Rapid7 (RPD) Stock Forecast & Price Target

Rapid7 has shown resilience in its annual recurring revenue (ARR), which grew by 4% year-over-year to approximately $840 million, driven by strong performance in its Detection and Response segment, now exceeding $400 million and expanding at a double-digit rate. The company’s investment in research and development, coupled with the anticipated increase in sales headcount and productivity, underlines its commitment to long-term growth and innovation, contributing to a positive outlook. Furthermore, the expected attainment of FedRAMP High certification in CY25 may unlock new growth opportunities, potentially enhancing the company’s market position.

Rapid7's FY25 revenue guidance of $860-870 million, representing only a 2-3% year-on-year growth, fell short of market expectations, indicating underlying weaknesses in demand for its services. The company also reported disappointing fourth-quarter results, with net income impacted by lower other income and higher tax expenses, which led to an EPS that was at the low end of guidance and below consensus estimates. Moreover, a significant decline in net new Annual Recurring Revenue (ARR) by 42% year-on-year raises concerns about Rapid7's growth trajectory and its ability to maintain profitability amidst increased investments in sales and marketing.