rp-20200507
0001560327false00015603272020-05-072020-05-07


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM 8-K 
CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 7, 2020 
Rapid7, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware 001-37496 35-2423994
(State or other jurisdiction
of incorporation)
 (Commission
File Number)
 (IRS Employer
Identification No.)

120 Causeway Street,Boston,Massachusetts 02114
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (617) 247-1717
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareRPDThe Nasdaq Global Market
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐




Item 2.02Results of Operations and Financial Condition.
On May 7, 2020, Rapid7, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended March 31, 2020. The Company’s press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information included in this Item 2.02 and in the accompanying Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01Financial Statements and Exhibits.
 
(d)Exhibits
Exhibit
No.
  Description
99.1  
104Cover Page Interactive Data File (embedded within the inline XBRL document)




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
  Rapid7, Inc.
Dated: May 7, 2020
  By: /s/ Jeff Kalowski
   Jeff Kalowski
   Chief Financial Officer
 


Document
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Exhibit 99.1
 Rapid7 Announces First Quarter 2020 Financial Results
 
Annualized recurring revenue (ARR) of $350.9 million, an increase of 31% year-over-year
Revenue of $94.3 million, 29% year-over-year growth, achieved 90% recurring revenue mix in the period
Total customer growth of 14% year-over-year
Products revenue of $87.5 million, 33% year-over-year growth
Boston, MA – May 7, 2020Rapid7, Inc. (Nasdaq: RPD), a leading provider of security analytics and automation, today announced its financial results for the first quarter of 2020.

"Rapid7 delivered a solid start to 2020 amidst a rapidly-shifting environment, exceeding the high end of our guidance range for the first quarter with revenue of $94.3 million and non-GAAP loss from operations of $(3.9) million, and we strengthened our balance sheet through a recent successful convertible note offering" said Corey Thomas, Chairman and CEO of Rapid7.

"Our first quarter results reflect our long standing commitment to innovation as we have built multiple market leading products on an integrated Platform. We remain focused on our long-term opportunity to deliver enhanced value and outcomes to our customers, both through sustained organic innovation and via strategic additions such as our recent acquisition of DivvyCloud."

First Quarter 2020 Financial Results and Key Metrics
 Three Months Ended March 31,
 20202019% Change
(dollars in thousands)
Annualized recurring revenue $350,884  $268,194  31 %
Number of customers 9,024  7,934  14 %
ARR per customer$38.9  $33.8  15 %
Recurring revenue as a percentage of total revenue90 %85 %
Renewal rate(1)
106 %117 %
(1) For the three months ended March 31, 2019 our renewal rate was adjusted from 120%, as previously disclosed, to 117% based on a reclassification of certain upsells and cross-sells.
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 Three Months Ended March 31,
 20202019% Change
(in thousands, except per share data)
Products revenue (2)
$87,549  $65,845  33 %
Professional services revenue6,791  7,340  (7)%
Total revenue$94,340  $73,185  29 %
North America revenue$78,705  $62,039  27 %
Rest of world revenue15,635  11,146  40 %
Total revenue$94,340  $73,185  
GAAP gross profit$66,626  $53,212  
GAAP gross margin71 %73 %
Non-GAAP gross profit$69,215  $55,143  
Non-GAAP gross margin73 %75 %
GAAP loss from operations$(19,820) $(9,744) 
GAAP operating margin(21)%(13)%
Non-GAAP (loss) income from operations$(3,933) $577  
Non-GAAP operating margin(4)%%
GAAP net loss$(22,924) $(11,673) 
GAAP net loss per share, basic and diluted$(0.46) $(0.24) 
Non-GAAP net (loss) income$(4,294) $1,158  
Non-GAAP net (loss) income per share, basic$(0.09) $0.02  
Non-GAAP net (loss) income per share, diluted$(0.09) $0.02  
Adjusted EBITDA$(780) $2,607  
Cash used in operating activities$(7,215) $(13,566) 
(2) Historically, we have presented revenue on our consolidated statement of operations as products, maintenance and support and professional services revenue. For the three months ended March 31, 2020, we have combined products and maintenance and support revenue together as products revenue on our consolidated statement of operations. Prior periods have been adjusted to conform with this presentation.

