Rapid7, Inc. (RPD): Results of Operations and Financial Condition
Rapid7, Inc. (RPD) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Rapid7 Announces Second Quarter 2026 Financial Results • Annualized recurring revenue (“ARR”) of $824 million • Total revenue of $211 million; Product subscriptions revenue of $205 million • GAAP income from operations of $3.0 million; Non-GAAP income from operations
How this was made
The 30-second read
Why it matters
Key trading inputs are the ARR and revenue YoY declines, the non-GAAP profitability level, free cash flow generation, and the expected restructuring charges timing. Guidance ranges for Q3 and full-year 2026 set the near-term expectations framework.
Market read
This is a primary earnings and guidance disclosure with explicit ARR, revenue, operating income, cash flow, and restructuring charge expectations, which can directly reset trader expectations.
What to watch
The restructuring charges are excluded from non-GAAP, so investors should watch for GAAP margin pressure and whether the workforce reduction improves future ARR retention and product momentum.
Rapid7 Announces Second Quarter 2026 Financial Results
Rapid7 reported GAAP and non-GAAP profitability and positive free cash flow, but total revenue, product revenue, and ARR each declined year-over-year, while third-quarter and full-year guidance calls for further revenue contraction.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Annualized recurring revenue (ARR)other | $824.0 million | – | a decrease of 2.0% year-over-year |
| Total revenueGAAP | $210.9 million | – | a decrease of 1.5% year-over-year |
| Product revenueGAAP | $205.1 million | – | a decrease of 1.5% year-over-year |
| Income from operationsGAAP | $3.0 million | – | – |
| Income from operationsnon-GAAP | $28.9 million | – | – |
| Net incomeGAAP | $6.1 million | – | – |
| Net income per diluted shareGAAP | $0.09 per diluted share | – | – |
| Net incomenon-GAAP | $33.0 million | – | – |
| Net income per diluted sharenon-GAAP | $0.44 per diluted share | – | – |
| Net cash provided by operating activitiesother | $37.0 million | – | – |
| Free cash flownon-GAAP | $31.9 million | – | – |
| Total cash, cash equivalents, and government securitiesother | $702.6 million | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Product revenueNo product-revenue driver was provided in the filing. | $205.1 million | – | a decrease of 1.5% year-over-year |
Third Quarter 2026 and Full-Year 2026 outlook
- RevenueThird Quarter 2026: $208 to $210; Full-Year 2026: $837 to $841
- NoteARR: Third Quarter 2026: Approximately $812 million; Full-Year 2026: Not provided
- NoteARR year-over-year growth: Third Quarter 2026: (3)%; Full-Year 2026: Not provided
- NoteRevenue year-over-year growth: Third Quarter 2026: (5)% to (4)%; Full-Year 2026: (3)% to (2)%
- NoteNon-GAAP income from operations: Third Quarter 2026: $34 to $36; Full-Year 2026: $129 to $133
- NoteNon-GAAP net income per share, diluted: Third Quarter 2026: $0.44 to $0.47; Full-Year 2026: $1.78 to $1.83
- NoteWeighted average shares used in non-GAAP earnings per share calculation, diluted: Third Quarter 2026: 80.1; Full-Year 2026: 79.4
- NoteFree cash flow: Third Quarter 2026: Not provided; Full-Year 2026: Approximately $130 million
- NoteThe Company expects to incur restructuring charges of approximately $10 million to $11 million, substantially all of which are expected to be paid during the third and fourth quarters of 2026.
- NoteGuidance for the third quarter 2026 and full-year 2026 does not include any potential impact of foreign exchange gains or losses.
What drove it
- Management is aligning resources and investment behind Detection and Response, Exposure Management, the core platform, and the AI foundation that connects it.
- In July, Rapid7 announced general availability of Rapid7 Cyber Governance Risk and Compliance.
- In July, Rapid7 announced a strategic distribution agreement with Mindware for managed detection and response services and its AI-powered platform.
- In June, Rapid7 achieved GovRAMP Authorization, expanding availability of its AI-powered cybersecurity operations and MDR services to SLED organizations.
- In May, Rapid7 announced access to OpenAI's Trusted Access for Cyber program for its Agentic SOC workflows.
Concerns
- Total revenue decreased 1.5% year-over-year.
- Product revenue decreased 1.5% year-over-year.
- ARR decreased 2.0% year-over-year.
- Third-quarter revenue guidance implies year-over-year growth of (5)% to (4)%, and full-year revenue guidance implies year-over-year growth of (3)% to (2)%.
- Third-quarter ARR guidance calls for year-over-year growth of (3)%.
- Approximately 12% of the Company's workforce was notified that their positions would be affected under the restructuring plan.
- The Company expects restructuring charges of approximately $10 million to $11 million.
What to watch
- Execution against third-quarter ARR guidance of approximately $812 million.
- Third-quarter revenue within the $208 to $210 guidance range.
- Delivery of third-quarter non-GAAP income from operations of $34 to $36.
