RPD - Earnings call 3 2023

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Operator

Good afternoon. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rapid7 Third Quarter 2023 Earnings Conference Call. [Operator Instructions]

Thank you. Investor may of your Director Chwalk, Relations, begin you conference. Elizabeth

Elizabeth Chwalk

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

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

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

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

on number should in the such expressed SEC. X, statements results on or report we with reports and based information and from implied subsequent Form of including provided results risks and in forward-looking that these in to uncertainties, those XX-Q filed recent contained of XXXX, current us. light outcomes and future this beliefs on our be in August information most due expectations on risks. These are our on call and quarterly Actual filed considered available conference The the materially a to currently may the statements differ

future timing this call, required as such the performance. differ materially and of may be an the results statements, of or considered by except and update forward-looking the not the obligation by assume implied results conference should on to any timing not presented law. indication or events to predicted RapidX applicable results does reported from Actual information extent

will not provide in on in terms we and GAAP found times this greater we that our press in today reconciliations release today's be and questions, commentary onetime and dynamics incremental remarks between website the historical your earnings results in insight non-GAAP primarily metrics our the at investors.rapidX.com. can or be and may Our nature, responses may to our additional prepared of our our may metrics in At these to non-GAAP business results. future. into offer in Please update be detail quarterly or or may advised be

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

Corey Thomas

you and quarter ended call. $XXX or delivering and for in Good operating revenue income third thank over ARR XX% XXXX on million third the joining our our quarter RapidX earnings us prior guided afternoon, ranges. everyone, today the with while above year

demand Insight During quarter, operations see the to our security we across solutions strong for platform. third integrated continued

Our customers, mainstream consolidated our enterprise value with proposition offerings. with is particularly resonating

was quarter integrated threat the or risk across capabilities either new supporting best-of-breed from or risk strategic XX% of and deal, modern our threat with around stock third complete Over the ARR detection. extended management in cloud validating a focus

increased platform larger our steadily sell together, As have ASPs year. deal all we more of getting see sizes as we

remained technology are securing and for environment of that as for programs quarter the often cybersecurity proactively automation the was in cloud with saw detection stable integrated expectations integrated third choosing to into manner, from with worsening we InsightOps challenge Overall, a and response environment consistently and incidents partners. There persistent hear October. and customers. a well IT offerings consequences set as Amid in cloud-native the during upgrade an of with conversations line efficient desire expertise we need a beans in to and critical our security customer spending differentiators is

sellers are have projects prioritizing areas, to approval The environment XX of management there that cloud anchors team successful these and good become during adept in detection higher extended our security and environment, security more news from levels see urgency While this last procurement spending we of the customers Consistent our around leaders navigating months, budget risk continue still offerings. with is remains the the on and cycles. around threat response, complex. is

to Our in is we're number long-term team reflected of from critical partner role as commitments SecOps a the seeing strategic growing customers.

prior in total RapidX our the year, quarter XX% long-term was as which weighted length the up average the and to technology a in speaks over value confidence Our contract have customers partner.

earnings the to results QX August. announced in we now restructuring our alongside Turning

and few Our past to are areas over complete underlying mostly we RapidX have our worked our efforts business are how the progressing organization to to changes we the has responded structure the months. proud and reinvestment. I strategic well of am cost optimize streamline team on as of our

Collectively, our full flows we as expected, generate the from to over free $XX approximately of basis we million. XXXX margin continue XXX expect benefiting to the strategic is and expand points year prior cash alignment operating to profitability, year and

continuity Regarding strong experience latter transition as our our executed intentional customers, the focus plan. we on an half overall of had third ensuring we the and quarter during customer

less pipeline. messaging heavily to with and were prospects customers spending on on focus focused customer-facing with time and scaling Our engaging relative teams existing more incremental

is customers, fueled conversion The the solid in received by that growth were driving rates well result widely quarter. that changes strong ARR overall our

we largely objectives. pipeline we strong And well we our through positioned to on year. believe we teams as fourth quarter Now focused changes, the to exit more remain improving drive achieve these that broadly momentum are are our incrementally and engaging

leadership further our to the our areas focus. accelerating technology. side well in alongside of ability into strategic reinvestment We're our Regarding our as offer expertise extended as scaling

