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Rapid7 outlines leaner strategy to reverse ARR decline under new CEO
The cybersecurity company said it is raising full-year non-GAAP operating income guidance to $129 million to $133 million after non-GAAP operating income beat plan.
Rapid7 used its first earnings call under new CEO Wael Mohamed to lay out a leaner, more focused strategy aimed at reversing its slide, with leadership framed as a continuation of plans already in motion, according to Yahoo Finance.
For the quarter, Rapid7 reported non-GAAP operating income of $28.9 million, a 13.7% margin that beat guidance, and free cash flow of $31.9 million tied to stronger-than-expected collections. The company also raised its full-year non-GAAP operating income guidance to a range of $129 million to $133 million.
Rapid7 said its restructuring cut about 12% of the workforce to help drive non-GAAP operating margin to roughly 20% in the fourth quarter, up from 13.7% in the second. Management indicated it will reinvest a meaningful share of the savings into its core detection and response platform and into its AI foundation built around its acquisition of Kenzo.
Even with improved profitability, Rapid7 continued to report weakening top-line trends, with total annual recurring revenue still sliding. The company said core platform products now account for over 80% of total ARR of $824 million, detection and response grew about 1% year over year to roughly 55% of ARR, and management guided third-quarter ARR down to approximately $812 million. On liquidity, Rapid7 ended the quarter with $702.6 million in cash, plus an undrawn $200 million credit facility, and it said it is well positioned to repay $600 million in convertible notes due in March 2027.