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CST: 07/12/2019 00:57:12   

 Rapid7 Announces Second Quarter 2019 Financial Results

127 Days ago

  • Annualized recurring revenue (ARR) of $290.0 million, an increase of 46% year-over-year
  • Revenue of $79.0 million, 35% growth year-over-year
  • Organic customer growth accelerated to 14% (16% with the NetFort acquisition)
  • Raising 2019 revenue growth guidance to 30% to 32%

BOSTON, Aug. 01, 2019 (GLOBE NEWSWIRE) --  Rapid7, Inc. (Nasdaq: RPD), a leading provider of security analytics and automation, today announced its financial results for the second quarter of 2019.

“Rapid7 had another strong quarter driven by the strength of our Insight platform products. Our focus on customer growth, which we believe to be the key to our long-term growth, is paying off as we ended the second quarter with 8,400 customers,” said Corey Thomas, Chairman and CEO of Rapid7.

“Based on the strength of our cloud-based subscription business, we are again raising our full-year 2019 guidance for total revenue. We have increased investments in our business, which we expect to drive higher long-term growth and sustainable profitability. These investments are well underway and we expect to execute on these in the second half of this year. Therefore, we continue to expect non-GAAP operating income to be breakeven in 2019.”

Second Quarter 2019 Financial Results and Other Metrics

  Three Months Ended June 30,
  2019   2018   % Change
   
  (dollars in thousands)
Annualized recurring revenue $ 290,016     $ 198,576     46 %
Number of customers (1) 8,400     7,216     16 %
ARR per customer $ 34.5     $ 27.5     25 %
Recurring revenue as a percentage of total revenue 87 %   79 %    
Renewal rate 116 %   122 %    
               
(1) Includes 156 customers from the NetFort acquisition              


  Three Months Ended June 30,
  2019   2018   % Change
   
  (in thousands, except per share data)
Products revenue $ 63,207     $ 39,043     62 %
Maintenance and support revenue 9,372     10,610     (12 )%
Professional services revenue 6,380     8,788     (27 )%
Total revenue $ 78,959     $ 58,441     35 %
           
North America revenue $ 66,301     $ 49,519     34 %
Rest of world revenue 12,658     8,922     42 %
Total revenue $ 78,959     $ 58,441      
           
GAAP gross profit $ 56,778     $ 41,048      
GAAP gross margin 72 %   70 %    
Non-GAAP gross profit $ 59,158     $ 42,410      
Non-GAAP gross margin 75 %   73 %    
           
GAAP loss from operations $ (12,180 )   $ (14,340 )    
GAAP operating margin (15 )%   (25 )%    
Non-GAAP income (loss) from operations $ 500     $ (5,992 )    
Non-GAAP operating margin 1 %   (10 )%    
           
GAAP net loss $ (13,420 )   $ (14,333 )    
GAAP net loss per share, basic and diluted $ (0.28 )   $ (0.31 )    
Non-GAAP net income (loss) $ 1,093     $ (5,985 )    
Non-GAAP net income (loss) per share, basic $ 0.02     $ (0.13 )    
Non-GAAP net income (loss) per share, diluted $ 0.02     $ (0.13 )    
           
Adjusted EBITDA $ 2,746     $ (4,247 )    
           
Cash provided by (used in) operating activities $ 2,483     $ (9,114 )    

Recent Business Highlights

  • In April, we acquired NetFort Technologies Limited, a provider of end-to-end network traffic visibility and analytics cloud, virtual and physical platforms, for a total cash consideration of approximately $15.0 million.
  • In May, Forrester Research recognized Rapid7 as a Strong Performer in The Forrester WaveTM: Global Cybersecurity Consulting Providers, Q2 2019 report.
  • In June, we announced that our Insight cloud integrates with Amazon Web Services (AWS) Security Hub, centralizing high priority security alerts and automating actions triggered by security alerts across the AWS environment.
  • In June, we announced the addition of Cloud Configuration Assessment to our InsightVM product. Cloud Configuration Assessment gives customers additional visibility into configuration risk within AWS environments.
  • Please see investors.rapid7.com for our Financial Metrics spreadsheet.
  • For additional details on the reconciliation of non-GAAP measures to their nearest comparable GAAP measures, please refer to the accompanying financial data tables contained in this press release.

