8-K: Rapid7 Exceeds Q4 Guidance, Eyes AI-Powered Growth in 2026

Rapid7, a leader in threat detection and exposure management, announced strong fourth quarter and full-year 2025 financial results, outperforming guidance and highlighting AI security operations.

Summary

• Rapid7 reported total revenue of $217 million for Q4 2025, an increase of 1% year-over-year, and $860 million for the full year 2025, up 2% year-over-year.
• Annualized Recurring Revenue (ARR) stood at $840 million as of December 31, 2025, remaining flat year-over-year.
• Full-year 2025 net cash provided by operating activities was $153.8 million, with free cash flow reaching $130.1 million.
• GAAP net income for Q4 2025 was $3.1 million ($0.05 per diluted share), while non-GAAP net income was $32.1 million ($0.44 per diluted share).
• For the full year 2025, GAAP net income was $23.4 million ($0.36 per diluted share), and non-GAAP net income was $151.8 million ($2.08 per diluted share).
• The company serves over 11,500 customers, with an average ARR per customer of approximately $72,000.
• Recent business highlights include the general availability of Managed Detection and Response (MDR) for Microsoft, a strategic partnership with ARMO for runtime security, and being recognized as a Leader in the 2025 Gartner Magic Quadrant for Exposure Assessment Platforms (EAP).
• Rapid7 was granted its 300th cybersecurity patent, focusing on advanced AI and machine learning technologies.
• For Q1 2026, Rapid7 anticipates ARR of approximately $830 million and revenue between $207 million and $209 million, representing a year-over-year decline of 1% to 2%.
• Full-year 2026 guidance projects total revenue between $835 million and $843 million, a year-over-year decline of 2% to 3%, with non-GAAP net income per share between $1.50 and $1.60, and free cash flow between $125 million and $135 million.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a mixed report. While Rapid7 exceeded its own Q4 2025 guidance and demonstrated strong cash flow and innovation, the flat ARR and projected revenue decline for full-year 2026 raise concerns about future growth trajectory.

Positives

• Outperformed fourth quarter ARR, revenue, and profitability guidance.
• Full-year revenue increased 2% year-over-year to $860 million.
• Full-year net cash provided by operating activities was strong at $153.8 million.
• Full-year free cash flow was $130.1 million.
• Non-GAAP operating income for Q4 2025 was $30.1 million, and for the full year was $135.7 million.
• Non-GAAP net income for Q4 2025 was $32.1 million ($0.44 per diluted share), and for the full year was $151.8 million ($2.08 per diluted share).
• Total cash, cash equivalents, and government securities stood at $659 million as of December 31, 2025.
• Maintained a robust customer base of over 11,500 with an average ARR per customer of approximately $72,000.
• Launched strategic product innovations and partnerships, including MDR for Microsoft and a collaboration with ARMO for cloud risk reduction.
• Recognized as a Leader in the 2025 Gartner Magic Quadrant for Exposure Assessment Platforms (EAP).
• Granted its 300th cybersecurity patent, highlighting innovation in AI and machine learning technologies.

Negatives

• Annualized recurring revenue (ARR) of $840 million was flat year-over-year.
• Q4 2025 total revenue increase was only 1% year-over-year.
• Full-year 2026 revenue guidance projects a decrease of 2% to 3% year-over-year ($835 million $843 million) compared to 2025 actuals ($860 million).
• First Quarter 2026 ARR guidance is approximately $830 million, a decrease from $840 million at the end of 2025.
• GAAP operating income for Q4 2025 decreased to $2.3 million from $7.3 million in Q4 2024.
• GAAP operating income for Full Year 2025 decreased to $11.6 million from $35.0 million in Full Year 2024.
• GAAP net income for Full Year 2025 decreased to $23.4 million from $25.5 million in Full Year 2024.
• Net cash provided by operating activities decreased to $37.6 million in Q4 2025 from $63.8 million in Q4 2024.
• Full-year net cash provided by operating activities decreased to $153.8 million in 2025 from $171.7 million in 2024.
• Full-year free cash flow decreased to $130.1 million in 2025 from $154.1 million in 2024.
• Professional services revenue decreased both quarterly and annually.

Risks

• Growing macroeconomic uncertainty and unstable market and economic conditions.
• Fluctuations in quarterly results.
• Ability to successfully grow sales of cloud-based solutions, including through the shift to a consolidated platform sales approach.
• Effectiveness of the restructuring plan completed during fiscal year 2024.
• Failure to meet publicly announced guidance or other expectations about the business.
• Ability to sustain the revenue growth rate.
• The ability of products and professional services to correctly detect vulnerabilities.
• Renewal of customer subscriptions.
• Competition in the markets in which the company operates.
• Market growth.
• Ability to innovate and manage growth.
• Sales cycles.
• Ability to integrate acquired companies.
• Exposure to greater than anticipated tax liabilities.
• Ability to operate in compliance with applicable laws.

Future Outlook

Rapid7 anticipates Q1 2026 ARR to be approximately $830 million, with revenue projected between $207 million and $209 million, indicating a year-over-year decline of 1% to 2%. For the full year 2026, the company expects total revenue between $835 million and $843 million, representing a year-over-year decline of 2% to 3%. Non-GAAP income from operations is guided to be $108 million to $116 million, non-GAAP net income per share between $1.50 and $1.60, and free cash flow between $125 million and $135 million.

Management Comments

• "Rapid7 exited 2025 delivering outperformance against fourth quarter ARR, revenue, and profitability guidance." Corey Thomas, CEO
• "Our differentiated approach to AI security operations continues to resonate with customers and gain market recognition." Corey Thomas, CEO
• "We are entering 2026 with a relentless focus on driving innovation, scaling up our execution, and securing Rapid7 customers' rapidly evolving attack surfaces." Corey Thomas, CEO

Industry Context

StockSavvy.ai notes that Rapid7's focus on AI-powered security operations and managed detection and response (MDR) aligns with the increasing demand for advanced cybersecurity solutions amidst a rapidly evolving threat landscape. The partnerships with Microsoft and ARMO, along with recognition in the Gartner Magic Quadrant, indicate a strong competitive position in a growing market, particularly as companies seek integrated protection and cloud risk reduction. However, the projected decline in revenue and flat ARR for 2026 suggests potential headwinds or a strategic shift that may impact market share or growth rates compared to faster-growing peers in the cybersecurity sector.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders: Mixed impact due to Q4 outperformance but cautious 2026 guidance (revenue decline, flat ARR). Potential for share price volatility.
• Customers: Positive impact from continued innovation, new partnerships (Microsoft, ARMO, HITRUST, AWS), and recognition in Gartner Magic Quadrant, enhancing security offerings.
• Employees: Recognition as a '2026 Best Places to Work' in key locations suggests positive employee sentiment and retention efforts.

Next Steps

• Rapid7 will host a conference call on February 10, 2026, to discuss its results.
• The company is entering 2026 with a relentless focus on driving innovation, scaling up execution, and securing customer attack surfaces.

Key Dates

Recommendation

While Rapid7 outperformed its Q4 2025 guidance and maintains a strong cash position with ongoing innovation in AI security, the flat ARR and projected revenue decline for 2026 indicate a slowdown in growth. The company's strategic focus on AI and partnerships is positive, but the near-term financial outlook suggests a period of consolidation or transition rather than aggressive expansion, warranting a "hold" position until clearer growth catalysts emerge.

Keywords

Cybersecurity, Threat Detection, Exposure Management, AI Security, MDR, Cloud Security, SaaS, Software, RPD, Rapid7, Financial Results, Q4 2025, Full Year 2025, ARR, Revenue, Profitability, Guidance