuant to local laws. So Q3 is, you know, we will not see that much of the benefit, really, you know, when all things being equal, Q4, you start to get a much cleaner view of it. So you, you know, have a you can see that full impact because it will be, you know, a quarter where by and large, we will work through all of that. So that is what you 4. On the cash side, you know, you are spot on. Again, you know, we do have the severance cost, and as I mentioned in the in the scripted part of the call, You know, most of those severance costs will fall in Q3 and Q4. You know, and that offsets essentially a lot of the savings that we are getting from the restructuring. So you kinda you know, we have been out a 130 million a 130 million of free cash flow all year long. So we are really just staying with that and working towards that number. It will be more back end loaded just the way the timing of the collections goes as well as the severance costs and whatnot from the restructuring. Helpful details. Thank you. Operator: At this time, we have reached the end of our question-and-answer session. We thank you all for your questions, and you can now disconnect your lines. Before you buy stock in Rapid7, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Rapid7 wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,511!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,381,960!* Now, it’s worth noting Stock Advisor’s total average return is 981% — a market-crushing outperformance compared to 216% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 17, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Rapid7 (RPD) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Rapid7 delivered Q2 results that received a positive market reaction, with management attributing performance to disciplined focus on core security offerings and operational changes. CEO Wael Mohamed emphasized that the company’s efforts to streamline the portfolio and align resources behind detection and response, as well as exposure management, supported margin improvement. He noted, “We are not shrinking our way to the future. We are reshaping the company so we can invest more behind the parts of the business that will define it.” The quarter also reflected the ongoing impact from non-core product declines, an issue management is actively addressing through restructuring and reinvestment. Is now the time to buy RPD? Find out in our full research report (it’s free). Revenue: $210.9 million vs analyst estimates of $208 million (1.5% year-on-year decline, 1.4% beat) Adjusted EPS: $0.44 vs analyst estimates of $0.35 (26.3% beat) Adjusted EBITDA: $35.85 million vs analyst estimates of $31.93 million (17% margin, 12.3% beat) The company reconfirmed its revenue guidance for the full year of $839 million at the midpoint Management raised its full-year Adjusted EPS guidance to $1.81 at the midpoint, a 15.7% increase Operating Margin: 1.4%, in line with the same quarter last year Customers: 11,500 Annual Recurring Revenue: $824 million vs analyst estimates of $820 million (2% year-on-year decline, in line) Billings: $202.6 million at quarter end, down 5.6% year on year Market Capitalization: $876.2 million While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Rob Owens (Piper Sandler) asked whether Rapid7’s exposure management platform lacked coverage or specific features, and CEO Wael Mohamed explained that the company had previously spread resources too thin but is now focusing on core enhancements and targeted investments to increase its win rate in this segment. Jonathan Ho (William Blair) questioned how Rapid7 balances operating leverage with growth reacceleration, especially after restructuring. Mohamed outlined a phased approach: generating cash, exiting non-core businesses, stabilizing the core, and eventually returning to growth, emphasizing that the turnaround will require multiple quarters. Fatima Boolani (Citi) probed the fate of the non-core product portfolio and whether deprecation or customer migration was the goal. Mohamed clarified that Rapid7 will focus on markets where it has a clear leadership position, selectively maintaining some non-core technologies as platform services but moving away from competing directly with pure-play vendors. Brian Essex (JPMorgan) asked about pipeline trends and the outlook for core business conversion rates. Mohamed and CFO Rafeal Edgar Brown noted that customer engagement remains high, but buyers are evaluating vendors carefully, making win rates and sales execution under the new leadership team critical for future momentum. Adam Tindle (Raymond James) sought quantification of restructuring impacts and the rationale for reinvestments. Brown detailed that cost savings from workforce reductions will be back-end loaded, with most severance costs incurred in the second half of the year, and reiterated that free cash flow guidance incorporates these timing effects. In upcoming quarters, our analysts will track (1) the pace and effectiveness of customer migration from non-core to core solutions, (2) progress in deploying AI-driven features and the realization of product modernization goals, and (3) improvements in operating margin and overall cash generation following restructuring. Continued updates on win rates in core categories and integration of new leadership priorities will also be key signals of execution. Rapid7 currently trades at $12.87, up from $11.61 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.

