• Rapid7 Announces Second Quarter 2021 Financial Results

    来源: Nasdaq GlobeNewswire / 04 8月 2021 16:05:03   America/New_York

    • Annualized recurring revenue (ARR) of $488.9 million, an increase of 29% year-over-year
    • Revenue of $126.4 million, up 28% year-over-year; Products revenue of $119.1 million, up 29% year-over-year
    • Total customer growth of 13% year-over-year
    • Total ARR per customer growth of 14% year-over-year

    BOSTON, Aug. 04, 2021 (GLOBE NEWSWIRE) -- Rapid7, Inc. (Nasdaq: RPD), a leading provider of security analytics and automation, today announced its financial results for the second quarter of 2021.

    "Strong demand across Rapid7's Insight Platform drove second quarter ending ARR of approximately $489 million, growth of 29% year-over-year, validating both our strategy and execution as we continue on our journey to make the best in security operations accessible and achievable for all," said Corey Thomas, Chairman and CEO of Rapid7.

    "Companies of all sizes are being met by a shifting attacker landscape as they dramatically increase their focus on delivering world-class digital and remote experiences to keep up with the pace of innovation. It is clear that our ability to meet customers where they are in their SecOps journey with leading capabilities across detection & response, vulnerability risk management, and cloud security is resonating. With the recent addition of IntSights leading threat intelligence capabilities, Rapid7 is even better positioned to lead the charge in enabling customers to drive security transformation alongside their digital investments."

    CFO Future Retirement

    The company also announced that Jeffrey Kalowski, who has served as Rapid7's Chief Financial Officer since January 2017, has informed the company of his intent to retire from his position in 2022. Kalowski will remain in his current position until a successor is named in order to facilitate a smooth transition. Rapid7 is initiating a search for a new Chief Financial Officer and will consider internal and external candidates.

    “On behalf of the entire Rapid7 organization I want to thank Jeff for his leadership in helping to guide Rapid7 through a period of tremendous growth,” said Corey Thomas. “Jeff has been instrumental in transitioning and scaling our recurring revenue business over the past 5 years while helping to build a world class culture at Rapid7, and I look forward to his continued partnership into next year.”

    Second Quarter 2021 Financial Results and Other Metrics

     Three Months Ended June 30,
     2021 2020 % Change
     (dollars in thousands)
    Annualized recurring revenue$488,860  $379,891  29%
    Number of customers (1) 9,315  8,223  13%
    ARR per customer (1)$52.5  $46.2  14%
    (1) Number of customers and ARR per customer are based on our new customer count methodology provided at our virtual investor day on March 10, 2021. Prior period amounts have been revised to conform with the modified definitions provided in the Non-GAAP Financial Measures and Other Metrics section below.


     Three Months Ended June 30,
     2021 2020 % Change
     (in thousands, except per share data)
    Products revenue$119,147   $92,430   29%
    Professional services revenue7,274   6,482   12%
    Total revenue$126,421   $98,912   28%
          
    North America revenue$103,485   $82,557   25%
    Rest of world revenue22,936   16,355   40%
    Total revenue$126,421   $98,912   28%
          
    GAAP gross profit$87,113   $69,831    
    GAAP gross margin69 % 71 %  
    Non-GAAP gross profit$91,845   $73,137    
    Non-GAAP gross margin73 % 74 %  
          
    GAAP loss from operations$(21,926)  $(15,732)   
    GAAP operating margin(17)% (16)%  
    Non-GAAP income from operations$6,070   $4,265    
    Non-GAAP operating margin5 % 4 %  
          
    GAAP net loss$(34,164)  $(21,466)   
    GAAP net loss per share, basic and diluted$(0.62)  $(0.42)   
    Non-GAAP net income$3,930   $2,795    
    Non-GAAP net income per share, basic$0.07   $0.06    
    Non-GAAP net income per share, diluted$0.07   $0.05    
          
    Adjusted EBITDA$10,030   $7,556    
          
    Net cash provided by operating activities$9,186   $442    
    Free cash flow$5,040   $(2,231)   

    For additional details on the reconciliation of non-GAAP measures and certain other business metrics to their nearest comparable GAAP measures, please refer to the accompanying financial data tables included in this press release.