Third Quarter and Full-Year 2019 Guidance

Rapid7 anticipates total revenue, non-GAAP income (loss) from operations, and non-GAAP net income (loss) per share to be in the following ranges:

Third Quarter and Full-Year 2019 Guidance (in millions, except per share data)
           
  Third Quarter 2019   Full-Year 2019
Revenue $ 79.2   to  $ 80.8     $ 318.0     $ 321.0  
Year-over-year growth 27 % to  29 %     30 %   32 %
Non-GAAP (loss) income from operations $ (2.5 ) to  $ (1.5 )   Breakeven
Non-GAAP net (loss) income per share $ (0.04 ) to  $ (0.02 )   $0.05
Weighted average shares outstanding     49.2         52.3  

Guidance for the third quarter and full-year 2019 does not include any potential impact of foreign exchange gains or losses. The weighted average shares outstanding for the third quarter of 2019 represent basic shares outstanding given our projected non-GAAP net loss. The weighted average shares outstanding for full-year 2019 represent diluted shares outstanding given our projected non-GAAP net income.

Non-GAAP guidance excludes estimates for stock-based compensation expense, amortization of acquired intangible assets, amortization of debt discount and issuance costs, and certain other items. Rapid7 has provided a reconciliation of historical non-GAAP financial measures to the most comparable GAAP measures in the financial statement tables included in this press release. A reconciliation of non-GAAP guidance measures to the most comparable GAAP measures is not available on a forward-looking basis without unreasonable efforts due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures.

Conference Call and Webcast Information

Rapid7 will host a conference call today, August 1, 2019, to discuss its results at 8:00 a.m. Eastern Time. The call will be accessible by telephone at 877-357-4230 (domestic) or 629-228-0721 (international). The call will also be available live via webcast on the Company’s website at https://investors.rapid7.com. A telephone replay of the conference call will be available at 855-859-2056 or 404-537-3406 (access code 8956899) until August 8, 2019. A webcast replay will be available at https://investors.rapid7.com.

About Rapid7

Rapid7 (Nasdaq: RPD) is advancing security with visibility, analytics, and automation delivered through our Insight cloud. Our solutions simplify the complex, allowing security teams to work more effectively with IT and development to reduce vulnerabilities, monitor for malicious behavior, investigate and shut down attacks, and automate routine tasks. 8,400 customers rely on Rapid7 technology, services, and research to improve security outcomes and securely advance their organizations. For more information, visit our website, check out our blog, or follow us on Twitter.

Non-GAAP Financial Measures and Other Metrics

To supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States, or GAAP, we provide investors with certain non-GAAP financial measures and other metrics, which we believe are helpful to our investors. We use these non-GAAP financial measures and other metrics for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We also use certain non-GAAP financial measures as performance measures under our executive bonus plan. We believe that these non-GAAP financial measures and other metrics provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making.

While our non-GAAP financial measures are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, you should review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures included below, and not rely on any single financial measure to evaluate our business.

Non-GAAP Financial Measures
We disclose the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP net income (loss) per share and adjusted EBITDA.

We define non-GAAP gross profit, non-GAAP income (loss) from operations, non-GAAP net income (loss) and non-GAAP net income (loss) per share as the respective GAAP balances excluding the effect of stock-based compensation expense, amortization of acquired intangible assets, amortization of debt discount and issuance costs and certain other items such as acquisition-related expenses, follow-on public offering costs, and litigation-related expenses.  Non-GAAP net income (loss) per basic and dilutive share is calculated as non-GAAP net income (loss) divided by the weighted average shares used to compute net income (loss) per share, with the number of weighted average shares decreased to reflect the anti-dilutive impact of the capped call transactions entered into in connection with the 1.25% convertible senior note issued in August 2018.

We believe these non-GAAP financial measures are useful to investors in assessing our operating performance due to the following factors:

Stock-based compensation expense. We exclude stock-based compensation expense because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact our non-cash expense. We believe that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between our operating results from period to period.

Amortization of acquired intangible assets. We believe that excluding the impact of amortization of acquired intangible assets allows for more meaningful comparisons between operating results from period to period as the intangible assets are valued at the time of acquisition and are amortized over several years after the acquisition.

