Rapid7 (RPD) Q3 2024 earnings summary

Executive summary

• Ended Q3 2024 with $823M in ARR, up 6% year-over-year, and revenue of $215M, an 8% increase, with operating income and margins above guidance.

• Detection and response business remains the primary growth driver, with consolidated offerings and risk management pipeline rebounding, supported by new solutions like Exposure Command.

• Customer base grew to over 11,600, with ARR per customer rising 4% year-over-year to $70.8K.

• The company completed the acquisition of Noetic Cyber, Inc. in July 2024 for $51M to enhance its security operations platform.

• Over 90% of new ARR bookings in Q3 were sold through the partner ecosystem.

Financial highlights

• Q3 2024 revenue was $215M, up 8% year-over-year, with recurring product subscription revenue at $206M and international revenue growing 17% to nearly 25% of total revenue.

• Q3 operating income was $44M (21% margin), adjusted EBITDA was $50.1M, and net income per diluted share was $0.66.

• Free cash flow for Q3 was $39M, up from $29M in Q2, and $38.5M for the quarter, with $95.2M for the nine months ended September 30, 2024.

• Ended Q3 with over $500M in cash, cash equivalents, and investments; $223M in cash and equivalents, and $281.5M in investments as of September 30, 2024.

• Product gross margin was 76%, total gross margin 74%, both flat year-over-year; non-GAAP gross margin was 74%.

Outlook and guidance

• Full-year 2024 ARR outlook lowered to $835M–$845M (4–5% growth); full-year revenue guidance raised to $839M–$841M (3–4% growth).

• Full-year operating income guidance raised to $157M–$159M (19% margin); non-GAAP net income per share expected at $2.28–$2.31; free cash flow guidance updated to $145M–$155M.

• Q4 2024 revenue expected at $211M–$213M (3–4% growth); non-GAAP operating income $33M–$35M (16% margin); EPS $0.48–$0.51.

• Early 2025 outlook: ARR growth rate expected to be flat to mildly accelerate from 2024 exit rate, assuming continued elongated deal cycles and stable demand.

• Guidance excludes potential FX impacts and is subject to significant business and economic uncertainties.