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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 001-37496
 
RAPID7, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 35-2423994
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
120 Causeway Street 
Boston,MA02114
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (617247-1717
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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
Large Accelerated Filer
Accelerated Filer
Non-accelerated Filer
Small Reporting Company
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No  
As of July 31, 2021, there were 55,783,467 shares of the registrant’s common stock, $0.01 par value per share, outstanding.



Table of Contents
Table of Contents
 
  Page
PART I.
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

i

Table of Contents
PART I—FINANCIAL INFORMATION
Item 1.Financial Statements.

RAPID7, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)
 
June 30, 2021December 31, 2020
Assets
Current assets:
Cash and cash equivalents$493,568 $173,617 
Short-term investments114,284 138,839 
Accounts receivable, net of allowance for doubtful accounts of $2,549 and $3,251 at June 30, 2021 and December 31, 2020, respectively
98,483 111,599 
Deferred contract acquisition and fulfillment costs, current portion23,960 21,536 
Prepaid expenses and other current assets27,555 27,844 
Total current assets757,850 473,435 
Long-term investments5,377 10,124 
Property and equipment, net49,431 53,114 
Operating lease right-of-use assets63,472 67,178 
Deferred contract acquisition and fulfillment costs, non-current portion46,132 43,103 
Goodwill254,418 213,601 
Intangible assets, net54,179 44,296 
Other assets9,450 8,271 
Total assets$1,240,309 $913,122 
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable$2,063 $3,860 
Accrued expenses55,633 61,677 
Operating lease liabilities, current portion9,285 9,612 
Deferred revenue, current portion302,186 278,585 
Convertible senior notes, current portion, net44,730  
Other current liabilities303  
Total current liabilities414,200 353,734 
Convertible senior notes, non-current portion, net810,093 378,586 
Operating lease liabilities, non-current portion71,691 75,737 
Deferred revenue, non-current portion30,124 31,365 
Other long-term liabilities9,596 2,164 
Total liabilities1,335,704 841,586 
Stockholders’ equity (deficit):
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized at June 30, 2021 and December 31, 2020; 0 shares issued at June 30, 2021 and December 31, 2020
  
Common stock, $0.01 par value per share; 100,000,000 shares authorized at June 30, 2021 and December 31, 2020; 56,235,219 and 52,712,084 shares issued at June 30, 2021 and December 31, 2020, respectively; 55,748,411 and 52,225,276 shares outstanding at June 30, 2021 and December 31, 2020, respectively
557 522 
Treasury stock, at cost, 486,808 shares at June 30, 2021 and December 31, 2020
(4,764)(4,764)
Additional paid-in-capital562,652 692,603 
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 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
1

Table of Contents
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,
 2021202020212020
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 
The accompanying notes are an integral part of these unaudited consolidated financial statements.

2

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RAPID7, INC.
Consolidated Statements of Comprehensive Loss (Unaudited)
(in thousands)
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Net loss$(34,164)$(21,466)$(64,009)$(44,390)
Other comprehensive income (loss):
Change in fair value of investments(3)128 (12)(107)
Adjustments for net losses (gains) realized and included in net loss 35  (21)
Total change in unrealized (losses) gains on investments(3)163 (12)(128)
Change in fair value of cash flow hedges(72) (201) 
Adjustments for net gains realized and included in net loss(174) (378) 
Total change in unrealized losses on cash flow hedges(246) (579) 
Total other comprehensive (loss) income(249)163 (591)(128)
Comprehensive loss$(34,413)$(21,303)$(64,600)$(44,518)

The accompanying notes are an integral part of these unaudited consolidated financial statements.


