Earnings call transcript Q1 2023

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Operator

Good afternoon and welcome to the Rapid7 First Quarter 2023 Earnings Call. All participants are in a listen-only mode. After the speakers' presentation, we will conduct a question-and-answer session. [Operator Instructions] as a reminder, this conference call is being recorded.

I would now like to turn the call to Sunil Shah, Vice President, Investor Relations. you. Thank ahead. go Please

Sunil Shah

for and to everyone. XXXX discuss in financial operating operator, fiscal and joining XXXX. year financial appreciate us results outlook our to today RapidX's addition second good you, quarter We full afternoon, you and the Thank first quarter

me call Corey today With Thomas, Tim and CEO; on CFO. our the Adams, are our

company metrics at We now posted is This the wire investors.rapidX.com, with being via have along and broadcast distributed financial at audio our the webcast, earnings press will presentation the is call and investors.rapidX.com. updated our be available file. call, over website and replay release live on an following

are Reform we considered company's the safe XXXX made and for business year may the such call, Private assumptions statements positioning, related financial related statements second harbor underlying that provisions strategy, this of XXXX quarter forward-looking Act to to guidance Litigation and securities and are full and federal the the the our plans statements of include and pursuant guidance. business During under Securities to make These laws. goals

Actual forward-looking the of predicted filed differ this conference reported of call the an be implied in or in may considered such should filed statements available forward-looking outcomes most a us. based light not annual These expressed results results considered and with and February materially our SEC. recent current in the of XXXX, as on statements on or XX-Q results number indication and by and timing XX, report or from results differ future to reports may materially and provided should the the and subsequent Actual such those risks results in timing events performance. information future contained on implied on beliefs from that and to on including expectations statements, these risks. The are currently our certain we be due Form information uncertainties, of

RapidX this applicable not information to assume presented on required does update by to law. except the call, extent conference any obligation the

today our historical GAAP earnings in at in will terms and be Our and and found be non-GAAP today's commentary investors.rapidX.com. primarily website our and on results can guidance press non-GAAP reconciliations release between

in incremental or we may be additional advised to insight questions, into provide our to Please dynamics this not At one-time update business results. and future. in these response prepared we may may times or metrics remarks detail may in nature, in metrics your the be of our offer quarterly that or greater the

CEO, call turn Thomas. to Corey? that, Corey our to like With I'd over the

Corey Thomas

Sunil. call. call afternoon for Thank everyone to the quarter you, Hello on today. XXXX first this our earnings you joining Thank on us

expectations our compelling and customer $XXX pleased I the exceeded year-over-year to of in customers manage year insight and supported ARR work security new consolidation from the value. quarter, XX% most expected report operations the towards as to our represented traction the operations am platform driving growth. platform, customers security economic RapidX gravitate profitable our Revenue income as operating at we strong offerings, the comprehensive than and momentum which a Faster Threat our deliver Complete Complete started Risk over with XX% that as Cloud steady demand growth we business solutions million. ARR for for first in both together

customer of year. start levels insight earnings with complexity first the expectations in our budgets, customer line elevated including deal call. The inspection, saw we to underlying demand was in ongoing in on platform spending the Despite environment broadly or February shared strong quarter our the

cybersecurity worsening needs critical on incidents. Our solutions solve set a constraints security for and consequences threat working teams for through complex landscape, of a from talent

uncertainty. higher our first with A budget ability few an teams to to ongoing themes execute that demonstrating the are trends were I'm with in to the macroeconomic throughout resonate share demand in business pleased our consistent positive overall environment quarter. While expectations, scrutiny continue our and

preference and offerings. laser environments clear security first traditional benefiting a while from their risk consolidated focused for and of to are both security their visibility dollars. effectiveness assess gain are we There and is across and programs on teams is that the cloud and budget The customer improving crucial a need maximizing efficiency persistent

Our and security, delivered being differentiated into across and packaging this best-in-class automated cloud models. and response, management, solutions lean dynamic new pricing while capabilities offering by through detection vulnerability

seeing capabilities, on of many scope as a consolidating a wallet share critical in As given we unique unique market. to These able look a to other less customers platform with dynamics competition result consolidate offerings, our single which the capture highlight vendors. times are approach, this position we of security in operations cases at our for aren't competitive rate

our towards quarter. Threat Complete and Cloud overall and in on average two the which in sales As up our are vendor times more customers benefit deals, our team gravitate offerings, consolidation we clear seeing new first the than ASPs ASPs ramps the Complete for Risk

of these first were around competed efforts quarter, in enablement sold one sellers marketing and of the offerings. consolidation at offerings one-third over our far least so Our have largely our

customers, of growing agentless vulnerability differentiators to that detection ability platform cloud cloud core including is their capabilities onto a solutions. differentiated to posture environments protection, offering theme been visibility cloud usability automated the security with have as cohesive features for value response, cloud in first Another Insight with continued cloud resonating RapidX. set increasingly real-time The and provided long workload bring into traction quarter particularly was remediation. management, the with a customers and assessment, these our breadth time

we into in a automated action. that can enterprises for show niche solutions evolved accessible, an security and increase efficient, market the years solve challenges mainstream in has their cloud Cloud over demand few the where last one see today from complex