While it's in give of business. and we're we early, the well tangible progressing examples traction still the areas, in I'll you both are positive seeing

solutions end-to-end to by our detection expand protection support our consolidation our to demand proposition the for October, we We value the response In general availability process. integrated endpoint of extended mainstream the continue innovate we managed multilayered for and to customers. continue capabilities to adding in announced stock, and see to strong

integrated next-gen focused forensics are customers solutions. onto response. our offering antivirus the and saw and legacy we endpoint meaningful effective elevating visibility gap that with incident By extended digital breadth detection a highly and our the of for We response agent, Insight are holistic capabilities, market in affordable, solutions on alongside

endpoint will these Insight security additional now customers from budget Our platform. their enable and onto dollars expanded while cost to freeing our offerings stock consolidating benefit within complexity by reduced MGR up

across platform see to continue integrated cross-selling our also We traction solutions. of

this was midsized a quarter enterprise owned extended fintech equity became risk threat additional a deal complete large is firm. offering in private after regulatory vulnerability cloud A and customer by good RapidX the management third example and constraints XXXX, visibility with customer a company requirements. of with in year, facing a this offering. in to reset security again our They the third earlier their resource managed our explore quarter This

budget our With environment to weren't after for of chose the their security customer process, threats competitive respond their throughout initial transferred that a entire and dollars across to and ability detect each part life RapidX and our DNR robust the allowing return deployed, our of on phase implement is cycle. security already to a purchase, able customer dollars. the their days Insight their quick of budget monitoring agent capabilities within With

the our course than the accelerating also SecOps figures expertise of our over to place by on resource-constrained and within to solutions We're solutions of XX strategic areas offer operations. X customer the strategic more Our ARR tripled security our alongside highlighting ability months, urgency the the services enterprises partnerships. value best-in-suite with scaling integrated managed high

helping the our quarter response ongoing I the foundation and to am competitive who leader that to announce a breaches. in with help and technology chose process third and a customers partnership detection a new for was It managed RapidX endpoint nationwide in their needed to security infrastructure offering. pleased we provider communication deal network, across their services, signed contain a and disrupt cloud server their partner security highly manage entire single while as

and detection landscape. and our other manage will solutions and threat to substantial to challenging best-in-class time, stock large threat customer help expand enterprise small, ever-evolving to base. to presence and their an the combine Over opportunity have partnership sell response better cyber platform our global partnership we'll customers This RapidX medium

security of We're integrated for overall excited security, customer. similar extended scale provider being each providing threat leading more management to partnerships solutions leverage our ability to integrated offer of and by focused and partnership context the as the in expertise we the ability future to to the our about customers. the tailored on this needs risk RapidX alongside remains stock of within expertise

range to results and disruption announcement we forward to We continue for updated goals. in degrees of guidance realignment, modest in pleased our and business. our restructuring ARR with high When third towards a established confidence are the strategic we August, alongside the quarter our our of account march

we've progress, range performance seen of within expectations. As track our make we

third Given concentration guidance we business. in strong to $XXX larger early large progress the making prudent year our and well deals full million are fourth within of quarter, results demand ARR deal pleased our customer work strategic reiterate reinvesting is with cycles by quarter the are we all, $XXX our believe of to to it All growth we of heavy as the as we million. as reaccelerate in into areas

streamlined range. company. to benefit outperform full target quarter operating the to growth profitable speaks to cost which structure, flow our new through more of able third were that income to to and We will become the in on us allow guidance our upside our year This a

next million flow this figure to million $XXX then generate double expect year at free of $XX approximately least in XXXX. We that cash and to year

