Subsequent Events

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Acquisition of Divvy Cloud Corporation

On May 1, 2020, we acquired Divvy Cloud Corporation (DivvyCloud), a Cloud Security Posture Management (CSPM) company, for consideration of approximately $130.8 million in cash paid at closing, an aggregate of 200,596 shares of Rapid7’s common stock to be issued to the founders of DivvyCloud in three equal annual installments beginning on the first anniversary of the closing date and $7.4 million in deferred cash payments. We also issued restricted stock units pursuant to our equity incentive plan with an aggregate fair market value of approximately $12.0 million to certain employees of DivvyCloud, subject to vesting conditions.

Convertible Senior Notes

On May 1, 2020, we issued $230.0 million aggregate principal amount of convertible senior notes due May 1, 2025 (collectively, the 2025 Notes). The total net proceeds from the offering, after deducting initial purchase discounts and estimated debt issuance costs, were approximately $223.2 million. The 2025 Notes are unsecured obligations and bear interest at a fixed rate of 2.25% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, commencing on November 1, 2020. The 2025 Notes will mature on May 1, 2025, unless earlier converted, redeemed or repurchased. The Notes do not contain any financial covenants. The 2025 Notes are governed by an indenture between the Company, as issuer, and U.S. Bank National Association, as trustee (the 2025 Indenture).

In connection with the issuance of the 2025 Notes, we entered into capped call transactions with certain counterparties (the Capped Calls). We used $27.3 million of the net proceeds from the 2025 Notes to purchase the Capped Calls. The Capped Calls are expected to offset potential dilution to our common stock upon conversion of the 2025 Notes. The Capped Calls have an initial cap price of $93.88 per share (which initially represents a premium of 100% over the last reported sale price of our common stock on April 28, 2020), subject to certain adjustments.

Senior Secured Credit Facility

On April 23, 2020, we entered into a Credit and Security Agreement (the Credit Agreement), with KeyBank National Association, as administrative agent, and the lenders party thereto. The Credit Agreement provides for a three year $30.0 million revolving credit facility, with a letter of credit sublimit of $15.0 million, and an accordion feature under which we can increase the credit facility to up to $70.0 million. The new credit facility bears interest at 2.50% over the London Interbank Offered Rate (LIBOR) (subject to a 1.00% floor) or, at our option, an alternate base rate. We are required to pay a 0.20% per annum commitment fee on the unused portion of the credit facility. As of May 8, 2020, we did not have any outstanding borrowings under the credit facility.