Summary
Rapid7 reported fourth-quarter revenue of $205.27 million, up 11.3% year over year. Full-year revenue reached $777.71 million, up 13.5%. The quarter's gross profit was $145.52 million, up 12.3%, and gross margin was 70.9%, up 0.7 percentage points. Full-year gross profit was $545.97 million, up 16.0%, with a gross margin of 70.2%, up 1.5 percentage points.
The quarter produced an operating profit. Operating income was $10.93 million, a swing from an operating loss in the prior-year quarter, and operating margin was 5.3%, up 12.6 percentage points. Net income was $19.12 million, also a swing from a net loss a year earlier, and diluted EPS was $0.26. The full-year results were mixed. Operating loss was $80.73 million, an improvement from the prior-year loss, and full-year operating margin was -10.4%, up 5.9 percentage points. However, full-year net loss widened to $149.26 million, and full-year diluted EPS was -$2.46, a wider loss per share than the prior year.
Cash flow improved. Fourth-quarter operating cash flow was $63.47 million, up 57.7% year over year. Full-year operating cash flow was $104.28 million, up 33.3%. Capital expenditures fell to $0.37 million in the quarter, down 95.0% year over year, and to $4.37 million for the full year, down 78.6%. Free cash flow, a non-GAAP measure, was $60.25 million in the quarter and $84.03 million for the full year. Current deferred revenue was $455.50 million, up 6.8% year over year.
Annualized recurring revenue was $805.67 million at December 31, 2023, up 13% from a year earlier. The customer count rose 5% to 11,526, and ARR per customer rose 7% to $69.9. Rapid7 highlighted a new Managed Digital Risk Protection service for external threat monitoring, AI-driven threat detection for the cloud, and recognition as a leader in the 2023 IDC MarketScape for risk-based vulnerability management.
Guidance for the first quarter of 2024 covers annualized recurring revenue, revenue, non-GAAP income from operations, non-GAAP net income per share and free cash flow, with non-GAAP income from operations of $37 million to $39 million and non-GAAP net income per share of $0.52 to $0.55. For full-year 2024, management guided to ARR of $885 million to $895 million, non-GAAP income from operations of $150 million to $158 million, and non-GAAP net income per share of $2.10 to $2.21. The full-year free cash flow outlook is at least $160 million.
Risks include growing macroeconomic uncertainty, unstable market and economic conditions, fluctuations in quarterly results, the ability to sustain revenue growth, renewal of customer subscriptions, competition, sales cycles, and the integration of acquired companies. Rapid7 also completed a restructuring plan in 2023 that was designed to reduce operating costs and better align the workforce, and the plan was substantially complete by December 31, 2023. The company has generated significant losses since inception and carries a substantial accumulated deficit. Guidance excludes any potential impact from foreign exchange gains or losses.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $205.3M | $198.8M | +3.2% | $184.5M | +11.3% |
| Gross profit | $145.5M | $141.0M | +3.2% | $129.5M | +12.3% |
| Gross margin | 70.9% | 70.9% | -0.0 pp | 70.2% | +0.7 pp |
| Research & development | $39.7M | $39.9M | -0.5% | $42.6M | -6.8% |
| Sales & marketing | $73.3M | $75.7M | -3.2% | $78.3M | -6.3% |
| General & administrative | $19.3M | $17.9M | +8.1% | $22.0M | -12.2% |
| Total operating expenses | $134.6M | $157.1M | -14.3% | $142.9M | -5.8% |
| Operating income (loss) | $10.9M | -$16.0M | +168.2% | -$13.3M | +181.9% |
| Operating margin | 5.3% | -8.1% | +13.4 pp | -7.2% | +12.6 pp |
| Net income (loss) | $20.0M | -$76.6M | +126.2% | -$11.4M | +276.1% |
| Net margin | 9.8% | -38.5% | +48.3 pp | -6.2% | +15.9 pp |
| Diluted EPS | $0.33 | -$1.25 | +$1.58 | -$0.19 | +$0.52 |
Risks
Prolonged economic uncertainty, inflation, and geopolitical conflicts have caused and may continue to cause delays in Rapid7's sales cycle, failures of customers to renew at anticipated scope, requests for payment term deferrals, and pricing or bundling concessions.
The August 2023 Restructuring Plan reduced Rapid7's workforce by approximately 16% and closed office spaces, resulting in a $3.6 million impairment in 2023; the company may not achieve intended savings and may face unintended employee attrition and damage to culture.
Rapid7 faces intense competition in the SecOps market, and competitors may more successfully incorporate AI into their products, gain superior access to AI technologies, and achieve higher market acceptance of their AI solutions.
Rapid7's growth strategy depends on a shift to a consolidated platform sales approach and offerings like Threat Complete and Cloud Risk Complete; failure of this approach in execution or timing could impair market acceptance and financial results.
Rapid7's business depends on customers renewing and expanding subscriptions; customers have no obligation to renew, and renewal rates may decline due to economic conditions, competitive offerings, or dissatisfaction, adversely impacting revenue.
Revenue derived through channel partners increased to approximately 62% in 2023 from 57% in 2022 and 52% in 2021; these partner agreements are non-exclusive, and partners may prioritize competing solutions.
Operations outside North America generated 22% of revenue in 2023, up from 21% in 2022 and 19% in 2021, exposing Rapid7 to foreign currency fluctuations, regulatory compliance costs, and geopolitical instability including the Russia-Ukraine war and Israel-Hamas conflict.
Rapid7 issued $300.0 million of 2029 Notes in September 2023 and repurchased $184.0 million of 2025 Notes; interest expense increased by $53.7 million in 2023, primarily due to $53.9 million of induced conversion expense, and debt may limit financial flexibility.
Rapid7 recorded a $30.8 million impairment of long-lived assets in 2023 related to idle office space, including its Boston headquarters and offices in Plano, Los Angeles, and Toronto; future changes in assumptions could result in additional charges.
Rapid7 depends on sales, marketing, and R&D personnel, and the Restructuring Plan plus hybrid work model may increase attrition, make hiring difficult, and impair execution of business objectives.
SaaS KPIs
All quarters →Free Cash Flow
ARR per Customer
Number of Customers
Annualized Recurring Revenue (ARR)
Non-GAAP Operating Margin
Non-GAAP Income from Operations
Adjusted EBITDA
Summary, forecast, risks and KPIs are extracted from Rapid7, Inc.'s SEC filings for Q4 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.