Rapid7 2025 Q1 Earnings Modest Revenue Growth with Record Net Income

Rapid7 (RPD) reported its fiscal 2025 Q1 earnings on May 12th, 2025. Rapid7's financial performance for Q1 2025 exhibited modest revenue growth, with total revenue increasing by 2.5% compared to the previous year. However, despite the revenue growth, the company’s earnings exceeded expectations, supported by record net income levels. Guidance for the upcoming quarters remains conservative, reflecting caution amid the current economic climate.

Revenue
Rapid7's total revenue for 2025 Q1 amounted to $210.25 million, showing a 2.5% increase from $205.10 million in the same quarter of the previous year. The majority of this revenue came from product subscriptions, which generated $203.94 million, while professional services contributed $6.32 million. This solid performance underscores the company's strength in its core business segments.

Earnings/Net Income
During 2025 Q1, Rapid7's earnings per share (EPS) surged by 50.0% to $0.03, up from $0.02 in the prior year. The company's net income reached $2.10 million, marking a 49.7% increase from $1.41 million in 2024 Q1. This achievement represents a record high for fiscal Q1 net income, the highest in 12 years. The EPS growth is commendable, reflecting the company's improved profitability.

Price Action
The stock price of Rapid7 experienced a 1.40% increase during the latest trading day. Over the most recent full trading week, the stock has jumped 11.00% and has risen 8.04% month-to-date, indicating positive market sentiment following the earnings report.

Post-Earnings Price Action Review
Investors following a strategy of purchasing Rapid7 shares after a quarterly revenue drop and holding for 30 days have encountered significant losses. Over the past five years, this strategy has resulted in a -49.64% return, compared to a benchmark return of 95.08%, translating to an excess return of -144.71%. This negative outcome is further highlighted by a Sharpe ratio of -0.26, indicating poor risk-adjusted returns. Additionally, the strategy faced a maximum drawdown of -85.23%, underscoring its high-risk nature and substantial losses. The results emphasize the challenges and volatility in predicting post-earnings price actions accurately.

CEO Commentary
Rapid7, Inc. CEO Corey Thomas acknowledged a slower start to 2025 than anticipated but emphasized confidence in the company's long-term potential. He discussed a focused execution strategy in a challenging macroeconomic environment, highlighting investments in Managed Detection and Response (MDR) and accelerating Exposure Command adoption. These initiatives aim to boost annual recurring revenue (ARR) in the latter half of the year while maintaining operational discipline and strong free cash flow.

Guidance
For the second quarter of 2025, Rapid7 forecasts ARR between $850 million and $880 million, indicating a year-over-year growth of 1% to 5%. Total revenue is expected to range from $211 million to $213 million, reflecting a growth of 1% to 2%. For the full year, ARR is anticipated to reach between $853 million and $863 million, with similar revenue growth projections. Non-GAAP income from operations is projected to be $30 million to $32 million for Q2 and $125 million to $135 million for the full year. The non-GAAP net income per share is expected to be $0.43 to $0.46 for Q2 and $1.78 to $1.91 for the full year.

Additional News
Recently, Rapid7 expanded its operational capabilities by launching a Global Capability Center in Pune, India, enhancing its service delivery and operational efficiency. The company also appointed three new board members as part of a cooperation agreement with JANA Partners, aiming to strengthen governance and strategic oversight. Additionally, Rapid7 recognized its top global partners with the 2025 Partner of the Year Awards, celebrating excellence in collaboration and performance across its partner ecosystem. These developments reflect Rapid7's ongoing commitment to growth and innovation in the cybersecurity landscape.