Rapid7, Inc.

Good day, everyone. My name is Leila, and I will be your conference operator today. At this time, I would like to welcome you to the Q2 2025 Rapid7 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 would like to ask a question during this time, and if you have joined via the webinar, please use the raise hand icon, which can be found at the bottom of your webinar application. At this time, I would like to turn the call over to Elizabeth Schwalk, Vice President of Investor Relations.

Thank you, Operator, and good afternoon, everyone. We appreciate you joining us today to discuss Rapid7's second quarter 2025 financial and operating results, in addition to our financial outlook for the third quarter and full fiscal year 2025. With me on the call today are Corey Thomas, our CEO, and Tim Adams, our CFO. We have 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 considered forward-looking under federal securities laws. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and include statements related to the company's financial guidance for the third quarter and full year 2025 and the assumptions underlying such goals and guidance. These forward-looking statements are based on our current expectations and beliefs and on 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 10-Q filed on May 12, 2025, and in the subsequent reports that we file 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. Rapid 7 does not assume any obligation to update the information presented on this conference call except to the extent required by applicable law. Our commentary today will primarily be in non-GAAP terms and reconciliations between our historical GAAP and non-GAAP results can be found in today's earnings press release and on our website at investors.rapid7.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 our quarterly results. Please be advised that this additional detail may be one time in nature and we may or may not update these metrics in the future. With that, I'd like to turn the call over to our CEO, Corey Thomas. Corey.