This article first appeared on GuruFocus. Total ARR: $824 million at the end of Q2 2026. Core Platform ARR: Over 80% of total ARR, growing approximately 1% year-over-year. Detection and Response ARR: Approximately 55% of total ARR, growing approximately 5% year-over-year. Total Revenue: $210.9 million, down approximately 1.5% year-over-year. Non-GAAP Gross Margin: 71.7%, down approximately 215 basis points year-over-year. Non-GAAP Operating Income: $28.9 million, or a margin of 13.7%. Non-GAAP EPS: $0.44 per diluted share. Free Cash Flow: $31.9 million in Q2 2026. Cash and Investments: $702.6 million at the end of the quarter. Customer Count: Over 11,500 customers. Average ARR per Customer: Approximately $70,000. Q3 2026 ARR Guidance: Approximately $812 million. Q3 2026 Revenue Guidance: $208 million to $210 million. Q3 2026 Non-GAAP Operating Income Guidance: $34 million to $36 million, or a margin of 16.7% at the midpoint. Q3 2026 Non-GAAP EPS Guidance: $0.44 to $0.47 per diluted share. Full-Year 2026 Revenue Guidance: $837 million to $841 million. Full-Year 2026 Non-GAAP Operating Income Guidance: $129 million to $133 million, or a margin of 15.6% at the midpoint. Full-Year 2026 Non-GAAP EPS Guidance: $1.78 to $1.83 per share. Full-Year 2026 Free Cash Flow Guidance: Approximately $130 million, or a margin of approximately 15.5%. Warning! GuruFocus has detected 3 Warning Signs with RPD. Is RPD fairly valued? Test your thesis with our free DCF calculator. Release Date: August 10, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Exceeded expectations across all metrics in Q2 2026, with non-GAAP operating income of $28.9 million and free cash flow of $31.9 million. Detection and Response business, which is approximately 55% of total ARR, grew approximately 5% year-over-year. Strong balance sheet with $702.6 million in cash and investments, positioning the company to repay its $600 million convertible notes due in March 2027. Announced restructuring to achieve 20% non-GAAP operating margins in Q4 2026, up from 13.7% in Q2, demonstrating commitment to operational efficiency. Leadership team strengthened with new Chief Financial Officer, Chief Commercial Officer, and Chief Product and Technology Officer, bringing experience in scaling and turnarounds. Healthy adoption of Exposure Command solution, driven by new customers and upgrades from older vulnerability management products. Raised full-year 2026 non-GAAP operating income guidance to $129 million to $133 million, reflecting improved profitability outlook. Total ARR declined sequentially to $824 million, with non-core products driving the decline and overall ARR growth not yet at desired levels. Exposure Management business is not yet where it needs to be, offsetting growth in Detection and Response within core platform solutions. Total revenue declined approximately 1.5% year-over-year in Q2 2026, reflecting weakness in non-core product ARR. Non-GAAP gross margins decreased approximately 215 basis points year-over-year due to increased staffing and cloud usage costs. Restructuring impacts approximately 12% of the workforce, leading to severance costs that will offset cash benefits in the near term. Third-quarter 2026 revenue guidance implies a year-over-year decline of approximately 4%, indicating continued pressure on top-line growth. Core platform solutions grew only approximately 1% year-over-year, highlighting slow progress in the company's key strategic areas. Q: As you look across the product set, and in particular your Exposure Management platform, is the issue a function of coverage, or is it lacking functionality that your customers are looking for? And what are customers doing in this environment, especially those that haven't moved to your more comprehensive capability?A: Wael Mohamed (CEO): The decline is mostly in the non-core, but there is work to do on the core side. For Exposure Management, the issue is focus; we were spread too thin. We are now shifting focus and investment to the core to increase our win rate. Customers are not in a "wait and see" mode; they are buying every day. They want solutions that not only identify issues but also fix them, and they are looking for vendors moving in the right direction with AI. Q: Can you help us understand the opportunities to reaccelerate growth and the balance between showing operating leverage while trying to reaccelerate growth?A: Wael Mohamed (CEO): We are in two big categories with a strong position and the right to win. The path to growth is a sequence over multiple quarters: first, generate cash to demonstrate operational precision; second, clear the non-core; third, stabilize the core; and fourth, return to growth. The categories we are in will allow us to get there. Q: Is the eventual end game for the non-core product portfolio to deprecate most of it on a standalone basis, or is there an opportunity to migrate customers to the core?A: Wael Mohamed (CEO): We are focusing energy and investment on categories where we are already a leader. Some non-core technologies will service our customers from the platform's vantage point. We are not going to chase races where the pure-play game is not ours to win. We need to defend our turf in MDR and Exposure Management, where we have the right to win, and may deemphasize some subcategories to make those choices. Q: What are you seeing in the pipeline? Are you seeing an acceleration, and how are conversion and win rates transpiring?A: Wael Mohamed (CEO): Customers are exploring more than buying as they figure out which vendors to bet on. They are asking about our vision for Agentic AI and the connection between Exposure Management and Detection and Response. We have over 10,000 customers and the confidence to give them answers, but we need to sharpen our story. Rafe Brown (CFO) added that sales productivity per rep is up, the team is focused on selling core platform solutions, and we are winning competitive deals against well-known competitors. Q: How are the current changes different from the restructuring in 2023, and what is the environment for attracting and retaining talent?A: Corey Thomas (Executive Chairman): The biggest change is clarity. We have a completely revised leadership team with experience doing turnarounds and driving growth. We enter this with a clear understanding of where to focus and a very inspired view of