Amortization of debt discount and issuance costs. In August 2018, we issued $230 million of convertible senior notes, which bear interest at an annual fixed rate of 1.25%. The imputed interest rate of the convertible senior notes was approximately 7.37%. This is a result of the debt discount recorded for the conversion feature that is required to be separately accounted for as equity, and debt issuance costs, which reduce the carrying value of the convertible debt instrument. The debt discount is amortized as interest expense together with the issuance costs of the debt. The expense for the amortization of debt discount and debt issuance costs is a non-cash item, and we believe the exclusion of this interest expense provides a more useful comparison of our operational performance in different periods.

Litigation-related expenses. We exclude certain litigation-related expenses consisting of professional fees and related costs incurred by us related to significant litigation outside the ordinary course of business. We believe it is useful to exclude such expenses because we do not consider such amounts to be part of our ongoing operations.

Acquisition-related expenses and follow-on public offering costs. We exclude acquisition-related expenses and follow-on public offering costs as costs that are unrelated to the current operations and neither are comparable to the prior period nor predictive of future results.

Anti-dilutive impact of capped call transaction. In connection with the issuance of our convertible senior notes, we entered into capped call transactions to offset potential dilution from the embedded conversion feature in the notes. Although we cannot reflect the anti-dilutive impact of the capped call transactions under GAAP, we do reflect the anti-dilutive impact of the capped call transactions in non-GAAP net income (loss) per basic and diluted share to provide investors with useful information in evaluating the financial performance of the company on a per share basis.

Adjusted EBITDA (non-GAAP). Adjusted EBITDA is a non-GAAP measure that we define as net loss before (1) interest income, (2) interest expense, (3) other income (expense), net, (4) provision for (benefit from) income taxes, (5) depreciation expense, (6) amortization of intangible assets, (7) stock-based compensation expense, and (8) certain other items.  We believe that the use of adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. Adjusted EBITDA should not be considered as a substitute for other measures of financial performance reported in accordance with GAAP. There are limitations to using this non-GAAP financial measure, including that other companies may calculate this measure differently than we do, that it does not reflect our capital expenditures or future requirements for capital expenditures and that it does not reflect changes in, or cash requirements for, our working capital and excludes some items that are cash based.

Other Metrics
Annualized Recurring Revenue (ARR). ARR is defined as the annual value of all recurring revenue related contracts in place at the end of the period. ARR should be viewed independently of revenue and deferred revenue as ARR is an operating metric and is not intended to be combined with or replace these items. ARR is not a forecast of future revenue and can be impacted by contract start and end dates and renewal rates, and does not include revenue reported as perpetual license or professional services revenue in our consolidated statement of operations.

Number of Customers. We define a customer as any entity that has (1) an active Rapid7 contract or a contract that expired within 90 days or less of the applicable measurement date; and for Logentries products, those customers with a contract value equal to or greater than $2,400 per year, or (2) purchased Rapid7 professional services within the 12 months preceding the applicable measurement date.

ARR per Customer. We define ARR per customer as ARR divided by the number of customers at the end of the period.

Recurring Revenue. We define recurring revenue as revenue from term software licenses, content subscriptions, managed services, cloud-based subscriptions and maintenance and support.

Renewal Rate. We calculate our renewal rate by dividing the dollar value of renewed customer agreements, including upsells and cross-sells of additional products, but excluding professional services, in a trailing 12-month period by the dollar value of the corresponding customer agreements.

Cautionary Language Concerning Forward-Looking Statements

This press release includes forward-looking statements. All statements contained in this press release other than statements of historical facts, including, without limitation, statements regarding our anticipated total revenue and our future financial and business performance for the third quarter and full-year 2019, market opportunities, short-term and long-term business operations and objectives are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including, without limitation, risks related to our rapid growth and ability to sustain our revenue growth rate, our transition to a subscription business model, the ability of our products and professional services to correctly detect vulnerabilities, competition in the markets in which we operate, market growth, our ability to innovate and manage our growth, our ability to integrate acquired operations, our ability to operate in compliance with applicable laws as well as other risks and uncertainties set forth in the “Risk Factors” section of our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission for the quarter ended March 31, 2019 filed with the Securities and Exchange Commission on May 3, 2019, and subsequent reports that we file with the Securities and Exchange Commission.  Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, we cannot guarantee future results, levels of activity, performance, achievements or events and circumstances reflected in the forward-looking statements will occur. We are under no duty to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.