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 May 1, 2020, Rapid7 closed the acquisition of DivvyCloud, a leader in Cloud Security Posture Management (CSPM). DivvyCloud will extend the cloud security capabilities of Rapid7’s Insight platform, accelerating the company's ability to address foundational elements of customers’ cloud programs by helping to secure their cloud assets.
On May 1, 2020, Rapid7 issued an aggregate of $230.0 million principal amount of 2.25% convertible senior notes due 2025 in a private placement.
In February 2020, Rapid7 was recognized as a Leader in Gartner's 2020 Magic Quadrant for Security Information and Event Management (SIEM).
In April 2020, Rapid7 was named a Challenger in Gartner's 2020 Magic Quadrant and Critical Capabilities for Application Security Testing, and received the highest score among vendors for Dynamic Application Security Testing.
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In April 2020, Rapid7 announced that Network Traffic Analysis (NTA) is now available in InsightIDR, the first of several new capabilities leveraging technology acquired from the company's purchase of NetFort in 2019.
Second Quarter and Full-Year 2020 Guidance

Rapid7 anticipates annualized recurring revenue, revenue, non-GAAP income (loss) from operations, and non-GAAP net (loss) income per share to be in the following ranges:
Second Quarter and Full-Year 2020 Guidance (in millions, except per share data)
Second Quarter 2020Full-Year 2020
Annualized recurring revenue$387.0  to$407.0  
Year-over-year growth14 %to20 %
Revenue$94.6  to$96.2  $388.0  to$395.0  
Year-over-year growth20 %to22 %19 %to21 %
Non-GAAP income (loss) from operations$1.0  to$2.0  $(3.0) to$(1.0) 
Non-GAAP net (loss) income per share$(0.02) to$0.00  $(0.19) to$(0.15) 
Weighted average shares outstanding50.7  51.0

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 second quarter and full-year 2020 includes the anticipated contribution from the acquisition of DivvyCloud as of May 1, 2020. Guidance for the second quarter and full-year 2020 does not include any potential impact of foreign exchange gains or losses. The weighted average shares outstanding for the second quarter and full-year 2020 represent basic shares outstanding given our projected non-GAAP net loss. In addition, fluctuations in Rapid7’s quarterly operating results may be particularly pronounced in the current economic environment due to the uncertainty caused by, and the unprecedented nature of, the current COVID-19 pandemic, whose severity, duration and ultimate impact is difficult to predict at this time. The guidance above also assumes that there are no new or recurrent shocks to the global economy, that the quarter ended June 30, 2020 will see the highest negative impact to economic growth and that it will be a 12-to-24 month economic recovery period. The primary set of drivers of Rapid7’s actual financial performance relative to the ranges provided will be a function of how long the economy remains closed and at what pace it recovers when it reopens. 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 discount and issuance costs, and certain other items. Rapid7 has provided a reconciliation of historical non-GAAP financial measures to the most comparable GAAP measures in the financial statement tables included in this press release. A reconciliation of non-GAAP guidance measures to the most comparable GAAP measures is not available on a forward-looking basis without unreasonable efforts due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures.
Conference Call and Webcast Information
Rapid7 will host a conference call today, May 7, 2020, 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 3408937) until May 15, 2020. 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 cloud. 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 9,000
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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 Key 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 key metrics, which we believe are helpful to our investors. We use these non-GAAP financial measures and key 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 key 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 (loss) from operations, non-GAAP net income (loss), non-GAAP net income (loss) per share and adjusted EBITDA. 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 (loss) 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 and litigation-related expenses. Non-GAAP net income (loss) per basic and dilutive 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 the 1.25% convertible senior note issued in August 2018.

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. In August 2018, we issued $230 million of convertible senior notes, which bear interest at an annual fixed rate of 1.25%. The imputed interest rate of the convertible senior notes was approximately 7.36%. This is a result of the debt discount recorded for the conversion feature that is required to be separately accounted for as equity, and debt issuance costs, which reduce the carrying value of the convertible debt instrument. The debt discount is amortized as interest expense together with the issuance costs of the debt. The expense for the amortization of debt discount and debt issuance costs 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.

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.

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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.

Anti-dilutive impact of capped call transaction. In connection with the issuance of our convertible senior notes, we entered into capped call transactions to offset potential dilution from the embedded conversion feature in the 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 basic and diluted share to provide investors with useful information in evaluating the financial performance of the company 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. Adjusted EBITDA should not be considered as a substitute for other measures of financial performance reported in accordance with GAAP. There are limitations to using this non-GAAP financial measure, including that other companies may calculate this measure differently than we do, that it does not reflect our capital expenditures or future requirements for capital expenditures and that it does not reflect changes in, or cash requirements for, our working capital and excludes some items that are cash based.

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.

