Rapid7, Inc.

Good afternoon. My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Rapid7 Q2 2022 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, please press star one again. And also, please limit yourself to one question. Thank you. Sunil Shah, VP of Investor Relations. You may begin.

Thank you, Operator, and good afternoon, everyone. We appreciate you joining us today to discuss Rapid7's second quarter 2022 financial and operating results, in addition to our financial outlook for the third quarter and full fiscal year 2022. With me on the call today are Corey Thomas, our CEO, and Tim Adams, our CFO. We've distributed our earnings press release over the wire, and it is now posted on our website at investors.rapid7.com. along with the updated company presentation and financial metrics file. This call is being broadcast live via webcast, and following the call, an audio replay will be available at investors.rapid7.com. During this call, we may make statements related to our business that are forward-looking under federal securities laws. These statements are made pursuant to the state private provisions of the Private Securities Litigation Reform Act of 1995, and include statements related to the company's positioning, our future goals, guidance for the third quarter and full year 2022, and the assumptions underlying such goals and guidance. These forward-looking statements are based on our current expectations and beliefs and our information currently available to us. Actual outcomes and results may differ materially from the future results expressed or implied in these statements due to a number of risks and uncertainties, including those contained in our most recent quarterly report on Form 10Q, filed on May 5, 2022, and in the subsequent reports we filed with the SEC. The information provided on this conference call should be considered in light of such risks. Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements, and reported results should not be considered as an indication of future performance. Rapid7 does not assume any obligation to update information presented on this conference call, except to the extent required by the book of law. Our commentary today will be primarily in non-GAAP terms and reconciliations and our historical GAAP and non-GAAP results and guidance can be found in today's earnings press release and on our website at investors.rappistep.com. At times, in our prepared remarks or in responses to your questions, we may offer incremental metrics to provide greater insight into the dynamics of our business or report the results. Please be advised that this additional detail may be one-time in nature and we may or may not provide an update in the future on these metrics. With that, I'd like to turn the call over to our CEO, Corey Thomas. Corey?

Thank you, Sunil, and good afternoon to everyone on the call today. Thank you for joining us for our second quarter 2022 earnings column. Rapid7 ended the second quarter with $658 million in AR, representing 35% year-over-year growth, while exceeding both our revenue and operating income guidance for the quarter. Our team is executing well, even as macroeconomic pressures begin to surface for some customers, and corporate budgets come under greater Despite growing pressure on IT budgets, it is clear from discussions with our customers and prospects that security remains a critical focus and priority. As a result, during the second quarter, we continue to see robust customer demand for our best-in-class insight platform, driving strong ARR growth in our security transformation solutions as customers look for a cloud-native approach to securing their shifting IT environments. However, Despite ongoing momentum for our security transformation solutions during Q2, our total ARR was impacted by growing macroeconomic uncertainty affecting customers internationally, particularly in Europe, where the majority of our international business is concentrated. As we progressed through the second quarter, we began to see increased levels of deal infections as customers and prospects in the region managed record inflation, softening demand, and effect pressures. As we navigate an evolving macro backdrop, there are a few key dynamics that I'll highlight for you to give us confidence in our near and long-term outlook.