Rapid7 (NASDAQ:RPD) executives used the company’s fiscal fourth-quarter 2025 earnings call to emphasize strategic investments in AI-enabled security operations while reporting results that exceeded guidance for revenue, annual recurring revenue (ARR) and operating income.
Q4 and full-year results topped guidance
CEO Corey Thomas said Rapid7 exited fiscal 2025 with “outperformance against our Q4 ARR revenue and profitability guidance,” ending the year with ARR of $840 million and total revenue of $860 million, both ahead of guidance.
Rapid7 ended the year with ARR of $839.9 million, which Brown described as “approximately flat year-over-year” as the business digests a mix shift toward detection and response, which now represents “just over 50%” of ending ARR.
Profitability, cash flow and balance sheet highlights
On profitability, Brown said Q4 non-GAAP operating income was $30.1 million, representing a 13.9% margin and coming in “incrementally ahead of expectations.” He attributed the sequential margin decline to the continued ramp of investments across areas including a global capacity center in India, go-to-market and product teams, and organizational leadership additions, noting the higher Q4 expense base would carry into 2026.
For Q4, Rapid7 posted non-GAAP earnings of $0.44 per diluted share, at the high end of guidance. For the full year, the company delivered non-GAAP operating income of $135.7 million (15.8% margin) and non-GAAP earnings of $2.08 per diluted share.
Cash generation remained a key theme. Brown said free cash flow was $32.3 million in Q4 and $130 million for full-year 2025. Thomas also cited $136 million of operating income and $130 million of free cash flow for the year.
Rapid7 finished 2025 with more than 11,500 customers and average ARR per customer of about $72,000. On the balance sheet, Brown said the company ended the year with more than $659 million in cash, cash equivalents and government securities, plus a $200 million undrawn revolver. He said this liquidity, along with free cash flow, supports confidence in Rapid7’s ability to settle its March 2027 convertible debt at maturity.
AI, services and platform strategy
Thomas framed Rapid7’s strategy around what he described as a durable position in cybersecurity as software markets reassess AI’s impact. He argued security operations are structurally resilient because threats are accelerating, security outcomes require a combination of software and human expertise, and Rapid7’s pricing is “anchored on outcomes and value delivered, not seats.”
He outlined a strategy built on three pillars: a broad proprietary data foundation, AI-powered productivity, and deep services and human expertise. Thomas said Rapid7’s Command Platform includes more than 500 integrations and that the company is training “expert-trained Agentic AI workflows” using years of SOC experience and real-world analyst feedback.
Rapid7 said it is integrating more AI into managed detection and response (MDR) and exposure offerings and evolving from reactive to proactive security postures. Thomas said the company expanded MDR coverage in 2025 to manage third-party alerts in a vendor-agnostic way, streamlined analyst workflows with its AI SOC for MDR and Incident Command, and began expanding its addressable market to larger enterprises with AI-powered services.
Thomas also highlighted an expanded partnership with Microsoft, including a launch of “MDR for Microsoft” offering 24/7 expert monitoring and native response across Microsoft Defender, along with collaboration in exposure management that unifies Microsoft telemetry with Rapid7’s Command Platform.
Segment commentary: detection and response vs. exposure management
Brown said detection and response ARR grew about 7% year-over-year, with MDR growing in the “high single digits.” Thomas described detection and response as Rapid7’s “biggest growth area” and said the company believes it can grow faster, particularly in what he called the mainstream enterprise market—organizations with roughly 1,000 to 20,000 employees.
Exposure management, executives said, showed signs of progress late in the year. Brown said Exposure Command saw “rapid adoption in Q4 by both new and existing customers.” Thomas described last year as disappointing for Exposure Command until Q4, but said the company saw improving upgrade motions and early continuation into Q1. He characterized Exposure Command as further along in its development than Incident Command, which he described as being in the “first inning” and not yet a major sales priority.
Guidance: Rapid7 pulls back on full-year ARR outlook
Rapid7 provided first-quarter and full-year 2026 guidance and said it will no longer provide full-year ARR guidance “at this time.” Brown said the decision reflects leadership changes and improvement initiatives across sales, marketing, customer success and support that make ARR visibility better reflected quarter-to-quarter. Thomas added the company did not want to be “overly precise” amid a fast-moving execution environment.
- Q1 2026 ARR: approximately $830 million, down 1% year-over-year
- Q1 2026 revenue: $207 million to $209 million (down 1% year-over-year at the midpoint)
- Q1 2026 non-GAAP operating income: $19 million to $21 million (9.6% margin at midpoint)
- Q1 2026 non-GAAP EPS: $0.29 to $0.32 on about 77 million diluted shares
- Full-year 2026 revenue: $835 million to $843 million (down 2% year-over-year at the midpoint)
- Full-year 2026 non-GAAP operating income: $108 million to $116 million (13.3% margin at midpoint)
- Full-year 2026 non-GAAP EPS: $1.50 to $1.60 on about 78 million diluted shares
- Full-year 2026 free cash flow: $125 million to $135 million (about 15.5% margin; flat year-over-year at the midpoint)
Brown said Q1 margins will be pressured by the higher expense base and seasonal costs such as the company’s global sales kickoff. He added that as investments “take hold and the efficiencies they bring materialize,” Rapid7 expects operating margins to expand as 2026 progresses, with margins moving into the mid-teens in the second half of 2026.
During Q&A, Thomas said the company is focused on improving sales and marketing productivity, scaling services while maintaining or improving gross margin, and better balancing deal mix. He also addressed customer demand for AI, saying customers are asking Rapid7 to help them “do more with less,” while also wanting transparency and trust in how AI-driven outcomes are produced.
About Rapid7 (NASDAQ:RPD)
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.
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