BOSTON, August 10, 2026, 16:50 EDT
- Shares of Rapid7 climbed 6.1% in after-hours trading to $12.32.
- The company reported second-quarter revenue and adjusted profit above its previously forecast ranges.
- Rapid7 intends to reduce its workforce by approximately 12%.
- The midpoint of full-year adjusted operating income guidance increased by $16 million.
Shares of Rapid7, Inc. NASDAQ:RPD advanced after the closing bell on Monday. The cybersecurity company surpassed previous guidance for the second quarter and lifted its profit forecast for the full year. Rapid7 also revealed plans to cut roughly 12% of its employees.
Shares rose 6.1% to $12.32 during after-hours trading after finishing 0.4% up at $11.61. The surge came after a report showed adjusted operating income surpassed expectations, though revenue remained lower compared to the previous year.
The composition is significant. Rapid7 maintained the midpoint of its 2026 revenue guidance at $839 million but increased the midpoint for operating profit by 14%. Earnings growth now relies more on managing costs than on accelerating sales.
| Q2 metric | Reported | Prior guidance | Result versus top end |
|---|---|---|---|
| ARR | $824 million | About $820 million | Exceeded by $4 million |
| Revenue | $210.9 million | $207 million-$209 million | Outpaced by $1.9 million |
| Non-GAAP operating income | $28.9 million | $24 million-$26 million | Came in $2.9 million above |
| Non-GAAP diluted EPS | $0.44 | $0.33-$0.36 | $0.08 above |
Each metric listed in the table surpassed Rapid7’s May outlook. Revenue was 0.9% above the upper range, while adjusted operating income exceeded expectations by 11%. The company submitted its results with the US Securities and Exchange Commission following the market close.
Rapid7 is implementing a wide-ranging reset and anticipates restructuring costs between $10 million and $11 million. The majority of these expenses are tied to severance and employee benefits. Most of the cash outlays are projected for the third and fourth quarters.
Chief Executive Wael Mohamed described the shift to a more focused approach plainly. According to him, customers and partners “want us to go deeper in Detection and Response and Exposure Management, not wider.” Rapid7 second-quarter release
| Full-year 2026 measure | New outlook | May outlook | Midpoint change |
|---|---|---|---|
| Revenue | $837 million-$841 million | $836 million-$842 million | No change at $839 million |
| Non-GAAP operating income | $129 million-$133 million | $112 million-$118 million | Increase of $16 million, or 13.9% |
| Non-GAAP diluted EPS | $1.78-$1.83 | $1.52-$1.60 | Increase of about $0.25, or 15.7% |
| Free cash flow | About $130 million | $125 million-$135 million | Midpoint remains unchanged |
The shift in guidance is the most direct signal to investors. The revenue range is now tighter but still centers on the same midpoint. Adjusted profit saw a significant increase. Based on the new midpoints, the implied full-year adjusted operating margin stands at roughly 15.6%, compared to 13.7% in the May outlook.
Cash projections were unchanged despite the earnings update. Rapid7 continues to anticipate roughly $130 million in free cash flow. As a result, the restructuring appears to be a reinvestment in margins rather than yielding instant cash benefits.
| Operating measure | Q2 2026 | Q2 2025 | Year-on-year change |
|---|---|---|---|
| Revenue | $210.9 million | $214.2 million | -1.5% |
| ARR | $824 million | About $841 million | -2.0% |
| GAAP net income | $6.1 million | $8.3 million | -27.1% |
| Free cash flow | $31.9 million | $42.3 million | -24.5% |
The core business continued to contract. ARR slipped 2% to $824 million. Revenue was down 1.5%. Free cash flow declined nearly 25%. As a result, the higher profit outlook needs to compensate for a softer recurring-revenue foundation.
There is some flexibility available in liquidity. As of June 30, Rapid7 reported $702.6 million in cash, cash equivalents, and government securities. The company’s balance sheet listed approximately $894 million in convertible notes, with around $598 million categorized as current.
On Monday, 3.25 million shares changed hands, marking a 17% increase over the recent average. After-hours trading saw the price surpass the analyst range listed on Google Finance.
| Analyst and firm | Latest recommendation | Price target | Date |
|---|---|---|---|
| Matthew Hedberg, RBC Capital | Hold | $11.00 | July 16, 2026 |
| Gregg Moskowitz, Mizuho | Hold | $11.00 | July 15, 2026 |
| Junaid Siddiqui, Truist | Hold | $10.00 | July 21, 2026 |
| Meta Marshall, Morgan Stanley | Sell | $9.00 | July 21, 2026 |
| Patrick Colville, Scotiabank | Hold | $7.00 | June 2, 2026 |
According to Google Finance, among 11 analysts covering the stock in the past three months, there were no buy recommendations, with eight hold ratings and three advising sell. Their mean price target stood at $8.44, while the top estimate was $11. With Rapid7 trading at $12.32 in after-hours, the price was 46% higher than the average target and 12% above the highest estimate.
Risks: The margin strategy relies on smooth implementation following significant staff reductions. ARR continues to fall. Restructuring may interfere with sales, product development, and customer service. After-hours trading typically involves lower liquidity compared to standard market hours.
The next challenge comes soon. Rapid7 anticipates third-quarter ARR at approximately $812 million, reflecting a 3% decline from the previous year. Investors will require the improved margin to withstand this ongoing contraction.
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