Rapid7 (RPD) Q2 2024 earnings summary

Executive summary

• Ended Q2 2024 with $816M ARR, up 9% year-over-year, and $208M revenue, driven by threat detection, response, and product subscriptions, with recurring revenue comprising 96% of total revenue.

• Launched Command Platform and Exposure Command, integrating security data for better attack surface visibility, supported by the Noetic acquisition.

• Achieved net income of $8.2M, a turnaround from a net loss in Q2 2023, reflecting improved operational efficiency and lower expenses.

• Strategic focus on detection and response innovation, partner ecosystem expansion, and cloud security adoption, with strong pipeline growth and increased partner contributions.

• Customer count increased 2% year-over-year to nearly 11,500, including 46% of the Fortune 100.

Financial highlights

• Q2 2024 revenue reached $208M, up 9% year-over-year; product subscriptions revenue grew 10% to $200M, while professional services revenue declined 9% to $7.9M.

• Product gross margin was 76%, total gross margin 74% (non-GAAP), and GAAP gross margin 71%; operating income was $39M (non-GAAP, 19% margin), GAAP operating income $7M.

• Adjusted EBITDA was $45M; non-GAAP net income was $41.6M ($0.58 per diluted share); GAAP net income was $8.2M ($0.11 per share).

• Free cash flow was $29M for the quarter, with $237M in cash and $206M in short-term investments at quarter end.

• ARR per customer grew 7% year-over-year to $71,000.

Outlook and guidance

• Q3 2024 guidance: ARR of $850M–$860M (6–7% growth), revenue of $209M–$211M, non-GAAP operating income of $36M–$38M, and non-GAAP EPS of $0.50–$0.53.

• Full-year 2024 guidance: ARR of $850M–$860M (6–7% growth), revenue of $833M–$837M (7–8% growth), non-GAAP operating income of $152M–$156M, non-GAAP EPS of $2.15–$2.20, and free cash flow of $150M–$160M.

• Management expects continued revenue growth driven by customer expansion and product innovation, with margin expansion and robust free cash flow.