EX-99.1 2 rapid7q120258-kex991.htm EX-99.1 Document
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Exhibit 99.1
Rapid7 Announces First Quarter 2025 Financial Results
 
•Annualized recurring revenue (“ARR”) of $837 million, an increase of 4% year-over-year
•Total revenue of $210 million, up 3% year-over-year; Product subscriptions revenue of $204 million, up 4% year-over-year
•GAAP operating loss of $0.1 million; Non-GAAP operating income of $32 million
•Net cash provided by operating activities of $30 million; Free cash flow of $25 million
Boston, MA – May 12, 2025 – Rapid7, Inc. (Nasdaq: RPD), a leader in extended risk and threat detection, today announced its financial results for the first quarter 2025.
“We had a slower start to 2025 than anticipated however we have a clear strategy and strong conviction in our long-term opportunity,” said Corey Thomas, Chairman and CEO of Rapid7. “Against a more uncertain macroeconomic environment, we are executing with increased focus and urgency—investing behind our leadership in MDR, accelerating Exposure Command adoption, and sharpening our go-to-market engine. We believe these steps position us for improved ARR in the second half of the year and beyond. At the same time, we remain committed to operational discipline and delivering strong free cash flow in 2025.”


First Quarter 2025 Financial Results and Other Metrics
 As of March 31,
 20252024% Change
(dollars in thousands)
ARR$837,220 $807,196 4 %
Number of customers11,685 11,462 2 %
ARR per customer$71.6 $70.4 2 %
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 Three Months Ended March 31,
 20252024% Change
(in thousands, except per share data)
Product subscriptions revenue$203,935 $196,918 4 %
Professional services revenue6,318 8,183 (23 %)
Total revenue$210,253$205,1013 %
North America revenue$157,945 $157,340 — %
Rest of world revenue52,308 47,761 10 %
Total revenue$210,253$205,1013 %
GAAP gross profit$150,773 $144,107 
GAAP gross margin72%70%
Non-GAAP gross profit$157,460 $151,112 
Non-GAAP gross margin75%74%
GAAP (loss) income from operations$(101)$9,716 
GAAP operating margin—%5%
Non-GAAP income from operations$32,353 $40,285 
Non-GAAP operating margin15%20%
GAAP net income$2,105 $1,406 
GAAP net income per share, basic$0.03 0.02
GAAP net income per share, diluted$0.03 $0.02 
Non-GAAP net income$35,578 $39,388 
Non-GAAP net income per share:
Basic$0.56 $0.64 
Diluted$0.49 $0.55 
Adjusted EBITDA$38,898 $46,619 
Net cash provided by operating activities$29,757 $31,070 
Free cash flow$24,677 $27,534 
For additional details on the reconciliation of non-GAAP measures and certain other business metrics to their nearest comparable GAAP measures, please refer to the accompanying financial data tables included in this press release. The prior year period reflects an immaterial correction. Refer to Note 16, Immaterial Correction of an Error, in the notes to our unaudited condensed consolidated financial statements for further information.
Recent Business Highlights
 
•In April, Rapid7 launched unified threat-informed remediation for its Command Platform, delivering effective remediation at scale via proactive exposure remediation and AI-assisted automated detection and response. In addition to these enhancements to the Command Platform, Rapid7 also launched Breach Protection Warranty, offering MTC (Managed Thread Complete) Ultimate customers up to $1,000,000 in coverage embedded directly into the service.
•In April, Rapid7 launched Managed Detection & Response (MDR) for Enterprise, a fully managed and customizable detection and response service designed to meet the unique demands of complex, distributed enterprise environments.
•In April, Rapid7 introduced Intelligence Hub within its Command Platform, an integrated threat intelligence solution designed to provide security teams with meaningful context and actionable insights for accelerated detection and response.
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•In March, Rapid7 announced the appointment of three new members to its Board of Directors: Wael Mohamed, Mike Burns, and Kevin Galligan. These strategic appointments reinforce the company’s commitment to scaling the business, enhancing operational efficiency, and driving long-term shareholder returns.
•In March, Rapid7 announced plans for expansion in India, including the opening of a global capacity center, which will serve as a Security Operations Center (SOC) and innovation hub to house technology, security operations, customer support, and IT teams.
Second Quarter and Full Year 2025 Guidance

