RPD - Earnings call transcript Q2 2021

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Operator

Good day, and thank you for standing by. Welcome to the Rapid7 Second Quarter 2021 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to Sunil Shah, Vice President of Investor Relations. Thank you. ahead. go Please

Sunil Shah

for at And today posted investors.rapidX.com, over release with CFO. following us We've via operator. financial replay on wire everyone. appreciate available and investors.rapidX.com audio it me our presentation our financial is earnings webcast. We operating will an website fiscal Kalowski, This and Thank being at company distributed XXXX. updated Jeff until Corey the year now metrics. to good Thomas, call discuss joining With along and the outlook our press to And today in financial the XXXX XX, third broadcast August RapidX's you quarter call, be our and results, the is live full call you, on addition afternoon, the are second and CEO; quarter our XXXX.

may may During provisions related to Reform quarter are securities XXXX statements under statements These materially current to and reports federal we The these underlying XX-Q the an recent that XXXX, this and full-year presented this related to Actual and indication differ rules future and results financial including differ positioning, from currently available on the assume in Act such our file and information call, on the extent number to the contained Safe due with outcomes results guidance. goals business or statements uncertainties pursuant for does RapidX and risks. timing not certain we on in results expectations Actual third such of forward-looking to the the or in Securities except as and then guidance based and are conference not our our includes Litigation information of beliefs results forward-looking expectations statements and assumptions the the made our a should and us. to call, Private the These make laws. implied this of to provided reported future and statements any company's are of most timing of risks should on SEC. such call information be conference forward-looking quarterly be law. light report the the of and statements, applicable contained considered performance. predicted may from the on events obligation materially Form by by that required considered update subsequent Harbor those

in reconciliations non-GAAP offer guidance one-time or to of future detail metrics. on the be turn to may quarterly be not over I'd dynamics be may results. that our may our Our like and advised commentary and prepared historical press your to release. comments the terms At in times will can Corey? be into today nature or provide we today's primarily Thomas. found these between to additional provide With update CEO, we results greater in the insight an may in questions, and our Please earnings and non-GAAP GAAP business metrics call response or incremental our our Corey in in the that,

Corey Thomas

growth both Thank afternoon, at $XXX sustain our report Insight second once exceeding us and all Thank and results for quarter Sunil. show XXXX approximately the business XX% you, quarter across quarter outperformance, joining you the Platform our goals second strong of results to again I'm quarter. demand And everyone. as delivers million. for good pleased ARR Strong our growth in call. profitability for earnings RapidX our year-over-year

accessible make for a this growth we ago, strong and weeks validation truly as the our all. both strategy achievable few organic a is shared our operation the continue of as and to our we As execution journey best

is to start management, our detection start evidenced hearing perspective are But leading to by customer with customer capabilities security our I'd Our XXXX. on engine consecutive some representing shortly. and of across customers. I'll two on like they we're journey SecOps and their momentum and today ability from what growth where this the risk more in quarters to share meet portability growth with cloud accelerating security landscape customers response,

industries think you shared of employees back class fundamentally are to of adoption. our we regions If delivering when dynamic experiences in you digital with Investor on all how increasing dramatically sizes innovation. and March, and look to world the a with keep pace in technology pace their of up to Day and with as their focus remote now comes across new right they I Companies are the customers it

of this landscape. rapid are threat footprints, experiencing customers technology the expansion alongside However, an evolving

scope in our are date Insight landscape company. activity. technology a turning the monitor protect. investment that the today's the backdrop, in of a landscape. customers every company is and an customers this of risks digital environment accelerated that attacker Travel being how XXXX attacker over integrated into must is recognizing a and in by increase indication areas where the shift We has driven the both portfolio RapidX threat explosion with This to is performance designed challenges strong past clear surface escalating met year in impact the and Against clear a are transformation by Platform to is in address the

is Many SecOps is threats our believe of level known more vulnerability RapidX's a adoption the leverage moment of of our ever vulnerabilities. attack. remains aspects more security risk to unified of me management even technology customer you strategy vectors solution platform Let threat hygiene. Accelerating in to positioned component Managing continue for is build critical today's than to visibility a opening customers. a important on our landscape. set address we cloud well the experience why multiple shipping to take

foundational to in against So VM the This the with to protecting solid Ransomware. continue best-in-class deliver threats basic demonstrated program during we celebration remain a as growth game durable having such second for ARR by is in quarter.

to and activity. after an vulnerabilities attack the to trend increasing recent to know people is This detection increasingly time, suspicious occurs. is VM best-in-class need attacks strong takes where about of program equation. part a response capabilities the that However, alert just a with customers the them them Remediating don't

InsightIDR year for a has one store. in RapidX's but the the the as leader in row, second Magic component recognized just SIEM, is the of For this we IDR Quadrant believe Gartner been

other a expanded of been, include was behavioral years them alerts the reflect As our had of law ago, intelligence. market, capability winning formula on we analytics, one The IR, best robust continue like emergence now driving detection of many law, visibility, IDRs a insufficient. additional traffic that growth SOAR network visibility we the to market roots beyond of telemetry, this threat validation capabilities. import has that's attack had began and leading off espouses and sustained six view response back to do extended scale high analytics, response since spans has for which EDR, with comprehensive the strong a to that across of most point simply view and detection This been with build among differentiated today and cloud SIEM, at

of initiatives drive leveraging digital recent our more to enabling security edition innovation. insights transformation investments. transformation are the alongside movement, businesses these believes positions extra digital increasingly cloud their as RapidX accelerate, to Our customers But comprehensive drive

