Earnings call transcript: Rapid7 Q1 2026 beats EPS forecasts, stock dips

Software stocks slid again after a second straight day of declines, with the S&P 500 and Nasdaq largely flat, indicating sector-level profit-taking rather than broad risk-off. The pullback followed a February selloff tied to Anthropic’s Claude Cowork raising fears AI agents could disrupt per-seat SaaS licensing. Rapid7 fell 8.9%, Sprout Social 9.4%, and Zeta Global 8.3%.

Rapid7 (NASDAQ:RPD) released its Q1 2026 Threat Landscape Report on May 21, citing vulnerability exploitation as 38% of incident response cases. The company said AI is speeding attackers’ ability to identify and exploit unpatched systems. Separately, Barclays lowered its price target and kept an Underweight rating after Rapid7’s Q1 results, citing weaker-than-expected Q2 ARR guidance. Rapid7 projects Q2 ARR of about $820M versus $832M in Q1.

Rapid7 has joined OpenAI's Trusted Access for Cyber programme to enhance its cybersecurity defense capabilities. This collaboration aims to accelerate the shift from reactive to preemptive security by leveraging advanced AI across internal software security, vulnerability research, and red-team operations. Rapid7 emphasizes that AI will augment human expertise, enabling security teams to operate at machine speed and effectively address increasing threats.

Morgan Stanley has adjusted its price target for cybersecurity company Rapid7 (RPD) to $9 from $10, while maintaining an "Equalweight" rating on the stock. This adjustment reflects a moderated outlook, despite Rapid7's continued efforts in leveraging AI for security operations and recent acquisition of Kenzo Security to enhance its preemptive security capabilities. The company provides a range of solutions including Managed Detection and Response (MDR) and Managed Vulnerability Management (MVM) to over 11,000 customers globally.

Rapid7 is set to report its Q1 2026 earnings, with analysts forecasting $0.30 EPS on $208 million revenue. The stock has seen a significant decline, losing over half its value since January, despite recent gains. Investors will be closely watching the company's annual recurring revenue (ARR), artificial intelligence integration, and full-year outlook amidst a cautious market sentiment and "Reduce" analyst rating.

A recent analysis advises caution on several under-$10 stocks, highlighting potential risks for investors. Rapid7 (RPD), eXp World (EXPI), and Graphic Packaging (GPK) were specifically flagged due to concerns such as slow growth, weak margins, and declining revenues. The report suggests that while low-priced stocks can be appealing, many lack solid fundamentals and require a disciplined investment approach.