Cybersecurity software provider Rapid7 (NASDAQ: RPD) reported revenue ahead of Wall Street’s expectations in Q4 CY2025, but sales were flat year on year at $217.4 million. On the other hand, next quarter’s revenue guidance of $208 million was less impressive, coming in 2.5% below analysts’ estimates. Its non-GAAP profit of $0.44 per share was 5.9% above analysts’ consensus estimates.
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Rapid7 (RPD) Q4 CY2025 Highlights:
- Revenue: $217.4 million vs analyst estimates of $214.9 million (flat year on year, 1.2% beat)
- Adjusted EPS: $0.44 vs analyst estimates of $0.42 (5.9% beat)
- Adjusted Operating Income: $30.13 million vs analyst estimates of $27.92 million (13.9% margin, 7.9% beat)
- Revenue Guidance for Q1 CY2026 is $208 million at the midpoint, below analyst estimates of $213.4 million
- Adjusted EPS guidance for the upcoming financial year 2026 is $1.55 at the midpoint, missing analyst estimates by 21.8%
- Operating Margin: 1%, down from 3.4% in the same quarter last year
- Free Cash Flow Margin: 14.9%, up from 13.8% in the previous quarter
- Annual Recurring Revenue: $840,000 vs analyst estimates of $837.9 million (99.9% year-on-year decline, miss)
- Market Capitalization: $704.6 million
"Rapid7 exited 2025 delivering outperformance against fourth quarter ARR, revenue, and profitability guidance," said Corey Thomas, CEO of Rapid7.
Company Overview
With its name inspired by the need for quick responses to cyber threats, Rapid7 (NASDAQ: RPD) provides cybersecurity software and services that help organizations detect vulnerabilities, monitor threats, and respond to security incidents.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Rapid7 grew its sales at a 15.9% annual rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the software sector, which enjoys a number of secular tailwinds.
We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. Rapid7’s recent performance shows its demand has slowed as its annualized revenue growth of 5.1% over the last two years was below its five-year trend. 
This quarter, Rapid7’s $217.4 million of revenue was flat year on year but beat Wall Street’s estimates by 1.2%. Company management is currently guiding for a 1.1% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 1% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and suggests its products and services will see some demand headwinds.
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Annual Recurring Revenue
While reported revenue for a software company can include low-margin items like implementation fees, annual recurring revenue (ARR) is a sum of the next 12 months of contracted revenue purely from software subscriptions, or the high-margin, predictable revenue streams that make SaaS businesses so valuable.
Rapid7’s ARR came in at $840,000 in Q4, and it averaged 22.8% year-on-year declines over the last four quarters. This alternate topline metric underperformed its total sales, which likely means that the recurring portions of the business are growing slower than less predictable, choppier ones such as implementation fees. If this continues, the quality of its revenue base could decline. 
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
Rapid7’s recent customer acquisition efforts haven’t yielded returns as its CAC payback period was negative this quarter, meaning its incremental sales and marketing investments outpaced its revenue. The company’s inefficiency indicates it operates in a highly competitive environment where there is little differentiation between Rapid7’s products and its peers.
Key Takeaways from Rapid7’s Q4 Results
We enjoyed seeing Rapid7 beat analysts’ EBITDA expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next year suggests a significant slowdown in demand and its full-year revenue guidance fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 6.3% to $9.75 immediately following the results.
The latest quarter from Rapid7’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).