Neeraj Mahajan, CFA
Vice President, Investor Relations
investors@rapid7.com
(857) 990-4074

Press contact:

Caitlin Doherty
press@rapid7.com
(857) 990-4240




RAPID7, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands)   

  June 30, 2019   December 31, 2018
Assets      
Current assets:      
Cash and cash equivalents $ 126,569     $ 99,565  
Short-term investments 119,138     159,210  
Accounts receivable, net 69,289     74,935  
Deferred contract acquisition and fulfillment costs, current portion 13,851     12,321  
Prepaid expenses and other current assets 15,416     9,746  
Total current assets 344,263     355,777  
Long-term investments 18,680     44,892  
Property and equipment, net 51,860     17,523  
Operating lease right-of-use assets 59,417      
Deferred contract acquisition and fulfillment costs, non-current portion 29,275     27,634  
Goodwill 97,866     88,420  
Intangible assets, net 29,726     23,955  
Other assets 5,192     1,168  
Total assets $ 636,279     $ 559,369  
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable $ 12,975     $ 7,048  
Accrued expenses 33,069     37,376  
Operating lease liabilities, current portion 6,057      
Deferred revenue, current portion 199,048     189,855  
Other current liabilities 126     707  
Total current liabilities 251,275     234,986  
Convertible senior notes, net 179,791     174,688  
Operating lease liabilities, non-current portion 71,722      
Deferred revenue, non-current portion 44,944     58,716  
Other long-term liabilities 1,023     3,660  
Total liabilities 548,755     472,050  
Stockholders’ equity:      
Common stock 488     476  
Treasury stock (4,764 )   (4,764 )
Additional paid-in-capital 581,127     556,223  
Accumulated other comprehensive income (loss) 351     (31 )
Accumulated deficit (489,678 )   (464,585 )
Total stockholders’ equity 87,524     87,319  
Total liabilities and stockholders’ equity $ 636,279     $ 559,369  



RAPID7, INC.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)

  Three Months Ended June 30,   Six Months Ended June 30,
  2019   2018   2019   2018
Revenue:              
Products $ 63,207     $ 39,043     $ 119,495     $ 74,322  
Maintenance and support 9,372     10,610     18,929     21,363  
Professional services 6,380     8,788     13,720     17,271  
Total revenue 78,959     58,441     152,144     112,956  
Cost of revenue:              
Products 14,556     9,650     27,041     18,086  
Maintenance and support 2,081     2,007     3,965     3,856  
Professional services 5,544     5,736     11,148     12,045  
Total cost of revenue 22,181     17,393     42,154     33,987  
Total gross profit 56,778     41,048     109,990     78,969  
Operating expenses:              
Research and development 19,626     16,082     37,491     32,804  
Sales and marketing 38,172     31,157     73,310     60,209  
General and administrative 11,160     8,149     21,113     16,881  
Total operating expenses 68,958     55,388     131,914     109,894  
Loss from operations (12,180 )   (14,340 )   (21,924 )   (30,925 )
Other income (expense), net:              
Interest income 1,582     464     3,313     707  
Interest expense (3,312 )       (6,541 )   (2 )
Other income (expense), net (29 )   (326 )   (235 )   (248 )
Loss before income taxes (13,939 )   (14,202 )   (25,387 )   (30,468 )
Provision for (benefit from) income taxes (519 )   131     (294 )   226  
Net loss $ (13,420 )   $ (14,333 )   $ (25,093 )   $ (30,694 )
Net loss per share, basic and diluted $ (0.28 )   $ (0.31 )   $ (0.52 )   $ (0.67 )
Weighted-average common shares outstanding, basic and diluted 48,451,562     46,279,947     48,141,474     45,746,513  



RAPID7, INC.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)

