Delaware | 001-37496 | 35-2423994 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
100 Summer Street, Boston, Massachusetts | 02110 | |||
(Address of principal executive offices) | (Zip Code) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits |
Exhibit No. | Description | ||
99.1 |
Rapid7, Inc. | ||||||
Dated: May 8, 2018 | By: | /s/ Jeff Kalowski | ||||
Jeff Kalowski | ||||||
Chief Financial Officer |
• | Revenue of $54.5 million under ASC 606 |
• | Revenue growth of 29% year-over-year under ASC 605 |
• | Annualized recurring revenue of $177.8 million, an increase of 38% year-over-year |
• | Raised revenue and ARR growth guidance for full-year 2018 |
• | Total revenue for the first quarter of 2018 was $54.5 million. |
• | For the first quarter of 2018, GAAP loss from operations was $(16.6) million and non-GAAP loss from operations was $(8.9) million. |
• | Adjusted EBITDA was $(7.4) million in the first quarter of 2018. |
• | For the first quarter of 2018, GAAP net loss was $(16.4) million or a GAAP loss per share of $(0.36) and non-GAAP net loss was $(8.6) million or a non-GAAP net loss per share of $(0.19). |
• | For the first quarter of 2018, total revenue from North America was $46.4 million and comprised 85% of total revenue. Total revenue from international was $8.1 million and comprised 15% of total revenue in the first quarter of 2018. |
• | Cash provided by operating activities was $7.3 million for the first quarter of 2018. |
• | Total revenue for the first quarter of 2018 was $58.2 million, an increase of 29% year-over-year. |
• | For the first quarter of 2018, GAAP loss from operations was $(14.6) million, compared to GAAP loss from operations of $(10.5) million in the first quarter of 2017. For the first quarter of 2018, non-GAAP loss from operations was $(6.9) million, compared to non-GAAP loss from operations of $(5.7) million in the first quarter of 2017. |
• | Adjusted EBITDA was $(5.4) million in the first quarter of 2018, compared to an adjusted EBITDA of $(4.6) million in in the first quarter of 2017. |
• | For the first quarter of 2018, GAAP net loss was $(14.4) million or a GAAP loss per share of $(0.32), compared to a GAAP net loss of $(10.5) million or a GAAP loss per share of $(0.25) for the first quarter of 2017. For the first quarter of 2018, non-GAAP net loss was $(6.7) million or a non-GAAP net loss per share of $(0.15), compared to a non-GAAP net loss of $(5.8) million or a non-GAAP net loss per share of $(0.14) for the first quarter of 2017. |
• | For the first quarter of 2018, total revenue from North America increased 30% year-over-year to $49.3 million and comprised 85% of total revenue. Total revenue from international increased 22% year-over-year to $8.9 million and comprised 15% of total revenue for the first quarter of 2018. |
• | Cash provided by operating activities was $7.3 million for the first quarter of 2018, compared to $3.3 million for the first quarter of 2017. |
Three Months Ended March 31, 2018 | ||||||||||||
Under ASC 606 | Under ASC 605 | Difference | ||||||||||
(in thousands) | ||||||||||||
Products | $ | 35,279 | $ | 37,766 | $ | (2,487 | ) | |||||
Maintenance and support | 10,753 | 11,682 | (929 | ) | ||||||||
Professional services | 8,483 | 8,753 | (270 | ) | ||||||||
Total revenue | 54,515 | 58,201 | (3,686 | ) | ||||||||