As a result, usage skyrocketing. infrastructure is cloud

RapidX. complexity We protecting on as customers noise cloud management, This for and and workload integrated visibility deliver understand enhancing extended integrates RapidXs identity multiple as posture these to continuous to management, need remain focused detection platform based and protection innovating leading environments of enables automating response, to Kubernetes the cloud visibility beyond solution their risks mind shift programs security reducing complex for to fully cloud cloud infrastructure help is our environments across automating payable one charge container and top security security cloud provide co, environments, security scale the security protection. cloud broad drive and comprehensive, workflows by of compliance. InsightCloudSec enable is environments. released and security visibility to a security newly teams and across DevOps is that to cloud. foundational provide the teams here too into Each team so natively better to single of cloud And the these left, gain mandates and to outcomes at customers

fact, only the offer one today can across these each of market of vendors the In best-in-class products three vectors. security is RapidX in that critical

reduces minimizing products a into that security expands, between platform a threat gaps our Resource for are these Platform integrating solutions a the a a in exist challenge strategy critical constraints with cloud. natively myriad is tasked this concern security consolidate via unified partners respective visibility driven tools. automation building in increasingly build integrated, but independent investing because an disparate products. today. market critical them categories, are single RapidX environment, sprawl the number moving surface today's in smaller not resonating struggling and just vendor customers by attack security technology of as security and capabilities. delivering unified their to through Insight are customers cloud and is gaps to looking to This best-in-class RapidX's sacrificing are their the is of platform manage that the increasingly with why relevant these As teams threat experience Customers now to experience without fast in to leading our

more integrated As emerging experience increasingly and threats, relevant. is gaps security teams to RapidX's look to platform respond coverage faster minimize

see You to-date our business in this in XXXX. reflected momentum

is customers strong growth quarter. our a growth two during saw XX% business engine, live customer fundamental with in driven to which by continue there second ARR drivers. in accelerating growth by This part We our year-over-year the

more customers our new time. platform of efficiently, they customers of ability are across SecOps core and expansion our lap while more where any journey add to continue we landing by demonstrating in ease First, meet over their pillars

enabling upsell is the deliver business customers our VM ongoing platform is in technology core scales. and a driver realization, improvement our aggressive with install of opportunity compelling sustained our a our coupled in investments are for teams in Second, to during ARR retention driving customer This strong in growth us cross as existing compelling value quarter. and integration which our base, gross

As our customer six ahead. customer. more example ARR deal customers, a competitive ability for support sales sell more A we global international the value in great as figure with look with resonates a of the our we quarter during of insight of platform one have products, per new growth realization expanded increasingly our was should which platform to teams this story

and particular barriers value example future purchase SecOps InsightAppSec this to making leverage InsightConnect lower As experience. competitively easier a versus customer's InsightVM, case, proposition to platform separated products, of projects other brief set how unified InsightIDR, but our reminder, Insight RapidX this accelerated and not to In adoption, customers approach InsightOne we're is case, point InsightOne's broad deliver this unified products. an In of the only multiple a the Insight for to platform capabilities. looking to

their customer resonated Our security for of coverage partnering was within platforms the we motions the platform minimize with with partner these half and looking second like year. to their business. We're since during single as security excited story agent continue enable leading gaps with this one about go-to-market further the a customers to opportunity the

on a our the towards Turning now to goals. enduring update progress brief recent

charge accelerate we capability, our vision to by their practices interest cloud. and capability. momentum elevating focused the cloud on around while customers First, is our delivering enable already this experience the platform. investments Insight to capabilities to leading see security our This We've and in in addition remain operations the this SecOps the of is customer demonstrated clearly begun differentiated to the SDR across transform by Insights strong

security milestone. as on we proposition. an portfolio, platform of ability together is distribution, accelerating of accelerates and experience This to sales here a which a but our Alcide brings cloud been into seamless drop we've Second, key to team and more value across further work the Insight cloud enable particularly DivvyCloud capabilities workload our leverage security platform recent of InsightCloudSec, platform sales our and on sell launch integrated the our

leverage XXX business prior remarks. operating to will year-to-date continue position committed first as first during half perspective. on free A and absorb a improving deferred long-term innovation basis expectations, will growth more investment while for operating point the details operating his from of down. of strong approach notwithstanding Insight's the flow. the XXXX, a over driving standpoint, well in non-GAAP as the third, profit this our on margin both well Insight's deliver to we growth. investing We delivering while XXXX expansion delivered solid over write our points performance, this commercialization acquisition half great the product validation disciplined cash And of have execution, as that from our share customer is are in profit to and incremental our expenses on alongside revenue Jeff we operating of This