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

Timothy Adams

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

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

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

in and detection integrated anchored RapidX towards the offerings response security, ARR, in threat complete. XXXX new quarter of in third ended XX% growing consolidated with third million gravitate ARR cloud management Customers our for risk over year over on of $XXX continue and prior the made demand which across in XX% solid the up our quarter. solutions to

customers customers, balanced customers as over the ended per proposition prior in quarter. growth to existing we to value with with climb longer. from $X,XXX, customer contracts and year ASPs the new get ARR over is over prior average total Our grew year. continue third quarter X% and relatively the XX,XXX see our reflecting and We saw contributions X% we resonating the

of quarter made prioritize revenue dollars up budget focus, Third year-over-year, $XXX in $XXX the the of range. million end of XX%. while and million year-over-year represented Product continue XX% our projects revenue exceeding of of represented to both guidance to ability our total XX% grew stock areas growth customers revenue, revenue to high XX% extended American International around the integrated offer North strategic around expertise. as

margin the in Moving August. on to reflect structure gross line profitability year, XX% implemented prior operating gross in that down margin the our for and represented the quarter. and expenses revenue was in in to with Operating we from XX% of was XX%, and marketing the XX%. prior changes measures Sales cost total the Product quarter, year.

and revenue were million of R&D year. of and in to XX% operating $XX third higher last a XX% Overall, in income respectively, higher-than-expected X% cost and leaner the compared X% structure and drove quarter. quarter G&A of revenue, the expenses

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

in to cash and our estate statement mention total Before expectations. impairment We restructuring and quarter turn real sheet not we non-GAAP in balance million flow certain charges affect results. want our items line do third in statement, income of from a incurred the $XX that I with quarter, the the to

XXXX We of the also expense the of $XX a induced booked repurchase the a convertible required treatment noncash as partial related our million notes. result in accounting of conversion quarter to

proceeds September, XXXX our This primarily our in favorable favorable third date notes. structure. the offset took and of to from us take The cash repurchase cash, previously from equivalents enter second notes the market liability of with equivalents our extended a a more reflects investments $XXX partially quarter conditions. We partial million. allowing and sheet into a advantage of quarter terms convertible the with portion increase proactive maturity our quarter by and new in cash to of of steps debt offering mentioned during the balance We ended the the management strengthen to was convert effort, and

of working timing third which reflects and million cash $X quarter, the was flow cash expected. collections. payments, Operating were in to restructuring capital also related the as It reflects the headwind of timing concentrated a

manage early these we'll in continue quarter, collections seen dynamics capital strong to working the already and have We fourth closely.

remainder Moving our outlook XXXX. to of for on the

over to XX% maintaining range of year. $XXX to million As million Corey approximately mentioned, we prior outlook XX% ARR growth $XXX or year are full our the

we our range maintaining As full is strategic with feel range for line confident about in our year. the expectations, tracking of realignment existing the

our product quarter, revenue million partially raising revenue some professional to coming forecast year guidance of services million, deemphasize outperformance slightly reflects growth. to services are $XXX full lower-value This year as the representing out We full by third offset $XXX XX% actively the lower for our restructuring. we in revenue

year improvement are also We to representing to operating our to full basis performance. our the This quarter over $XX prior midpoint reflect year year. full the $XX by of million third brings guidance million margin operating full income XX% points our from of raising strong income operating and XXX year $X roughly guidance million,

expected anticipated is to weighted shares diluted to $X.XX million average share per on income net XX.X based be an $X.XX outstanding. Non-GAAP

reiterating cash for full are approximately the of our guidance year. flow million free $XX We

As quarter the XX%. year of million the implied an net shares revenue outstanding. to which $XX per million for the of $X.XX to guidance based to fourth quarter be and income approximately on an $X.XX income of expected Non-GAAP we our between fourth XX.X average full million is and by $XXX represents margin $XXX anticipated operating weighted million, for $XX diluted share expect in operating range XXXX, million

and With questions. the the call that, open joining thank will you us for on now for today, Operator? call we

Operator

Hedberg the Markets. line And Matt from first question your comes Capital RBC from of