Cost of revenue - GAAP | 16,594 | 16,616 | (22 | ) | ||||||||
Gross margin - GAAP | 70.0 | % | 71.4 | % | ||||||||
Cost of revenue - non-GAAP | 15,312 | 15,334 | (22 | ) | ||||||||
Gross margin - non-GAAP | 71.9 | % | 73.7 | % | ||||||||
Sales and marketing - GAAP | 29,052 | 30,743 | (1,691 | ) | ||||||||
Sales and marketing - non-GAAP | 27,450 | 29,141 | (1,691 | ) | ||||||||
GAAP loss from operations | (16,585 | ) | (14,612 | ) | (1,973 | ) | ||||||
Non-GAAP loss from operations | (8,872 | ) | (6,899 | ) | (1,973 | ) | ||||||
Deferred revenue, current portion | 140,448 | 152,336 | (11,888 | ) | ||||||||
Deferred revenue, non-current portion | 78,450 | 61,730 | 16,720 | |||||||||
Total deferred revenue | 218,898 | 214,066 | 4,832 |
• | Annualized recurring revenue for the first quarter of 2018 was $177.8 million, an increase of 38% year-over-year. |
• | In March, InsightVM was recognized by Forrester Research, Inc. as a Leader in The Forrester Wave™: Vulnerability Risk Management, Q1 2018 report. Among the vendors included in the report, Rapid7 received the highest scores in both the “Strategy” and “Current Offering” categories. “Rapid7 has already implemented what VRM will look like in the future,” wrote Forrester report author Josh Zelonis. The report also states: “Rapid7 leverages the same agent for endpoint detection and response as well as VRM to ease deployment, management, and, most importantly, to marry all your endpoint data at the point of collection.” |
• | Our renewal rate for the first quarter of 2018, which includes upsells and cross-sells of additional products and services, was 120%. The expiring renewal rate, which excludes upsells and cross-sells of additional products and services, was 89% in the first quarter of 2018. |
• | 77% (under ASC 606) and 75% (under ASC 605) of total revenue in the first quarter of 2018 was recurring revenue, which is comprised of content subscriptions, maintenance and support, cloud-based subscriptions, managed services subscriptions, and term licenses, up from 69% in the first quarter of 2017. |
• | 85% (under ASC 606) and 89% (under ASC 605) of total revenue for the first quarter of 2018 came from deferred revenue on the balance sheet at the beginning of the quarter. |
• | Ended the first quarter of 2018 with over 7,100 customers, an increase of 12% year-over-year. |
• | Calculated billings were $48.0 million (under ASC 606) and $47.8 million (under ASC 605) for the first quarter of 2018, an increase of 9% year-over-year. Growth in calculated billings was depressed by an anticipated decrease in weighted average contract lengths from 23 months to 18 months year-over-year as we shift the business towards ARR, and a |
• | On January 30, 2018, we closed on a public offering of 5.95 million shares, of which 1.5 million were sold by us, resulting in net proceeds to us of approximately $30.9 million. On March 15, 2018, we closed on a public offering of 2.0 million shares, all which were sold by certain existing stockholders. We did not receive any of the proceeds from the sale of shares by the selling stockholders. |
• | Please see investors.rapid7.com for our Financial Metrics spreadsheet. |
• | 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 posted in this press release. |