threats team, detect that making and XXXX cannot I'm once of proud on the visibility the our for summary, cloud be security his their to our escalating to goals in of threat work helps Jeff So achievable commitment from and unified gaps, ongoing experience in in announced accessible the delivering the SecOps tracking our by On we're to Jeff while also responses. I to deliver landscape challenges effort our and we and sure into press I as the faster, And release, our as appointed. you. look today's partner Kalowski world-class saw team entire next helping minimize has the of to in With building more recurring many to automated by the a the his I to has customers, myself our intent retire scale five successor us leadership finally, and CFO, a that, for all. his outstanding best I'll here to you and behalf deliver continued of been you, And scale want a at thank year. that team is over for leadership years. finance revenue turn RapidX management. as culture partnership thank call to RapidX. transition to forward our Jeff in instrumental He business, and entire past Jeff has true served

Jeff Kalowski

afternoon, and everyone. Corey, Thanks, good

non-GAAP can except I and non-GAAP revenue, discuss be stated between today's will Before results financial and in are all we GAAP otherwise our found results for reminder brief measures, a earnings that reconciliations release. unless press today begin, financial

vulnerability our over and the management. of continued our driven RapidX quarter and results, transformation by second Turning in momentum to strong solutions, high during growth acceleration security sustained of XX% XXXX

our transform ending $XXX.X of Second to reflecting XX% million Platform, demand grew customers prior look over cloud. the operations for year strong the overall security Insight ARR as quarter their around

expectations million, of high platform our As end a the integrated result our opportunity our of accelerating resonating to growth, with revenue XX% revenue increasingly $XXX.X quarter exceeded XX% to growth. of of this accelerated ongoing million, $XXX.X Products momentum, second year-over-year is exceeded and as guidance, customers.

driving during the quarter. XX% quarter, in well geographically total of by We grew durable rest growth revenue regions North continue across of XX% our XX%, XX% grew comprised revenue and to execute America revenue. the while by second year-over-year, world of representing total

recent growing ahead. with we opportunity huge see I calls, As shared you a market and on

business detail intend we we our acquisition. I including profit drive as so against continuing And continuing to growth this are while margin performance the we to shortly, incremental our global scale. our year-to-date will execute invest fund share operating to as we all goals, ongoing in strong more on growth expenses leverage our and how from improvements IntSights to recent

financial quarter, During fundamental at the we out goals laid our second in towards demonstrated Day we progress Investor ongoing the March.

In customer journey. ability our off growth innovation second in saw are paying focus SecOps a of to customer our strong ARR accelerating growth, is where quarter consecutive we addition they centric to meet by a led customers as

land growth As with which growth saw quarter for the upsell per continued sustained an execution, demonstrate risk detection a in value security end for period ARR is platform across approximately $XX,XXX. customers. management, experience delivering pillars cloud differentiated year-over-year a in cross our year. over result, globally, strong opportunity engine expand the to on quarter feats that results we This over ongoing driving performance our response, and XXXX and These the best-in-class prior the ended with to strength our integrated customers our customer delivering customer at vulnerability growth proposition focus of in long-term XX% engine, XX%

see consistent period, XXXX, XX% of for approximately margin expenses to year a XX% productivity continue grew as of prior with the over we quarter revenue for expected grew continue growth compared from the improvements second Turning R&D prior Sales as the see grew down versus our and G&A XX%, consistent quarter. in revenue cloud to year-over-year, growth of XX% with to scale compared we the prior details now QX expenses to to our business. first to were Insight the represented innovation. was operating the modestly and revenue, continue to some quarter in expenses XX% ongoing improved ago, gross X% slightly driven year for and on headcount, XX% the technology period, the by product marketing we results in Platform. XX% and X% as based ago business. as in demand strong in year our and reflecting our we and and faster than products year, down invest year, Total

guidance million ahead also and Our the investing strong in our record above end guidance. income while of continue in EBITDA range. operating still quarter revenue overachievement per Adjusted was quarter $XX of us high million, enabled share $X.X our was for to profit $X.XX of the net second business, delivering quarterly the

ended our QX the cash impact of investments to This to equivalents July. at cash We million $XXX.X the balance sheet approximately compared of $XXX.X end and Moving in and acquisition the million, for flows. is cash of at with and before net $XXX cash QX paid million XXXX. closing IntSights

strong the Shifting approximately buildings free Our our and anticipated strong in flow to ARR the the cash quarter drove million. for than quarter full-year. now second guidance updated $X growth of better associated

Our of for million once the only A to of prior confidence the an approximately ARR growth now the opportunity strong XX% customers for raising solutions. deliver the these efforts of in We XXXX, expectations management growth investments acquisition. risk attack for of amplifies the help of driving durable ongoing to to value and a strong ARR our surface and addition response, drivers the full-year security improved with of and extended an XX% this across our year. vulnerability in reflects We best-in-class our and platform year-to-date team's proposition, business. This of over challenge positioned improvement growth cloud for ever execution a for acquisition full-year growth, expect have success over XXXX. our experience combination further ARR $XXX our detection organic again today accounts believe of expanding integrated fuel growth RapidX. our now meet the us of outlook XX% plus strong ARR a outlook invest an over both IntSights These prior IntSights in expands

a of As the second reminder, ARR. billion with IntSights quarter ended approximately $XX

$XXX strong IntSights growth business, of improved anticipate outlook After once in be the we're raising the addition deferred contribution again account the revenue momentum million, XX%. the in for account, purchase account revenue to taking of adjustment. full-year of Given revenue in $XXX million now an to IntSights to our or and into guidance to to XX% range organic

Turning to operating profit.

we've XXXX our shared, IntSights of This execution Corey in margin us to revenue to performance great growth, to basis profit to operating As first position delivered absorb points durable of half compared strong first puts leverage a us the over with expenses. half of improvement, reinvesting XXX to continue over in operating and the enabling drive XXXX.

as able accounting full-year share million weighted if per our all of is to billion As share. acquisition the recognize a of to We $X to become shares account based framework. be of of line loss operating full-year result, basic our path million, deferred to revenue low growth outstanding. guidance IntSights profitability an a on deferred with drive would of we're adjusting these IntSights. $X.XX balance, operating end delivering we non-GAAP million. investments to revenue will and in average I profit with business were the prior strictly for full that our adjustment now per approximately growth a our business, anticipate the purchase anticipate consistent $XX.X $XX $X for anticipate as to we approximately with now anticipated full-year Factoring full-year operating our $XX IntSights approximately this in in, well accelerate durable profit guidance This million, and loss the we profit look of we believe income reiterate ongoing position operating approximately

a coupled ARR over remain updated to for of Turning IntSights to focused pleased the accounting given delivering free We year. free to date, performance scaling cash while $XX generation cash of growth, investing our our after cash expectations million validation with full-year for of this flow. and we guidance, even business. on approximately are cash report long-term anticipate acquisition, great flow cash I'm potential free the raising flow flow strong flow that free time. now our our is This and

of Moving now quarter IntSights the Note our to the third quarterly acquisition. also includes impact guidance guidance. that

approximately For XX% a of approximately million shares the basic total We $XXX.X for is loss invest $X.XX we in operating XX%. anticipate income growth a a of the to anticipated quarter of XXXX, the to third We per absorb of based weighted outstanding. $XXX range third to anticipate be to of million, we $X.X quarter net share which quarter in and revenue loss of per share, as anticipate million to be expenses. million be IntSights non-GAAP the average non-GAAP business on an $XX.X partial loss

profitability I RapidX XXXX to So driving behalf a And security validation entire been cash flow goal team. in to you to time to when our appreciate our And meantime, of growth, I'd to is support. talented a and and of that, on the summary, call has against free continue express then. work finally, work in execute proud achievement ability five And now look durable my forward first-half Corey and past to questions. transition our of I and smooth the scaling until years. of time gratitude the we close great It I'm invest like look extremely forward And leadership we've while customers. with all privilege comes. the to appreciation a of open GAAP as of to With everything we here continuing ensuring the we'll any for the accomplished. team for with the Operator? your to

Operator

[Operator Owen Sandler. Instructions] first comes Our question Robert with Piper from

Your line open. is

Rob Owens

additions right with kind the in think now you leaning well great? that question. my capacity will these do additional new part been on and sales I you've of of But you end-to-end acceleration as story. can know to to characterize, what Corey preexisting in and And sales the productivity and guys is if touch a Thanks. logos. you bit the want environment little be of terms relative Great, taking thank for the where adding force

Corey Thomas

Thanks, Robert good question.

factors. I there a for So, the security is really operations, market. that is about demand but the earlier, two especially cybersecurity, big offering innovations demand to what talked environment healthy One we're is for the environment

helpful productivity. our always that's for sales So

actually know, one we we have a second we very The acquisitions. introduce model, or - do we products is, new disciplined you as that

And As prove home, is we had then, process positive specialized, and start actually out our the last tailwind at a to sales thing, over that as productivity. we you sales we productivity. of there. We're more sales all then action. teams noted, is offerings positive sales productive that to But and we're the time, that's with those a also to very also investing the in optimizing journey our tailwind in early been out

coming us also reflected together, So are new our and ARR ARR the all been and in reflected for those both overall been growth, the in customer that's things grow sales to it's productivity but actually allowing customers.

Rob Owens

reflect less second had linearity quarter then look far there this obviously than and billings at Does expected we collections the outstanding, day's And your of versus If historic? helps the it's question or unique I Thanks? cash guess. that was something relative Great. to for I Jeff, flow. quarter

Jeff Kalowski

that the quarters and but in I other really last say we it's wouldn't we than improvement. to and really seen favorable outstandings, dramatically the linearity couple had improving different billings improvement but on days we our Yes, ARR the in I internal efforts over dramatic due see think, some did of quarter,

more… I think it's

Rob Owens

both. you thank right, All

Jeff Kalowski

Yes.

Operator

Matt RBC Markets. from Hedberg comes question Capital with next Our

open. is line Your

Matt Hedberg

and leaving career? We on Thanks the soon, like but certainly well retirement. Jeff, for anytime done your so certainly, ride in I luck quarter chapter the next congratulations questions enjoyed here also will we you're with we've your the of taking not you my best of felt

Jeff Kalowski

Thank you, Matt.

Matt Hedberg

think I years. fun a you been said it's Yes, five

fun… a So it's been

Jeff Kalowski

was I for longer. a bit hoping here

Matt Hedberg

that. enjoy We'll

normal, I obviously to added target frame continue you unique on logo XX% growth quarter? want kind of about Corey, was the XX%, with to that of that, this for sort was with follow-up new better kind quarter this to talked you Day, new of just with where sort quarter? anything you X% customer lot previously? Day XX%, see XX% your numbers Analyst Analyst Is this expect you level about a On I kind is than ads want there of X% talked a Rob's this the those ads, sort of of It's know, You question. to to

Corey Thomas

Yes, the CAGR was four so think like one is keep Analyst five I discussion over there's in years. that points or this couple a Day of mind at

that could an fact so, you we And of little earlier this bit performance above a year, saw that. in imagine

you of over So can same the like expect sort as average topic. that CAGR

to about that an migration The I a talked that other strategic to is And that's more thing and customers. keep we're we've in think And move doing intentional mind continuing pace. before.

momentum so long-term CAGR think say near the good in in continue double-digits. near-term, And we I the confidence there I our what see I in change material. is the don't would A have actually we very that but trends very say term, would

Matt Hedberg

and customer I little a carries it basic. the and you're about higher kind able successful which DivvyCloud talked recipe, level talk of values into cross-sell kind back early base you you dollar the bit remarks, about can prepared when And is that But what's your and think InsightCloudSec, also that your base? existing now. in when - then for of your you And how your of of are you sort to penetration ACV

Corey Thomas

cross Keep main for on and the where question vulnerability That's in cloud transformation. mind, digital we're like in traction the cross catalyst sales, all big our solutions, response, To solutions. detection specific pillars, of lendable your around increasing seeing they're all is our sales. management, growth especially security

it From threshold abreast our looking to transformation, we in actually load driver And IP to transformation the give seeing are there. when stay but a that's quite customer visibility dropper, the rollout the momentum, team is infrastructure. to not things. dynamic, with we'd need especially a of longer perspective, digital a they is through big is it long-term horizon. patient number the us digital the automation they like actually a that but us in where actually we're so look expected - initiative. digital industry to at that a and But and management growth it And term change security good actually talking it's stay it security, current good good growth, a cross position for to to catalyst critical where And their a is those the and grow the abreast to both puts any and that, cloud need sort reports, you having just get of stay priority but as - and over a transformation, to to current sales is excitement to we're digital tied they

Operator

from comes Saket with Kalia question next Our Barclays.

open. is line Your

Saket Kalia

Thanks here. well And very my my echo retirement for deserved. Jeff questions on taking I'll congrats

Jeff Kalowski

Thanks Saket.

Saket Kalia

was to how that there Corey, prepared you with of was make some could just about, and InsightOne wondering that, sort I a example without of data just are bundle example the during to be there bit talked of the about points bundles are any maybe talk an if sense are that little you'll what other might interesting pre-announcing just able share bundles start anything, working you on that you, to remarks. explore?

Corey Thomas

the the there of SOC enhanced I've you little and like bit. some but too talk together and good a a drill a telemetry of positive. out into go premature that's actually to we of number where So talked quite on have pilots it's I won't One, will analysis, the traffic question. actually numbers it's I it, about have IDR, about networks automation, the sort endpoint trends before numbers, SOAR

one, willing actually two - us there. moving think it forward people are at to the the of deals prong upgrade most we're piloting is time that with allows is that of bundling are programs. we're overall And their is when to a strategy names other do looking importantly, are several some to about that security have sale We out primarily bundling, strategy

one I'm programs. going Now is gave The bundling was time to do significant to sure field But at a sales. that I to says in we're of customer so looking subsequently I'm here bundling my program. listen a upgrade upgrades hey, do that you know of like focus example the security

buy. be clear look is team not I to the the it complete concerned just wanted I say, how categories, multiple the they only across our concerned thing that of made so and And customers with that not to investment there. is am would at sense results actually The economics

So actually a over time, big arm product, quickly, security it in you great and their if a improve do they they that's the that's And do buy are to great. looking also. actually slowly shot because if

over slowly plan both that point in and guess is upgrade our to predictable actually out time that time. to third actually their the pricing and also operations emphasize and it for, that customers for build the security I'd over make on solutions we're Now I are economical investing packaging

traction, having I the three validation. are we're those that they're of So say getting areas strategy, would

resonating therefore sales back accelerating, But It's the working. such from of further not that us, are today are roll we're phases material things our very coming the the actually massively will team call would So to them new very, continuing are out positive momentum, and customers, we well I success these with say I packaging perspective. that. to to therefore actually

Saket Kalia

that I about kind just sort the and broader that VM When bit. part this newly of us I was Got of of remind you end it out it, growing? sort that little maybe for how that's of growing million that zooming fast ARR, $XX versus said can business fast Does mix how make the at ARR do my is helpful. think sense? as follow-up that base acquired $XXX million? Insight Jeff about about How of you, you in question, roughly bucket? transformation we security think is just you for a guidance the maybe that year, for look at of think

Jeff Kalowski

the Yes, XX%. Day, we excuse first is said and XX% about Analyst security off, million acquisition $XX acquired it And transformations was was over at that VM of me, a date. bit as we so that

transformation, saying grow over is security to this year. XX% we're going So,

be bigger it our is the we IntSights included specific pie. So We're And products, projecting. piece which in will the become year. that security will slower, a of pick transformation And what percentage, over total end that'll a will IntSights growing I will not to become call less this XX% going over have was think of - set VM out pie grow year, we're is still by systems even without but the of our XX%. growing the

Saket Kalia

very Jeff. helpful. again, Congrats Got it,

Jeff Kalowski

Thanks.

Operator

Essex Goldman comes Our from Brian with Sachs. next question

is open. Your line

Brian Essex

question. congrats me taking for for you Jeff, the well. Well Thank as done. And

Jeff Kalowski

Brian. Thanks,

Brian Essex

to years, you is, touch in are, things And maturity all Salesforce looking have with Salesforce think your done to so Perhaps economics? where on if Corey, bottom the versus of you've line terms guess in regard - wanted maturity? several them a these we pillars, for aligned to I these the buckets put the And are quiver I that unit that to about to you platform maybe across and do then of the accretive what just past how acquisitions in has three arrows over a kind have speak? is with our you're incentivizing others the which more better might of ones

Corey Thomas

good question. a It's

So of distinct there's it. parts think I two

first mastery do understand dedicated the in we what a rolling make when is that we have thing what acquire sure productivity. make what do think team we Salesforce. and rebuild, to how optimizing And is because with we the how to out we always So Salesforce is, is of about start sure general, selling, we or we actually we sales on really want do

As dump of of one is the And that not the expansion that. broaden that's of the can you just actually when that a that number we mastery get then a sort sell team into we Salesforce, like selling shot steady sales of themselves.

in do quite sell. time. of they out to us actually actually of sales we cost allows our actually to actually way And it and that total that's mastery we worked really what So want selling productivity these sales, expanding which capacity well. the But over drive sellers, steadily have up can a

on think which we that focus with our to the have sales you're or space that perspective my two actually part sell for of point The product maybe educational track target new our sell and that sales not to manage part should teams do we customer or that sales, second versus you say, incentivize perspective how that them. team an to this we're from either customer, I product existing The reason the we is large, we offerings, do happened an because while and for product referring actually by on something innovation we and some is we from engineering and have engine, in profitability have things constantly with but an a don't the levers. political that time, But updating we at such One to. that we it, sales. actually actually the is do partner

And changing so those over are both time. of

meeting meaning us So them a say where we customer they we says that are, customer pain where lot sales they to sales you and focus the I that out delivering actually focus our then that because want that pain want lot, friction, want as going on are, the a hear could If term introducing our points, in credibility this teams customers don't you creates of steer they the customers for on that way. point. them solution for take actually And a and team.

do So is that to we've when then on Which that's our focused are things the profitable customers, alright, actually we been we And more why we more we the expansion. do strategy able at how and look time? have. like, over marketing do

Brian Essex

seems free you've write-off But helpful. a got flow you bumping I for maybe us, up. to acquisition. up already million. appreciate it. IntSights deferred by like reconcile the the about Got cash Jeff from it? follow guide you're That's it to revenue and And maybe $X it super cash Could a adjustment

confident puts gets guide So what free up? you the associated bringing cost and and So takes that the with are more cash flow that business?

Jeff Kalowski

increased the Yes, for are income $XX a the about And loss projecting million. but first the performance, is driver believe half ARR from net we the biggest second I half.

the from from which with million flow you, - a guidance. can the so is cash implied in the deduct ARR from what really previous the is that raise around balance really $XX $X.X, loss, the we realize And you incremental

Brian Essex

you. helpful. Super Thank it. Got

Operator

comes Michael KeyBanc. next Our with Church question from

line is open. Your

Eric Keith

Keith Michael, This well. for congratulations as is on and thanks queue for taking the Eric Jeff,

Jeff Kalowski

Thank you.

Eric Keith

good ARR increased customers on the of increasing you to larger progressing more drive as you you're Salesforce rates? the Corey, among really and saw educating per But power attach customer progress, on can you expansion about platform do talk those unified that metric combined lands. customers in the how

Corey Thomas

to is we're my I mean mean, prove take I that that not don't I customers it one us. taking Yes, sell ago. federally would just week say that it the in just

so the looking we're expansion engine existing why their extend and And points, is customer we with what as leverage think show expand, investments. and about actually we for taking pain them we our

on say listen, like, I So how We're an scales to a say, VM or no they you an cloud here's matter or hey, okay, where IDR and if existing we have start point your have pain customer incremental up. able investment applications.

and incremental scale now much up. actually scale much more, and work investing a because it's the to more for points again, early is echo we're And you here, it's up as our right a more buy scale not like, recognize about more in still it can it investment. claim and to so them And efficiently and and more national. easier plan our else. And much naturally product innings for pain lots of packaging lots than feel engineering work customers more an making anyone that big we effectively again, But made of about

Eric Keith

then I the wanted upon That's mentioned to - this you helpful. And quarter. just it. Got accelerated touch

do of And So top breaches that seen now. it's of VM this kind year? would you you rest to year? to demand elevated is sustained continue the attribute you that the accelerate a mind this we've level to Obviously, right kind of some the of could for of think seek

Corey Thomas

it and Our fundamental a shifted. We've VM hasn't outlook thought always market, updated. and more actually effective on sustainable was

market We that continue confident we that it's sustainable. thing. to see did It And a pretty But long-term the going we vulnerability demand saw. to management as have that's accelerate. positive feel

VMC we that customers, commitment. and the overall, what have to that including us of stay Now, of high levels aspects is with continue acceleration

churn So me? a hear you about we Did before retention fee factor of higher growth. also and talked and the lower the customers, that's

Operator

question next Jonathan Our comes Ruykhaver Baird. with from

open. is Your line

Jonathan Ruykhaver

one made the months. mark you've have the just same IDR is about not target talking a an several in just I about for question. last pretty Obviously, So exceed from to or shift

you've and touched capabilities deeper maybe to critical the today, And so Corey of have know are category, this some I might if on have I'm I, touched those you could might future your evolution comments. not you those opening you've of into that in you positioning. for wondering XDR today just in on that you believe, some need competitive But dig

Jeff Kalowski

reducing really that is. It's what you extended about think gap this response, detection you in which operational the have about pre When environment. is XDR actually

invest companies still why to of about and compromised and and be think so are so you If blind security, spots just organizations then it's lots in able it, environment. because many but attack

environment. the you gaps idea start, of where security operations overall minimizing XDR in actually no the So is matter those

specifically, us exactly for starts with very So data. gaps in

And to And the the data the be to endpoint see to which in data lot data. to data, able a vital. see ability traditional of so that to now see film, network the able also there's actually is be but to environment, see actually external usually the that's the

workflows. the We're in the thing the that to gaps actually you of in And data way the and about use deal behavioral understanding workflow, user with have sure. to the have area focus comes analytics, but gaps the attack my do work on I is I of again about that for processing process. with to make or a my score had It's that's different data. workflows make analytics, environment. my how my then the sure way actually context. second the starts actually data, technology And actually we the it whether in We with automation. workflows, it attacks is vectors to look in environment, that forensics when really overall the an another have last I'll But minimizing remediation was investigation you unique to innovation that's be have you So information, able what that the have additional

just response, And today the minimizing also about is why minimizing in the those So part team's but XDR have about the being there that analytics, is of automation success. think around That's market the been I and you always the our which of strategy. big them that's workflows has the data gap. it's extended gaps. IDR we along why of that in vision think with and a we're the value recognizing recognized And when extended the IDR that. is, detection about

Jonathan Ruykhaver

in view and that one is Corey think ability thoughts. the How just leverage your to last item product And I hear do you the It's where that today? portfolio me support, let that intelligence.

Corey Thomas

The intelligence, intelligence. you say

Jonathan Ruykhaver

Yes.

Corey Thomas

an think But the part about environment. is so two also the things in that create I about much you of data expanding external to what's actually a just potential not context, think you you happened like adopted, one have which do as have lot the have noise. just so you more context, surface, attack the digital data, transformation, know, has I of more analytic things that and So which you

actually have technology, allows another tool key from to we're the actually amount to from out the key pulling the doing that you a what massive pull we another key noise. like, predominantly signal noise. is out figure on of continuously out and do how that the so strategy And up engineers us just another the And threat signal game have the intelligence

those So two actually what shows are up. places the

Operator

comes question Our from with Mizuho. Gregg Moskowitz next

line open. Your is

Gregg Moskowitz

you're you, terrific know job I yet. a But missed. going just will Jeff. not most and anywhere you've thank certainly Okay, done be

Jeff Kalowski

appreciate I thanks Gregg. that,

Gregg Moskowitz

XDR, up of a an today looking guess do at areas these I technologies? Corey, had customer course. all comes it most and that as XDR increased when awareness to of believe that the In of of Of you are the and/or, question. SIEM follow as or deployment light last to and customers their

Corey Thomas

are looking they're so their reduce developing, economy at the So, actually in how one gaps the do they market operations. - most customers

more clear and - out anything. so that's stands that than really And

bias, think is the said customer I adoption Why, there. something but of that that were we before, we which focused XDR customers on what were used earlier, you haven't - term clearly part XDR you because it's an like is have had have actually that. companies getting massive Now, is

to consolidate allow So my doesn't ability could XDR gaps customers and a security security are proxy in manage as less actually definitely the that for operations, with you shifting. really, use operations, me my to improve my

I'm offering to be manage infrastructure. is to Now, I'm minimize security able my gaps are that to means which in my in consolidate, actually of [XDR ability Citrix] able security, belief because that, to able

are people do that think I likely future. the more win to that

the to analytics you security SIEMs providing Citrix XDR think I because likely market business more overall of move yes, real share taking have value highly that's forward. for SIEM the actually in take and proposition, But which for So a much as in they're the volume actually more it as increase. becomes it even that as is gaps of simplifying customers, lots are complex scale things manual, environment, are

Gregg Moskowitz

trying is able roughly very guide is to that's most much revenue Jeff, a the QX. say Insight's ARR are helpful. increased get metric, just revenue acquired? Corey. of for sense from right, QX how for important how of organic you're Obviously, then to and the And Thanks, versus just expecting All much you

Jeff Kalowski

single-digits, high for figure Yes, half. the of second for the single-digits half upper

Gregg Moskowitz

second For okay, you, half, the guys. perfect. Thank

Operator

question next Our with from Stifel. comes Brad Rebeck

open. is line Your

Brad Rebeck

Corey, last you few in much, out know, retention process. over the very you've just that broadly wondering where are called thanks calls, Great you gains,

from there's you incrementalism or If you've of to here, think gotten most still and that if had? it's meaningful gains be

Corey Thomas

overtime. and which steadily per clear that forward, improvements, and expectations different so our all say again I ARR most upside actually retention customer customer you is commitments metric, in mean, strategy And on our make and in I we are reflected And their we adds would I think per we as primary metrics. our see up just - we have go have we opportunity, steady customer execute expect go ARR customer as metrics. we that to

fundamental stable either underlying has that or increase expect assumption. could as a You retention in

Operator

comes question next from with Our Needham. Alex Henderson

Your line is open.

Alex Henderson

question they're piece a the of was But ratio upside. The in average, if great below ARR they're that a coming relative us still well you you per to just the customers, little and of update if that have of wanted that near bit. and just whether lot could to on or Can give follow-up new helping move the Thanks, puzzle? statistic. wondering I to boost in to statistic the that's I room is customer last ARR coming

Jeff Kalowski

additional bit then platform ASPs, the up and - XX.X. but a grow with smaller, it's with less Alex they change of the hasn't they more products below with that higher and come platform than going products there still, been average in us. Yes, start in XX.X, still they it's it's new, a little But big

Corey Thomas

we have always say up trend would that will we that's company could having last additional trends a when are four mid-market. like-for-like time we basis in And going so have and that's I through see the say in expansion. five years strength continue But we're continue would split, strong our And product at I especially you the on or in over segmentation. to as the thing sizes, like I that compare across having, dried one to

Alex Henderson

that Is wins? for you maybe been the that course last and customer number environment those and is is up that like changed incredible the edicts really need something defense result looks So what well sort it is accelerating these business? terms depth of the in defense part over a attacks perimeter How things sense of six, notches in nine, call of it the clearly of as that Is or acts? all a your that attacks, down of a in moved breadth significantly of give perception as months the has of result lot of an in presidential they've some as that of the a the Can the environment of of impacting XX acceleration quite as of impact? static notches? multiple

Jeff Kalowski

the making is making a I and the demand, do very both that Yes, that this was It had actually more environment the levels, levels, get at discussion, clear the the is commentary favorable. say been improving. we that that the second companies it's Executive is year. And that environment would saw you to the tough focus I at seriousness, topic attribution say specific clearly coming the out the of actually of last what demand actually different the would to is levels, fact demand Board half

say where in you the the more a voice, security default look not security a seeing much transformation - most if say two in digital ago, today would you of discussion. have see years of actually must solutions, you're digital some transformation I transformation default think security discussion. back I as in I of was you would that our kind

say whether just up would the the correlation - but it's there's it's say Now, breaches, press, year. I materially gone attribution. security the of that's the to can't some between whether the digital transformation do I And whether tough I that's the there, government, upgrade hard course has that and transformation last over that's think

Alex Henderson

thank see, much. you I very

Jeff Kalowski

Thank you.

Operator

from Hamza Our with Fodderwala Morgan next comes question Stanley.

is open. Your line

Hamza Fodderwala

Hey guys, Jeff, on and thank you again for the congrats, taking my question retirement.

of year-on-year, to question quick you're norm? of on expect to one normalize just that mentioned is range should mid So this few that could margin, from just end, that What when start the something that next gross sort quarters? slightly XXs, my sort down we we should expect, you over

Jeff Kalowski

just Yes, mid-XX% but want range. to we the I here still the would remind deferred second but you have headwinds revenue, we expect in that can't of because cost, little cut, all to may we in a recognize bit have because be half, that we revenue of the

Hamza Fodderwala

term? longer or near that Is

Jeff Kalowski

change. margins product, no For product - so XX% overall significant and range, for that in

Operator

to closing call to no further Thomas Corey turn the over for back are like the There questions. remarks. I'd

Corey Thomas

for that us of hearing today are for fact grateful you Well, I you the be will we joining of appreciate how him. you still Jeff, on all call. thank shared but our many And sentiments the from

Jeff Kalowski

right. That's

Corey Thomas

over and So forward chatting time. we look thank with you you to

Jeff Kalowski

Thank you very much.

Operator

the program. concludes This

You may a now Everyone, have great day. disconnect.

Rapid7 (RPD) 5 Aug 212021 Q2 Earnings call transcript