Key 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 (1) an active Rapid7 contract or a contract that expired within 90 days or less of the applicable measurement date; and for Logentries products, those customers with a contract value equal to or greater than $2,400 per year, or (2) purchased Rapid7 professional services within the 12 months preceding the applicable measurement date.

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

Recurring Revenue. We define recurring revenue as revenue from term software licenses, content subscriptions, managed services, cloud-based subscriptions and maintenance and support.

Renewal Rate. We calculate our renewal rate by dividing the dollar value of renewed customer agreements, including upsells and cross-sells of additional products, but excluding professional services, in a trailing 12-month period by the dollar value of the corresponding customer agreements.

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 second quarter and full year 2020, the assumptions underlying such guidance and the timing of global economic recovery, the impact of the DivvyCloud acquisition on our products, strategy and future results of operations, and the anticipated impact of COVID-19 on our guidance, business, financial condition and results of operations. 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,
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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, including DivvyCloud, 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 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2020, in the Current Report on Form 8-K filed with the SEC on April 28, 2020 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

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RAPID7, INC.    
Consolidated Balance Sheets (Unaudited)     
(in thousands)    
 
March 31, 2020December 31, 2019
Assets
Current assets:
Cash and cash equivalents$204,434  $123,413  
Short-term investments36,384  116,158  
Accounts receivable, net64,388  87,927  
Deferred contract acquisition and fulfillment costs, current portion17,486  17,047  
Prepaid expenses and other current assets19,624  20,051  
Total current assets342,316  364,596  
Long-term investments12,804  22,887  
Property and equipment, net50,075  50,670  
Operating lease right-of-use assets62,942  60,984  
Deferred contract acquisition and fulfillment costs, non-current portion34,289  34,213  
Goodwill97,866  97,866  
Intangible assets, net27,867  28,561  
Other assets5,518  5,136  
Total assets$633,677  $664,913  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$10,062  $6,836  
Accrued expenses26,486  41,021  
Operating lease liabilities, current portion8,866  7,179  
Deferred revenue, current portion219,432  231,518  
Other current liabilities35  119  
Total current liabilities264,881  286,673  
Convertible senior notes, net187,944  185,200  
Operating lease liabilities, non-current portion71,586  72,294  
Deferred revenue, non-current portion31,641  36,226  
Other long-term liabilities1,325  1,352  
Total liabilities557,377  581,745  
Stockholders’ equity:
Common stock504  499  
Treasury stock(4,764) (4,764) 
Additional paid-in-capital621,992  605,650  
Accumulated other comprehensive (loss) income(78) 213  
Accumulated deficit(541,354) (518,430) 
Total stockholders’ equity76,300  83,168  
Total liabilities and stockholders’ equity$633,677  $664,913  




RAPID7, INC.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)
 
 Three Months Ended March 31,
 20202019
Revenue:
Products$87,549  $65,845  
Professional services6,791  7,340  
Total revenue94,340  73,185  
Cost of revenue:
Products21,256  14,369  
Professional services6,458  5,604  
Total cost of revenue27,714  19,973  
Total gross profit66,626  53,212  
Operating expenses:
Research and development24,202  17,865  
Sales and marketing48,145  35,138  
General and administrative14,099  9,953  
Total operating expenses86,446  62,956  
Loss from operations(19,820) (9,744) 
Other income (expense), net:
Interest income1,048  1,731  
Interest expense(3,462) (3,229) 
Other income (expense), net(447) (206) 
Loss before income taxes(22,681) (11,448) 
Provision for income taxes243  225  
Net loss$(22,924) $(11,673) 
Net loss per share, basic and diluted$(0.46) $(0.24) 
Weighted-average common shares outstanding, basic and diluted50,127,310  47,827,939  




