Rapid7, Inc. Q1 FY2026 earnings call

Corey Thomas discussed the shift in the security landscape due to frontier models, emphasizing the need for preemptive security operations. Rapid7's investments in AI SOC and preemptive security infrastructure, and innovation on exposure command platform with capabilities like runtime validation and data security posture management. Rafe Brown unpacked Q1 ARR performance, core vs non-core business mix, revenue, profitability, free cash flow, and provided 2026 guidance. Mentioned strategic investments in AI-enabled SOC, expert talent for high-value customer engagements, customer wins in the quarter, and acquisition of Kenzo Security as an accelerant to AI stock vision.

Core platform solutions now total over 80% of overall ARR. Detection response business, which had approximately 55% of total ARR, grew approximately 7% year-over-year. Exposure management business within core platform solutions had DNR growth partially offset. Non-platform products declined in the quarter, driving sequential decline in total ARR. Core platform solutions grew ~2% YOY, detection response ~7% YOY, exposure management had ongoing momentum in holistic offerings but not yet growth driver. Non-platform products declined, driving sequential ARR decline.

Second quarter 2026 guidance: Expect ARR of approximately $820 million, total revenue in range of $207 million to $209 million, non-GAAP operating income in range of $24 to $26 million, non-GAAP earnings per diluted share in range of $0.33 to $0.36. Full-year fiscal 2026 guidance: Total revenue in range of $836 million to $842 million, non-GAAP operating income in range of $112 million to $118 million, non-GAAP earnings per share in range of $1.52 to $1.60 per share, free cash flow in range of $125 to $135 million.

Actual results could differ materially due to risks and uncertainties including those in SEC filings. Non-core standalone offerings experienced declines and were driver of sequential net ARR declines. Uncertainty around customer behavior and budget allocation related to AI and geopolitical factors. Risk of not being able to successfully integrate Kenzo Security and realize expected benefits. Risk of not achieving expected margins and growth in core platform solutions.

Q: Mike Sikos with Needham asked about core ARR business, specifically exposure management's growth and Q2 ARR guide.

A: Rick and Corey responded on exposure management stabilization, not growth driver yet, and about Q2 ARR guide with core being net positive contributor.

Q: Matthew Hedberg with RBC asked about impact of frontier models on customers.

A: Corey explained customers' situation with two classes, confusion with investors vs experts, and focus on helping customers manage complexity.

Q: Joe Gallo with Jefferies asked about tradeoff between stabilizing ARR growth and maintaining gross margins.

A: Rafe and Corey discussed expanding margins, MDR business and Kenzo thesis for margin expansion.

Q: Jonathan Ho with William Blair asked about MDR and CTEM evolving with AI landscape.

A: Corey explained changes for customers, Rapid7's focus on exploitability, remediation at scale, and active response.

Q: Eric Heath with KeyBank asked about impact of Glasswing on pipeline and non-core guide.

A: Corey and Rafe talked about Glasswing's impact on customers and Q1 core platform execution.

Q: Jonathan Ho with William Blair asked about monetization of frontier AI model world.

A: Corey discussed focus on VM to exposure command acceleration and recalibrating resources for active response.

Q: Adam Borg with Stiefel asked about frontier models preventing exploitability etc.

A: Corey explained cost, exploitability understanding, and trust in active response with frontier models.

Q: Gray Powell with BTIG asked about non-core products trend line stabilization.

A: Rafe talked about building robust platforms and upgrade opportunities for non-core customers