3

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RAPID7, INC.
Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited)
(in thousands)
 Common stockTreasury stockAdditional
paid-in-capital
Accumulated
other
comprehensive
gain (loss)
Accumulated
deficit
Total
stockholders’
(deficit)
 SharesAmountSharesAmount
Balance, March 31, 202155,091 $551 487 $(4,764)$542,415 $112 $(619,539)$(81,225)
Stock-based compensation expense— — — — 22,487 — — 22,487 
Vesting of restricted stock units500 5 — — (5)— —  
Shares withheld for employee taxes(42)(1)— — (3,346)— — (3,347)
Issuance of common stock upon exercise of stock options109 1 — — 1,102 — — 1,103 
Issuance of common stock in connection with conversion of convertible senior notes23 — — — — — —  
Issuance of common stock related to acquisition67 1 — — (1)— —  
Other comprehensive loss— — — — — (249)— (249)
Net loss— — — — — — (34,164)(34,164)
Balance, June 30, 202155,748 $557 487 $(4,764)$562,652 $(137)$(653,703)$(95,395)

 Common stockTreasury stockAdditional
paid-in-capital
Accumulated
other
comprehensive
gain (loss)
Accumulated
deficit
Total
stockholders’
equity
 SharesAmountSharesAmount
Balance, March 31, 202050,419 $504 487 $(4,764)$621,992 $(78)$(541,354)$76,300 
Stock-based compensation expense— — — — 15,864 — — 15,864 
Vesting of restricted stock units415 4 — — (4)— —  
Shares withheld for employee taxes(42)— — — (1,917)— — (1,917)
Issuance of common stock upon exercise of stock options160 1 — — 2,163 — — 2,164 
Other comprehensive gain— — — — — 163 — 163 
Equity component of convertible senior notes, net— — — — 46,835 — — 46,835 
Purchase of capped calls related to convertible senior notes— — — — (27,255)— — (27,255)
Net loss— — — — — — (21,466)(21,466)
Balance, June 30, 202050,952 $509 487 $(4,764)$657,678 $85 $(562,820)$90,688 



















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 Common stockTreasury stockAdditional
paid-in-capital
Accumulated
other
comprehensive
gain (loss)
Accumulated
deficit
Total
stockholders’
equity (deficit)
 SharesAmountSharesAmount
Balance, December 31, 202052,225 $522 487 $(4,764)$692,603 $454 $(617,279)$71,536 
Stock-based compensation expense— — — — 44,771 — — 44,771 
Issuance of common stock under employee stock purchase plan148 1 — — 4,466 — — 4,467 
Vesting of restricted stock units874 9 — — (9)— —  
Shares withheld for employee taxes(80)(1)— — (6,670)— — (6,671)
Issuance of common stock upon exercise of stock options279 3 — — 2,518 — — 2,521 
Purchase of capped calls related to convertible senior notes— — — — (76,020)— — (76,020)
Issuance of common stock in connection with repurchase and conversion of convertible senior notes2,200 22 — — (2,720)— — (2,698)
Issuance of common stock in connection with inducement of convertible senior notes35 — — — 2,740 — — 2,740 
Issuance of common stock related to acquisition67 1 — — (1)— —  
Cumulative-effect adjustment for the adoption of ASU 2020-06— — — — (99,026)27,585 (71,441)
Other comprehensive loss— — — — — (591)— (591)
Net loss— — — — — — (64,009)(64,009)
Balance, June 30, 202155,748 $557 487 $(4,764)$562,652 $(137)$(653,703)$(95,395)
 Common stockTreasury stockAdditional
paid-in-capital
Accumulated
other
comprehensive
gain (loss)
Accumulated
deficit
Total
stockholders’
equity
 SharesAmountSharesAmount
Balance, December 31, 201949,911 $499 487 $(4,764)$605,650 $213 $(518,430)$83,168 
Stock-based compensation expense— — — — 28,829 — — 28,829 
Issuance of common stock under employee stock purchase plan102 1 — — 3,345 — — 3,346 
Vesting of restricted stock units723 7 — — (7)— —  
Shares withheld for employee taxes(69)— — — (3,450)— — (3,450)
Issuance of common stock upon exercise of stock options285 2 — — 3,731 — — 3,733 
Other comprehensive loss— — — — — (128)— (128)
Equity component of convertible senior notes, net— — — — 46,835 — — 46,835 
Purchase of capped calls related to convertible senior notes— — — — (27,255)— — (27,255)
Net loss— — — — — — (44,390)(44,390)
Balance, June 30, 202050,952 $509 487 $(4,764)$657,678 $85 $(562,820)$90,688 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
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RAPID7, INC.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
 