Matthew Hedberg

products prepared commentary of restructuring benefits the to and reaccelerate results or think reacceleration control it what to your that you I'm here. uncertainty? marketing growth. that about I'm important and think to the great what when wondering, Great. doing curious, going in on guys economic some demand you of of ongoing the do whatever you're you be, see of sales guess, even remarks or aspects might some Corey, I working noted and despite are most the we are

Corey Thomas

a Yes. question. It's Matt. Thanks, good

So fundamentals. right the I there's the have be one, demand right drivers. This think in that X have you markets to

think I we're there.

doing with cost If are service struggling environment. in you of their the complexity of think stock, tech what extended the we're managing about this customers in

reallocate are expertise. investment a we that that so And leaning focus. into cloud, also area delivering that to That's and we're into investment long-term area of involves continuing and

But we're focused actually that. course, of on

differentiated. we competitively We more long-term think We rotating good And our been. to a again, leg a area. over have We those up. investment of we're we're have investment think time. But it's areas

one goes market I to that Now would going be one is faster. say the can the go to point we is, on grow to that look, also actually

Our efficiently, though. right big is now growing focus

growth the And to that looking make spend for. that up actually this efficient sure for and over We actually so we are we focus can the going look have a because growth actually to forward, is have come actually right as time. we the services, have areas, growth making it that in know actually products we set And of efficient right sure the durable we we we we're right know spaces. in that is

are, I methodical, we very being So thoughtful. being say, would

to going to be it's are into services. We actually deliver partners cloud. it spending but to with going extend continuing reinvestment, the to to the work be augmented

I we the of that. just of one As that you'll provider actually did, large with talked the national and see more about deals

importantly, sales but make actually the And that our marketing of doing XXXX. an over over what that year, and focus through we'll doing make partners course more that's us both but extending But also investments course both a see ourselves. big investments it's of on engine, this you'll the but efficiently

on actually in long-term about gives but it very disciplined, very potential, then and doing think sure and of way makes adding kind that's actually focused that stay growth. how lean efficiency that we growth growth now that But a We're we actually efficient. very

Operator

from comes Raymond from the Your Adam next of James. Tindle question line

Adam Tindle

how makes How pivot to probably things Okay. guess were okay, Corey, from you and be, you new from incentives. start, to the was existing? QX customers of them mentioned do sales focus pipelines, question you some do a how sense focus And good I I you shift wanted existing the pipeline them just to sure which do how to on can move shift did the would the force focus? making you on from impacted total

I light follow-up that's an XXXX QX. wanted a in this, that, growth have that Tim, or in think, can that should that you at And if in why Wondering a growth, moving of we're XXXX. lagged exiting, as we expect if of to indicator Wondering what maybe not? forward in to on maybe Why know single-digit to growth, revenue pipeline. in about I impact deceleration how think

Corey Thomas

Yes.

So I'll tackle that.

So I'll first. it tackle

customers. -- the structure guidance, say, of as sort converting I biggest the very cost our we about would customers on sure team one, executing of focused we had actually the said, were. what The make existing sure on you deals. were the servicing So were we our was, direct take about make well, make that sure and think listen, care alignment priorities there we very We we're to as just actually priorities just discussions with factor

saw more just see strong we to were see pipeline. to and adding And very, that continue rates continue We very overall. consolidation we actually conversion

more pipe cycles. bigger actually longer as So those They have we -- sales deals. are had consolidation

comfortable what QX. with short-term less was, ask That's something effect structure. theoretically, pipe again, the cost the focus because, big near-term you we're So for our very was

Yes, benefits consolidation that focused equipped that just we're and we're well XXXX. longer build the that doing that. team Now we're some seeing now. say on continuing of sure We're is it. the strategic actually around selling we're in would pipe, things efforts. which very to term, making benefits I in X And seeing have sales our

of time, in for but the very, but sellers, sets we that call, talked the And adding part way it think that dynamic, of direct very that's not disciplined are actually in right of about our I capabilities I generation demand is last to did drive more up is pipe over and as that in our efficient. about on have focus expect we the a go-to-market -- long-term but good of lean more lots and a the that other now. we the that we actually overall engine. And efficiency, But add is,