the work we can do for customers. Wael Mohamed (CEO) added that the team has embraced the change because of the conviction that we can serve customers the way they want to be served. Q: Can you talk about go-to-market refinement? Are more changes expected there, and how are you embedding the job impact into guidance?A: Wael Mohamed (CEO): We have been careful to protect the customer journey, both pre- and post-sales. We need to protect our customer base and show up when invited. Alan (CCO) is laser-focused on improving our win rate. Rafe Brown (CFO) added that every group participated in the reorganization, but there was a big focus on protecting frontline customer-facing roles. This was considered when forming guidance. Q: When should we think of judging milestones for the products in Exposure Management and MDR, and what is the pricing commentary in the MDR market?A: Wael Mohamed (CEO): We have done a lot of work on the product over the last year, and it's showing in our win rate. In D&R, price is rarely the differentiator; customers are looking for a partner with references and the ability to evolve into the AI world. For Exposure Management, it's about focus and making it a priority to complete the customer journey. Dan (CPTO) is managing priorities around AI-first design, vendor neutrality, and connecting exposure management with detection and response. Q: You mentioned asking investors to judge you on cash generated and how you reinvest. What would be different about the period of time where you are investing once you get to that point?A: Wael Mohamed (CEO): It was clear there was a core and non-core component in our book. I was pleasantly surprised that most of the decline was in the non-core. The appetite of customers to talk to us and work with us was surprising. We have the right to win in MDR and Exposure Management, and we are invited. This made me feel stronger about accelerating the restructuring to redirect energy into these two important subcategories. Q: Can you provide more quantification around the restructuring, what hits in Q3, what is incremental in Q4, and the cash cost of the restructuring?A: Rafe Brown (CFO): Q3 will not see much of the benefit since the restructuring is happening partway into the quarter. Q4 will provide a much cleaner view, driving the big increase in operating margin. On the cash side, severance costs will fall in Q3 and Q4, offsetting the savings from the restructuring. We are maintaining our free cash flow guidance of approximately $130 million for the full year. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management identified that the company's primary challenge is not asset quality but a lack of resource focus, leading to a 'ceiling' on performance that requires a disciplined reset. The company is shifting its strategy from providing individual tools to delivering integrated security outcomes, specifically connecting exposure management with detection and response. Performance attribution shows that while the core platform (Detection & Response and Exposure Management) grew approximately 1% year-over-year, total ARR was pressured by a decline in non-core products which represent less than 20% of the business. Management is prioritizing the 'heart of the enterprise' market, targeting customers who require enterprise-grade security but seek to reduce complexity through fewer, better partners. The acquisition of Kenzo is being leveraged as the foundation for an 'AI-first' platform, intended to connect data, agents, and human decisions across existing customer tools. Operational discipline is being reinforced through a new leadership team, including a new CEO, CFO, CCO, and CPTO, to align capital allocation with core growth drivers. The company expects to exit 2026 with a 20% non-GAAP operating margin, viewed as a milestone of a healthier operating model rather than a final destination. Management anticipates a multi-quarter transformation where some business segments may face pressure and simplification before visible acceleration occurs in 2027. Guidance for Q3 2026 assumes core platform ARR will remain approximately flat sequentially, with total ARR declines driven primarily by the intentional de-emphasis of non-core offerings. Reinvestment of restructuring savings will be targeted toward the AI foundation and core platform modernization to drive durable growth beyond the current fiscal year. The company is positioned to repay its $600 million convertible notes due in March 2027 using its current cash position and continued free cash flow generation. Rapid7 announced a restructuring plan involving a 12% workforce reduction to align the cost structure with core platform solutions and create investment capacity for AI. The company expects to incur restructuring charges of approximately $10 million to $11 million, primarily impacting the third and fourth quarters of 2026. Management flagged that exposure management performance is 'not yet where it needs to be,' requiring sharpened execution and product modernization to improve win rates. Free cash flow for 2026 is maintained at $130 million, as the cash benefits of reduced headcount will be largely offset by severance costs and targeted reinvestments in the near term. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management clarified that the weakness in exposure management is primarily a function of being 'spread very thin' across too many products rather than a lack of core technology. The strategy involves shifting focus to help customers not just find vulnerabilities but fix them through better integration between exposure management and detection and response. Rapid7 will no longer chase 'pure-play' races in non-core categories where the market has already decided on winners, choosing instead to focus on areas where they have a 'right to win.' Non-core technologies will be transitioned to serve customers from the 'vignettes' of the core platform rather than being managed as standalone competitive offerings. Management noted that price is rarely the primary differentiator in the Detection and Response market; customers are prioritizing service levels and the ability to evolve into AI-driven operations. Despite competition from endpoint players moving into the MDR space, Rapid7 believes its 'vendor-neutral' stance and deep expertise provide a significant competitive advantage.