    Recent Business Highlights

    • On July 16, 2021, Rapid7 closed the acquisition of IntSights Cyber Intelligence Ltd. (IntSights), a leading provider of cybersecurity threat intelligence. IntSights will extend the core capabilities of Rapid7's Insight Platform, enabling more comprehensive monitoring across internal and external attack surfaces to help drive proactive threat mitigation across our customers' digital footprints.
    • In July 2021, Rapid7 was recognized as a Leader in Gartner's 2021 Magic Quadrant for Security Information and Event Management (SIEM) for the second year in a row.
    • In July 2021, Rapid7 announced the launch of InsightCloudSec, an integrated Cloud-Native Security Platform (CNSP) that brings together the cloud and container security capabilities of DivvyCloud and Alcide into one seamless cloud security solution as part of Rapid7's Insight Platform.
    • In June 2021, Rapid7 was named a Visionary in Gartner's 2021 Magic Quadrant for Application Security Testing.

    Third Quarter and Full-Year 2021 Guidance

    Rapid7 anticipates annualized recurring revenue, revenue, non-GAAP (loss) income from operations, non-GAAP net loss per share and free cash flow to be in the following ranges:

    Third Quarter and Full-Year 2021 Guidance (in millions, except per share data)
          
     Third Quarter 2021 Full-Year 2021
    Annualized recurring revenue    Approximately $576.0
    Revenue$133.4 to$135.0   $520.0 to$524.0  
    Year-over-year growth27%to28 % 26%to27 %
    Non-GAAP (loss) income from operations  $(0.5)    $7.0  
    Non-GAAP net loss per share  $(0.07)    $(0.09) 
    Weighted average shares outstanding, basic and diluted   56.1      55.3  
    Free cash flow    Approximately $20.0

    The guidance provided above is forward-looking in nature. Actual results may differ materially. See the cautionary note regarding “Forward-Looking Statements” below. Guidance for the third quarter and full-year 2021 includes the contribution from the acquisition of IntSights as of July 16, 2021 and does not include any potential impact of foreign exchange gains or losses. The guidance provided above is based on a number of assumptions, estimates and expectations as of the date of this press release and, while presented with numerical specificity, this guidance is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond Rapid7's control and are based upon specific assumptions with respect to future business decisions or economic conditions, some of which may change. Rapid7 undertakes no obligation to update guidance after this date.

    Non-GAAP guidance excludes estimates for stock-based compensation expense, amortization of acquired intangible assets, amortization of debt issuance costs, and certain other items. Rapid7 has provided a reconciliation of each non-GAAP guidance measure to the most comparable GAAP measures in the financial statement tables included in this press release. The reconciliation does not reflect any items that are unknown at this time, such as certain acquisition-related expenses, litigation-related expenses and the amortization of intangible assets associated with the IntSights acquisition for the third and fourth quarters of 2021, which we are not able to predict without unreasonable effort due to their inherent uncertainty.

    Conference Call and Webcast Information

    Rapid7 will host a conference call today, August 4, 2021, to discuss its results at 4:30 p.m. Eastern Time. The call will be accessible by telephone at 877-357-4230 (domestic) or 629-228-0721 (international). The call will also be available live via webcast on Rapid7's website at https://investors.rapid7.com. A telephone replay of the conference call will be available at 855-859-2056 or 404-537-3406 (access code 5589334) until August 11, 2021. A webcast replay will be available at https://investors.rapid7.com.

    About Rapid7

    Rapid7 (Nasdaq: RPD) is advancing security with visibility, analytics, and automation delivered through our Insight Platform. Our solutions simplify the complex, allowing security teams to work more effectively with IT and development to reduce vulnerabilities, monitor for malicious behavior, investigate and shut down attacks, and automate routine tasks. Over 9,300 customers rely on Rapid7 technology, services, and research to improve security outcomes and securely advance their organizations. For more information, visit our website, check out our blog, or follow us on Twitter.

    Non-GAAP Financial Measures and Other Metrics

    To supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States, or GAAP, we provide investors with certain non-GAAP financial measures and other metrics, which we believe are helpful to our investors. We use these non-GAAP financial measures and other metrics for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We also use certain non-GAAP financial measures as performance measures under our executive bonus plan. We believe that these non-GAAP financial measures and other metrics provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making.