Timothy Adams

And Yes. Adam, then, Tim. it's

year. The our we regarding for next XXXX, your of the budgeting right question of in second process part are middle

make what we're strong So it to said, focused I'll cash growth for year. would Corey efficient for very on and reemphasize us be But premature next growth comments any flow. free about generating

guys So million we've $XXX you flow cash with shared that last roughly of year. anticipate free quarter we next

structure. And we of still sets very we we've August next realignment that actions with back I But hard do we that well the that some look, had take that up very the us think number. restructuring cost feel And and to company. good about the had rationalized in year the for

So on call. more efficient QX year very to the next and growth, focused have on say we'll about

Operator

Your the Saltzman next comes Morgan question Matt Stanley. from from line of

Matthew Saltzman

Great.

it's So last specifically qualitatively don't curious and trended speak trends just the mid-single-digit the this range I in gross on I'm retention just you logo kind can the looking gross quarters or But over total months. for months guys you guide disclose last maybe X customer XX several to now. of appreciate if growth, at retention. logo about

Corey Thomas

Yes. we it. at will don't I a as mean, I level, disclose you high talk say,

is to in pressure to year, we And area we in seeing the we've expected just would exiting some that last that year, have talked I that year see. Europe. actually this say seen I improvement last think were what

if direction feel at it's we overall. this say positively, year, It's good we good retention the going and just we and to look last about setup forward. our compared about on year So feel the that trending balance, you feel

business. we part it really first. the customers you're trends a the the a think value, sort lot we about in sure efficient about allotment is make customer of in to growth, that as fact, in for feel care good taking of seeing we're And for in focused of that big us. your That's And the does

Operator

question comes Citi. the Boolani line from Your next Fatima of from

Fatima Boolani

very about, happy logo on and wanted was pipe be keeping I into there front. building Corey, commentary our that share of talked customers to sounds it very intentional like generation there. the wallet pipeline the some some existing growing the new and on pivots you clear incremental focus are new demand to But revisit very, going the

correctly. I just I And or sure understood picked on to wanted make information up that

momentum to And going the are reaccelerate some really, you're that initiatives? putting be customer place to in what able of some maybe new acquisition those new and and that things to so of be logo

Corey Thomas

And a are of back. way, doing really question. X that job Great key welcome the there's great strategic is overall actually -- on Look, think dynamics there's one. to of pipe focus that question I pipe. on the by building We're a

this And and talked I've about so -- before.

One same We're those thing. pipe, as is things build more That's those of we as cycles the things bigger they follow of timing positive deals the interesting bigger converting consolidation are the build as and deals. things thing. that's a sales actually we a And more well.

think visibility have that we as more I into So go we actually outlook the forward.

to in what's that is pipe. we're how thing efficiency I think important, build just you're but we're the alluding second hitting pipe, we on not on, do focused cost which in the what's is and focusing build actually to actually also on, The

all So things treating the we're not same.

through have very do about how in a perfect through a of and to is pipe we you partners the that we focus give ecosystem intention example I'll So build MSPs. actually

broadly, example on named channel. of more an X that of deals partners, marquee that the especially saw the the partners going call, but You MSSP on actually and through

very have targeted we a and efficiently partners, We set a we very, do of on X that that's that, can focus tight think through example.

I focused, just say, build engine overall just growth right if and and as can fast in the areas, you're cost that sort the of now pipe the driving ways would you to then the efficiency like as on actually and we possible. actually of demand build again, in that actually pipe, the more But are we

will We grow.

sure actually not right on sustainable, also it's has but that Again, fastest our around tight cost actually trying it's to focus is it. actually but making the structure both the growth. is growth time long-term to on durable, get

Timothy Adams

is, prepared Threat on the now over think of add Corey, thing would of that And grow Complete, just only I nicely the Risk the quarter. strength commented we new both ARR. we've Cloud in XX% remarks, the Complete, I over our packages, seen the

tailwind customers. we have So momentum, both that's of another with existing our think, I and sellers, new

Corey Thomas

again. you Thank question. Great Absolutely.