Interested in Rapid7, Inc.? Here are five stocks we like better. Rapid7 exceeded its Q2 fiscal 2026 guidance, reporting $210.9 million in revenue, $28.9 million in non-GAAP operating income, $31.9 million in free cash flow and $824 million in ARR. Core platform ARR grew about 1% year over year, led by 5% growth in Detection and Response, while non-core products declined. The company is restructuring to focus on Detection and Response, Exposure Management and AI, including a workforce reduction affecting approximately 12% of employees. Rapid7 plans to reinvest savings in its core platform, product engineering and AI capabilities, including technology from its Kenzo acquisition. Rapid7 raised full-year non-GAAP operating income guidance to $129 million-$133 million and maintained its approximately $130 million free cash flow outlook. The company expects restructuring and efficiency measures to lift fourth-quarter non-GAAP operating margin to about 20%, while preparing to repay $600 million of convertible notes due in March 2027. Rapid7: Could Be Profitable in FY 2022 Despite Bear Market Rapid7 (NASDAQ:RPD) reported second-quarter fiscal 2026 results that exceeded its guided metrics, while outlining a restructuring and strategic reset centered on Detection and Response, Exposure Management and artificial intelligence-driven platform capabilities. The cybersecurity company ended the quarter with $824 million in annual recurring revenue, non-GAAP operating income of $28.9 million and free cash flow of $31.9 million. Revenue totaled $210.9 million, down about 1.5% from a year earlier, while non-GAAP diluted earnings per share were $0.44. → MarketBeat Week in Review – 08/03 - 08/07 3 Best Cybersecurity Stocks: Cyber Threats Are on the Rise CEO Wael Mohamed, speaking on his first earnings call in the role, said Rapid7 is seeking to concentrate resources on areas where it believes it has a stronger right to win rather than attempting to compete across its entire portfolio. He described the company as “a good company ready to be great,” adding that its challenge is not its assets but how it deploys resources and energy. Chief Financial Officer Rafe Brown said Rapid7’s core platform solutions, consisting of Detection and Response and Exposure Management, represented more than 80% of total ARR and grew about 1% year over year. Detection and Response, which includes managed detection and response services and represented roughly 55% of ARR, increased approximately 5% from the prior-year period. → Quantum Earnings Week: Winners and Losers Are Finally Emerging However, overall Exposure Management results offset some of the Detection and Response growth, according to Brown. He said the company continued to see adoption of its Exposure Command offering from both new customers and customers upgrading from older vulnerability management products. Non-core products, which represent less than 20% of ARR, declined during the quarter and drove the sequential decline in total ARR. Brown said the company sees opportunities to improve margins on standalone non-core offerings and migrate customers toward core platform solutions. → Take-Two’s Q1 Results Leave GTA 6 Bulls Stuck in the Fog of War Rapid7 finished the quarter with more than 11,500 customers and average ARR per customer of about $70,000. Non-GAAP gross margin was 71.7%, down about 215 basis points year over year, reflecting higher staffing at global security operations centers and increased cloud usage tied to product improvements. The company announced a restructuring that will affect approximately 12% of its workforce. Brown said Rapid7 first sought to eliminate non-headcount spending before making workforce reductions. The restructuring is intended to align costs and investment with the core platform while creating capacity for additional investment in AI-driven products and product engineering. Rapid7 expects to incur restructuring charges of approximately $10 million to $11 million, with most payments occurring in the third and fourth quarters of 2026. Mohamed said the company plans to reinvest a meaningful portion of the savings into its core platform, personnel building that platform and an AI foundation designed to connect Exposure Management and Detection and Response. He said the company will continue supporting customers that use other products, but it will de-emphasize categories where it does not intend to compete against specialized providers. “We are not shrinking our way to the future,” Mohamed said. “We are reshaping the company so we can invest more behind the parts of the business that will define it.” Rapid7 acquired Kenzo as part of its AI strategy, which Mohamed said is intended to connect data, AI agents and human decision-making across customers’ existing tools. The company aims to use AI and automation to help customers move from identifying security exposures and alerts to addressing and resolving them. Mohamed said customers are increasingly seeking platforms and service providers that can help identify vulnerabilities, determine whether they are exploitable and assist with remediation. He said pricing was not typically the deciding factor in Detection and Response customer discussions, with customers more focused on service levels, AI capabilities and vendor references. Rapid7 expects the restructuring and other efficiency actions to produce a non-GAAP operating margin of about 20% in the fourth quarter of 2026, compared with 13.7% in the second quarter. Brown said the company expects limited restructuring-related savings in the third quarter because the action is occurring during the period, with a more complete benefit expected in the fourth quarter. Despite severance costs and planned product investments, the company maintained its full-year free cash flow outlook of approximately $130 million. Rapid7 