- Progress toward full-year free cash flow of approximately $130 million.
- The restructuring charges of approximately $10 million to $11 million and the expected timing of substantially all cash payments during the third and fourth quarters of 2026.
- Management's execution of investment priorities in Detection and Response, Exposure Management, the core platform, and AI.
Balance sheet and cash flow
- Net cash provided by operating activities of $37.0 million.
- Free cash flow of $31.9 million.
- Total cash, cash equivalents, and government securities of $702.6 million as of June 30, 2026.
Analysis
Rapid7's second-quarter operating picture shows contraction in its principal growth measures. Total revenue was $210.9 million, down 1.5% year-over-year, while product revenue of $205.1 million also declined 1.5%. ARR was $824.0 million, a decrease of 2.0% year-over-year. These declines frame management's decision to focus resources and investment on Detection and Response, Exposure Management, the core platform, and an AI foundation.
Profitability and cash generation were positive despite the top-line decline. GAAP income from operations was $3.0 million and non-GAAP income from operations was $28.9 million. GAAP net income was $6.1 million, or $0.09 per diluted share, compared with non-GAAP net income of $33.0 million, or $0.44 per diluted share. Net cash provided by operating activities was $37.0 million and free cash flow was $31.9 million.
The company is undertaking a material organizational action alongside the strategic refocus. Approximately 12% of the workforce was notified that their positions would be affected under a restructuring plan initiated during the second quarter. Rapid7 expects restructuring charges of approximately $10 million to $11 million, primarily severance and related employee costs, with substantially all payments expected during the third and fourth quarters of 2026. The company stated that these costs will be excluded from non-GAAP results.
The outlook indicates that management expects the revenue and ARR declines to persist in the near term. Third-quarter ARR is expected to be approximately $812 million, with year-over-year growth of (3)%, while revenue is guided to $208 to $210 and year-over-year growth of (5)% to (4)%. Full-year revenue is guided to $837 to $841, with year-over-year growth of (3)% to (2)%, while full-year non-GAAP income from operations is expected to be $129 to $133 and free cash flow approximately $130 million.
Balance-sheet liquidity was $702.6 million of total cash, cash equivalents, and government securities as of June 30, 2026. No debt balance, repurchase activity, or dividend activity was provided in the filing. Recent product, distribution, authorization, and AI-program announcements support the stated strategic emphasis, but the key disclosed financial issue remains whether that focus can stabilize ARR and revenue within the guided ranges.
Management, verbatim
Rapid7 is a good company ready to be great, but getting there requires clear choices, strong execution, and the discipline to focus on what matters most,
Wael Mohamed, CEO of Rapid7
Not in the filing
stated, not guessed- GAAP gross profit and gross margin
- Non-GAAP gross profit and gross margin
- GAAP operating margin
- Non-GAAP operating margin
- GAAP operating expenses
- Non-GAAP operating expenses
- Adjusted EBITDA
- Unlevered free cash flow
- Debt balance
- Share repurchases
- Dividends
- Capital-return amounts
- Prior-year dollar amounts for ARR, total revenue, and product revenue
- Prior-quarter comparisons for reported metrics
- Year-over-year and prior-quarter comparisons for profitability and cash-flow metrics
- Prior-quarter outlook and guidance comparison
- Segment revenue beyond product revenue
- Forward guidance for gross margin, operating expenses, and tax rate
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Rapid7 filed an SEC Form 8-K (Item 2.02) with Q2 2026 financial results and third quarter and full-year 2026 guidance, plus a restructuring plan.
Ticker impact
Rapid7 reported Q2 2026 results and issued Q3 and full-year 2026 guidance, including ARR, revenue, and free cash flow ranges.
Likely moderate volatility around the guidance and restructuring charge, with direction dependent on how ARR and revenue trends compare to expectations.
This is a primary 8-K earnings and guidance disclosure with specific ARR and revenue declines, GAAP and non-GAAP operating income, and a stated restructuring plan and expected charges.
Market effects
Cybersecurity managed services names may see read-across from Rapid7’s ARR and MDR demand signals, especially around AI-enabled SOC and exposure management positioning.
Limited direct regional impact; primarily US-listed sentiment for cybersecurity software and services.
Global MDR and security operations demand signals can influence broader investor appetite for AI-powered cybersecurity platforms.
Counterpoint
Despite ARR and revenue declines, the company’s positive operating cash flow and sizable cash balance could support a valuation re-rate if investors focus on cash generation and execution discipline.
Key entities
- companyRapid7, Inc.
Nasdaq-listed AI-powered managed cybersecurity operations provider reporting Q2 2026 results and issuing 2026 guidance.
- executiveWael Mohamed
CEO quoted on strategic focus and operating model alignment.
- executiveRafe
Named as Chief Financial Officer to strengthen operating discipline.
- executiveAllan
Named as Chief Commercial Officer to scale and win with customers.
- executiveDejan
Named as Chief Product and Technology Officer to build an AI-first platform.