Rapid7 anticipates ARR, revenue, non-GAAP income from operations, non-GAAP net income per share and free cash flow to be in the following ranges:
Second Quarter 2025
Full-Year 2025
(in millions, except per share data)
ARR$850to$880
Year-over-year growth1%to5%
Revenue$211to$213$853to$863
Year-over-year growth1%to2%1%to2%
Non-GAAP income from operations$30to$32$125to$135
Non-GAAP net income per share$0.43to$0.46$1.78to$1.91
Weighted average shares outstanding75.376.7
Free cash flow$125to$135
The guidance provided above is forward-looking in nature. Actual results may differ materially. See the cautionary note regarding “Forward-Looking Statements” below. Guidance for the second quarter 2025 does not include any potential impact of foreign exchange gains or losses. The guidance provided above is based on a number of assumptions, estimates and expectations as of the date of this press release and, while presented with numerical specificity, this guidance is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond Rapid7's control and are based upon specific assumptions with respect to future business decisions or economic conditions, some of which may change. Rapid7 undertakes no obligation to update guidance after this date.
Non-GAAP guidance excludes estimates for stock-based compensation expense, amortization of acquired intangible assets, amortization of debt issuance costs, and certain other items such as acquisition-related expenses, impairment of long-lived assets, restructuring expense, induced conversion expense, change in the fair value of derivative assets, litigation-related expenses and discrete tax items. Rapid7 has provided a reconciliation of each non-GAAP guidance measure to the most comparable GAAP measures in the financial statement tables included in this press release. The reconciliation does not reflect any items that are unknown at this time, including, but not limited to, non-ordinary course litigation-related expenses, which we are not able to predict without unreasonable effort due to their inherent uncertainty.
Conference Call and Webcast Information
Rapid7 will host a conference call today, May 12, 2025, to discuss its results at 4:30 p.m. Eastern Time. The call will be accessible by telephone at 888-330-2384 (domestic) or +1 240-789-2701 (international) with the event code 8484206. The call will also be available live via webcast on Rapid7's website at https://investors.rapid7.com. A webcast replay of the conference call will be available at https://investors.rapid7.com.
About Rapid7
Rapid7 (Nasdaq: RPD) is on a mission to create a safer digital world by making cybersecurity simpler and more accessible. We empower security professionals to manage a modern attack surface through our best-in-class technology, leading-edge research, and broad, strategic expertise. Rapid7’s comprehensive security solutions help more than 11,000 global customers unite cloud risk management and threat detection to reduce attack surfaces and eliminate threats with speed and precision. For more information, visit our website, check out our blog, or follow us on LinkedIn or Twitter.
Non-GAAP Financial Measures and Other Metrics
To supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we provide investors with certain non-GAAP financial measures and
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other metrics, which we believe are helpful to our investors. We use these non-GAAP financial measures and other metrics for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We also use certain non-GAAP financial measures as performance measures under our executive bonus plan. We believe that these non-GAAP financial measures and other metrics provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making.
While our non-GAAP financial measures are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, you should review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures included below, and not rely on any single financial measure to evaluate our business.
Non-GAAP Financial Measures
We disclose the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income, non-GAAP net income per share, adjusted EBITDA and free cash flow. We also disclose non-GAAP gross margin and non-GAAP operating margin derived from these financial measures.
We define non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income and non-GAAP net income per share as the respective GAAP balances excluding the effect of stock-based compensation expense, amortization of acquired intangible assets, amortization of debt issuance costs and certain other items such as acquisition-related expenses, impairment of long-lived assets, change in the fair value of derivative assets, restructuring expense, induced conversion expense and discrete tax items. Non-GAAP net income per basic and diluted share is calculated as non-GAAP net income divided by the weighted average shares used to compute net income per share, with the number of weighted average shares decreased, when applicable, to reflect the anti-dilutive impact of the capped call transactions entered into in connection with our convertible senior notes.
We believe these non-GAAP financial measures are useful to investors in assessing our operating performance due to the following factors:
Stock-based compensation expense. We exclude stock-based compensation expense because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact our non-cash expense. We believe that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between our operating results from period to period.
Amortization of acquired intangible assets. We believe that excluding the impact of amortization of acquired intangible assets allows for more meaningful comparisons between operating results from period to period as the intangible assets are valued at the time of acquisition and are amortized over several years after the acquisition.
Amortization of debt issuance costs. The expense for the amortization of debt issuance costs related to our convertible senior notes and our former revolving credit facility is a non-cash item, and we believe the exclusion of this interest expense provides a more useful comparison of our operational performance in different periods.
Induced conversion expense. In conjunction with the third quarter of 2023 partial repurchase of our 2.25% convertible senior notes due 2025, we incurred a non-cash induced conversion expense of $53.9 million. We exclude induced conversion expense because this amount is not indicative of the performance of or trends in our business, and neither is comparable to the prior period nor predictive of future results.
Litigation-related expenses. We exclude non-ordinary course litigation expense because we do not consider legal costs and settlement fees incurred in litigation and litigation-related matters of non-ordinary course lawsuits and other disputes to be indicative of our core operating performance. We do not adjust for ordinary course legal expenses, including legal costs and settlement fees resulting from maintaining and enforcing our intellectual property portfolio and license agreements.