Second Quarter 2018 Guidance (in millions, except per share data) | |||||||||||||||||||||||
Impact of Adoption | |||||||||||||||||||||||
Under ASC 606 | Under ASC 605 | of ASC 606 | |||||||||||||||||||||
Revenue | $ | 54.3 | to | $ | 55.7 | $ | 57.6 | to | $ | 59.0 | $ | (3.3 | ) | to | $ | (3.3 | ) | ||||||
Year-over-year growth | 21 | % | to | 24 | % | ||||||||||||||||||
Non-GAAP loss from operations | $ | (9.8 | ) | to | $ | (8.4 | ) | $ | (8.7 | ) | to | $ | (7.8 | ) | $ | (1.1 | ) | to | $ | (0.6 | ) | ||
Non-GAAP net loss per share | $ | (0.21 | ) | to | $ | (0.18 | ) | ||||||||||||||||
Weighted average shares outstanding | 46.5 | ||||||||||||||||||||||
Full-Year 2018 Guidance (in millions, except per share data) | |||||||||||||||||||||||
Impact of Adoption | |||||||||||||||||||||||
Under ASC 606 | Under ASC 605 | of ASC 606 | |||||||||||||||||||||
Revenue | $ | 231.0 | to | $ | 236.5 | $ | 244.5 | to | $ | 249.0 | $ | (13.5 | ) | to | $ | (12.5 | ) | ||||||
Year-over-year growth | 22 | % | to | 24 | % | ||||||||||||||||||
Non-GAAP loss from operations | $ | (26.0 | ) | to | $ | (20.0 | ) | $ | (25.0 | ) | to | $ | (21.0 | ) | $ | (1.0 | ) | to | $ | 1.0 | |||
Non-GAAP net loss per share | $ | (0.55 | ) | to | $ | (0.42 | ) | ||||||||||||||||
Weighted average shares outstanding | 46.7 |
March 31, 2018 | December 31, 2017 | |||||||||||
Under ASC 606 | Under ASC 605 | Under ASC 605 | ||||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 99,646 | $ | 99,646 | $ | 51,562 | ||||||
Short-term investments | 29,630 | 29,630 | 39,178 | |||||||||
Accounts receivable, net | 38,718 | 38,718 | 73,661 | |||||||||
Deferred contract acquisition and fulfillment costs, current portion | 8,583 | — | — | |||||||||
Prepaid expenses and other current assets | 12,232 | 11,949 | 8,877 | |||||||||
Total current assets | 188,809 | 179,943 | 173,278 | |||||||||
Long-term investments | 1,096 | 1,096 | 1,102 | |||||||||
Property and equipment, net | 9,238 | 9,238 | 8,589 | |||||||||
Goodwill | 83,164 | 83,164 | 83,164 | |||||||||
Intangible assets, net | 16,316 | 16,316 | 16,640 | |||||||||
Deferred contract acquisition and fulfillment costs, non-current portion | 20,295 | — | — | |||||||||
Other assets | 1,552 | 1,552 | 1,363 | |||||||||
Total assets | $ | 320,470 | $ | 291,309 | $ | 284,136 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ | 5,669 | $ | 5,669 | $ | 2,240 | ||||||
Accrued expenses | 18,372 | 18,372 | 29,728 | |||||||||
Deferred revenue, current portion | 140,448 | 152,336 | 155,811 | |||||||||
Other current liabilities | 1,702 | 1,702 | 1,706 | |||||||||
Total current liabilities | 166,191 | 178,079 | 189,485 | |||||||||
Deferred revenue, non-current portion | 78,450 | 61,730 | 68,689 | |||||||||
Other long-term liabilities | 1,907 | 1,478 | 1,809 | |||||||||
Total liabilities | 246,548 | 241,287 | 259,983 | |||||||||
Stockholders’ equity: | ||||||||||||
Common stock | 462 | 462 | 441 | |||||||||
Treasury stock | (4,764 | ) | (4,764 | ) | (4,764 | ) | ||||||
Additional paid-in-capital | 503,669 | 503,669 | 463,428 | |||||||||
Accumulated other comprehensive loss | (44 | ) | (44 | ) | (39 | ) | ||||||
Accumulated deficit | (425,401 | ) | (449,301 | ) | (434,913 | ) | ||||||
Total stockholders’ equity | 73,922 | 50,022 | 24,153 | |||||||||
Total liabilities and stockholders’ equity | $ | 320,470 | $ | 291,309 | $ | 284,136 |