    While our non-GAAP financial measures are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, you should review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures included below, and not rely on any single financial measure to evaluate our business.

    Non-GAAP Financial Measures

    We disclose the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income (loss), non-GAAP net income (loss) per share, adjusted EBITDA and free cash flow. We also disclose non-GAAP gross margin and non-GAAP operating margin derived from these financial measures.

    We define non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income (loss) and non-GAAP net income (loss) per share as the respective GAAP balances excluding the effect of stock-based compensation expense, amortization of acquired intangible assets, amortization of debt discount and issuance costs and certain other items such as acquisition-related expenses, litigation-related expenses and induced conversion expense. Non-GAAP net income (loss) per basic and diluted share is calculated as non-GAAP net income (loss) divided by the weighted average shares used to compute net income (loss) per share, with the number of weighted average shares decreased to reflect the anti-dilutive impact of the capped call transactions entered into in connection with our convertible senior notes.

    We believe these non-GAAP financial measures are useful to investors in assessing our operating performance due to the following factors:

    Stock-based compensation expense. We exclude stock-based compensation expense because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact our non-cash expense. We believe that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between our operating results from period to period.

    Amortization of acquired intangible assets. We believe that excluding the impact of amortization of acquired intangible assets allows for more meaningful comparisons between operating results from period to period as the intangible assets are valued at the time of acquisition and are amortized over several years after the acquisition.

    Amortization of debt discount and issuance costs. The expense for the amortization of debt discount and debt issuance costs related to our convertible senior notes and revolving credit facility is a non-cash item, and we believe the exclusion of this interest expense provides a more useful comparison of our operational performance in different periods.

    Induced conversion expense. In conjunction with the first quarter of 2021 partial repurchase of our 1.25% convertible senior notes due 2023, we incurred an induced conversion expense of $2.7 million. We exclude induced conversion expense because this amount is not indicative of the performance of, or trends in, our business and neither is comparable to the prior period nor predictive of future results.

    Litigation-related expenses. We exclude certain litigation-related expenses consisting of professional fees and related costs incurred by us related to significant litigation outside the ordinary course of business. We believe it is useful to exclude such expenses because we do not consider such amounts to be part of our ongoing operations.

    Acquisition-related expenses. We exclude acquisition-related expenses as costs that are unrelated to the current operations and neither are comparable to the prior period nor predictive of future results. Our acquisition-related expenses for the three and six months ended June 30, 2021 include $9.0 million of tax expense related to the sale of acquired intellectual property through an intercompany transaction related to the Alcide acquisition.

    Anti-dilutive impact of capped call transaction. Our capped calls transactions are intended to offset potential dilution from the conversion features in our convertible senior notes. Although we cannot reflect the anti-dilutive impact of the capped call transactions under GAAP, we do reflect the anti-dilutive impact of the capped call transactions in non-GAAP net income (loss) per diluted share to provide investors with useful information in evaluating our financial performance on a per share basis.

    Adjusted EBITDA (non-GAAP). Adjusted EBITDA is a non-GAAP measure that we define as net loss before (1) interest income, (2) interest expense, (3) other income (expense), net, (4) provision for income taxes, (5) depreciation expense, (6) amortization of intangible assets, (7) stock-based compensation expense, and (8) certain other items. We believe that the use of adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods.

    Free Cash Flow. Free cash flow is a non-GAAP measure that we define as net cash provided by (used in) operating activities less purchases of property and equipment and capitalization of internal-use software costs.

    Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact upon our reported financial results. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in our business and an important part of the compensation provided to our employees.

    Other Metrics

    Annualized Recurring Revenue (ARR). ARR is defined as the annual value of all recurring revenue related contracts in place at the end of the period. ARR should be viewed independently of revenue and deferred revenue as ARR is an operating metric and is not intended to be combined with or replace these items. ARR is not a forecast of future revenue and can be impacted by contract start and end dates and renewal rates, and does not include revenue reported as perpetual license or professional services revenue in our consolidated statement of operations.

    Number of Customers. We define a customer as any entity that has an active Rapid7 recurring revenue contract as of the specified measurement date, excluding InsightOps and Logentries only customers with a contract value less than $2,400 per year.

