Rapid7 Shares Tumble on Weak Q2 EPS Outlook, Results Still Seen as ‘Solid’

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Rapid7 reported Q1 adjusted loss per share of 16c, compared to the loss per share of 3c in the year-ago period and in line with the consensus estimates. Revenue came in at $157.4 million, up 34% YoY and above the consensus projection of $154.1 million.

For Q2, the cybersecurity and compliance solutions provider expects adjusted loss per share in the range of 3c to 7c, while analysts were expecting EPS of 2.9c. RPD expects Q2 revenue in the range of $163 million to $165 million, compared to the analyst consensus of $164.2 million.

For the full year, Rapid7 expects adjusted EPS in the range of 5c to 16c, compared to the consensus estimates of 11c.

The company expects FY revenue in the range of $686 million to $692 million, up from its previous forecast range of $682 million to $690 million, while analysts were looking for $686.4 million.

“Rapid7’s strong start to the year was driven by on-going momentum across our security transformation and vulnerability management solutions, as we sustained year-over-year ARR growth of 38%,” said Corey Thomas, Chairman, and CEO of Rapid7.

Goldman Sachs analyst Brian Essex cut the price target to $113.00 per share from $130.00 to reflect lower peer multiples.

“Despite the solid ARR/revenue beat, the stock traded lower after hours which we believe was due to the lack of upside to FY22 ARR guidance and low customer net adds. Commentary during the call was optimistic with regard to the demand environment, but management noted that the company would reassess ARR guidance later in the year. We are encouraged by another quarter of execution with healthy growth, but we remain Neutral rated as we see better risk/reward elsewhere within our coverage universe,” Essex told clients in a note.

Mizuho analyst Gregg Moskowitz also lowered the price target to $110.00 per share from $135.00 again on lower competition multiples.

“We continue to believe that RPD is well positioned in the SecOps market, as security and IT operations teams increasingly collaborate to effectively mitigate risk. We reiterate our Buy rating,” Moskowitz said in a note.

By Senad Karaahmetovic