Three Months Ended March 31, | ||||||||||||
2018 | 2018 | 2017 | ||||||||||
Under ASC 606 | Under ASC 605 | Under ASC 605 | ||||||||||
Revenue: | ||||||||||||
Products | $ | 35,279 | $ | 37,766 | $ | 25,942 | ||||||
Maintenance and support | 10,753 | 11,682 | 10,802 | |||||||||
Professional services | 8,483 | 8,753 | 8,501 | |||||||||
Total revenue | 54,515 | 58,201 | 45,245 | |||||||||
Cost of revenue: | ||||||||||||
Products | 8,436 | 8,464 | 4,710 | |||||||||
Maintenance and support | 1,849 | 1,849 | 1,878 | |||||||||
Professional services | 6,309 | 6,303 | 5,676 | |||||||||
Total cost of revenue | 16,594 | 16,616 | 12,264 | |||||||||
Total gross profit | 37,921 | 41,585 | 32,981 | |||||||||
Operating expenses: | ||||||||||||
Research and development | 16,722 | 16,722 | 11,393 | |||||||||
Sales and marketing | 29,052 | 30,743 | 24,810 | |||||||||
General and administrative | 8,732 | 8,732 | 7,248 | |||||||||
Total operating expenses | 54,506 | 56,197 | 43,451 | |||||||||
Loss from operations | (16,585 | ) | (14,612 | ) | (10,470 | ) | ||||||
Other income (expense), net: | ||||||||||||
Interest income (expense), net | 241 | 241 | 169 | |||||||||
Other income (expense), net | 78 | 78 | (115 | ) | ||||||||
Loss before income taxes | (16,266 | ) | (14,293 | ) | (10,416 | ) | ||||||
Provision for income taxes | 95 | 95 | 129 | |||||||||
Net loss | $ | (16,361 | ) | $ | (14,388 | ) | $ | (10,545 | ) | |||
Net loss per share, basic and diluted | $ | (0.36 | ) | $ | (0.32 | ) | $ | (0.25 | ) | |||
Weighted-average common shares outstanding, basic and diluted | 45,210,250 | 45,210,250 | 42,016,831 |
Three Months Ended March 31, | ||||||||||||
2018 | 2018 | 2017 | ||||||||||
Under ASC 606 | Under ASC 605 | Under ASC 605 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net loss | $ | (16,361 | ) | $ | (14,388 | ) | $ | (10,545 | ) | |||
Adjustments to reconcile net loss to cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 2,399 | 2,399 | 1,624 | |||||||||
Stock-based compensation expense | 6,225 | 6,225 | 4,279 | |||||||||
Provision for doubtful accounts | 156 | 156 | 316 | |||||||||
Foreign currency re-measurement loss | 147 | 147 | 44 | |||||||||
Other non-cash (income) expense | (52 | ) | (52 | ) | 97 | |||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | 34,722 | 34,722 | 15,182 | |||||||||
Deferred contract acquisition and fulfillment costs | (1,713 | ) | — | — | ||||||||
Prepaid expenses and other assets | (3,190 | ) | (2,936 | ) | 1,466 | |||||||
Accounts payable | 3,219 | 3,219 | (244 | ) | ||||||||
Accrued expenses | (11,317 | ) | (11,317 | ) | (7,216 | ) | ||||||
Deferred revenue | (6,495 | ) | (10,435 | ) | (1,416 | ) | ||||||
Other liabilities | (444 | ) | (444 | ) | (266 | ) | ||||||
Net cash provided by operating activities | 7,296 | 7,296 | 3,321 | |||||||||
Cash flows from investing activities: | ||||||||||||
Purchases of property and equipment | (2,147 | ) | (2,147 | ) | (1,335 | ) | ||||||
Capitalization of internal-use software costs | (693 | ) | (693 | ) | — | |||||||
Purchases of investments | (4,460 | ) | (4,460 | ) | (7,401 | ) | ||||||
Sale and maturities of investments | 14,062 | 14,062 | 900 | |||||||||
Net cash provided by (used in) investing activities | 6,762 | 6,762 | (7,836 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from secondary public offering, net of offering costs paid of $284 | 31,231 | 31,231 | — | |||||||||