  Three Months Ended June 30,   Six Months Ended June 30,
  2019   2018   2019   2018
Cash flows from operating activities:              
Net loss $ (13,420 )   $ (14,333 )   $ (25,093 )   $ (30,694 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities              
Depreciation and amortization 3,944     2,678     7,371     5,077  
Amortization of debt discount and issuance costs 2,594         5,104      
Stock-based compensation expense 10,430     7,350     19,064     13,575  
Provision for doubtful accounts 916     300     1,353     456  
Deferred income taxes (761 )       (761 )    
Foreign currency re-measurement loss (58 )   324     191     471  
Other non-cash (income) expense (568 )   (19 )   (1,290 )   (71 )
Changes in operating assets and liabilities:              
Accounts receivable (10,180 )   (10,136 )   4,549     24,586  
Deferred contract acquisition and fulfillment costs (2,078 )   (2,818 )   (3,172 )   (4,531 )
Prepaid expenses and other assets (3,394 )   (412 )   (9,334 )   (3,602 )
Accounts payable 2,118     (828 )   2,184     2,391  
Accrued expenses 6,378     3,511     (7,312 )   (7,806 )
Deferred revenue 7,038     5,494     (5,066 )   (1,001 )
Other liabilities (476 )   (225 )   1,129     (669 )
Net cash provided by (used in) operating activities 2,483     (9,114 )   (11,083 )   (1,818 )
Cash flows from investing activities:              
Business acquisition, net of cash acquired (14,621 )       (14,621 )    
Purchases of property and equipment (9,249 )   (3,503 )   (17,712 )   (5,650 )
Capitalization of internal-use software costs (1,551 )   (720 )   (3,152 )   (1,413 )
Purchases of investments (9,403 )   (6,195 )   (72,432 )   (10,655 )
Sales/maturities of investments 67,564     19,066     140,302     33,128  
Net cash provided by investing activities 32,740     8,648     32,385     15,410  
Cash flows from financing activities:              
Proceeds from follow-on public offering, net of offering costs of $608     (324 )       30,907  
Taxes paid related to net share settlement of equity awards (1,860 )   (543 )   (2,839 )   (1,005 )
Proceeds from employee stock purchase plan         2,634     1,632  
Proceeds from stock option exercises 3,340     2,696     6,058     4,657  
Net cash provided by financing activities 1,480     1,829     5,853     36,191  
Effect of exchange rate changes on cash, cash equivalents and restricted cash (3 )   (278 )   (151 )   (314 )
Net increase in cash, cash equivalents and restricted cash 36,700     1,085     27,004     49,469  
Cash, cash equivalents and restricted cash, beginning of period 89,869     100,146     99,565     51,762  
Cash, cash equivalents and restricted cash, end of period $ 126,569     $ 101,231     $ 126,569     $ 101,231  



RAPID7, INC.
GAAP to Non-GAAP Reconciliation (Unaudited)
(in thousands, except share and per share data)

  Three Months Ended June 30,   Six Months Ended June 30,
  2019   2018   2019   2018
GAAP gross profit $ 56,778     $ 41,048     $ 109,990     $ 78,969  
Add: Stock-based compensation expense1 718     469     1,291     843  
Add: Amortization of acquired intangible assets2 1,662     893     3,020     1,801  
Non-GAAP gross profit. $ 59,158     $ 42,410     $ 114,301     $ 81,613  
Non-GAAP gross margin 74.9 %   72.6 %   75.1 %   72.3 %
               
GAAP gross profit - Products $ 48,651     $ 29,393     $ 92,454     $ 56,236  
Add: Stock-based compensation expense 207     157     364     282  
Add: Amortization of acquired intangible assets 1,662     893     3,020     1,801  
Non-GAAP gross profit - Products $ 50,520     $ 30,443     $ 95,838     $ 58,319  
Non-GAAP gross margin - Products 79.9 %   78.0 %   80.2 %   78.5 %
               
GAAP gross profit - Maintenance and support. $ 7,291     $ 8,603     $ 14,964     $ 17,507  
Add: Stock-based compensation expense 166     60     286     88  
Non-GAAP gross profit - Maintenance and support $ 7,457     $ 8,663     $ 15,250     $ 17,595  
Non-GAAP gross margin - Maintenance and support 79.6 %   81.6 %   80.6 %   82.4 %
               
GAAP gross profit - Professional services $ 836     $ 3,052     $ 2,572     $ 5,226  
Add: Stock-based compensation expense 345     252     641     473  
Non-GAAP gross profit - Professional services $ 1,181     $ 3,304     $ 3,213     $ 5,699  
Non-GAAP gross margin - Professional services 18.5 %   37.6 %   23.4 %   33.0 %
               