Operator

question of from Jonathan line the from next comes Blair. Ho William Your

John Weidemoyer

is This John for Jonathan. Weidemoyer

So to your approach or proposition. efforts improve seeing modern stock solutions SIEM are apps targeting relate save SOC of solutions you start customers to shift are they might spending, muddy and that value in to how other traditional terms like security? And how RapidX's

Corey Thomas

yes, doing seeing a when big cloud. on-premise the we're and was stock, -- think the was shift. collecting stock focusing you the on if traditional files One focused on-premise on the It monitoring just it is about about we're It's the log applications. think primarily on is environment environment. is which the environment. tetris not overall actually surface, attack the extended It's what we in

a volume all full to the But surface. is, data. we're do what monitor massive data the customers collect one, also so attack of adds And that helping

And so the we're to augmenting manage of focused or larger data partners our on from sales and expertise both that talent actually attack the surface. the but with with the also volume either productivity

able happening how many efficiency extended and also the therefore, but that's really, I And can Thank efficiency right shifting you as cover on like. if that as add security from our and agent, really absolutely do that they they're would and customers not traditional focus focused on then you are I efficiently. malls deliver for focus attack are at professionals their partners now, question. SOC. looking in full say, your to do in our surface, focus to that look on-premise Because at the are their SIEMs how Customers trends do my

Operator

the comes Your Essex from line of Brian JPMorgan. next question from

Unknown Analyst

This is was see you doubling cash It flow reiterate XXXX. for of in Brian free on Essex. the [indiscernible] great to

have are what let do much control to confidence that it? how levers . what in of primary cash and them? us looking you you're do have you can the deliver know you If like flow over And level

Corey Thomas

a confidence very business. high -- rate the very what in plus on thoughtful flow. of have controls We've of talked $XXX year. looked or I million we minus levers growth that the to We say a at lot the growth would cash approach this taken overall and I free have of rates, is would we've planning that --

And so like scenarios. how we're we cash across what about free actually of range -- do flow a very that thoughtful deliver wide

We that levers to a reinvestments. the actually we're in also well part are gives why all have because our business. up timed actually big go, expect to steadily, of We're the in that levers doing the we're make that also That's the X sure to doing reinvestment we us reinvestments as not performance see.

So we I say of have a visibility. lot

We lot to company entire have importantly, today good is a our we that. and of from But most a have deliver controls. on structure committed, fairly

Operator

comes Your next question Heath from Eric the line Markets. of from KeyBanc Capital

Eric Heath

Good top environment. execution and

questions. some of macro kind on kind up follow guidance of of to just -- the So

curious embedded relatively seems of conversion your because it in XQ -- kind maybe like conversion you rates for in quarter. high rates this some guidance what's of Just terms had

macro great, that the also linearity the commentary out. if And far that any So quarter, the extrapolating curious if on had this would too. be budget And flush. or just you're expectations on any on you so color

Corey Thomas

miss may I Yes. something.

for So I'll if Tim cover miss me will and those I actually something. cover

is seen, not picked X actually So the year, what up. would I conversion been would say improved that's it's across rates quarter, dean just a consistent but we've I say, this

consistency So we more expect than else. anything

rates. expect would I consistency we conversion that one, overall just the I the the say to that quarter indicates think and consistency the on start in early And

right great, reason about to we flush in out budget now. indicate this actually from a any flush flush our would it into overall budget we're think guidance. other on expectations that for quarter. a The expecting We our but not no, not our I indicators there is, factor no we skis of that's and how was factor perspective budget piece a over a If the don't see did budget flush. do,

Operator

And line the your Genuity. next question comes from Walkley Canaccord from of Tom

Daniel Park

It's Daniel on Mike. for

worth of Also, some cash sales are investments your term? So on now experience, to of grow selling just productivity offerings. that continue have quarters' really provide do flows, think changing color profitability on to focus via you level you how of given your consolidated longer sufficient exclusively they improving reps and just few could is the the maybe a

Corey Thomas

X Yes, great questions.