ended the quarter with $702.6 million in cash equivalents and short-term investments, along with an undrawn $200 million credit facility. Brown said those resources and ongoing free cash flow generation position the company to repay its $600 million of convertible notes due in March 2027. Third-quarter ARR is expected to be approximately $812 million. Third-quarter revenue is projected at $208 million to $210 million. Third-quarter non-GAAP operating income is projected at $34 million to $36 million, implying a 16.7% margin at the midpoint. Full-year revenue is forecast at $837 million to $841 million, down about 2% year over year at the midpoint. Full-year non-GAAP operating income guidance was raised to $129 million to $133 million, or a 15.6% margin at the midpoint. Mohamed said investors should evaluate the transformation over several quarters, focusing on cash generation, stabilization and improvement in the core business, performance in Exposure Management and how the company reinvests in product, engineering and AI capabilities. Rapid7, Inc is a publicly traded cybersecurity company headquartered in Boston, Massachusetts. Since its founding in 2000, the company has specialized in delivering cloud-based security data and analytics solutions designed to help organizations detect, investigate, and remediate cyber threats. Rapid7 operates under the NASDAQ symbol “RPD” and serves a broad range of industries, including technology, financial services, healthcare, retail, and the public sector. The core of Rapid7's offering is its Insight platform, a unified, cloud-native security operations and analytics suite. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Rapid7 Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Annualized recurring revenue (“ARR”) of $824 million Total revenue of $211 million; Product subscriptions revenue of $205 million GAAP income from operations of $3.0 million; Non-GAAP income from operations of $28.9 million Net cash provided by operating activities of $37 million; Free cash flow of $31.9 million BOSTON, Aug. 10, 2026 (GLOBE NEWSWIRE) -- Rapid7, Inc. (Nasdaq: RPD), a global leader in AI-powered managed cybersecurity operations, today announced its financial results for the second quarter 2026. “Rapid7 is a good company ready to be great, but getting there requires clear choices, strong execution, and the discipline to focus on what matters most," said Wael Mohamed, CEO of Rapid7. "Since stepping into this role, I've been listening closely to our customers, our people, and our partners, and the message is consistent: they want us to go deeper in Detection and Response and Exposure Management, not wider. The steps we're taking align our resources and investment behind our core platform and the AI foundation that connects it, giving us more capacity to invest, innovate, and serve our customers well. “Over the past year, we've been building the leadership team to take Rapid7 into its next chapter, adding Rafe as Chief Financial Officer to strengthen our operating discipline, Allan as Chief Commercial Officer to help us scale and win with customers, and Dejan as Chief Product and Technology Officer to build an AI-first platform. Now, we have taken decisive action to align our operating model and our future product investments in a direction that supports the future of the company and our industry.” Second Quarter 2026 Financial Highlights Revenue: Total revenue of $210.9 million, a decrease of 1.5% year-over-year. Product revenue of $205.1 million, a decrease of 1.5% year-over-year. ARR: Annualized recurring revenue of $824.0 million, a decrease of 2.0% year-over-year. Operating Income: GAAP income from operations of $3.0 million; Non-GAAP income from operations of $28.9 million. Net Income: GAAP net income of $6.1 million or $0.09 per diluted share and non-GAAP net income of $33.0 million or $0.44 per diluted share. Cash Flow: Net cash provided by operating activities of $37.0 million and free cash flow of $31.9 million. Total cash, cash equivalents, and government securities of $702.6 million as of June 30, 2026. Recent Business Highlights In July, Rapid7 announced general availability of Rapid7 Cyber Governance Risk and Compliance, becoming the first major security operations platform to connect GRC workflows with live Security Operations data in one platform. In July, Rapid7 announced a strategic distribution agreement with Mindware to scale regional availability of its managed detection and response (MDR) services and AI-powered platform. In July, Rapid7 unveiled key Command Platform updates, introducing "Detection as Code" capabilities via Terraform, bidirectional alert synchronization with Microsoft Defender, and intent-based Ransomware Prevention features. In June, Rapid7 achieved GovRAMP Authorization, expanding the availability of its AI-powered cybersecurity operations and MDR services to state, local, and educational (SLED) organizations. In June, Rapid7 announced its participation in Anthropic’s Project Glasswing, obtaining early access to Claude Mythos Preview to support practitioner-led defensive engineering, deep code reviews, and automated vulnerability patching. In May, Rapid7 announced access to OpenAI's Trusted Access for Cyber (TAC) program, integrating frontier models such as GPT-5.5 into its Agentic SOC workflows to accelerate telemetry triage and reduce false-positive queue times by 25%. In May, Rapid7 released its Q1 Threat Landscape Report, identifying vulnerability exploitation (38%) as having officially overtaken social engineering (24%) as the leading initial access vector. Restructuring During the second quarter of 2026, the Company initiated a restructuring plan to streamline its organizational structure and better align resources and investments with its Core Platform Solutions, under which approximately 