Rapid7 (RPD) Stock Forecast & Price Target

Rapid7's financial performance indicates a stable growth trajectory, with Detection & Response (D&R) contributing over 50% of its Annual Recurring Revenue (ARR), amounting to approximately $419 million, and demonstrating double-digit growth in Q3. Additionally, the company's ARR reached $838 million, growing by 1.8% year-over-year, while revenue of $218 million grew by 1.5% year-over-year, suggesting consistent revenue streams despite some market challenges. Furthermore, management noted positive demand conditions supported by a healthy pipeline of larger-than-expected deals, which may enhance future growth prospects beyond current forecasts.

Rapid7 has lowered its annual recurring revenue (ARR) guidance for the fourth quarter by approximately $20 million, now anticipating zero net new annual recurring revenue (NNARR), primarily due to leadership changes and a need to de-risk expectations. For the third quarter of FY25, Rapid7 reported an ARR of $837.7 million, which was below consensus expectations, representing only a 1.8% year-over-year growth, and indicating a decline in ARR for the second consecutive quarter. Management has acknowledged ongoing challenges in their exposure management strategy, coupled with elongated deal cycles, prompting a more conservative revenue outlook for FY25, with projected revenue now set between $856 million and $858 million.