Acquisition-related expenses. We exclude acquisition-related expenses, including accretion expense associated with contingent consideration, as costs that are unrelated to the current operations and are neither comparable to the prior period nor predictive of future results.
Change in fair value of derivative assets. The expense for the change in fair value of derivative assets related to our 2023 capped calls settlement is a non-cash item and we believe the exclusion of this other income (expense) provides a more useful comparison of our operational performance in different periods.
Impairment of long-lived assets. Impairment of long-lived assets consists of impairment charges allocated to the carrying amount of certain operating right-of-use assets and the associated leasehold improvements when the carrying amounts exceed
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their respective fair values and we believe the exclusion of the impairment charges provides a more useful comparison of our operational performance in different periods.
Restructuring expense. We exclude non-ordinary course restructuring expenses related to our restructuring plan, that was completed during fiscal year 2024, because we do not believe these charges are indicative of our core operating performance and we believe the exclusion of the restructuring expenses provides a more useful comparison of our performance in different periods.
Discrete tax items. We exclude certain discrete tax items such as income tax expenses or benefits that are not related to ongoing business operations in the current year and adjustments to uncertain tax position reserves as these charges are not indicative of our ongoing operating results, and they are not considered when we are forecasting our future results.
Anti-dilutive impact of capped call transaction. Our capped call transactions are intended to offset potential dilution from the conversion features in our convertible senior notes. Although we cannot reflect the anti-dilutive impact of the capped call transactions under GAAP, we do reflect the anti-dilutive impact of the capped call transactions in non-GAAP net income (loss) per diluted share, when applicable, to provide investors with useful information in evaluating our financial performance on a per share basis.
Adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure that we define as net income (loss) before (1) interest income, (2) interest expense, (3) other (income) expense, net, (4) provision for (benefit from) income taxes, (5) depreciation expense, (6) amortization of intangible assets, (7) stock-based compensation expense, (8) acquisition-related expenses, and (9) restructuring expense. We believe that the use of adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods.
Free Cash Flow. Free cash flow is a non-GAAP measure that we define as cash provided by operating activities less purchases of property and equipment and capitalization of internal-use software costs. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after necessary capital expenditures.
Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact upon our reported financial results. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in our business and an important part of the compensation provided to our employees.
Other Metrics
ARR. ARR is defined as the annual value of all recurring revenue related to contracts in place at the end of the period. ARR should be viewed independently of revenue and deferred revenue as ARR is an operating metric and is not intended to be combined with or replace these items. ARR is not a forecast of future revenue, which can be impacted by contract start and end dates and renewal rates, and does not include revenue reported as professional services revenue in our consolidated statement of operations.
Number of Customers. We define a customer as any entity that has an active Rapid7 recurring revenue contract as of the specified measurement date, excluding InsightOps and Logentries only customers with a contract value of less than $2,400 per year.
ARR per Customer. We define ARR per customer as ARR divided by the number of customers at the end of the period.
Cautionary Language Concerning Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, the statements regarding our financial guidance for the second quarter and full-year 2025, and the assumptions underlying such guidance. Our use of the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. The events described in our forward-looking statements are subject to a number of risks and uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Risks that could cause or contribute to such differences include, but are not limited to, growing macroeconomic uncertainty, unstable market and economic conditions, fluctuations in our quarterly results, our ability to successfully grow our sales of our cloud-based solutions, including through the shift to a consolidated platform sales approach, effectiveness of our restructuring plan that was completed during fiscal year 2024,
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failure to meet our publicly announced guidance or other expectations about our business, our ability to sustain our revenue growth rate, the ability of our products and professional services to correctly detect vulnerabilities, renewal of our customer's subscriptions, competition in the markets in which we operate, market growth, our ability to innovate and manage our growth, our sales cycles, our ability to integrate acquired companies, exposure to greater than anticipated tax liabilities, and our ability to operate in compliance with applicable laws as well as other risks and uncertainties that could affect our business and results described in our filings with the Securities and Exchange Commission (the “SEC”), including our most recent Annual Report on Form 10-K filed with the SEC on February 28, 2025, particularly in the section entitled "Item 1.A Risk Factors," and in the subsequent reports that we file with the SEC. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those expressed in any forward-looking statements we may make. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.