GAAP Loss from operations $ (12,180 )   $ (14,340 )   $ (21,924 )   $ (30,925 )
Add: Stock-based compensation expense1 10,430     7,350     19,064     13,575  
Add: Amortization of acquired intangible assets2 1,698     933     3,095     1,881  
Add: Acquisition-related expenses3 297         514      
Add: Follow-on public offering costs4     65         205  
Add: Litigation-related expenses5 255         328     400  
Non-GAAP Income (loss) from operations $ 500     $ (5,992 )   $ 1,077     $ (14,864 )
               
GAAP Net loss $ (13,420 )   $ (14,333 )   $ (25,093 )   $ (30,694 )
Add: Stock-based compensation expense1 10,430     7,350     19,064     13,575  
Add: Amortization of acquired intangible assets2 1,698     933     3,095     1,881  
Add: Acquisition-related expenses3 297         514      
Add: Follow-on public offering costs4     65         205  
Add: Litigation-related expenses5 255         328     400  
Add: Release of valuation allowance, acquisition-related (761 )       (761 )    
Add: Amortization of debt discount and issuance costs 2,594         5,104      
Non-GAAP Net income (loss) $ 1,093     $ (5,985 )   $ 2,251     $ (14,633 )
               
Reconciliation of net income (loss) per share, basic              
GAAP net loss per share, basic $ (0.28 )   $ (0.31 )   $ (0.52 )   $ (0.67 )
Non-GAAP adjustments to net loss 0.30     0.18     0.57     0.35  
Non-GAAP net income (loss) per share, basic $ 0.02     $ (0.13 )   $ 0.05     $ (0.32 )
               
Reconciliation of net income (loss) per share, diluted              
GAAP net loss per share, diluted $ (0.28 )   $ (0.31 )   $ (0.52 )   $ (0.67 )
Non-GAAP adjustments to net loss 0.30     0.18     0.56     0.35  
Non-GAAP net income (loss) per share, diluted $ 0.02     $ (0.13 )   $ 0.04     $ (0.32 )
               
Weighted average shares used in GAAP per share calculation, basic and diluted 48,451,562     46,279,947     48,141,474     45,746,513  
               
Weighted average shares used in non-GAAP per share calculation:              
Basic 48,451,562     46,279,947     48,141,474     45,746,513  
Diluted 52,035,868     46,279,947     51,611,858     45,746,513  
               
1 Includes stock-based compensation expense as follows:              
Cost of revenue $ 718     $ 469     $ 1,291     $ 843  
Research and development 4,054     2,850     7,228     5,416  
Sales and marketing 2,942     2,055     5,406     3,618  
General and administrative 2,716     1,976     5,139     3,698  
               
2 Includes amortization of acquired intangible assets as follows:              
Cost of revenue $ 1,662     $ 893     $ 3,020     $ 1,801  
Sales and marketing 35     38     73     77  
General and administrative 1     2     2     3  
               
3 Includes acquisition-related expenses as follows:              
General and administrative $ 297     $     $ 514     $  
               
4 Includes follow-on public offering costs as follows:              
General and administrative $     $ 65     $     $ 205  
               
5 Includes litigation-related expenses as follows:              
General and administrative $ 255     $     $ 328     $ 400  



RAPID7, INC.
Reconciliation of Net Loss to Adjusted EBITDA (Unaudited)
(in thousands)

  Three Months Ended June 30,   Six Months Ended June 30,
  2019   2018   2019   2018
GAAP net loss $ (13,420 )   $ (14,333 )   $ (25,093 )   $ (30,694 )
Interest income (1,582 )   (464 )   (3,313 )   (707 )
Interest expense 3,312         6,541     2  
Other (income) expense, net. 29     326     235     248  
Provision for (benefit from) income taxes (519 )   131     (294 )   226  
Depreciation expense 2,056     1,642     3,906     3,025  
Amortization of intangible assets 1,888     1,036     3,465     2,052  
Stock-based compensation expense 10,430     7,350     19,064     13,575  
Acquisition-related expenses 297         514      
Follow-on public offering costs     65         205  
Litigation-related expenses 255         328     400  
Adjusted EBITDA $ 2,746     $ (4,247 )   $ 5,353     $ (11,668 )

 

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