    ARR per Customer. We define ARR per customer as ARR divided by the number of customers at the end of the period.

    Cautionary Language Concerning Forward-Looking Statements

    This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, the statements regarding our financial guidance for the third quarter and full year 2021, the assumptions underlying such guidance and the timing of global economic recovery and the anticipated impact of COVID-19 on our guidance, business, financial condition, the impact of the acquisition of IntSights on our products, strategy and future results of operations, including plans for IntSights technology and the benefits of its technology on the core capabilities of our Insight Platform. Our use of the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. The events described in our forward-looking statements are subject to a number of risks and uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Risks that could cause or contribute to such differences include, but are not limited to, risks arising from the ongoing COVID-19 pandemic, fluctuations in our quarterly results, failure to meet our publicly announced guidance or other expectations about our business, our rapid growth and ability to sustain our revenue growth rate, the ability of our products and professional services to correctly detect vulnerabilities, our customers renewal of their subscriptions with us, competition in the markets in which we operate, market growth, our ability to innovate and manage our growth, our sales cycles, our ability to integrate acquired companies, our ability to operate in compliance with applicable laws as well as other risks and uncertainties set forth in the “Risk Factors” section of our most recent Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (the “SEC”) on May 7, 2021 and in the subsequent reports that we file with the Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those expressed in any forward-looking statements we may make. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.

    Investor contact:

    Sunil Shah
    Vice President, Investor Relations
    investors@rapid7.com
    (857) 990-4074

    Press contact:

    Caitlin Doherty
    press@rapid7.com
    (857) 990-4240

    RAPID7, INC.    
    Consolidated Balance Sheets (Unaudited)     
    (in thousands)    

      June 30, 2021 December 31, 2020
    Assets    
    Current assets:    
    Cash and cash equivalents $493,568   $173,617  
    Short-term investments 114,284   138,839  
    Accounts receivable, net 98,483   111,599  
    Deferred contract acquisition and fulfillment costs, current portion 23,960   21,536  
    Prepaid expenses and other current assets 27,555   27,844  
    Total current assets 757,850   473,435  
    Long-term investments 5,377   10,124  
    Property and equipment, net 49,431   53,114  
    Operating lease right-of-use assets 63,472   67,178  
    Deferred contract acquisition and fulfillment costs, non-current portion 46,132   43,103  
    Goodwill 254,418   213,601  
    Intangible assets, net 54,179   44,296  
    Other assets 9,450   8,271  
    Total assets $1,240,309   $913,122  
    Liabilities and Stockholders’ Equity (Deficit)    
    Current liabilities:    
    Accounts payable $2,063   $3,860  
    Accrued expenses 55,633   61,677  
    Operating lease liabilities, current portion 9,285   9,612  
    Deferred revenue, current portion 302,186   278,585  
    Convertible senior notes, current portion, net 44,730   —  
    Other current liabilities 303   —  
    Total current liabilities 414,200   353,734  
    Convertible senior notes, non-current portion, net 810,093   378,586  
    Operating lease liabilities, non-current portion 71,691   75,737  
    Deferred revenue, non-current portion 30,124   31,365  
    Other long-term liabilities 9,596   2,164  
    Total liabilities 1,335,704   841,586  
    Stockholders’ equity (deficit):    
    Common stock 557   522  
    Treasury stock (4,764)  (4,764) 
    Additional paid-in-capital 562,652   692,603  
    Accumulated other comprehensive (loss) income (137)  454  
    Accumulated deficit (653,703)  (617,279) 
    Total stockholders’ equity (deficit) (95,395)  71,536  
    Total liabilities and stockholders’ equity (deficit) $1,240,309   $913,122  


    RAPID7, INC.
    Consolidated Statements of Operations (Unaudited)
    (in thousands, except share and per share data)

