Rapid7 Inc. Reports Strong Financial Performance in 2024
Rapid7 Inc., a leading cybersecurity software and service provider, has released its annual report for the fiscal year 2024, showcasing significant growth and operational improvements. Founded over two decades ago, Rapid7's mission is to create a safer digital world by making cybersecurity simpler and more accessible.
1. Revenue Growth
Rapid7 reported a remarkable revenue increase of $66.3 million for 2024, bringing total revenue to $844 million. This growth was attributed to a $6.1 million increase in revenue from new customers and a substantial $60.2 million from existing customers, reflecting strong customer retention and expansion strategies.
Revenue Breakdown by Geography
In terms of geographical distribution, North America remains the largest market for Rapid7, contributing $643.4 million, up from $607.4 million in 2023, marking a 5.92% growth. Notably, the Rest of the World segment saw a more robust growth of 17.82%, increasing from $170.2 million in 2023 to $200.6 million in 2024.
Revenue Breakdown by Products and Services
Rapid7's revenue is primarily derived from product subscriptions, which increased by 9.29% to $808.9 million in 2024. However, professional services revenue saw a decline, falling to $35.1 million, down 6.49% from the previous year.
2. Financial Performance Highlights
Rapid7's financial performance showed a dramatic turnaround with a net income of $25.5 million in 2024, compared to a net loss of $149.3 million in 2023. This change was bolstered by an operating income of $35.03 million and a total non-operating income of $6.42 million.
Income Statement Overview
The income statement illustrates the key metrics of Rapid7's performance:
- Total Revenue: $844.0 million
- Cost of Revenue: $251.0 million
- Operating Expenses: $557.9 million
- Net Income: $25.5 million
| Feb 2024 | Feb 2025 | |
|---|---|---|
Net Income | -149.2M | 25.52M |
Profit | -149.2M | 25.52M |
Net Income Continuing | -149.2M | 25.52M |
Income Tax Expense | -518K | 15.92M |
Pretax Income | -149.7M | 41.45M |
Non-operating Income | -69.04M | 6.42M |
Operating Income | -80.73M | 35.03M |
Revenue | 777.7M | 844.0M |
Costs and Expenses | 858.4M | 808.9M |
Cost of Revenue | 231.7M | 251.0M |
Operating Expenses | 626.6M | 557.9M |
Impairment Expense | 30.8M | 0 |
Research & Development | 176.7M | 173.1M |
Restructuring Charge | 22.22M | 0 |
Selling, General & Administrative | 396.9M | 384.8M |
Other Operating Expenses | -16K | 0 |
3. Cost Management and Operating Expenses
The company's cost of revenue rose by $19 million, mainly due to increased cloud computing costs. However, Rapid7 managed to enhance its gross margin percentage, thanks to improvements in professional services gross margin.
Operating expenses saw a mixed response; research and development expenses decreased by $4.8 million, while sales and marketing expenses dropped significantly by $14.9 million, indicating a focused strategy to improve efficiency.
4. Balance Sheet and Liquidity
As of December 31, 2024, Rapid7 reported total assets of $1.65 billion, with current assets constituting a significant portion at $786.1 million. The company holds $334.7 million in cash and cash equivalents and $224.3 million in investments.
Balance Sheet Overview
- Total Assets: $1.65 billion
- Total Liabilities: $1.63 billion
- Total Equity: $17.71 million
| Feb 2024 | Feb 2025 | |
|---|---|---|
Total Assets | 1.50B | 1.65B |
Total Current Assets | 634.4M | 786.1M |
Cash and Equivalents | 213.6M | 334.6M |
Short-term Investments | 169.5M | 187.0M |
Prepaid Expenses | 41.40M | 44.02M |
Other Current Assets | 209.8M | 220.3M |
Total Non-current Assets | 870.8M | 865.9M |
Intangible Assets | 630.8M | 660.9M |
Long-term Investments | 56.17M | 37.27M |
Net PP&E | 39.64M | 32.24M |
Lease Assets | 54.69M | 48.87M |
Other Non-current Assets | 89.49M | 86.54M |
Total Liabilities and Equity | 1.50B | 1.65B |
Total Liabilities | 1.62B | 1.63B |
Total Current Liabilities | 569.7M | 630.2M |
Accounts Payable and Accrued Liabilities | 100.3M | 107.7M |
Current Debt | 13.45M | 61.38M |
Current Deferred Revenue | 455.5M | 461.1M |
Other Current Liabilities | 536K | 0 |
Total Non-current Liabilities | 1.05B | 1.00B |
Long-term Debt | 929.9M | 888.3M |
Non-current Deferred Revenue | 32.57M | 27.07M |
Other Non-current Liabilities | 91.16M | 88.67M |
Total Equity and Non-controlling Interests | -118.1M | 17.71M |
Total Equity | -118.1M | 17.71M |
5. Cash Flow Analysis
Rapid7 generated a net change in cash of $127.9 million in 2024, compared to a modest increase of $6.32 million in 2023. The cash flow from operating activities was robust at $171.6 million, indicating strong operational cash generation capabilities.
Cash Flow Overview
- Net Cash from Operating Activities: $171.6 million
- Net Cash from Investing Activities: -$46.52 million
- Net Cash from Financing Activities: $5.58 million
| Feb 2024 | Feb 2025 | |
|---|---|---|
Net Change in Cash | 6.32M | 127.9M |
Effect of Exchange Rate Changes | 1.20M | -2.75M |
Net Cash from Operating Activities | 104.2M | 171.6M |
Operating Profit | -149.2M | 25.52M |
Adjustment to Operating Profit | 253.5M | 146.1M |
Net Cash from Investing Activities | -178.7M | -46.52M |
Business & Interest in Affiliates | 34.84M | 37.30M |
Investments | 126.3M | -8.00M |
Productive Assets | 20.24M | 17.58M |
Other Investing Activities | 2.71M | 360K |
Net Cash from Financing Activities | 79.59M | 5.58M |
Debt | 92.09M | 0 |
Equity Issuance/Repurchase | 14.37M | 10.81M |
Other Financing Activities | -26.87M | -5.23M |
6. Strategic Acquisitions and Future Outlook
In 2024, Rapid7 completed the acquisition of Noetic for $37.3 million, which is expected to enhance its cybersecurity offerings. The company also entered into a significant cloud-services agreement, committing to $125 million annually over the next five years, signaling its strategic focus on expanding cloud capabilities.
7. Conclusion
Rapid7 Inc. has demonstrated a solid financial performance in 2024, marked by significant revenue growth, a return to profitability, and effective cost management. With a strong balance sheet and strategic acquisitions on the horizon, Rapid7 is well-positioned to continue its growth trajectory in the increasingly vital cybersecurity landscape. As cyber threats become more complex, Rapid7's commitment to innovation and customer engagement will be crucial in navigating the challenges ahead.