cloud broader focused Our approach market more to the base. ease accessible consolidated to of and a platform security a through making on customer use is accessibility

visibility to Risk the with visibility and pricing cloud compelling traditional provides environments Complete which value addition, technology driving environments. depth risk a sizes. for and proposition cloud of hybrid structure alongside top organizations of This vulnerability In breadth package grade comprehensive our enterprise combined the management, is Cloud all strong our packages across rank

we're Risk standalone the six bringing with and customers a to figure a Complete manage of value A great VM deal technology their searching ARR unhappy for a with was solution. Cloud placement vulnerability through customer mid-cap is provider recent The company. example

efficient Our stood able to as differentiators, with product sellers data were combined Complete to to application as of robust customers Cloud new bring more security conversation part solutions well this automated teams as with a Risk more premise alerts unified cloud actionable RapidX's were together our cloud Ultimately, expand contract. win security security on by and as into cloud a combining event-driven and the features data remediation. unite competitive single three data and real-time deal sellers harvesting to out the for vulnerability with our able security to ability platform cost package offering. silo include

that way the reports ARR of to expanding due as regional as is a customers automated the the complexity managed data for manual unified identify legacy work. way They in by of quality SIEM well with use six-figure deal example our company. quarter one and proposition alerts. healthcare to behavior The reduced customer defined of needed user MSSP solution solutions is and value the first Another a a struggling to a

SOC amplified response automation with of and based by our us deal security best-in-class offering win expertise analysts. detection to underlying InsightConnect the allowed on the combined managed technology, Our strong

companies advisory, from part you million helping to customers, We're across as company Officer LogMeIn customer for excited thrilled organization D'Angelo firms, $X.X is to may to support Officer. and from have on our having created end to welcome all a our customer cycle. their sales our private onboarding, that will cohesive $XXX focus of support. software customers team extensive various served oversees Chief our Customer as remember for and of role life commitment As billion background I'm he in the a teams to customer that success Chief and eight scale growth to Larry over years, and believe end some our the throughout Larry's to Sales revenue. This equity of newly Larry continued and that RapidX organization and at benefit

the in out in growth tighter environment are as we wave the demand growth solutions. consolidation center and operation by underlying customer of programs. to cloud to the position targets on platform, look security We're long-term we're vision bring the on unique strategic track our our profitability native year, for insight and encouraged our of XXXX we meet for execute for a and As for customer driven our budgetary our operations execute well-positioned to to remainder over RapidX we the security believe ability

of our our deliberate us expanding focused we innovation, support to better while market on opportunity strategy delivering refine we a large As and security and on efficiency the profitability invest focus outcomes in front of go-to-market the maintaining business. are

thank over on today. our Tim turn Tim? and will call our to financial that, on I outlook. call now detail joining for With to us Adams, you CFO, results the share additional the

Tim Adams

you, us. and Thank for on good you joining Thank to Corey, today's afternoon call. everyone

to results, financial today results discuss otherwise are I non-GAAP unless except will Before we the revenue, all quick reminder a turn that for stated. financial measures,

our results in found non-GAAP and earnings between our reconciliations GAAP Additionally, be press can release.

growth with of RapidX year-over-year, ARR, and in our of ended with quarter XX% $XXX first the consistent representing million expectations. XXXX

ability Threat our resonating part management, We and detection driven of drive navigate The Complete the and foundational to see which evolving anchor cloud with are vulnerability breadth offerings environment. continue to budgetary Cloud by security represent customers in our offerings. along our our an with large and value they platform, with our Complete of year-over-year growth of consolidation response, offerings and as Risk complete continue to effectiveness insight capabilities

with new over grew We and year both existing the growth prior ARR from that $XX,XXX. customers, to see ARR per coming customer X%

customer to base year-over-year XX,XXX over customers. While global our X% grew

was see As type expanding XX% customers in and or offering. landing our of first here new Cloud healthy each either seeing our Corey customer. the for with new complete a traction quarter new ARR Risk ARR contributions customers Complete Complete earlier, We Threat of by deals, with from mentioned both over with driven current

the guidance prior First grew year. of range. revenue XX% Over year revenue, grew XX% recurring, while grew product XX% quarter North year-over-year and revenue quarter to International high $XXX million. prior million represented revenue over over our revenue America of year the XX% over prior end exceeded was grew total and the the in XX% the XX% of $XXX and of

the XXs in quarter, margin XX% the margin for gross within is and Turning to low XXs measures was gross Both gross Product and our gross margin. mid of overall margin operating XX%. expectations, and range overall our first stated for product for profitability which was were quarter.

of end R&D Sales of and X% year. of in expenses prior guided revenue We the the to period. marketing last expenses income our the represented and G&A and delivered XX% were revenue, compared $XX strong XX% XX% respectively operating XX% above first quarter X% high to million compared of range. of and in first quarter

was EBITDA adjusted quarter $X.XX. in Our the income diluted per net was share and $XX million

balance Moving and the to ahead $X cash was We our and sheet investments flow breakeven. of from flow flow $XXX first quarter below Cash statement. of equivalents and operations ended was just expectations and million. cash free our million cash, cash with

outlook. This our brings us to

that to the consolidated of believe year performance behavior. will buying to We for drivers including momentum the on offerings, impact executional of as environment related improvement, well continue our largest growth broader be macroeconomic continued customer ARR this the as

across ARR are We a representing to million of year track to plan year-over-year are XXXX growth quarter XX% full $XXX noisy our reiterating all million we our of environment. that Therefore, results metrics pleased $XXX despite to first XX%. guidance the