     Three Months Ended June 30, Six Months Ended June 30,
     2021 2020 2021 2020
    Revenue:       
    Products$119,147   $92,430   $228,432   $179,979  
    Professional services7,274   6,482   15,440   13,273  
    Total revenue126,421   98,912   243,872   193,252  
    Cost of revenue:       
    Products33,169   23,118   62,819   44,373  
    Professional services6,139   5,963   12,778   12,422  
    Total cost of revenue39,308   29,081   75,597   56,795  
    Total gross profit87,113   69,831   168,275   136,457  
    Operating expenses:       
    Research and development35,305   26,120   68,385   50,322  
    Sales and marketing56,246   44,959   111,224   93,104  
    General and administrative17,488   14,484   33,708   28,583  
    Total operating expenses109,039   85,563   213,317   172,009  
    Loss from operations(21,926)  (15,732)  (45,042)  (35,552) 
    Other income (expense), net:       
    Interest income122   208   218   1,256  
    Interest expense(3,059)  (5,917)  (8,453)  (9,379) 
    Other income (expense), net148   210   (919)  (237) 
    Loss before income taxes(24,715)  (21,231)  (54,196)  (43,912) 
    Provision for income taxes9,449   235   9,813   478  
    Net loss$(34,164)  $(21,466)  $(64,009)  $(44,390) 
    Net loss per share, basic and diluted$(0.62)  $(0.42)  $(1.18)  $(0.88) 
    Weighted-average common shares outstanding, basic and diluted55,392,383   50,695,706   54,169,464   50,411,508  


    RAPID7, INC.
    Consolidated Statements of Cash Flows (Unaudited)
    (in thousands)

     Three Months Ended June 30, Six Months Ended June 30,
     2021 2020 2021 2020
    Cash flows from operating activities:       
    Net loss$(34,164)  $(21,466)  $(64,009)  $(44,390) 
    Adjustments to reconcile net loss to cash provided by (used in) operating activities:       
    Depreciation and amortization7,028   5,576   13,768   10,419  
    Amortization of debt discount and issuance costs1,133   4,264   1,791   7,007  
    Stock-based compensation expense23,814   16,446   44,676   29,793  
    Deferred income taxes3,924   —   3,924   —  
    Induced conversion expense—   —   2,740   —  
    Other42   224   1,446   1,060  
    Change in operating assets and liabilities:       
    Accounts receivable(21,598)  (11,773)  12,816   10,835  
    Deferred contract acquisition and fulfillment costs(3,497)  (2,478)  (5,453)  (2,994) 
    Prepaid expenses and other assets530   1,638   394   1,773  
    Accounts payable(1,879)  (3,873)  (1,329)  137  
    Accrued expenses7,837   7,126   (7,592)  (7,437) 
    Deferred revenue21,233   4,675   22,220   (11,996) 
    Other liabilities4,783   83   4,389   (980) 
    Net cash provided by (used in) operating activities9,186   442   29,781   (6,773) 
    Cash flows from investing activities:       
    Business acquisition, net of cash acquired(2,700)  (125,771)  (52,420)  (125,771) 
    Purchases of property and equipment(1,699)  (1,199)  (2,671)  (3,955) 
    Capitalization of internal-use software costs(2,447)  (1,474)  (4,205)  (2,948) 
    Purchases of investments(52,914)  (24,987)  (59,308)  (49,259) 
    Sales/maturities of investments46,038   32,675   87,938   146,599  
    Other—   —   (1,500)  —  
    Net cash used in investing activities(13,722)  (120,756)  (32,166)  (35,334) 
    Cash flows from financing activities:       
    Proceeds from issuance of convertible senior notes, net of issuance costs paid(1,660)  223,500   585,440   223,500  
    Purchase of capped calls related to convertible senior notes—   (27,255)  (76,020)  (27,255) 
    Payments of debt issuance costs—   (248)  —   (248) 
    Payments for repurchase of convertible senior notes(2,002)  —   (184,649)  —  
    Payments related to business acquisition—   —   (2,431)  —  
    Taxes paid related to net share settlement of equity awards(3,347)  (1,917)  (6,671)  (3,450) 
    Proceeds from employee stock purchase plan—   —   4,467   3,346  
    Proceeds from stock option exercises1,103   2,167   2,530   3,728  
    Net cash (used in) provided by financing activities(5,906)  196,247   322,666   199,621  
    Effects of exchange rates on cash, cash equivalents and restricted cash207   259   (293)  (301) 
    Net (decrease) increase in cash, cash equivalents and restricted cash(10,235)  76,192   319,988   157,213  
    Cash, cash equivalents and restricted cash, beginning of period503,840   204,434   173,617   123,413  
    Cash, cash equivalents and restricted cash, end of period$493,605   $280,626   $493,605   $280,626  