 Six Months Ended June 30,
 20212020
Cash flows from operating activities:
Net loss$(64,009)$(44,390)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization13,768 10,419 
Amortization of debt discount and issuance costs1,791 7,007 
Stock-based compensation expense44,676 29,793 
Deferred income taxes3,924  
Induced conversion expense2,740  
Other1,446 1,060 
Changes in operating assets and liabilities:
Accounts receivable12,816 10,835 
Deferred contract acquisition and fulfillment costs(5,453)(2,994)
Prepaid expenses and other assets394 1,773 
Accounts payable(1,329)137 
Accrued expenses(7,592)(7,437)
Deferred revenue22,220 (11,996)
Other liabilities4,389 (980)
Net cash provided by (used in) operating activities29,781 (6,773)
Cash flows from investing activities:
Business acquisition, net of cash acquired(52,420)(125,771)
Purchases of property and equipment(2,671)(3,955)
Capitalization of internal-use software costs(4,205)(2,948)
Purchases of investments(59,308)(49,259)
Sales/maturities of investments87,938 146,599 
Other(1,500) 
Net cash used in investing activities(32,166)(35,334)
Cash flows from financing activities:
Proceeds from issuance of convertible senior notes, net of issuance costs paid of $14,560 and $6,500 for the six months ended June 30, 2021 and 2020, respectively
585,440 223,500 
Purchase of capped calls related to convertible senior notes(76,020)(27,255)
Payments of debt issuance costs (248)
Payments for repurchase and conversion of convertible senior notes(184,649) 
Payments related to business acquisition(2,431) 
Taxes paid related to net share settlement of equity awards(6,671)(3,450)
Proceeds from employee stock purchase plan4,467 3,346 
Proceeds from stock option exercises2,530 3,728 
Net cash provided by financing activities322,666 199,621 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(293)(301)
Net increase in cash, cash equivalents and restricted cash319,988 157,213 
Cash, cash equivalents and restricted cash, beginning of period173,617 123,413 
Cash, cash equivalents and restricted cash, end of period$493,605 $280,626 
Supplemental cash flow information:
Cash paid for interest on convertible senior notes$4,025 $1,438 
Cash paid for income taxes, net of refunds$632 $135 
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents$493,568 $279,343 
Restricted cash included in prepaid expenses and other current assets37 $1,283 
Total cash, cash equivalents and restricted cash$493,605 $280,626 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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RAPID7, INC.
Notes to Consolidated Financial Statements (Unaudited)
Note 1. Description of Business, Basis of Presentation and Consolidation and Significant Accounting Policies
Description of Business
Rapid7, Inc. and subsidiaries (“we,” “us” or “our”) 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.
Basis of Presentation and Consolidation
The accompanying unaudited consolidated financial statements have been prepared by us in accordance with accounting principles generally accepted in the United States of America (GAAP), as well as pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), regarding interim financial reporting. Accordingly, certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 26, 2021.
The consolidated financial statements include our results of operations and those of our wholly-owned subsidiaries and reflect all adjustments (consisting solely of normal, recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented. All intercompany transactions and balances have been eliminated in consolidation. The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The management estimates include, but are not limited to the determination of the estimated economic life of perpetual licenses for revenue recognition, the determination of standalone selling prices in revenue transactions with multiple performance obligations, the estimated period of benefit for deferred contract acquisition and fulfillment costs, the useful lives and recoverability of long-lived assets, the valuation of allowance for doubtful accounts, the valuation of stock-based compensation, the fair value of assets acquired and liabilities assumed in business combinations, the incremental borrowing rate for operating leases and the valuation for deferred tax assets. We base our estimates on historical experience and on various other assumptions that we believe are reasonable. Actual results could differ from those estimates.
