Rapid7 (RPD) Stock Forecast & Price Target

Rapid7 has demonstrated solid performance with its Annual Recurring Revenue (ARR) showing a 4% year-over-year growth, amounting to approximately $840 million, primarily driven by its Detection and Response (D&R) services, which exceed $400 million and are growing at a double-digit pace. The company's Exposure Management pipeline has seen a significant increase of over 20% year-over-year, indicating strong customer demand and positioning for future revenue growth. Additionally, with expectations for FedRAMP High validation in CY25 and ongoing investments in research and development, Rapid7 is well-positioned to enhance its market competitiveness and drive future profitability.

Rapid7's fiscal year 2025 revenue guidance of $860-870 million, reflecting only a 2-3% year-over-year growth, fell short of the consensus estimate of $882 million, indicating potential challenges in revenue generation. Additionally, the company's reported operating income margin is projected to decline by over 400 basis points year-over-year, primarily due to increased investments in sales and marketing and new product capabilities, which raises concerns regarding profitability. Lastly, a significant drop in net new annual recurring revenue (ARR) by 42% year-over-year further underscores the company's struggles to attract and retain customers, casting doubt on its long-term growth trajectory.