Thank you, Elizabeth, and welcome to everyone joining us on the call today. Rapid7 ended the second quarter with $841 million in ARR in line with our expectations and growing 3% year over year. Revenue and profitability were ahead of our outlook, and our business generated a strong fee cash flow of $42 million. While customer spending scrutiny persists, our detection response business continues to be a core growth driver, which now represents over half of our ARR and continues to grow in the mid teams year over year. We also saw encouraging pipeline growth and exposure management in response to product investments we have made in our command platform strategy. The key message I want to leave you with today is that we're uniquely positioned to capitalize on the escalating customer demand to bring AI tools and capabilities into the SOC. We have years of experience operating in security operations centers with our scale software and services MDR business. And this gives us a tremendous head start with proprietary data and experience. We're taking focused action to enhance our go-to-market capabilities, including today's announcement of our new chief commercial officer. As we will discuss, we today have the products and the capabilities to win. Accelerating our organizational focus to capitalize on this and match our product capabilities with faster revenue growth is our top organizational priority. First, let's recap the most recent quarter. We experienced a solid second quarter that reflects strong performance globally, particularly in our larger deal segments. We want a number of meaningful consolidation opportunities at higher ASPs. This validates our strategic position in the market. Deal cycles remain extended, but we're seeing strong adoption among enterprises willing to make larger investments in comprehensive security solutions. And we have a number of signature seven figure wins this quarter that are highly validating both of our product capabilities and the value of our integrated offerings. While these higher value consolidation deals naturally have longer cycle times, the quality and scale of opportunities we're pursuing, and in particular, the ones that we have won, demonstrate clear market validation of our approach. We're optimistic about our strategy, while maintaining realistic expectations around the extended deal cycles that naturally accompany these substantial commitments. I'm excited to share that ahead of Black Hat this week, we announced a significant milestone in our journey to deliver truly integrated security operations that give customers command of their end-to-end attack service. We built the command platform to unify all customer data, not just the data that we collect, so that organizations get the facts from the beginning and reduce their time to action. Our new next-gen SIM, Incident Command, has the power to scale detection and response operations with expertise from our decades of SOC expertise and agentic AI integrated directly within the workflows that customers use every day. We launched the first phase of the Command Platform last year with Surface Command and Exposure Command. And now with Incident Command, we have delivered a fully integrated platform for security operations and management. This enables our partners and our MDR team to fully leverage a unified AI-driven platform that provides complete visibility in the customer's environments with the ability to leverage data on demand to minimize the attack surface and respond to threats in real time. Rapid7 is the only cybersecurity vendor with years of learnings from operating a managed stock offering, including the past year activating and developing our own proprietary AI agents, and our unique capabilities and experience give us a huge advantage in this growing market. Incident Command now provides customers with the easy packaging and platform integration to activate this. Coming out of the second quarter, one thing is clear. Customers are increasingly focused on collecting more of their security data and leveraging AI in the SOC to drive measurable outcomes. Security teams need platforms that provide a more comprehensive view of their risk surface while delivering more efficient, transparent, and accelerated decision-making and response. We see growing demand for unified attack surface visibility to simplify risk management, and the mounting regulatory pressure is reinforcing the need for integrated compliance and reporting. These priorities align directly with our platform strategy, which continues to be focused on expert guided AI, automation, and providing strong ROI for customers. We benefit from the headstart we have given the years of operating our own security operations center and all the learnings that accompany it, making us uniquely positioned in this market. Our long-term strategy continues to focus on scaling our leading AI-driven security operations platform. At the center of this strategy is the command platform, which integrates native telemetry, open data ingestion, curated intelligence, and automation into a single system of record for risk and response. It's built on three core differentiators. First, our open platform with over 500 integration, it solves a fundamental challenge for security teams, fragmented and conflicting views of the attack surface. The command platform brings together diverse data sources into a single, de-conflicted and contextualized view, giving customers a holistic understanding of the environment and the risk it represents. Second, our expert-trained agentic AI workflows are built on years of Slack expertise, trained on live playbooks, and refined through real-world analyst feedback. These are not generic models. They are proprietary and purpose-built engines that improve outcomes in real time. And these agentic AI workflows are fully embedded in our MDR offering. Third, customers are looking for automated, measurable progress. And we don't just surface alerts, we drive outcomes. Whether that's reducing noise through AI-informed active response, prioritizing toxic misconfigurations to maximize remediation, or coordinating faster incident response, our platform helps security teams reduce meeting time to detect, respond, and remediate. These innovations continue to drive our leadership position in the growing detection and response market, our largest product segment. led by our managed offerings. During the second quarter, we advanced our enterprise MDR rollout with the addition of co-managed detection, expanded support for operational cloud environments, and new SOC capacity in India. These investments strengthen our ability to support larger enterprise use cases that demand hybrid visibility, AI powered automation, and human expertise. We're starting to see our enterprise MDR investments begin to pay off, and we think we're just getting started. For example, during the second quarter, we signed a multi-year, multi-million dollar agreement with a major UK-based retailer that consolidated its security operations stack on Rapid7's command platform. After years of managing fragmented tools across multiple vendors with limited visibility, this customer selected our MDR-led solution to unify detection response and exposure management. Our ability to deliver deep coverage, asset-level context, and expert-trained AI resonated throughout a highly competitive process. The decision to replace multiple incumbent vendors at a large enterprise with our command platform underscores the growing demand for Rapid7's integrated, AI-driven security operations. Shifting to our exposure management business. As we've discussed, a key pillar of our platform strategy is helping customers move from siloed standalone tools to an integrated outcome-driven security operations model. In exposure management, that means upgrading customers from traditional vulnerability management products to our unified risk and exposure management solution, Exposure Command. Built directly into the command platform, Exposure Command provides a single contextualized view of risk across both on-premise and cloud environments, enabling faster, more precise prioritization and remediation. By eliminating fragmented tools and manual integration and giving customers a more complete AI-powered understanding of their risk surface, Rapid7 is firmly positioned as a strategic consolidation platform for modern security operations. Before I turn the call over to Tim, I want to briefly address our updated outlook. We're narrowing our four-year ARR guidance range to $850 million to $865 million. As you know, budget dollars and new commitments are subject to normal seasonality and are typically Q4 concentrated. Given a number of macro factors impacting our customers and the back-end loaded nature of our new business cadence, we think it's prudent to provide this updated color. That said, we internally continue to target better pipeline conversion as we firmly believe our product offerings give us the right to win more business in the market. Accelerating our revenue growth rate to match the underlying strength of our product portfolio is a core focus. The remainder of our guidance items remains unchanged. In closing, I want to reiterate the confidence we have in our strategy and our team's ability to execute against it. We have a clear path forward with AI-driven managed detection response as it continues to drive healthy growth and our differentiated command platform rooted in automation, integration, and expert-guided AI is more relevant than ever. We're seeing early proof points, we're doing the hard work, and we remain focused on delivering meaningful outcomes for our customers, our shareholders, and our team. Thank you for joining us on the call today. I appreciate your support, and I will now turn the call over to Tim to walk through the results in more detail.