The COVID-19 pandemic has resulted in a sustained global slowdown of economic activity that has decreased demand for a broad variety of goods and services, including from our customers. While we have not experienced significant disruptions from the COVID-19 pandemic during the three and six months ended June 30, 2021, we are unable to accurately predict the extent to which the COVID-19 pandemic may impact our business, results of operations and financial condition going forward. Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment. As of the date of issuance of these financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates, assumptions and judgments or revise the carrying value of our assets or liabilities. These estimates may change as new events occur and additional information is obtained and will be recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to our financial statements.
Significant Accounting Policies
Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. Other than the impact of our early adoption of Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06) on January 1, 2021, as further detailed in Note 10, Debt, there have been no additional changes to the significant accounting policies during the three and six-month periods ended June 30, 2021.
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Recent Accounting Pronouncements
Accounting Pronouncements Recently Adopted
In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplified the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. We early adopted this standard on January 1, 2021 under the modified retrospective basis. Refer to Note 10, Debt, for further details of the impact the adoption of this standard had on our consolidated balance sheet.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying certain aspects of the current guidance to promote consistency among reporting entities. We adopted this standard on January 1, 2021 and there was no impact to our consolidated financial statements as a result of the adoption.
Accounting Pronouncements Not Yet Effective
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions to GAAP guidance on contract modifications to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) to alternative reference rates. We may elect to apply the amendments prospectively through December 31, 2022. The impact to our consolidated financial statements from the adoption of this standard is expected to be immaterial.
Note 2. Revenue from Contracts with Customers
We generate revenue primarily from: (1) subscriptions from the sale of cloud-based subscriptions, managed services, term software licenses, content subscriptions and maintenance and support associated with our software licenses, (2) perpetual software licenses, and (3) professional services from the sale of our deployment and training services related to our solutions, incident response services, penetration testing and security advisory services.
The following table summarizes revenue from contracts with customers for the three and six months ended June 30, 2021 and 2020:
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
(in thousands)
Subscriptions$117,014 $89,591 $224,181 $174,139 
Perpetual software licenses2,036 2,636 4,150 5,406 
Professional services7,274 6,482 15,440 13,273 
Other97 203 101 434 
Total revenue$126,421 $98,912 $243,872 $193,252 
Subscriptions
Subscriptions consists of revenue from our cloud-based subscription, managed services offerings, term software licenses and content subscriptions maintenance and support associated with our software licenses.
We generate cloud-based subscription revenue primarily from sales of subscriptions to access our cloud platform, together with related support services to our customers. These arrangements do not provide the customer with the right to take possession of our software operating on our cloud platform at any time. Instead, customers are granted continuous access to our cloud platform over the contractual period. Revenue is recognized over time on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our cloud-based subscription contracts generally have annual or multi-year contractual terms which are billed in advance of the annual subscription period and are non-cancellable.
Managed services offerings consist of fees generated when we operate our software and provide our capabilities on behalf of our customers. Revenue is recognized on a ratable basis over the contract term beginning on the date that our
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service is made available to the customer. Our managed services offerings generally have annual or multi-year contractual terms which are billed in advance of the annual subscription period and are non-cancellable.
For our term software licenses where the utility to the customer is dependent on the continued delivery of content subscriptions, we recognize the license revenue over the contractual term of the arrangement as a material right does not exist. For our term software licenses which are not dependent on the continued delivery of content subscriptions, the license is considered distinct from the maintenance and support, and we therefore recognize revenue attributable to the license at the time of delivery.