12% of the Company's workforce was notified that their positions would be affected. In connection with this plan, the Company expects to incur restructuring charges of approximately $10 million to $11 million, consisting primarily of severance and related employee costs, substantially all of which are expected to be paid during the third and fourth quarters of 2026 and excluded from the Company's non-GAAP results. Third Quarter and Full Year 2026 Guidance Non-GAAP guidance excludes estimates for stock-based compensation expense, amortization of acquired intangible assets, amortization of debt issuance costs, and certain other items such as acquisition-related expenses, impairment of long-lived assets, restructuring expense, induced conversion expense, change in the fair value of derivative assets, non-ordinary course litigation-related expenses and discrete tax items. A reconciliation of non-GAAP guidance measures to the most comparable GAAP measures is not available on a forward-looking basis without unreasonable efforts due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures. Rapid7 anticipates ARR, revenue, non-GAAP income from operations, non-GAAP net income per share and free cash flow to be in the following ranges: The guidance provided above is forward-looking in nature. Actual results may differ materially. See the cautionary note regarding “Forward-Looking Statements” below. Guidance for the third quarter 2026 and full-year 2026 does not include any potential impact of foreign exchange gains or losses. Conference Call and Webcast Information Rapid7 will host a conference call today, August 10, 2026, to discuss its results at 4:30 p.m. Eastern Time. The call will be available live via webcast on Rapid7's website at https://investors.rapid7.com. A webcast replay of the conference call will be available at https://investors.rapid7.com. About Rapid7 Rapid7, Inc. (NASDAQ: RPD) is a global leader in AI-powered managed cybersecurity operations, trusted to advance organizations’ cyber resilience. Open and extensible, the Rapid7 Command Platform integrates security data, enriching it with AI, threat intelligence, and 25 years of expertise and innovation to reduce risk and disrupt attackers. As a recognized leader in preemptive managed detection and response (MDR), Rapid7 unifies exposure and detection to transform the cybersecurity operations of more than 11,500 customers worldwide. For more information, visit our website, check out our blog, or follow us on LinkedIn or X. Non-GAAP Financial Measures and Other Metrics We disclose the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income, non-GAAP net income per share, adjusted EBITDA, free cash flow and unlevered free cash flow. We use these non-GAAP financial measures and other metrics for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We also use certain non-GAAP financial measures as performance measures under our executive bonus plan. We believe that these non-GAAP financial measures and other metrics provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making. While our non-GAAP financial measures are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, you should review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures included below, and not rely on any single financial measure to evaluate our business. Non-GAAP Financial Measures We disclose the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income, non-GAAP net income per share, adjusted EBITDA and free cash flow. We also disclose non-GAAP gross margin and non-GAAP operating margin derived from these financial measures. We define non-GAAP gross profit, non-GAAP income from operations, 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, impairment of long-lived assets, change in the fair value of derivative assets, restructuring expense, induced conversion expense and discrete tax items. Non-GAAP net income per basic and diluted share is calculated as non-GAAP net income divided by the weighted average shares used to compute net income per share, with the number of weighted average shares decreased, when applicable, to reflect the anti-dilutive impact of the capped call transactions entered into in connection with our convertible senior notes. 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 expense. We believe that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between our operating results from period to period. Amortization of acquired intangible assets. We believe that excluding the impact of amortization of acquired intangible assets allows for more meaningful comparisons between operating results from period to period as the intangible assets are valued at the time of acquisition and are amortized over several years after the acquisition. Amortization of debt issuance costs. 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. Acquisition-related expenses. 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. Discrete tax items. 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. Restructuring expense. We exclude non-ordinary course restructuring expenses related to the restructuring activities because we do not believe these charges are indicative of our core operating performance and we believe the exclusion of restructuring expense provides a more useful comparison of our performance in different periods. Adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure that we define as net income (loss) 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. We believe that the use of adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. Free Cash Flow and Unlevered 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 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. We define unlevered free cash flow as free cash flow adjusted for the after-tax cash flow impact of interest income and interest