    RAPID7, INC.    
    GAAP to Non-GAAP Reconciliation (Unaudited)    
    (in thousands, except share and per share data)   

     Three Months Ended June 30, Six Months Ended June 30,
     2021 2020 2021 2020
    GAAP gross profit$87,113   $69,831   $168,275   $136,457  
    Add: Stock-based compensation expense11,812   1,131   3,366   2,062  
    Add: Amortization of acquired intangible assets22,920   2,175   5,661   3,833  
    Non-GAAP gross profit$91,845   $73,137   $177,302   $142,352  
    Non-GAAP gross margin72.7 % 73.9 % 72.7 % 73.7 %
            
    GAAP gross profit - Products$85,978   $69,312   $165,613   $135,606  
    Add: Stock-based compensation expense1,200   710   2,218   1,283  
    Add: Amortization of acquired intangible assets2,920   2,175   5,661   3,833  
    Non-GAAP gross profit - Products$90,098   $72,197   $173,492   $140,722  
    Non-GAAP gross margin - Products75.6 % 78.1 % 75.9 % 78.2 %
            
    GAAP gross profit - Professional services$1,135   $519   $2,662   $851  
    Add: Stock-based compensation expense612   421   1,148   779  
    Non-GAAP gross profit - Professional services$1,747   $940   $3,810   $1,630  
    Non-GAAP gross margin - Professional services24.0 % 14.5 % 24.7 % 12.3 %
            
    GAAP loss from operations$(21,926)  $(15,732)  $(45,042)  $(35,552) 
    Add: Stock-based compensation expense123,814   16,446   44,676   29,793  
    Add: Amortization of acquired intangible assets23,068   2,285   5,957   3,975  
    Add: Acquisition-related expenses3863   831   2,031   1,138  
    Add: Litigation-related expenses4251   435   354   978  
    Non-GAAP income from operations$6,070   $4,265   $7,976   $332  
            
    GAAP net loss$(34,164)  $(21,466)  $(64,009)  $(44,390) 
    Add: Stock-based compensation expense123,814   16,446   44,676   29,793  
    Add: Amortization of acquired intangible assets23,068   2,285   5,957   3,975  
    Add: Acquisition-related expenses39,828   831   10,996   1,138  
    Add: Litigation-related expenses4251   435   354   978  
    Add: Amortization of debt discount and issuance costs1,133   4,264   1,791   7,007  
    Add: Induced conversion expense—   —   2,740   —  
    Non-GAAP net income (loss)$3,930   $2,795   $2,505   $(1,499) 
            
    Reconciliation of net income (loss) per share, basic       
    GAAP net loss per share, basic$(0.62)  $(0.42)  $(1.18)  $(0.88) 
    Non-GAAP adjustments to net loss0.69   0.48   1.23   0.85  
    Non-GAAP net income (loss) per share, basic$0.07   $0.06   $0.05   $(0.03) 
            


    Reconciliation of net income (loss) per share, diluted       
    GAAP net loss per share, diluted$(0.62)  $(0.42)  $(1.18)  $(0.88) 
    Non-GAAP adjustments to net loss0.69   0.47   1.22   0.85  
    Non-GAAP net income (loss) per share, diluted$0.07   $0.05   $0.04   $(0.03) 
            
    Weighted average shares used in GAAP and non-GAAP per share calculation, basic and diluted 55,392,383    50,695,706    54,169,464    50,411,508  
            
    Weighted average shares used in GAAP and non-GAAP per share calculation:       
    Basic 55,392,383    50,695,706    54,169,464    50,411,508  
    Diluted 57,731,694    53,063,261    56,626,465    50,411,508  
            
    1 Includes stock-based compensation expense as follows:       
    Cost of revenue$1,812   $1,131   $3,366   $2,062  
    Research and development9,420   6,389   17,235   11,034  
    Sales and marketing6,038   4,345   11,784   8,023  
    General and administrative6,544   4,581   12,291   8,674  
            
    2 Includes amortization of acquired intangible assets as follows:       
    Cost of revenue$2,920   $2,175   $5,661   $3,833  
    Sales and marketing103   80   206   112  
    General and administrative45   30   90   30  
            