Content subscriptions and our maintenance and support services are sold with our perpetual and term software licenses. Revenue related to our content subscriptions associated with our software licenses is recognized ratably over the contractual period. Maintenance and support services are distinct from the perpetual and term software license and revenue attributable to maintenance and support services is recognized ratably over the contractual period.
Perpetual Software Licenses
For our perpetual software licenses where the utility to the customer is dependent on the continued delivery of content subscriptions, the content subscription renewal options result in a material right with respect to the perpetual software license. As a result, the revenue attributable to the perpetual software license is recognized ratably over the customer’s estimated economic life of five years, which represents a longer period of time in comparison to the initial contractual period of maintenance and support. The estimated economic life of five years represents the period which the customer is expected to benefit from the material right. We estimated this period of benefit by taking into consideration several factors, including the terms and conditions of our customer contracts and renewals and the expected useful life of our technology.
For our perpetual software licenses which are not dependent on the continued delivery of content subscriptions, the license is considered distinct from the maintenance and support, and we therefore recognize revenue attributable to the license at the time of delivery.
Professional Services
All of our professional services are considered distinct performance obligations when sold stand alone or with other products. These contracts generally have terms of one year or less. For the majority of these contracts, revenue is recognized over time based upon the proportion of work performed to date.
Contracts with Multiple Performance Obligations
The majority of our contracts with customers contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price (SSP) basis. We determine SSP of our products and services based on our overall pricing objectives using all information reasonably available to us, taking into consideration market conditions and other factors, including the geographic locations of our customers, negotiated discounts from price lists and selling method (i.e., partner or direct). When available, we use directly observable stand-alone transactions to determine SSP. When not regularly sold on a stand-alone basis, we estimate SSP for our products and services utilizing historical sales data, including discounts from list price. The historical data is aggregated and analyzed by geographic location and selling method to establish a median or average price. Once SSP is established it is applied consistently to all transactions including that product or service utilizing a portfolio approach.
Contract Balances
Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are recognized as revenue over the contractual period consistent with the above methodology. For the three months ended June 30, 2021 and 2020, we recognized revenue of $108.2 million and $84.8 million, respectively, and for the six months ended June 30, 2021 and 2020, we recognized revenue of $181.3 million and $149.3 million, respectively, that was included in the corresponding contract liability balance at the beginning of the periods presented. Deferred revenue that will be realized during the succeeding 12-month period is recorded as current, and the remaining deferred revenue is recorded as non-current.
We receive payments from customers based upon contractual billing schedules. Accounts receivable are recorded when the right to consideration becomes unconditional. Unbilled receivables include amounts related to our contractual right to consideration for both completed and partially completed performance obligations that have not been invoiced. If the right to
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consideration is based on satisfaction of another performance obligation in the contract other than the passage of time, we record a contract asset. As of June 30, 2021 and December 31, 2020, unbilled receivables of $0.9 million and $1.2 million, respectively, are included in prepaid expenses and other current assets in our consolidated balance sheet. As of June 30, 2021 and December 31, 2020, we had no contract assets recorded on our consolidated balance sheet.
Transaction price allocated to the remaining performance obligations
The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied as of June 30, 2021. The estimated revenues do not include unexercised contract renewals.
Next Twelve MonthsThereafter
 (in thousands)
Subscriptions$314,471 $91,750 
Perpetual software licenses5,981 1,813 
Professional services14,101 1,142 