$XXX guidance for services revenue. first high million in to from our revenue professional the range full of contribution total growth raising to represents XX% to growth $XXX This outperformance the single million, year with XX% digit are quarter. reflecting We

quarter was of margin million we On XXX also $XX reflects guidance for portion of represents unrelated timing the The least spend. to increase which points. operating profitability, the that million the of $XX of first full raising operating at are to year, income basis our expansion outperformance

year, flow, reflects We on outstanding. $X.XX XXX points expect of free and margin approximately per income full to flow double weighted is to shares net which in expansion. And free year cash continue over $XX we million XXXX level an full diluted $X.XX the the our approximately for average range expect of for estimated based share million cash XX.X basis

Moving to the our outlook of for second XXXX. quarter

in revenue of million $XXX million. the to total expect We $XXX range

shares of million non-GAAP expect diluted of to to income $X.XX We million income operating on average share range outstanding. net quarter is the based XX.X non-GAAP which the $X.XX, in $X second and per million weighted for $X

Thank for us call to open you And that we will join today. time for with questions. the taking the on Operator? line

Operator

Instructions] [Operator

Thank you.

Markets. first from Our from question go ahead. Hedberg RBC comes Matt Capital Please

is line open. Your

Matthew Hedberg

wondering efficacy Corey, it customers the to security think clearly guess, I Keep maybe one here. question. of to there ROI perspective of is my when offerings. the bundled to big those that on narrative taking consolidate. select customer's for if they But Obviously, great be talk offerings from success a you the talk part. to when if part really a for I Thanks wonder Great. benefit one here. see. a I to I'm there's element could the you complete It seems could

Corey Thomas

Yeah.

You're right, Matt.

one, have you do things. that that consolidation little past uncertainty. to slower customers still more a the think growing are They're just bit I interested because I a two in remind they There's with budgets there's in rate more. are growing. at they were more

necessary, environment want of their improvements it's to also more, out they But want just are we productivity a their they've remember, is are figure separate that a productivity. And their tighter figure say their out would so and how importantly budgets and the to that to budgetary also actually effectiveness is the the that team. talk not they really Because just going they team's security teams what teams' by and out about, customers I figure are to, it's boost do in forward. large committed one, trying how that two they critical, things, continue

Threat the a value to problem that really solve threats levels The both Complete complete it's managing all productivity Complete of platform. that how SOC providing on to tax spend the productivity. we to the effective But the proposition on to of that around across collect but analytics or managing make of we're really driving that detect of the risk, respond, that and our Threat primary automation high then is the the a the doing is focused benefits side how way actually benefit the stack And and either then Risk at you one do hundred common Cloud the Complete the actually data And percent is and that is high leverage efficiency. around people cost of environment that levels the efficacy solution response that also do with sure and and of is robust. and

Cloud best-in-class but they looking risk across people actually to And a VM, their integration the manage that the Risk really Complete, on holistically. way to of cloud increasingly want and at both the cloud are in it's also find the the migrating traditional to environment

how more with their that a staff, it's a So and outta gives them by consulting do also their get again, the productivity investing by talent boost they about but they in platform, get us. boost direct scale economic

Matthew Hedberg

Corey. Thanks

Corey Thomas

Thank you very much.

Operator

Kalia comes next from Please Barclays. go Our question Saket from ahead.

Your line is open.

Saket Kalia

Okay. guys. around at comment make if just is earlier process. this headlines to Corey, year question I all wonder this for Hey, was taking question the publicly. asked that Thanks public here. my on a just Great. sale you just sure

comment ongoing last of Of that's course, difficulty]. is that asked quarter. part whether maybe same the still question that process a as I [technical also on But

Corey Thomas

last towards were front it's on little have end, were comment. That difficulty. end, I that asking about don't really had We that in you just addressed We opportunity say call. And still exciting the it, up the technical bit difficulty, a apologies. you you we of rumors -- same believe I comment I'll pretty little a a up I but on broke said, the us. believe the towards broke rumors. the little technical you but believe Saket, Saket, I

focused our deliver is the shareholders. and we're results to drive for customers, this on deliver a results people that's actually understand our but us great going I about that performance think that our think in return momentum lens, talk business, have for we would to and in continuing We we demonstrated why so quarter, by squarely

Saket Kalia

Fair you. enough. it. Thank Got

Corey Thomas

you. Thank

Operator

from Our from next Piper Owens Sandler. Please go question comes Rob ahead.

open. is line Your

Rob Owens

year, ARR, Good taking half. acceleration for been focus Yeah. the some year. does back the a afternoon. guidance ARR last in given obviously Thanks holding for Wanted little for think my And new bit require to question. net under it's your in around pressure the and I

pipeline appreciated. productivity? be that to function a a at that of point? some of color Thanks. is this function Just sales sets where So, Is up the

Operator

are difficulties. and Ladies we line. on gentlemen, Please the stay experiencing technical

Corey Thomas

a I'm you can we been have sorry, difficulties. okay? might technical couple I -- me Rob, hear

Rob Owens

you I me? you. hear Can hear Corey. can

Corey Thomas

Yes.

Tim Adams

Yeah. now. We can

Corey Thomas

We can now.

for gave? Apologies I Sorry. Did that the answer hear you that.

Rob Owens

after questions, It I went I I did think you. not. stumped completely my so dark don't

and go maybe into net -- So, put Sales for just ahead the productivity, us. start from beginning. new ARR, context

Corey Thomas

Yeah. Thanks for that, Rob.

execution that's trend based And on two say of is we're look, expected so well -- to the really is things, look, going Salesforce I was which and we of the present transformation, exactly just to. I one was we're underway. outlook schedule think, ahead -- would common as our

The consolidation bills which were looking build the continue critical areas actually we the and space. pipeline are for, that we ahead platform second could the schedule is, pipe thing in of we

third them conversion the again, quite conversion rates those is in The to areas the thing And expected rates are strong for areas. where those are we be.

So, we also today Salesforce the rates up deep, to half but for trends of set the broad not year the it's adoption we're just continuing continuing. sit really those on pipeline as and predicated strong, second the being the build, with here well conversion and be

trends in So, not shift trends, our of a into just really continuation core a that's those model. based it's the

Rob Owens

Thank you.

Corey Thomas

very much. Thank you

Operator

go Kothari question Robert Shrenik Please Baird. comes next from ahead. from Our

Your line is open.

Tim Adams

go Hey, cannot ahead. Shrenik, We you. hear

Operator

Sorry, your line is open.

Shrenik Kothari

guys hear me now? you Sorry. Can

Corey Thomas

Yes, can we you now. hear

Shrenik Kothari

Great. Yeah. a Great. Thanks lot.

ASP. kind is have DR of that well. hearing and And Can So, you mean, very seeing which that guys the quickly -- vendor in as rivals highlighted kind and also you been security, something and from on cloud peers And your I we for consolidation? this gravitation this driving you're towards adoption highlighted of benefit guys. on guys it's you the inside traction multi-product you

seeing I on the know comment out comment lot of right you're So, noise there, now? rates but there's quickly some environment, competitive the win can would appreciate a just that there. and you

Corey Thomas

if few spray Yeah. that operations. operations mean, There's we're -- actually think well and about I cover look, folks of think span I security you security positioned space. consolidation this

look protection. of cloud security You aspects us, at CSPM, cloud cloud a at security, -- multiple workload we're We're vulnerability management, VM.

a quite for impressive response SIEM security platform forms have also core security along that We operations the managed detection automation. with technology our of

I else look really you than in think set can security of actually to I across drive consolidation better operations, up if anyone space. that So, we're think

direct So we don't lots competition. of have

do and you security to do from the automation risk When and from across how how perspective. endpoint perspective and management you security orchestration think visibility you both across detect and about end-to-end manage analytics risk cloud a environments environment operations, the attacks on-prem respond a

so offerings. because that at is actually when about with really Because focus actually And our long-term our accelerating learned the And shift the best it momentum what consolidation cost, that that and really make for actually rates that has, the efficacy extraordinarily security your do frankly win they're how our we high. think in primary the team. Salesforce Salesforce operations is the sales what differentiates lowest not possible and to has you challenged to it's again, actually And space. our dynamic

the that's security space, What in what see we point seeing we're space. operations. so consolidation And of space in solution competition the is the not primarily

Tim Adams

new be the QX, successful our Corey, packages sale. of with know of it's add, over new we're our consolidation from more I still sellers getting and we that the offerings. and But early just engage in more and ARR seeing came XX%

we saw what from up QX. that's in So

said, was data to gain second intended this points of full two it's towards as the but always the are looking really momentum positive, that you half So, year. very

Corey Thomas

Thank for the question. you

Shrenik Kothari

Thanks Corey.

Operator

Please from comes Capital Michael next from ahead. Turits question Markets. Our go KeyBanc

open. is line Your

Eric Heath

like progressing make macro wanted is Corey, I kind it on for guys. go-to-market execution like then just is quarter, the you got no of level, high understand of than Eric bit worse curious, And the just but better in in a Michael. Hey, Heath days it expected. just This sounds maybe ago. more XX on to factoring were kind than you sounds already sure

to that right? in more that if kind confidence the one, And kind that, guide So, secondarily year. just then, you for of that's of gives ARR if curious some

Corey Thomas

Yeah.

a -- largely would in descriptor. this say I that's we the bit we think in materialized and I expected. would what say of the pressure line factored little pressure right I year with

about And I so in stage. that's we line our at why good expectations which this frankly the market say feel with expectations,

of the that your year we And about the the Salesforce, then, the participation converting pipe forward. Salesforce early the Salesforce. gives confidence that us the breathe And fact the the questions as live to of actually broader cycle, that pipeline the But on team relatively predictability it the the two give we also Salesforce, better fresh while and as look it's and is on confidence. confidence retention actually we actually and gives have visibility are, actually to out the because people things still look, pipe's one, go breadth building and us the in also both more

because So, confidence. executed the boosts I this so would plan say that year far incrementally yes our we've against

when study off, You you but gone plan have made plan. that as a plan start plan. that a you're It's forward. And high we you confidence to against execution executing against see want we've that

Eric Heath

Thanks Corey. Great.

Corey Thomas

you. Thank

Operator

Moskowitz Gregg go from comes question next ahead. from Mizuho. Our Please

Your is open. line

Gregg Moskowitz

an the packages Hey, taking Complete from the to great Is for more ASPs uptake fair mid-market? that Risk more thank about enterprises uplift. traction as than Cloud you're assume It's Threat of that showing Complete it for a including been seeing have and to these you Xx opposed to with hear question.

of now strong you that more not have a have sustainable? whether data, could months this secondly, uplift few Thanks. ASP you do sense of or And a be

Corey Thomas

a It's question. great Yeah.

see that we or of from bit customers in mix. do a more do around you larger offerings on, early come That We expect said, would to expect, bias the As yes. oriented the change. consolidation more the enterprise

in with are actually of building we lots conversion but there. is We excitement pipeline early an The has very perspective, expected, our the mid-size there. while line what team they're excitement about residents have our high the and rates team. From expectations healthy on mid-market that

consolidation that space. is but the case expect we extraordinarily do we in also the so, mid-market enterprise, the strong, just And span for in to and think not actually

Gregg Moskowitz

Thanks That's helpful. Yeah. Corey.

Corey Thomas

Thank you.

Operator

ahead. Morgan. Essex from question next JP comes from go Our Please Brian

is line Your open.

Brian Essex

maybe for both afternoon. Thank are embedded of year. well if half just the Maybe for taking in expectations as like in sales we Corey, the the you of question. macro second in and productivity understand for a standpoint terms setup what good guidance a dig the from can the the as Hi, the rest of your year,

front, you guess macro there your you assuming -- see the and stay I assumptions are I are last that maybe was into of year of any sales is from kind the a then to Salesforce? certain guess, a the perspective, need And what linearity maturity is -- on the the So, what's it hiring setup? from same deteriorate? Like what the look baked

Corey Thomas

a Yeah. That's great question.

So, down I sort of will like balance. break the

So, would be it would that [technical our we able productive. they retain the expect need was the be to to be. say the retain of to as difficulty] critical on Salesforce actually would biggest where assumption side, and is productivity I parts We would to building that able and we one the look, be continue Salesforce a

a the we Salesforce They've up have are offerings. The is conversion about of say good stable. year-over-year set a in experienced are a basis, you period setup. would that think sales have I competitive, we a Keep So, the actually sort mind new team. piece ramp the had offerings more well. of rates comparative When

we actually feel of about to for a good And on the there. we so relatively outlook feel basis, from a the setup Salesforce both do, year. the but work back strong comparative There's basis and extraordinarily setup, an

rate the we're pipeline is could second predicated And first of build of the is part have. of the for year still would actually actually increasing on the pipe. half at the actually we're build we that building right that half the say I what's second the doing The actually pipe, year assumption we but the the that first,

we stay think with for the And rates the pressured environment so we've the enough seen we'll conversion have quarter. half we what in things consistent expect of even recent the this to in And year. back

tees Now pressured back all expectations environment. a the to a be up for of continuous that year is to the half our

sales better. because learn more pipeline environment. bit shown to of with actually teams We're having deal expecting little higher why actually get that pressure. That's they we would say a not expect sales how to deal cycles. gives to our volatility. requirements can bit expecting It's the that why outlook We little be expecting We're changing are to has noisy and me that we are navigate. a actually I our And have cycle. economic confidence still what still team things

We our sales expect assumptions. baked of cycles, all longer into that's but

And so, I today trends for QX would we're forward we QX QX. and our we're and QX as say seeing forward to what are continue set in up saw continue for and what

Tim Adams

really to because that really that worth and budget point board underscoring this and how our the know customers to it's We Corey, are they're -- I they understanding sellers adapting across sell across better environment. appreciate there's scrutiny think in environment.

Corey Thomas

Absolutely. the Thank you for question.

Brian Essex

Super helpful color. Thank you.

Corey Thomas

Thanks.

Operator

Please go Our next from ahead. question comes from Stifel. Reback Brad

open. Your line is

Brad Reback

about international year? what you of where rest the bit very talk you retention the they this were a a Thanks. headwind. for last expectations Corey, Maybe of rates the quarter being are can talked much. Thanks and to Great. quarter

Corey Thomas

international Tim, slightly expectations team say with I even but is lines from expected. better in is the Yeah. I'll tag team I that are that what our general, performing in than what would

for so, our about year And good the as the we feel international far pretty going forward as teams outlook go.

Tim Adams

Yeah. investment modestly that is retention it see No, Overall that's improved, me Corey, let that is Look, right. to the starting internationally. We're Internationally, paying QX. off. made in retention is we've signs say of into very it in and of that's put to important. something expectations lot it. attention line pay effort continues stable a to But We America. be North with lot and in a our

Corey Thomas

Thanks for the question.

Brad Reback

very much. Thanks

Operator

Morgan ahead. Please from Stanley. Saltzman Our go Matt next question from comes

open. is line Your

Matt Saltzman

team. taking afternoon. Thanks Hey, question. Good for the

on QX. that metric billings how ARRs, notice top line key bit But through all in than lighter here. to a thinking that little can So, about fully in the appreciate the model, we want but help the focus flows expected that were just

was the achieve what guide? curious to of driver the up make over year of that the still Thanks. to drive updated I'm of was? the course revenue -- kind So, what the And you that expect where

Tim Adams

question. Look, a the ARR retention, is lot Yeah. to expand, number, with get that of core share the things embeds everyone, No, we the I is metric appreciate different Hey, Matt. in to cetera. that et new, which the

when can do of I be of rate that to you in at months longer we're at of it's take I maybe worth terms to link more a better line on think to would a indicative that, if ARR. that, There going look with billing. look and And way the have view in a term timing is at to you're but is careful be seeing it view I ARR. those you'll billings think but in the more looking number. the see a last do that little XX you rate think that growth you to do that's anomalies. encourage We customers, that of quarterly lot probably certain not I growth with billings some do There's

Corey Thomas

the Thanks for question.

Operator

next comes from question Raymond Tindle Adam Our Please ahead. James. go from

open. is Your line

Adam Tindle

afternoon. hand, as the Okay. theme. RapidX viewed Thanks. RSA, a Coming asset cloud And within of a hidden big Hey, on Corey. model. Good one of was off security kind certainly

more in coming RapidX. suggesting there was this half that'll share some that of companies after security management they're On cloud go the traditional and very and taking the with private with like the vulnerability hybrid of other runtime out some capability hand, year healthy in back players funding

that with So potentially of you're about I and truth the in floor, half competing some of those fears threat how this Thanks. the give and just behind year. defending the wanted Wiz back thinking you to

Corey Thomas

will when the be all, that It'll way risk at first they to customers actually dominate say, is as actually it their the cloud, I want you for market couple And in think us environment. that we look great. long help there endpoint tail it'll player any that complete of there's think find about a across should across think I and we different one, I management. space. reasons So, an on-prem And on other incredibly vulnerability have will customers

not grade and time customers you look would've a the some all think able it all been what data, the long management, looking windows the collect ago. do at enterprise across but to when this engineering You can content, assess XX-month you disrupted to are look was a That's easy be about pieces, that If effort. of market vulnerability have that. for

been investing under it. security. We've and marketing of importantly cloud the maturity Most is the we've underselling in been

actually up these our have ramping and we've So from that. focus cloud. marketing a now perspective, capability quite of a on compelling we a been And in head-to-head sales in

that, about that us faster holistically, Now, that at combine the that is it'll a basis. I it benefits about it's on-prem, it it's comparison all hybrid, that your endpoint, the when risk be whether a whether think market the thinks technology And about for And to together, at or in execute whether market, we anyone strategy. the easier from whether should cloud. RapidX manage it's it's model, the you the that be the head-to-head actually way that have to you we actually will think think

to be And So, we're certainly that understand we customers it risk an in they welcome competitor perspective, those in these in the from end-to-end investing us us. management should think about market think customers the should going investing that benefits helping platforms. be any frame holistically that helping way end-to-end because

Adam Tindle

Thank Great point. you.

Corey Thomas

Thanks.

Operator

Fishbein from Please ahead. from Truist. comes Joel question go next Our

open. is line Your

Joel Fishbein

Thanks my question. for for Corey, taking one you.

I whether wasn't integrated but fully acquisition, be overall know big, it. -- a and very I know it ago. it'll while how little be but going forward? the Thanks. that was sold the Just, forward. to into love understand fits know Appreciate going how you whether theme it a it'll you I'd did small Minerva, What

Corey Thomas

unlock strategy. us Threat to deal enables and It's Great tech question. Complete a team it really our and

you're help from the to lots customers demand detect, manage the aware them to we actually cloud, remediate As is respond, and the ability for threats. of have that endpoint to

customers a to is had protection they wide endpoint could us that and and Now, technologies those, to we'll of our ones with or those with for approach. range happy The antivirus. or We actually cooperation or asked one that integrate endpoint advanced integrate focused partnership that like technologies. the with things we're had of of sort continue afford a

endpoints. processes, actually efficient for able need orchestrate those. way AV, contain simple of has that detection detection technology their them relied do spending sure to protection highly when SOAR shouldn't have actually make automation on have to our to mentality are That And the end-to-end cost effective those provide across stop But frankly, respond are lots and us response actually to capability, for to same a advanced actually we had customers to detection response. in-memory same those our allows the on truly the to allows customers that to response capability. detect us environment actually the effective actually and they customers their us helping what the between The empowered and stop make resources, money those end-to-end and our trade-off threats, Minerva and to that same allows That isolate actually just stop, is users. way we us

meeting where that is providing are, detection a response platform. capabilities and asking to they're robust our the again, the endpoint So deliver to focus for they cloud customers

Joel Fishbein

Thank Great. you.

Corey Thomas

Thank you.

Operator

Gray from Our comes Powell ahead. go next question from Please BTIG.

open. is line Your

Gray Powell

taking Thanks for the Great. question.

was complete XX% to ARR. mix the So, yeah, increase the to new net good it of see in

can last the that quarter. is maybe that security that more be Just drove side, I improvements? or what products? more you the was think And that number then, XX% was curious on just Threat cloud -- Complete

Corey Thomas

traction we both healthy both. sides got for the the on there of has build pipeline equation been No, and

actually do continue recall, both. don't here we across the We we'll on reporting but those item so, both on I can't portfolios. And gotten we -- line it, focus of have don't traction to

Tim Adams

significantly and you're QX, Yeah. Gray, ARR of QX. so new right, up was XX% in in it it's

Gray Powell

very you much. All Got Thank right. it.

Corey Thomas

Thank you.

Operator

Jonathan from comes question Blair. ahead. next William Please go from Our Ho

is open. line Your

Garrett Burkam

Ho. question. my Hi. is Jonathan this taking for Thanks Garrett for And Burkam

improvement? transition well for So, bit? where a is of progressing the little can expand sales Thanks. you your is what just Maybe there's that schedule, there of mentioned specifically expectations, ahead on still and so maybe room you ahead

Corey Thomas

there's this improvement Yeah. the to room as we Well, I think in for have plan. hit

you're of but ahead the because we're plan, still ahead scheduling to manage the have So, of you plan. schedule,

-- the that there's we've a the actually We've doing And the sales plan check? couple no sales emphasized. in done One a the is very that specifically, next with could of like team what's you big on expect sort do elements what's actually retaining and good transition it the actually retain is, the where and ahead confidence. transition job and then team and so gap big And be. we steps to of the there's that's

his we're part few broad nicely reps selection that to matters, larger a not just actually base you a second section you follow XX%, deals. and of get starting actually success this across could This of thirdly, larger but highlighted a broader pipeline is And reps, seeing a think it. and few over of broader is actually to then the not people. sort across cross a is remarks I landing Tim that's from continually is is why And is The moving Salesforce. just build because in ramp the pipeline to XX% XX% of people, need billed, but increase across

QX And saw that that be we continue ahead actually where wanted see in and progress to so, progress QX. we in that to we need was of to

or so metrics. are the the And that have they converting what Now, outlook we've for setup rates plan, pipe the continues, the it's they that far pipe Salesforce and those expected conversion versus across elements the better Are those motivated? in our all deals? building presumes of is they pipeline, progress areas? are are the both than right they we QX are seen. and Are because they that's of at that that we that closing in But the there,

for you Thank the question.

Garrett Burkam

thanks. Got it. Thank you. Yep,

Operator

go Tilton next Research. ahead. Wolfe from comes Joshua Our Please from question

Your line is open.

Joshua Tilton

XQ. taking to to that on new I for have kind a question. you but your want guys guidance. I come of my Hey, back triple imply been kind It guys. does to by the of net it, ARR lot know Thanks there's just

to go to you what these achieve does complete from So a offerings? ramping, And of like the end consolidated in you the because assuming and pretty does meaningful new need business. feel rest bundles to to these it in of going the by the improvement addition all just come that, that see this percentage plan net ARR year I'm only of see sort of asking is

that one, you for right at So rest I the for net the other will and of two, the of the driving looking how can this ARR, XX% just that new maybe unpack trend what's us year? am And way?

Corey Thomas

Yeah.

of what the our of other drivers consolidation compete part you traditional primary that the business have would is factors be. AR detection the It it. around one, the is doesn't it expect So to response

actually it's management efficient. So what think it's cloud. standalone category, there that. I you less The say and have it's SIEM is, And about really standalone vulnerability would

can dynamics see clearly that packages. from the ASP You the than

out the So, you get efficiency packages. build as you actually

the not elements, things be no don't it expect percent in do a one to that a It's base not cross-sell. clarify execute sales remotely platform still have the you, that successful are we to to MDR, in of it's close consolidations. to model. have hundred ensuring we it. on in in to security, We our and we our are still SIEM, couple landing, assume But way for traditional vulnerability We in meet closing management, actually cloud do those upsell

add on, threat have add to we have we [indiscernible]. intelligence to So

things those are of the business. of part All

year is this relates not So the actually to how one, would the in the like what's to It's just comparative setup. sort last it's way just of about of it also think year, the I the the backdrop basis I backdrop that year. think would about just

challenge actually in mature we the mind, the with but sales of had like a we stronger product comparables process year-over-year we last year, at of -- and stronger with sort team in have talked much actually those more Keep about that's a end portfolio. actually

more one, it's actually than you So, much about setup, think just the setup headline. if the a favorable

you that analysis think would actually indicate. I gave

-- be to thing cross-sell those and the with performance is be the cloud aspects most on where is are on we're market VM -- clearly that of in close But even have going on the is other It's and We're still better. our actually importantly, half the we getting though upsell. executing we execute and executing towards the we execute to business. the be, in back business. of packages. business. for then line the but it year, we we're second to The have I still that expected have actually we actually to still we a But building think will on we're the XX%, need the going there. We Cloud We of is to robust above to trending other have pipe that aspects pipe.

in of on executed be material business, a install expansion is part base, again, the still the which So the that. we'll

the business the set we've that setup, So, against upsell the of the if of we're that for already half and second run think up the and the you the executing cross-sell, the parts QX. against, setup, and packages, take I then well year executing been quite total rate

that analysis you the actually with numeric gave a agree I from So perspective.

Tim Adams

macroeconomic security It's environment $XX our opportunity. tightened, are from customers is I We just being of and strategic all our for would Corey, challenges prospects. so know pipeline, market know billion, is Yes, we We there. demand but underscore. start, see more the breadth conversion but there We're huge. over products, We critically still have budgets the toward Yeah. we it's said off some to the And comes the just and the second rates, which of now execution, and heavily good the year. the have down mature have the we of have do. oriented work it to to we packages. will see we sellers, the we half a be

Corey Thomas

you question. Absolutely. for the Thank

Operator

ahead. go Alex Henderson and comes from Company. from next Needham Our question Please

open. Your is line

Alex Henderson

success it's the it it going through XX% coming XQ, up trajectory Actually, question that I ARR question well. follow a a for XQ to XQ? I new was what the quarter go as you good XX% what XX% would If asked. hit from was these next period, And and portion XX% ARR thought model should in out that like good But the hoping packages. from sense XX%, as to look into or pretty some your give Great. new and could was we to is XX%, of be just us of

Corey Thomas

Yeah.

And directionally in mind stage. not to number a say this question. to it's not at is we keep going and would what packages. expand. it most I at this We're a specific it's just But up. expect time importantly, provide good continue the So, to would It's

also doing We to to upselling. and cross-selling continue expect be

And by there. going to of But think now. of directly too it's per right continue expand, premature that say a we we you are be involved to so different would expect it quarter provide when ARR expansion, it's number what to elements to there's and about I our absolutely quarter number like specific but a

Alex Henderson

the going to with us one, any if with answer you late the sense debacle, hesitation? whether of in was associated of Well, not the Yeah. one. could impacting I any financial another ask -- give your disruption that CFO Can March customers Or your maybe any you're behavior there linearity?

Corey Thomas

a you there. Yes. I'll very quick response give

a say So like that to I of definitely happened a say people some future, saw like, and like breath was and this and a was close does a only So from bit would It is is But hey, perspective and does to it's one, mean? of like Does breath. actually perspectives, what got overall. both our moment, a our they I actually breath there. crisis? and team a took sales sort -- this so But strong some to say there customers lots a quarter we that would this just like we think little like, world, I customer of the fairly impact a the back whole had business moment what -- banking to actually actually the mean? an was down say what what slow indicator

right. Thank All you and going. let's for questions the keep

Operator

Our from Genuity. next Please Walkley go ahead. comes Canaccord question from Mike

open. is line Your

Unidentified Analyst

productivity you to selling what had they're two wanted Hey, guys complete progress? trending, guys. reps the or on your they afternoon. of of Yeah, expecting, ahead from It's in previously for with see this I how you line guess taking detail are especially the on Good just Daniel now of provide some can -- sales are Is been question. Mike. sort bundles. I the Thanks if as

Corey Thomas

overall and line the would ahead. the And of we're about the productivity the where on that would have in frankly, the are the we earlier expecting where actually was seeing the that's slightly expecting. addition ahead. about seeing based That's larger be to to goes say bit we're a in deal were But assumed actually packages the we're Again, cycles deals longer I And is ramp little to new with and expectations talked which say build. to a we're expectation. what I shift and bundles, sales questions of that there environment. It's just progress line mix And going we we and delivering in our training, we're some do against. earlier, which the pipeline

I'll we it exactly So, be. expect productivity is to say what

And confidence so the actually the we half close gives rates tech as at us we building back year. in we productivity look are forward, of that actually pipe the the that expect

Operator

Please Seyrafi last question FBN from will Shebly Our come ahead. Securities. from go

is open. line Your

Shebly Seyrafi

much. very you Thank Yes.

XX% XX-K What expect marketing S&M in growth your XXXX? your sales that do kind of employee you in headcount showed in XXXX. by headcount grew So,

Corey Thomas

Yeah.

of I sort think Tim conveyed like earlier.

looking there. I for think growth we're modest pretty

I think expect productivity more we increases.

more the the people actually the get was the have having them benefit get of place. tenured, the We to ramping. enablement, good to and training, It in allowing

would I expect there. focus on And So the and modest productivity. a really I think it's trending well we're

Tim Adams

know, all flow, you got as we've We just way very year ago, headcount we're certainly curve over the guidance from are expenses, the to that and that. Shebly, along profitability front Yeah. we the our a of with invest watch business. doubled carefully very in free the hiring in a we and to something year-over-year going committed cash it's and of

Corey Thomas

question. the for you Thank Absolutely.

Shebly Seyrafi

Thanks.

Operator

further closing no call Corey I turn like over to have questions. for to remarks. We would the back Thomas

Corey Thomas

week. I us good and with rest the have evening. time all you the spending of for hope a all you day thank this Well, And great

Operator

conference you today's Thank participation. concludes call. your This for

Rapid7 (RPD) 9 May 232023 Q1 Earnings call transcript