expense. We believe unlevered free cash flow provides investors with useful supplemental information regarding our liquidity because it provides insight into the cash generated by our business before cash interest payments on financing obligations and excluding interest received on cash and investments. Management uses unlevered free cash flow to assess our ability to invest in the business and satisfy future contractual obligations. However, given our debt obligations, non-cancelable commitments and other contractual obligations, unlevered free cash flow does not represent residual cash flow available for discretionary expenses. We include all non-GAAP financial measures in the current year or any comparative year that will be included in the non-GAAP reconciliation during the current fiscal year annual Form 10-K. As such, not all non-GAAP financial measures listed above may be included in the current reporting period non-GAAP reconciliation in the GAAP to Non-GAAP Reconciliation section below. Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. 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. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in our business and an important part of the compensation provided to our employees. Other Metrics ARR. Annualized Recurring Revenue and Growth. ARR is defined as the annual value of all recurring revenue related to active contracts as of the last day of the period. ARR is measured at a specific point in time and does not incorporate consideration of any anticipated contract terminations or other prospective events, regardless of whether such events may exert a favorable or adverse influence on the metric. 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 is not a forecast of future revenue, which can be impacted by contract start and end dates and renewal rates and does not include revenue reported as professional services revenue in our consolidated statement of operations. We use ARR and believe it is useful to investors as a measure of the overall success of our business. Number of Customers. 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. We define ARR per customer as ARR divided by the number of customers at the end of the period. Cautionary Language Concerning Forward-Looking Statements This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding our financial guidance for the third quarter and full-year 2026, and the assumptions underlying such guidance, and statements regarding our restructuring plan, including the expected timing of its completion, the amount and timing of expected charges, the expected benefits of the restructuring plan, and our strategy, business plans and focus. Our use of the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. The events described in our forward-looking statements are subject to a number of risks and uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Such forward-looking statements are based on our current assumptions, expectations and estimates and involve a number of judgments and risks, many of which are outside of our control. Risks that could cause or contribute to such differences include, but are not limited to, macroeconomic uncertainty, unstable market and economic conditions, fluctuations in our quarterly results, the possibility that our restructuring plan may not achieve its intended benefits or may take longer than anticipated to complete or result in charges greater than currently estimated, our ability to successfully grow our sales of our cloud-based solutions, including through the shift to a consolidated platform sales approach, failure to meet our publicly announced guidance or other expectations about our business, our ability to grow our revenue, the ability of our products and professional services to correctly detect vulnerabilities, renewal of our customers' subscriptions, competition in the markets in which we operate, market growth, our ability to innovate, our sales cycles, our ability to successfully develop, deploy and realize the expected benefits of our artificial intelligence and automation capabilities, including risks related to performance, reliability, security and customer adoption of such technologies, our ability to successfully integrate acquired companies, including Kenzo Security, and achieve the expected synergies and benefits of such acquisitions in a timely manner or at all, exposure to greater than anticipated tax liabilities, our ability to operate in compliance with applicable laws, fluctuations in foreign currency exchange rates and their impact on our results, risks related to the accuracy, efficacy and perceived reliability of our threat intelligence, detection and response capabilities, including the potential for undetected vulnerabilities, false positives or failures in our systems, as well as other risks and uncertainties that could affect our business and results described in our filings with the Securities and Exchange Commission (the “SEC”), including our most recent Quarterly Report on Form 10-Q filed with the SEC on May 5,, 2026, particularly in the section entitled "Item 1A Risk Factors," and in the subsequent reports that we file with the SEC. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those expressed in any forward-looking statements we may make. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release. (1) We use the if-converted method to compute diluted earnings per share with respect to our convertible senior notes. There was no add-back of interest expense or additional dilutive shares related to the convertible senior notes where the effect was anti-dilutive. On an if-converted basis, for the three months ended June 30, 2026, the 2027 and 2029 Notes were anti-dilutive; for the three months ended June 30, 2025, the 2029 Notes, 2027 Notes and 2025 Notes were anti-dilutive.