Note 3. Business Combinations
Velocidex
On April 12, 2021, we acquired Velocidex Enterprises Pty Ltd (Velocidex), a leading open-source technology and community used for endpoint monitoring, digital forensics, and incident response. The purchase price consisted of $2.7 million paid in cash and $0.3 million in deferred cash payments. The purchase price was allocated to developed technology intangible asset which has an estimated useful life of 6 years.
Alcide.IO Ltd.
On January 28, 2021, we acquired Alcide.IO Ltd. (Alcide), a leading provider of Kubernetes security, for a purchase consideration of $50.5 million, which was funded in cash.
The following table summarizes the preliminary allocation of purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date (in thousands):
Purchase price$50,538 
Recognized amount of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents818 
Other current assets163 
Deferred tax asset, long-term1,621 
Other assets208 
Accounts payable and other current liabilities(3,489)
Intangible assets10,400 
Total identifiable net assets assumed9,721 
Goodwill40,817 
Total purchase price allocation$50,538 
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We identified developed technology as the sole acquired intangible asset. The estimated fair value of the developed technology intangible asset was $10.4 million which was based on a valuation using the income approach. The estimated useful life of the developed technology is 6 years.
The excess of the purchase price over the tangible assets acquired, identifiable intangible assets acquired and assumed liabilities was recorded as goodwill. We believe that the amount of goodwill reflects the expected synergistic benefits of being able to leverage the integration of the technology acquired with our existing product offerings and being able to successfully market and sell these new features to our customer base. The goodwill was allocated to our one reporting unit. The acquired goodwill and intangible assets were not deductible for tax purposes.
Following the acquisition, certain retained employees of Alcide received an aggregate of 96,127 restricted stock units (RSUs), which will vest over a maximum of three years. The vesting of the RSUs are subject to the employee's continued service with us. Accordingly, stock-based compensation expense associated with the RSUs will be expensed as incurred in our post-acquisition financial statements.
In the six months ended June 30, 2021, we recorded $0.9 million of acquisition-related costs related to the acquisition of Alcide, of which $0.8 million was recorded to general and administrative expense and $0.1 million was recorded to sales and marketing expense.
During the three months ended June 30, 2021, we sold acquired intellectual property through an intercompany transaction, which resulted in $5.0 million of current tax expense and $3.9 million of deferred tax expense in Israel.
Pro forma results of operations have not been included, as the acquisition of Alcide was not material to our results of operations for any periods presented.
Divvy Cloud Corporation
On May 1, 2020, we acquired Divvy Cloud Corporation (DivvyCloud), a Cloud Security Posture Management (CSPM) company, for a purchase price with an aggregate fair value of $137.8 million.
The assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. The excess of the purchase price over the assets acquired and liabilities assumed was recorded as goodwill. The fair value of net assets acquired, goodwill and intangible assets were $0.8 million, $115.7 million and $21.2 million, respectively. The goodwill was allocated to our one reporting unit. The acquired goodwill and intangible asset were not deductible for tax purposes.
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Note 4. Investments
Our investments, which are all classified as available-for-sale, consisted of the following:
 As of June 30, 2021
 Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
 (in thousands)
Description:
U.S. government agencies35,204 2  35,206 
Commercial paper55,227   55,227 
Corporate bonds29,218 11 (1)29,228 
Total$119,649 $13 $(1)$119,661 
 As of December 31, 2020
 Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
 (in thousands)
Description:
U.S. government agencies$83,596 $3 $(12)$83,587 
Corporate bonds24,162 31 (1)24,192 
Commercial paper34,766   34,766 
Agency bonds3,998 1  3,999 
Asset-backed securities2,419   2,419 
Total$148,941 $35 $(13)$148,963 
As of June 30, 2021, our available-for-sale investments had maturities ranging from 1 to 18 months. As of December 31, 2020, our available-for-sale investments had maturities ranging from 1 to 16 months.
For all of our investments for which the amortized cost basis was greater than the fair value at June 30, 2021 and December 31, 2020, we have concluded that there is no plan to sell the security nor is it more likely than not that we would be required to sell the security before its anticipated maturity. In making the determination as to whether the unrealized loss is other-than-temporary, we considered the length of time and extent the investment has been in an unrealized loss position, the financial condition and near-term prospects of the issuers, the issuers’ credit rating and the time to maturity.
Note 5. Fair Value Measurements
We measure certain financial assets and liabilities at fair value. Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:
Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2: