One-glance verdict
Undervalued
$39.23 our estimate vs market $12.25
Wall Street consensus: $7.67 (-80.4% lower than our fair-value estimate)
69% below our estimate, below the bear case
Fundamentals snapshot
Rapid7, Inc.
RPD · NGM · Technology · Software - Infrastructure
Current price
$12.25
52-week range
$4.97 - $23.26
Market cap
$818.68M
Balance sheet
Stretched
1.11x Concerning
Net debt $294.93M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
0 Risks
2 rewards · 0 risks
- Reward Returns 19.7% on equity, ahead of 60% of its peers.
- Reward Free cash flow was positive in 7/10 years.
What this company does
Rapid7, Inc.
Rapid7 is a cybersecurity company that acts like a digital security guard for other businesses, selling software and services to find and fix security weaknesses in their computer networks. The company makes most of its money from subscriptions to its software, which creates predictable recurring revenue (income from ongoing customer contracts that is expected to continue). This is an important field because nearly every organization needs to protect its sensitive data from a growing number of online threats.
How the company got here
Rapid7 started in 2000 as a small consulting company that helped businesses find security weaknesses. A key turning point was in 2009 when it acquired Metasploit, a popular tool used by security professionals to test defenses, which greatly expanded its reputation. In 2015, the company had its IPO (Initial Public Offering, the first time it sold shares of stock to the public) to raise money for growth. Over the years, Rapid7 has bought several other companies to combine different security tools into a single, unified platform.
What it actually does
Think of Rapid7 as a digital security expert for other companies. It provides a single software platform and services that constantly scan a company's computers, cloud services, and applications to find weak spots that hackers could exploit. When it finds a problem or sees suspicious activity, it alerts the company and helps them fix the issue quickly. Essentially, Rapid7 helps businesses manage their cybersecurity—the practice of protecting their digital systems and data—from one central place.
The Rapid7 Command Platform
The company's main business is selling subscriptions to its all-in-one cybersecurity software, known as the Rapid7 Command Platform. Instead of buying separate tools, customers pay Rapid7 for access to a platform that combines several key functions. This includes Exposure Management, which helps companies see their entire digital footprint and find vulnerabilities (flaws in software that could be attacked). It also includes Security Operations, which monitors the company's systems 24/7 to detect and respond to active threats. This single platform approach forms the vast majority of the company's business.
Managed Services
For companies that don't have their own large security teams, Rapid7 offers a service where its own experts manage security for them. This is a growing part of their business called Managed Detection and Response (MDR). In this model, customers pay Rapid7 to have its team of security analysts (experts who investigate cyber threats) monitor their systems around the clock. This team uses Rapid7's platform to hunt for threats and helps the customer shut down attacks, acting as an extension of the customer's own team.
What management is betting on now
Rapid7's main strategy is to use Artificial Intelligence (AI) to make cybersecurity simpler and more automatic for its customers. The company is investing heavily in its Command Platform to help security teams find and fix risks faster, without needing as much manual effort. Management believes that by offering a single, easy-to-use platform that intelligently sorts through threats, it can win over customers who are tired of juggling dozens of complex security tools. This focus on a unified, AI-powered platform is what they believe will drive future growth.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q2
$32.58M
FY2024 Q3
$42.63M
FY2024 Q4
$62.59M
FY2025 Q1
$28.40M
FY2025 Q2
$46.59M
FY2025 Q3
$34.81M
FY2025 Q4
$36.42M
FY2026 Q1
$37.74M
Revenue
$209.69M
Net income
$1.13M
Diluted EPS
0.02
Operating cash flow
$39.82M
Free cash flow
$37.74M
Fetching…
Sources
Revenue
$217.39M
Net income
$3.13M
Diluted EPS
0.05
Operating cash flow
$37.58M
Free cash flow
$36.42M
Fetching…
Sources
Revenue
$217.96M
Net income
$9.81M
Diluted EPS
0.15
Operating cash flow
$38.95M
Free cash flow
$34.81M
Fetching…
Sources
Revenue
$214.19M
Net income
$8.34M
Diluted EPS
0.13
Operating cash flow
$47.54M
Free cash flow
$46.59M
Fetching…
Sources
Revenue
$210.25M
Net income
$2.10M
Diluted EPS
0.03
Operating cash flow
$29.76M
Free cash flow
$28.40M
Fetching…
Sources
Revenue
$216.26M
Net income
$-1.48M
Diluted EPS
0.04
Operating cash flow
$63.77M
Free cash flow
$62.59M
Fetching…
Sources
Revenue
$214.65M
Net income
$16.55M
Diluted EPS
0.22
Operating cash flow
$43.97M
Free cash flow
$42.63M
Fetching…
Sources
Revenue
$207.99M
Net income
$8.20M
Diluted EPS
0.11
Operating cash flow
$32.86M
Free cash flow
$32.58M
Fetching…
Sources
Is it cheap or expensive?
Fair value $39.23 vs current price $12.25
Wall Street consensus is the average analyst price target: $7.67 (-80.4% lower than our fair-value estimate).
Our most-likely fair value is $39.23 a share — about 220.2% above today's price of $12.25, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Stretched
Net debt $294.9M. Interest coverage 1.1x.
Net debt
$294.93M
Interest coverage
1.11x
Rapid7, Inc.'s profit covers its interest bill about 1.1 times over. which is stronger than every peer shown here and 3 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Stretched
Worse cushion
Baseline
Better cushion
RPD
BASELINE
Rapid7, Inc.
Total debt $965.19M Interest coverage 1.11x This is the baseline the peer rows are being compared against.
Total debt $421.80M Interest coverage -0.21x -100% vs RPD This peer has almost no interest-payment cushion compared with RPD.
Total debt $522.17M Interest coverage -22.31x -100% vs RPD This peer has almost no interest-payment cushion compared with RPD.
Total debt $18.98M Interest coverage -12.48x -100% vs RPD This peer has almost no interest-payment cushion compared with RPD.
What you should know
The case for and against RPD
2 Rewards
0 Risks
Rewards
-
Returns 19.7% on equity, ahead of 60% of its peers.
-
Free cash flow was positive in 7/10 years.
Risks
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
35.00x
Forward P/E
7.88x
P/B
4.68x
P/S
0.95x
EV/EBITDA
19.52x
PEG ratio
0.70x
Profitability
How much profit each dollar creates
Gross margin
69.7%
Operating margin
0.0%
Net margin
2.6%
ROE
19.7%
ROA
0.4%
Health
Liquidity and balance-sheet strength
Debt / equity
5.52x
Current ratio
0.78x
Quick ratio
0.70x
Total debt
$965.19M
Total cash
$670.26M
Growth
How the business has been compounding
Revenue TTM
$859.23M
Revenue 5Y CAGR
12.6%
EPS TTM
0.35
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$163.89M
Free CF TTM
$146.23M
FCF margin
17.0%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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