Rapid7 (RPD) Stock Forecast & Price Target

Rapid7's positive outlook is underpinned by the strong performance of its Detection and Response (D&R) segment, which continues to grow at double-digit rates and represents over 50% of its annual recurring revenue (ARR), amounting to more than $419 million. Furthermore, the company's revenue of $218 million reflects a year-over-year growth of 1.5%, indicating resilience in a challenging market, while the ARR reached $838 million, demonstrating a consistent year-over-year increase. Management anticipates a healthier IT budget climate, combined with a robust pipeline of larger deals, which may enhance revenue streams and accelerate growth in their Exposure Management segment moving forward.

The negative outlook on Rapid7's stock is primarily based on the company's lowered annual recurring revenue (ARR) guidance, which was reduced by approximately $20 million, and the expectation of zero net new ARR for the fourth quarter. In the third quarter, Rapid7's ARR of $837.7 million fell short of consensus estimates, indicating a lack of growth momentum, further exacerbated by deteriorating performance in the Exposure Management segment and elongated deal cycles. Additionally, the revision of FY25 revenue guidance to a growth rate between 1% to 2% from previously anticipated figures highlights ongoing challenges in meeting market expectations amid leadership transitions and operational hurdles.