Taxes paid related to net share settlement of equity awards | (462 | ) | (462 | ) | (169 | ) | ||||||
Proceeds from employee stock purchase plan | 1,632 | 1,632 | 1,499 | |||||||||
Proceeds from stock option exercises | 1,961 | 1,961 | 775 | |||||||||
Net cash provided by financing activities | 34,362 | 34,362 | 2,105 | |||||||||
Effects of exchange rates on cash, cash equivalents and restricted cash | (36 | ) | (36 | ) | (76 | ) | ||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 48,384 | 48,384 | (2,486 | ) | ||||||||
Cash, cash equivalents and restricted cash, beginning of period | 51,762 | 51,762 | 53,148 | |||||||||
Cash, cash equivalents and restricted cash, end of period | $ | 100,146 | $ | 100,146 | $ | 50,662 |
Three Months Ended March 31, | ||||||||||||
2018 | 2018 | 2017 | ||||||||||
Under ASC 606 | Under ASC 605 | Under ASC 605 | ||||||||||
Total gross profit (GAAP) | $ | 37,921 | $ | 41,585 | $ | 32,981 | ||||||
Add: Stock-based compensation expense1 | 374 | 374 | 202 | |||||||||
Add: Amortization of acquired intangible assets2 | 908 | 908 | 439 | |||||||||
Total gross profit (non-GAAP) | $ | 39,203 | $ | 42,867 | $ | 33,622 | ||||||
Gross margin (non-GAAP) | 72 | % | 74 | % | 74 | % | ||||||
Gross profit (GAAP) - Products | $ | 26,843 | $ | 29,302 | $ | 21,232 | ||||||
Add: Stock-based compensation expense | 125 | 125 | 60 | |||||||||
Add: Amortization of acquired intangible assets | 908 | 908 | 439 | |||||||||
Total gross profit (non-GAAP) - Products | $ | 27,876 | $ | 30,335 | $ | 21,731 | ||||||
Gross margin (non-GAAP) - Products | 79 | % | 80 | % | 84 | % | ||||||
Gross profit (GAAP) - Maintenance and support | $ | 8,904 | $ | 9,833 | $ | 8,924 | ||||||
Add: Stock-based compensation expense | 28 | 28 | 60 | |||||||||
Total gross profit (non-GAAP) - Maintenance and support | $ | 8,932 | $ | 9,861 | $ | 8,984 | ||||||
Gross margin (non-GAAP) - Maintenance and support | 83 | % | 84 | % | 83 | % | ||||||
Gross profit (GAAP) - Professional services | $ | 2,174 | $ | 2,450 | $ | 2,825 | ||||||
Add: Stock-based compensation expense | 221 | 221 | 82 | |||||||||
Total gross profit (non-GAAP) - Professional services | $ | 2,395 | $ | 2,671 | $ | 2,907 | ||||||
Gross margin (non-GAAP) - Professional services | 28 | % | 31 | % | 34 | % | ||||||
Loss from operations (GAAP) | $ | (16,585 | ) | $ | (14,612 | ) | $ | (10,470 | ) | |||
Add: Stock-based compensation expense1 | 6,225 | 6,225 | 4,279 | |||||||||
Add: Amortization of acquired intangible assets2 | 948 | 948 | 486 | |||||||||
Add: Secondary public offering costs3 | 140 | 140 | — | |||||||||
Add: Litigation-related expenses4 | 400 | 400 | — | |||||||||
Loss from operations (non-GAAP) | $ | (8,872 | ) | $ | (6,899 | ) | $ | (5,705 | ) | |||
Net loss (GAAP) | $ | (16,361 | ) | $ | (14,388 | ) | $ | (10,545 | ) | |||
Add: Stock-based compensation expense1 | 6,225 | 6,225 | 4,279 | |||||||||
Add: Amortization of acquired intangible assets2 | 948 | 948 | 486 | |||||||||
Add: Secondary public offering costs3 | 140 | 140 | — | |||||||||
Add: Litigation-related expenses4 | 400 | 400 | — | |||||||||
Net loss (non-GAAP) | $ | (8,648 | ) | $ | (6,675 | ) | $ | (5,780 | ) | |||