So is for expected on actually they're productivity, what the I productivity would we our be to that QX, say sellers. where direct through

larger pipe, the building sales which has are on deals some the timing cycle. in We impact

of you bit on a of have mix shift little in provided my I remarks. a size qualitative the So that in pipe. prepared deals in data the

we think more of a that out. So timing but issue, that's washes

productivity I of So consistent what I healthy come productivity would next would to expect, very we And see say, actually levels trends. year. say is reasonable, up we

happy productivity. and we're the trends So outlook the on with

second was, second I . Your forgot question part

Timothy Adams

With still levels are investing right focus the profitability, on our at we content. to

Corey Thomas

Yes.

look, be I I'm on, really long-term very view is drive So I'm but would mid super think to not I short-term -- take not I acceleration. yes, growth. focused a actually say, just clear trying -- to

so in think the investments products that way and And to heavy that is we're doing about services.

heavily for about have We're stock. about talk what to going our we to and drives investing making if long-term there that. customers. keep preferred I When be We're you we sure heavily augment growth to ecosystem us is We're because about the services, extended there. and provider I'm our committed talking doing the can investing think like

and those the course that increasing going and lots services. putting now, products be we're intentional it's year. but to very investments the in steadily of And the making we're of that. we're also over next investments We're resources And onboarded that about are

And so plan. ongoing that's our

is resources. in focused, part sales be marketing. this is investment the sure will we're say to adding I we're We're but engine, we the be in engine making while and really And that of our The and environment. looking efficient at we're capacity, very going adding second

We environment. approach approach aligned are a more and in taking partner-focused this

going hit midterm, if out, very, the that the and it's so And quarter-by-quarter think growth we're engine, marketing something to on look actually in have investments. very a we you sales a to again, try target. rushing actually are not good to we're but

Timothy Adams

next think that out year as healthy Yes, like pencil what Corey. year. the it and -- look think but numbers full a into investment we analysts marketing, And sales I it's may still look is for it's amount, right carries the for

Corey Thomas

how more year But investments it we marketing. allocate The is and a made investments methodical we for in again, that are sales approach Yes. a net taking actually actually help next this year. we on

Operator

[Operator line next from comes the BTIG. Your Rambo Trevor from Instructions] of question

Trevor Rambo

just categories breach lastly, than This is I increase to activity customers ask, you in I in see you breach react an the how Gray for product are just Trevor latest any an increase do do in -- you And more to then was drive it company? for that Powell. seeing benefit are another? expect on And X want headlines.

Corey Thomas

Yes.

that's on not first, sell to news also backdrop said, be So creates incentives. to not focused weird over we into because is just trying a It That time. pretty happening. customers' to that headlines some tend it trust hurts

look, the are especially that accountability. some of it solar here's CISOs, recent just focused on level, I to very relates personal and the with fundamental other at how the things, their is SEC's So at clearly backdrop winds most as security and actions

we security think still priority. projects a resources top as so and that I have they And significant of needed. And backlog a are have security

The the environment CISO are is going into tight. funding

space, we the reconciliation underlying demand underplays the And other actually and is of cycles velocity the CISO see what the that and the all so stuff pressure the budgets speed getting all of an that the deal and the backlog, they're tension things. that

get assume if backlog think has of time. I absolutely actually resolved to that over you out projects

actually demand healthy driver, think a market. we have I demand healthy So

the I as focus for for a Again, CISO. the I set out budget from endpoint think budget the to the the across on with But environment I environment love with on-prem that place RapidX say environment we're going surface to sits would play is looking extended attack the the well. just CISOs place SoC, and the entire up cloud,

to ourselves only Our long-term be up think this is a goal them. approach partner as our they brought to a dividends. great as and to money, is set I steadily to they where have will funds ecosystem pay methodical have great And

Timothy Adams

X So of last that there was maybe piece question.

the packages, Just products I to the particular in we go way does fund. it any just back benefit