Rapid7 (RPD) came out with quarterly earnings of $0.44 per share, beating the Zacks Consensus Estimate of $0.35 per share. This compares to earnings of $0.58 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +25.71%. A quarter ago, it was expected that this cybersecurity company would post earnings of $0.3 per share when it actually produced earnings of $0.36, delivering a surprise of +20%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Rapid7, which belongs to the Zacks Internet - Software industry, posted revenues of $210.88 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.34%. This compares to year-ago revenues of $214.19 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Rapid7 shares have lost about 23.9% since the beginning of the year versus the S&P 500's gain of 13.3%. While Rapid7 has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Rapid7 was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.43 on $210.24 million in revenues for the coming quarter and $1.56 on $838.94 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the top 42% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. eGain (EGAN), another stock in the same industry, has yet to report results for the quarter ended June 2026. This maker of customer engagement software is expected to post quarterly earnings of $0.04 per share in its upcoming report, which represents a year-over-year change of -55.6%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. eGain's revenues are expected to be $21.65 million, down 6.8% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Rapid7, Inc. (RPD) : Free Stock Analysis Report eGain Corporation (EGAN) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Rapid7 (RPD) reported $210.88 million in revenue for the quarter ended June 2026, representing a year-over-year decline of 1.5%. EPS of $0.44 for the same period compares to $0.58 a year ago. The reported revenue represents a surprise of +1.34% over the Zacks Consensus Estimate of $208.1 million. With the consensus EPS estimate being $0.35, the EPS surprise was +25.71%. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Rapid7 performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Annualized recurring revenue: $824.02 billion versus $819.93 billion estimated by six analysts on average. Number of customers: 11,772 versus the two-analyst average estimate of 11,461. ARR per customer: $70,000.00 versus the two-analyst average estimate of $71,374.45. Revenue- Professional services: $5.83 million compared to the $5.45 million average estimate based on seven analysts. The reported number represents a change of -4.3% year over year. Revenue- Product subscriptions: $205.05 million versus $202.64 million estimated by seven analysts on average. Compared to the year-ago quarter, this number represents a -1.5% change. Non-Gaap Gross Profit- Professional services: $0.52 million versus $0.45 million estimated by six analysts on average. Non-Gaap Gross Profit- Product subscriptions: $150.65 million versus the six-analyst average estimate of $150.84 million. View all Key Company Metrics for Rapid7 here>>> Shares of Rapid7 have returned +3.6% over the past month versus the Zacks S&P 500 composite's +3.4% change. The stock currently has a Zacks Rank #4 (Sell), indicating that it could underperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Rapid7, Inc. (RPD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

In its upcoming report, Rapid7 (RPD) is predicted by Wall Street analysts to post quarterly earnings of $0.35 per share, reflecting a decline of 39.7% compared to the same period last year. Revenues are forecasted to be $208.1 million, representing a year-over-year decrease of 2.8%. The current level reflects no revision in the consensus EPS estimate for the quarter over the past 30 days. This demonstrates how the analysts covering the stock have collectively reappraised their initial projections over this period. Before a company announces its earnings, it is essential to take into account any changes made to earnings estimates. This is a valuable factor in predicting the potential reactions of investors toward the stock. Empirical research has consistently shown a strong correlation between trends in earnings estimate revisions and the short-term price performance of a stock. While investors typically use consensus earnings and revenue estimates as indicators of quarterly business performance, exploring analysts' projections for specific key metrics can offer valuable insights. Given this perspective, it's time to examine the average forecasts of specific Rapid7 metrics that are routinely monitored and predicted by Wall Street analysts. Analysts forecast 'Revenue- Professional services' to reach $5.45 million. The estimate points to a change of -10.5% from the year-ago quarter. Analysts predict that the 'Revenue- Product subscriptions' will reach $202.64 million. The estimate points to a change of -2.6% from the year-ago quarter. Analysts' assessment points toward 'Annualized recurring revenue' reaching $819.93 billion. Compared to the present estimate, the company reported $840.61 billion in the same quarter last year. Analysts expect 'Number of customers' to come in at 11,461 . The estimate compares to the year-ago value of 11,643 . It is projected by analysts that the 'ARR per customer' will reach $71374.45 . Compared to the current estimate, the company reported $72200.00 in the same quarter of the previous year. The collective assessment of analysts points to an estimated 'Non-Gaap Gross Profit- Product subscriptions' of $150.84 million. Compared to the present estimate, the company reported $157.34 million in the same quarter last year. View all Key Company Metrics for Rapid7 here>>> Over the past month, shares of Rapid7 have returned -5.4% versus the Zacks S&P 500 composite's +3.3% change. Currently, RPD carries a Zacks Rank #4 (Sell), suggesting that it may underperform the overall market in the near future. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> . Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Rapid7, Inc. (RPD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research