RAPID7, INC.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
 
 Three Months Ended March 31,
 20202019
Cash flows from operating activities:
Net loss$(22,924) $(11,673) 
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization4,843  3,427  
Amortization of debt discount and issuance costs2,743  2,510  
Stock-based compensation expense13,347  8,634  
Provision for doubtful accounts527  437  
Foreign currency re-measurement loss447  249  
Other non-cash (income) expense(138) (722) 
Changes in operating assets and liabilities:
Accounts receivable22,608  14,729  
Deferred contract acquisition and fulfillment costs(516) (1,094) 
Prepaid expenses and other assets135  (5,940) 
Accounts payable4,010  66  
Accrued expenses(14,563) (13,690) 
Deferred revenue(16,671) (12,104) 
Other liabilities(1,063) 1,605  
Net cash used in operating activities(7,215) (13,566) 
Cash flows from investing activities:
Purchases of property and equipment(2,756) (8,463) 
Capitalization of internal-use software costs(1,474) (1,601) 
Purchases of investments(24,272) (63,029) 
Sales/maturities of investments113,924  72,738  
Net cash provided by (used in) investing activities85,422  (355) 
Cash flows from financing activities:
Taxes paid related to net share settlement of equity awards(1,533) (979) 
Proceeds from employee stock purchase plan3,346  2,634  
Proceeds from stock option exercises1,561  2,718  
Net cash provided by financing activities3,374  4,373  
Effect of exchange rate changes on cash, cash equivalents and restricted cash(560) (148) 
Net increase (decrease) in cash, cash equivalents and restricted cash81,021  (9,696) 
Cash, cash equivalents and restricted cash, beginning of period123,413  99,565  
Cash, cash equivalents and restricted cash, end of period$204,434  $89,869  




RAPID7, INC.    
GAAP to Non-GAAP Reconciliation (Unaudited)    
(in thousands, except share and per share data)   
 
 Three Months Ended March 31,
 20202019
GAAP gross profit$66,626  $53,212  
Add: Stock-based compensation expense1
931  573  
Add: Amortization of acquired intangible assets2
1,658  1,358  
Non-GAAP gross profit$69,215  $55,143  
Non-GAAP gross margin73.4 %75.3 %
GAAP gross profit - Products$66,293  $51,476  
Add: Stock-based compensation expense573  277  
Add: Amortization of acquired intangible assets1,658  1,358  
Non-GAAP gross profit - Products$68,524  $53,111  
Non-GAAP gross margin - Products78.3 %80.7 %
GAAP gross profit - Professional services$333  $1,736  
Add: Stock-based compensation expense358  296  
Non-GAAP gross profit - Professional services$691  $2,032  
Non-GAAP gross margin - Professional services10.2 %27.7 %
GAAP loss from operations$(19,820) $(9,744) 
Add: Stock-based compensation expense1
13,347  8,634  
Add: Amortization of acquired intangible assets2
1,690  1,397  
Add: Acquisition-related expenses3
307  217  
Add: Litigation-related expenses4
543  73  
Non-GAAP (loss) income from operations$(3,933) $577  
GAAP net loss$(22,924) $(11,673) 
Add: Stock-based compensation expense1
13,347  8,634  
Add: Amortization of acquired intangible assets2
1,690  1,397  
Add: Acquisition-related expenses3
307  217  
Add: Litigation-related expenses4
543  73  
Add: Amortization of debt discount and issuance costs2,743  2,510  
Non-GAAP net (loss) income$(4,294) $1,158  
Reconciliation of net (loss) income per share, basic
GAAP net loss per share, basic$(0.46) $(0.24) 
Non-GAAP adjustments to net loss0.37  0.26  
Non-GAAP net (loss) income per share, basic$(0.09) $0.02  
Reconciliation of net (loss) income per share, diluted
GAAP net loss per share, diluted$(0.46) $(0.24) 
Non-GAAP adjustments to net loss0.37  0.26  
Non-GAAP net (loss) income per share, diluted$(0.09) $0.02  



Weighted average shares used in GAAP per share calculation, basic and diluted50,127,310  47,827,939  
Weighted average shares used in non-GAAP per share calculation:
Basic50,127,310  47,827,939  
Diluted50,127,310  51,184,402  
1 Includes stock-based compensation expense as follows:
Cost of revenue$931  $573  
Research and development4,645  3,174  
Sales and marketing3,678  2,464  
General and administrative4,093  2,423  
2 Includes amortization of acquired intangible assets as follows:
Cost of revenue$1,658  $1,358  
Sales and marketing32  38  
General and administrative—   
3 Includes acquisition-related expenses as follows:
General and administrative$307  $217  
4 Includes litigation-related expenses as follows:
General and administrative$543  $73  




RAPID7, INC.
Reconciliation of Net Loss to Adjusted EBITDA (Unaudited)
(in thousands)
 
 Three Months Ended March 31,
 20202019
GAAP net loss$(22,924) $(11,673) 
Interest income(1,048) (1,731) 
Interest expense3,462  3,229  
Other (income) expense, net447  206  
Provision for income taxes243  225  
Depreciation expense2,675  1,850  
Amortization of intangible assets2,168  1,577  
Stock-based compensation expense13,347  8,634  
Acquisition-related expenses307  217  
Litigation-related expenses543  73  
Adjusted EBITDA$(780) $2,607