Corey Thomas

Consolidation helps to us do cloud. they that allows economic the job. expertise. which and Tim, with if attack actually actually it absolutely, their is partner, to that's I it or provides to -- Yes. and great leverage scale, from them do being say actually manage value, surface provides the choose the an It our my with a on-prem It able augment CISOs can point, endpoint

security at an the provides And economic it so same time, core value, it concerns. addresses

Operator

next Galvin Your of Rob line the question from comes Stifel. from

Robert Galvin

growth, last international operating XX% on more for This of offshore Brad. appears talent focused the from had on revenue efficiencies. Rob growth or to be cost The is if talent if impact any the wondering shift and the this XX% mix of shift was quarter mix restructuring And trending well. discussed I'm on offshore

Corey Thomas

Yes.

say I workloads to think work have it's would support and properly the catch-up service sure of sure some great that world I that a the primary our was better. of earlier. I question. too make would driver not growth around say we do because make to global is to So distribution did that actually What ecosystem a it's the it's allocated

in the the not zones is thing of cyber attackers U.S. attacks just zones other the reality time the is are The operate of time of more that

actually our are operating as clock, actually same have time make the also are actually not zones so attacker around it's we sure the And that is but to operating customers, our in in. important that teams the just that people time zones, operating

benefits because will and to we in aggressively see confidence availability. get are actually in talk think actually commitment and and and resources ability I Asia the teams able our to more both more Europe about now and local directly

early results. I to too will thing the have be that, go for that think say shown would actually we positive But QX that we forward. So just up as a it's specific actually in

Operator

of comes Henderson Alex question the from next line Needham. from Your

Alex Henderson

add you and call. could that the that bit XXXX XXXX. as the your we in talk into was expansion out noted do MSP How about little partnership material it a programs, will look have consolidation? on of line it, a looking result you mind does growth Splunk Cisco, X%, impact would positive you're at that at by X%, your X% you And the any to as that while acquisition I you you think just hoping be particularly top rate? Can

Corey Thomas

Yes. Great questions.

one, I positive, will in what first the one. think We on 'XX. be is that would X say incrementally did big it So I

to I this. prior had some we'll some actually do We've smaller ones think more.

I in say, the just I longer are, be the 'XX. think positive will incrementally is. would they bigger it So ramp The cycle

-- these be are I gears to big to have just the -- turn want So actually you of it's you organizations, clear, and the like just your organizations.

So I 'XX. would the be say but some picks think clear. and like consolidated really incremental with breadth in And to on 'XX, partnering, movement we it yes, I partners up focus going this 'XX in

war We partner have a post.

few that focused I these organizations sophisticated think, dial, of move But partners really bigger, a having customers. lots But very the are big important. it's with

in some our So available. investing the to is be sort make investment of and to it lots of we're actually also effort heavily and that is well it. investment they do is partner, going with but this And lots worth work broadly like

over operate. how in So benefits positivity expect you actually these expect some years. the have, really looking to to see organizations would picking But I say, 'XX they and do I we of at say but incremental in 'XX, multiple would we start when up larger

for look, Cisco, question, I then of pocket And for have the lot on a Splunk. respect

that and or opportunity. an And -- those is What disruptions have organizations. and actually when you to nothing market I the or about say always have that's would you so that those changes there's teams specific

And I budget where especially opportunity. there concerned, are think talent an concern, are I say, it's people environment would in this where

extended story. probably and vans very just extended and the it's Now caused a great think But spacious a consolidation surface. have they lot attack I stock on of the

here. what I offer we think in we're unique can actually fairly

And that's so us. things actually shift any competitor cause think that focus, market the any in or that them I has for to opportunity time an focus

it's from the respect But And in market think an that oval the that's competitors I an yes, opportunity. so of perspective, for here.

Operator

our for closing our I back the of remarks. will And some to period. turn we call Corey Thomas, CEO, now final question-and-answer have over reached the end

Corey Thomas

Thank on wish a all you and I joining year. of our good all the us rest you today for call,

Timothy Adams

you. Thank

Operator

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

now disconnect. may You

Rapid7 (RPD) 1 Nov 232023 Q3 Earnings call transcript