###
Investor contact:
Elizabeth Chwalk
Vice President, Investor Relations
investors@rapid7.com
(617) 865-4277

Press contact:
Alice Randall
Director, Global Corporate Communications
press@rapid7.com
(214) 693-4727






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RAPID7, INC.    
Consolidated Balance Sheets (Unaudited)     
(in thousands)    
 
March 31, 2025December 31, 2024
Assets
Current assets:
Cash and cash equivalents$291,462 $334,686 
Short-term investments202,011 187,025 
Accounts receivable, net140,541 168,242 
Deferred contract acquisition and fulfillment costs, current portion50,667 52,134 
Prepaid expenses and other current assets47,964 44,024 
Total current assets732,645 786,111 
Long-term investments99,136 37,274 
Property and equipment, net31,659 32,245 
Operating lease right-of-use assets46,404 48,877 
Deferred contract acquisition and fulfillment costs, non-current portion69,843 73,672 
Goodwill575,268 575,268 
Intangible assets, net79,763 85,719 
Other assets10,092 12,868 
Total assets$1,644,810 $1,652,034 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$12,318 $18,908 
Accrued expenses and other current liabilities69,458 88,802 
Convertible senior notes, current portion, net45,967 45,895 
Operating lease liabilities, current portion13,614 15,493 
Deferred revenue, current portion447,798 461,118 
Total current liabilities589,155 630,216 
Convertible senior notes, non-current portion, net889,303 888,356 
Operating lease liabilities, non-current portion65,484 68,430 
Deferred revenue, non-current portion27,524 27,078 
Other long-term liabilities20,622 20,243 
Total liabilities1,592,088 1,634,323 
Stockholders’ equity:
Common stock$642 $635 
Treasury stock(4,765)(4,765)
Additional paid-in-capital1,042,355 1,011,080 
Accumulated other comprehensive (loss) income419 (1,205)
Accumulated deficit(985,929)(988,034)
Total stockholders’ equity52,722 17,711 
Total liabilities and stockholders’ equity$1,644,810 $1,652,034 

Note: Certain prior periods reflect immaterial corrections. Refer to Note 16, Immaterial Correction of an Error, in the notes to our Consolidated Financial Statements for further information.


RAPID7, INC.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)
 
 Three Months Ended March 31,
 20252024
Revenue:
Product subscriptions$203,935 $196,918 
Professional services6,318 8,183 
Total revenue210,253 205,101 
Cost of revenue:
Product subscriptions54,368 54,734 
Professional services5,112 6,260 
Total cost of revenue59,480 60,994 
Total gross profit150,773 144,107 
Operating expenses:
Research and development47,888 41,368 
Sales and marketing79,400 73,095 
General and administrative23,586 19,928 
Total operating expenses150,874 134,391 
(Loss) income from operations(101)9,716 
Other income (expense), net:
Interest income5,758 4,720 
Interest expense(2,654)(2,670)
Other income (expense), net1,802 (1,435)
Income before income taxes4,805 10,331 
Provision for income taxes2,700 8,925 
Net income$2,105 $1,406 
Net income per share, basic$0.03 $0.02 
Net income per share, diluted (1)$0.03 $0.02 
Weighted-average common shares outstanding, basic63,835,945 61,907,808 
Weighted-average common shares outstanding, diluted64,224,415 74,021,704 

(1) We use the if-converted method to compute diluted earnings per share with respect to our convertible senior notes. There was no add-back of interest expense or additional dilutive shares related to the convertible senior notes where the effect was anti-dilutive. On an if-converted basis, for the three months ended March 31, 2025 and 2024, the 2025, 2027 and 2029 Notes were anti-dilutive.

Note: Certain prior periods reflect immaterial corrections. Refer to Note 16, Immaterial Correction of an Error, in the notes to our Consolidated Financial Statements for further information.