Net loss per share, basic and diluted (non-GAAP) | $ | (0.19 | ) | $ | (0.15 | ) | $ | (0.14 | ) | |||
Weighted-average common shares outstanding, basic and diluted | 45,210,250 | 45,210,250 | 42,016,831 | |||||||||
1 Includes stock-based compensation expense as follows: | ||||||||||||
Cost of revenue | $ | 374 | $ | 374 | $ | 202 | ||||||
Research and development | 2,566 | 2,566 | 1,513 | |||||||||
Sales and marketing | 1,563 | 1,563 | 1,403 | |||||||||
General and administrative | 1,722 | 1,722 | 1,161 | |||||||||
2 Includes amortization of acquired intangible assets as follows: | ||||||||||||
Cost of revenue | $ | 908 | $ | 908 | $ | 439 | ||||||
Sales and marketing | 39 | 39 | 38 | |||||||||
General and administrative | 1 | 1 | 9 | |||||||||
3 Includes secondary public offering costs as follows: | ||||||||||||
General and administrative | $ | 140 | $ | 140 | $ | — | ||||||
4 Includes litigation-related expenses as follows: | ||||||||||||
General and administrative | $ | 400 | $ | 400 | $ | — |
Three Months Ended March 31, | ||||||||||||
2018 | 2018 | 2017 | ||||||||||
Under ASC 606 | Under ASC 605 | Under ASC 605 | ||||||||||
Total revenue | $ | 54,515 | $ | 58,201 | 45,245 | |||||||
Add: Deferred revenue, end of period | 218,898 | 214,066 | 167,647 | |||||||||
Less: Deferred revenue, beginning of period | 225,393 | 224,500 | 169,063 | |||||||||
Calculated billings | $ | 48,020 | $ | 47,767 | $ | 43,829 |
Three Months Ended March 31, | ||||||||||||
2018 | 2018 | 2017 | ||||||||||
Under ASC 606 | Under ASC 605 | Under ASC 605 | ||||||||||
Net loss | $ | (16,361 | ) | $ | (14,388 | ) | $ | (10,545 | ) | |||
Interest (income) expense, net | (241 | ) | (241 | ) | (169 | ) | ||||||
Other (income) expense, net | (78 | ) | (78 | ) | 115 | |||||||
Provision for income taxes | 95 | 95 | 129 | |||||||||
Depreciation expense | 1,383 | 1,383 | 1,138 | |||||||||
Amortization of intangible assets | 1,016 | 1,016 | 486 | |||||||||
Stock-based compensation expense | 6,225 | 6,225 | 4,279 | |||||||||
Secondary public offering costs | 140 | 140 | — | |||||||||
Litigation-related expenses | 400 | 400 | — | |||||||||
Adjusted EBITDA | $ | (7,421 | ) | $ | (5,448 | ) | $ | (4,567 | ) |
Adjusted under ASC 606 | |||
January 1, 2018 | |||
Cash and cash equivalents | $ | 51,562 | |
Short-term investments | 39,178 | ||
Accounts receivable, net | 73,661 | ||
Deferred contract acquisition and fulfillment costs, current portion | 7,844 | ||
Prepaid expenses and other current assets | 8,907 | ||
Long-term investments | 1,102 | ||
Property and equipment, net | 8,589 | ||
Goodwill | 83,164 | ||
Intangible assets, net | 16,640 | ||
Deferred contract acquisition and fulfillment costs, non-current portion | 19,321 | ||
Other assets | 1,363 | ||
Total assets | $ | 311,331 | |
Accounts payable | $ | 2,240 | |
Accrued expenses | 29,728 | ||
Deferred revenue, current portion | 142,020 | ||
Other current liabilities | 1,706 | ||
Deferred revenue, non-current portion | 83,373 | ||
Other long-term liabilities | 2,238 | ||
Total liabilities | 261,305 | ||
Common stock | 441 | ||
Treasury stock | (4,764 | ) | |
Additional paid-in-capital | 463,428 | ||
Accumulated other comprehensive loss | (39 | ) | |
Accumulated deficit | (409,040 | ) | |
Total stockholders’ equity | 50,026 | ||
Total liabilities and stockholders’ equity | $ | 311,331 |