Rapid7 (RPD) Stock Forecast & Price Target

Rapid7 has demonstrated stable growth with its Detection & Response (D&R) segment, which constitutes over 50% of its Annual Recurring Revenue (ARR) totaling more than $419 million, indicating a solid foundation for future expansion. The company's revenue reached $218 million, reflecting a year-over-year increase of 1.5% and suggesting resilience amidst market challenges, while ARR grew 1.8% year-over-year, demonstrating gradual improvement. Management's insights into a healthier outlook for IT budgets and a robust pipeline of larger deals intensify the potential for accelerated revenue growth in the coming years.

Rapid7's outlook appears negative due to a decrease in annual recurring revenue (ARR), with the company lowering its guidance by approximately $20 million and projecting zero net new ARR for the fourth quarter, reflecting leadership changes and a reset of expectations. The third quarter results revealed a sequential decline in ARR to $837.7 million, below consensus expectations, which has led to a reduction in future revenue guidance for fiscal year 2025 to $838 million, indicating stagnation in growth. Additionally, the challenges in the Exposure Management sector, coupled with longer deal cycles and execution shortfalls, contribute further to a subdued financial outlook.