Billion Dollar Unicorns: Rapid7 To Focus On Profits In Fiscal 2019

A recent Markets and Markets report estimates the global Cybersecurity Market to grow at a CAGR of 11% from $137.85 billion in 2017 to $231.94 billion by 2022, driven by regulatory data protection directives and the need to counter cyber terrorism, coupled with the growing adoption of Internet of Things (IoT) and Bring Your Own Device (BYOD) trends. Billion Dollar Unicorn Rapid7 (Nasdaq: RPD) is counting on this high growth in the industry.

Rapid7’s Financials

Boston-based Rapid7 was founded in 2000 by serial entrepreneur Alan Matthews, Tas Giakouminakis, and Chad Loder with the objective of providing a comprehensive security solution for organizations that would help manage security across the entire IT environment of network, hardware, software, web, and database components. Since being founded, it has become a leading provider of security data and analytics solutions.

Rapid7 was venture funded till 2015. It had raised $89 million from investors including Bain Capital Ventures and Technology Crossover Ventures. In 2015, the company listed by raising $103.2 million at a pre-trading valuation of $605 million. The stock has seen robust growth ever since.

Last month, Rapid7 reported its second-quarter results that surpassed market expectations. Revenues for the quarter grew 23% to $58.4 million, ahead of the Street’s forecast of $55.2 million. While the growth is impressive, it is slowing down constantly. Revenue growth has slowed from 42% in 2016 to 28% in 2017 to 23% in the most recent quarter. During the quarter, Rapid7 reported an operating loss of $0.31 per share, or $14.34 million. On an adjusted basis, it recorded a loss of $0.13 per share, better than the market’s forecast of a loss of $0.18 per share.

By segment, revenues from products came in at $39 million, maintenance and support revenues brought in $10.6 million, and professional services segment delivered $8.8 million for the quarter.

For the current quarter, Rapid7 expects revenues of $58.6-$60 million. It expects to end the current year with revenues of $237-$240 million and a net loss of $0.52-$0.45 per share. The Street has forecast revenues of $238.9 million with a net loss of $0.49 for the year.