Second Quarter 2026
Filed Aug 10, 2026Rapid7 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
AlphaAI 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.