RAPID7, INC.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
 Three Months Ended March 31,
 20252024
Cash flows from operating activities:
Net income$2,105 $1,406 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization11,665 11,348 
Amortization of debt issuance costs1,019 1,053 
Stock-based compensation expense27,151 25,745 
Deferred income taxes— 1,840 
Other(1,153)(203)
Changes in assets and liabilities:
Accounts receivable27,668 39,529 
Deferred contract acquisition and fulfillment costs5,295 (679)
Prepaid expenses and other assets(1,995)(1,223)
Accounts payable(6,555)(4,190)
Accrued expenses(20,325)(24,890)
Deferred revenue(12,874)(21,186)
Other liabilities(2,244)2,520 
Net cash provided by operating activities29,757 31,070 
Cash flows from investing activities:
Purchases of property and equipment(1,361)(620)
Capitalization of internal-use software(3,719)(2,916)
Purchases of investments(144,461)(93,158)
Sales and maturities of investments69,000 55,000 
Other investing activities1,328 — 
Net cash used in investing activities(79,213)(41,694)
Cash flows from financing activities:
Taxes paid related to net share settlement of equity awards(1,303)(1,764)
Proceeds from employee stock purchase plan4,446 5,046 
Proceeds from stock option exercises1,589 1,080 
Net cash provided by financing activities4,732 4,362 
Effect of exchange rate changes on cash ,cash equivalents and restricted cash1,334 (1,493)
Net decrease in cash, cash equivalents and restricted cash(43,390)(7,755)
Cash, cash equivalents and restricted cash, beginning of period$342,101 $214,130 
Cash, cash equivalents and restricted cash, end of period$298,711 $206,375 

Supplemental cash flow information:
Cash paid for interest on convertible senior notes1,571 2,698 
Cash paid for income taxes, net of refunds992 2,352 
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents$291,462 $198,716 
Restricted cash included in prepaid expenses and other current assets and other assets7,249 7,659 
Total cash, cash equivalents and restricted cash$298,711 $206,375 

Note: Certain prior periods reflect immaterial corrections. Refer to Note 16, Immaterial Correction of an Error, in the notes to our Consolidated Financial Statements for further information.


RAPID7, INC.    
GAAP to Non-GAAP Reconciliation (Unaudited)    
(in thousands, except share and per share data)   
 
 Three Months Ended March 31,
 20252024
GAAP gross profit$150,773 $144,107 
Add: Stock-based compensation expense1
2,264 2,671 
Add: Amortization of acquired intangible assets2
4,423 4,317 
Non-GAAP gross profit$157,460$151,095
Non-GAAP gross margin74.9 %73.7 %
GAAP gross profit - Product subscriptions$149,567 $142,184 
Add: Stock-based compensation expense1,731 2,298 
Add: Amortization of acquired intangible assets4,423 4,317 
Non-GAAP gross profit - Product subscriptions$155,721$148,799
Non-GAAP gross margin - Product subscriptions76.4 %75.6 %
GAAP gross profit - Professional services$1,206 $1,923 
Add: Stock-based compensation expense533 373 
Non-GAAP gross profit - Professional services$1,739$2,296
Non-GAAP gross margin - Professional services27.5 %28.1 %
GAAP (loss) income from operations$(101)$9,716 
Add: Stock-based compensation expense1
27,151 25,745 
Add: Amortization of acquired intangible assets2
5,120 5,014 
Add: Acquisition-related expenses3
183 — 
Add: Restructuring expense— (190)
Non-GAAP income from operations$32,35332353000$40,285
GAAP net income$2,105 $1,406 
Add: Stock-based compensation expense1
27,151 25,745 
Add: Amortization of acquired intangible assets2
5,120 5,014 
Add: Amortization of debt issuance costs1,019 1,053 
Add: Acquisition-related expenses3
183 — 
Add: Restructuring expense4
— (190)
Add: Discrete tax items5
— 6,360 
Non-GAAP net income$35,578$39,388
Add: Interest expense of convertible senior notes6
1,571 1,571 
Numerator for non-GAAP earnings per share, diluted calculation$37,149$40,959
Weighted average shares used in GAAP earnings per share calculation, basic63,835,945 61,907,808 
Dilutive effect of convertible senior notes6
11,183,611 11,183,611 
Dilutive effect of employee equity incentive plans7
388,471 930,195 
Weighted average shares used in non-GAAP earnings per share calculation, diluted75,408,02774,021,614


