Rapid7, Inc. Q3 FY2025 earnings call

Key messages include Rapid7's $838M ARR, $218M revenue, and $37M operating income for Q3. The company made organizational changes, including new leadership (Chief Commercial Officer Allan Peters and incoming CFO Rafe Brown). Focus on AI-powered SOC with the Command Platform, highlighted by a large Tier 1 public university win replacing a fragmented tech stack. Expanding partnership with Microsoft for MDR in Microsoft environments. Emphasis on transitioning VM customers to the integrated Exposure Command model and improving execution around this expansion engine.

Rapid7 ended Q3 2025 with $838 million in ARR, growing 2% year-over-year. Revenue for the quarter was $218 million. Product subscription revenue grew 2% YOY to $210 million. International revenue represented 25% of total revenue and grew 8% over the prior year. Product gross margin was 75% and total gross margin was 73%.

Fourth quarter ARR expected to be approximately flat Q/Q. Full year revenue guidance tightened to $856M-$858M (1%-2% YOY growth). Operating income guidance raised to $130M-$135M (15%-16% margin). Full year free cash flow target $125M-$135M. Q4 revenue guidance $214M-$216M, non-GAAP operating income $25M-$30M, non-GAAP net income per share $0.37-$0.44.

Timing variability in large deal pipeline; operational changes and new sales processes may cause near-term forecasting variance; dependence on successful execution of organizational and go-to-market strategies.

Q: Rob Owens from Piper Sandler asked about MDR economic model and international vs domestic growth.

A: Corey Thomas and Tim Adams responded on MDR's high gross margin and international growth at 8%.

Q: Fatima Boolani from Citi asked about MDR pricing dynamics and 2026 growth vs profitability.

A: Corey Thomas discussed MDR's economic model and 2026 growth plans.

Q: Matthew Hedberg from RBC asked about large deal pipeline in Q4.

A: Corey Thomas and Tim Adams talked about factoring in pipeline variability and Allan's impact on process.

Q: Michael Cikos from Needham asked about Allan Peters' role in resource alignment.

A: Corey Thomas elaborated on Allan's focus on standardizing processes and aligning sales around MDR.

Q: Joseph Gallo from Jefferies asked about exposure management and MDR budget priorities.

A: Corey Thomas stated MDR is a top budget priority for CISOs.

Q: Gregg Moskowitz from Mizuho asked about Microsoft partnership expectations.

A: Corey Thomas discussed early-stage technology integration and go-to-market aspects.

Q: Junaid Siddiqui from Truist asked about pipeline visibility and close rates.

A: Corey Thomas and Tim Adams spoke about standardizing processes and Allan's focus on managing larger deal cycles.

Q: Joshua Tilton from Wolfe Research asked about underlying business momentum.

A: Corey Thomas clarified ARR guidance and pipeline consistency.

Q: Zachary Schneider from Baird asked about Exposure Command data and ramp.

A: Corey Thomas discussed larger ASPs and slower conversion of larger deal pipelines for Exposure Command.

Q: William Kingsley Crane from Canaccord Genuity asked about Microsoft integration investment and customer base.

A: Corey Thomas spoke about mid-half customer base and engineering/investment focus.

Q: Rudy Kessinger from D.A. Davidson asked about gross churn and retention.

A: Corey Thomas clarified gross churn trends and focus on new customer ARR and expansion.