    3 Includes acquisition-related expenses as follows:       
    Sales and marketing$—   $—   $122   $—  
    General and administrative863   831   1,909   1,138  
    Provision for income taxes 8,965    —    8,965    —  
            
    4 Includes litigation-related expenses as follows:       
    General and administrative$251   $435   $354   $978  


    RAPID7, INC.
    Reconciliation of Net Loss to Adjusted EBITDA (Unaudited)
    (in thousands)

     Three Months Ended June 30, Six Months Ended June 30,
     2021 2020 2021 2020
    GAAP net loss$(34,164)  $(21,466)  $(64,009)  $(44,390) 
    Interest income(122)  (208)  (218)  (1,256) 
    Interest expense3,059   5,917   8,453   9,379  
    Other (income) expense, net(148)  (210)  919   237  
    Provision for income taxes9,449   235   9,813   478  
    Depreciation expense3,053   2,740   6,047   5,415  
    Amortization of intangible assets3,975   2,836   7,721   5,004  
    Stock-based compensation expense23,814   16,446   44,676   29,793  
    Acquisition-related expenses863   831   2,031   1,138  
    Litigation-related expenses251   435   354   978  
    Adjusted EBITDA$10,030   $7,556   $15,787   $6,776  


    RAPID7, INC.
    Reconciliation of Net Cash Provided by (Used in) Operating Activities to Free Cash Flow (Unaudited)
    (in thousands)

     Three Months Ended June 30, Six Months Ended June 30,
     2021 2020 2021 2020
    Net cash provided by (used in) operating activities$9,186   $442   $29,781   $(6,773) 
    Less: Purchases of property and equipment(1,699)  (1,199)  (2,671)  (3,955) 
    Less: Capitalized internal-use software costs(2,447)  (1,474)  (4,205)  (2,948) 
    Free cash flow$5,040   $(2,231)  $22,905   $(13,676) 


    Third Quarter and Full-Year 2021 Guidance
    GAAP to Non-GAAP Reconciliation    
    (in millions, except per share data)

     Third Quarter Full-Year
     2021 2021
    Reconciliation of GAAP to non-GAAP loss from operations:   
    Anticipated GAAP loss from operations$(37.8)  $(117.8) 
    Add: Anticipated stock-based compensation expense28.7   103.6  
    Add: Anticipated amortization of acquired intangible assets3.1   11.9  
    Add: Anticipated acquisition-related expenses5.5   8.9  
    Add: Anticipated litigation-related expenses—   0.4  
    Anticipated non-GAAP (loss) income from operations$(0.5)  $7.0  
        
    Reconciliation of GAAP to non-GAAP net loss:   
    Anticipated GAAP net loss$(42.3)  $(145.7) 
    Add: Anticipated stock-based compensation expense28.7   103.6  
    Add: Anticipated amortization of acquired intangible assets3.1   11.9  
    Add: Anticipated acquisition-related expenses5.5   17.9  
    Add: Anticipated litigation-related expenses—   0.4  
    Add: Anticipated amortization of debt issuance costs1.2   4.1  
    Add: Anticipated induced conversion expense—   2.7  
    Anticipated non-GAAP net loss$(3.8)  $(5.1) 
        
    Anticipated GAAP net loss per share, basic and diluted$(0.75)  $(2.63) 
    Anticipated non-GAAP net loss per share, basic and diluted$(0.07)  $(0.09) 
        
    Weighted average shares used in GAAP per share calculation, basic and diluted 56.1    55.3  

    The reconciliation does not reflect any items that are unknown at this time, such as certain acquisition-related expenses, litigation-related expenses and the amortization of acquired intangible assets associated with the IntSights acquisition, which we are not able to predict without unreasonable effort due to their inherent uncertainty. As a result, the estimates shown for Anticipated GAAP loss from operations, Anticipated GAAP net loss and Anticipated GAAP net loss per share are expected to change.

     Full-Year 2021
    Reconciliation of net cash provided by operating activities to free cash flow: 
    Net cash provided by operating activities$37.0  
    Purchases of property and equipment(8.5) 
    Capitalized internal-use software costs(8.5) 
    Free cash flow$20.0  

     


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