Non-GAAP net income per share:
Basic$0.56 $0.64 
Diluted$0.49 $0.55 
1 Includes stock-based compensation expense as follows:
Cost of revenue$2,264 $2,671 
Research and development10,386 7,944 
Sales and marketing7,241 7,137 
General and administrative7,260 7,993 
2 Includes amortization of acquired intangible assets as follows:
Cost of revenue$4,423 $4,317 
Sales and marketing652 652 
General and administrative45 45 
3 Includes acquisition-related expenses as follows:
General and administrative$183 $— 
4 For the three months ended March 31, 2024 restructuring expense was included within general and administrative expense in our consolidated statements of operations.
5 Includes discrete tax items as follows:
Provision for income taxes$—$6,360
6 We use the if-converted method to compute diluted earnings per share with respect to our convertible senior notes. There was no add-back of interest expense or additional dilutive shares related to the convertible senior notes where the effect was anti-dilutive.
7 We use the treasury method to compute the dilutive effect of employee equity incentive plan awards.
Note: Certain prior periods reflect immaterial corrections. Refer to Note 16, Immaterial Correction of an Error, in the notes to our Consolidated Financial Statements for further information.


RAPID7, INC.
Reconciliation of Net Income (Loss) to Adjusted EBITDA (Unaudited)
(in thousands)
 
 Three Months Ended March 31,
 20252024
GAAP net income$2,105 $1,406 
Interest income(5,758)(4,720)
Interest expense2,654 2,670 
Other (income) expense, net(1,802)1,435 
Provision for (benefit from) income taxes2,700 8,925 
Depreciation expense2,791 2,908 
Amortization of intangible assets8,874 8,440 
Stock-based compensation expense27,151 25,745 
Acquisition-related expenses183 — 
Restructuring expense— (190)
Adjusted EBITDA$38,898 $46,619 

Note: Certain prior period reflect immaterial corrections. Refer to Note 16, Immaterial Correction of an Error, in the notes to our Consolidated Financial Statements for further information.

RAPID7, INC.
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (Unaudited)
(in thousands)
 
 Three Months Ended March 31,
 20252024
Net cash provided by operating activities$29,757 $31,070 
Less: Purchases of property and equipment(1,361)(620)
Less: Capitalized internal-use software costs(3,719)(2,916)
Free cash flow$24,677 $27,534 









Second Quarter and Full-Year 2025 Guidance
GAAP to Non-GAAP Reconciliation    
(in millions, except per share data)

Second Quarter 2025Full-Year 2025
Reconciliation of GAAP income from operations to non-GAAP income from operations:
Anticipated GAAP loss from operations$(2)to$— $(11)to$(1)
Add: Anticipated stock-based compensation expense27 to27 116 to116 
Add: Anticipated amortization of acquired intangible assets5 to5 20 to20 
Anticipated non-GAAP income from operations$30 to$32 $125 to$135 
Reconciliation of GAAP net income to non-GAAP net income:
Anticipated GAAP net loss$(2)to$— $(9)to$1 
Add: Anticipated stock-based compensation expense27 to27 116 to116 
Add: Anticipated amortization of acquired intangible assets5 to5 20 to20 
Add: Anticipated amortization of debt issuance costs1 to1 4 to4 
Anticipated non-GAAP net income$31 to$33 $131 to$141 
Add: Anticipated interest expense on convertible senior notes1.4 to1.4 5.6 to5.6 
Numerator for non-GAAP earnings per share calculation$32.4 to$34.4 $136.6 to$146.6 
Anticipated GAAP net (loss) income per share1
$(0.03)$— $(0.14)$0.02 
Anticipated non-GAAP net income per share, diluted$0.43 $0.46 $1.78 $1.91 
Weighted average shares used in earnings per share calculation, diluted75.376.7
1 The anticipated GAAP net loss per share is calculated using basic weighted average shares for periods in which the Company anticipated a GAAP net loss. The anticipated GAAP net income per share is calculated using GAAP diluted weighted average shares for periods in which the Company anticipated GAAP net income.
The reconciliation does not reflect any items that are unknown at this time, including, but not limited to, non-ordinary course litigation-related expenses, which we are not able to predict without unreasonable effort due to their inherent uncertainty. As a result, the estimates shown for Anticipated GAAP loss from operations, Anticipated GAAP net loss and Anticipated GAAP net loss per share are expected to change.
Full-Year 2025
Reconciliation of net cash provided by operating activities to free cash flow:
Anticipated net cash provided by operating activities$146 to$156 
Less: Anticipated purchases of property and equipment(7)to(7)
Less: Anticipated capitalized internal-use software costs(14)to(14)
Anticipated free cash flow$125 $135