DB:R7D

Stock Analysis Report

Executive Summary

Rapid7, Inc. provides analytics solutions for security and information (IT) operations.

Rewards

Trading at 6.7% below its fair value

Revenue is forecast to grow 17.1% per year

Earnings have grown 17.6% per year over the past 5 years

Risk Analysis

Currently unprofitable and not forecast to become profitable over the next 3 years

Highly volatile share price over past 3 months

Shareholders have been diluted in the past year



Snowflake Analysis

Adequate balance sheet with limited growth.


Similar Companies

Share Price & News

How has Rapid7's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: R7D's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-0.9%

R7D

0.6%

DE Software

0.3%

DE Market


1 Year Return

77.2%

R7D

37.4%

DE Software

13.8%

DE Market

Return vs Industry: R7D exceeded the German Software industry which returned 39.3% over the past year.

Return vs Market: R7D exceeded the German Market which returned 17.1% over the past year.


Shareholder returns

R7DIndustryMarket
7 Day-0.9%0.6%0.3%
30 Day8.7%5.3%1.7%
90 Day29.0%7.9%5.7%
1 Year77.2%77.2%39.3%37.4%17.4%13.8%
3 Year377.1%377.1%60.2%53.8%15.9%5.7%
5 Yearn/a144.3%126.9%27.9%10.6%

Price Volatility Vs. Market

How volatile is Rapid7's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is Rapid7 undervalued compared to its fair value and its price relative to the market?

5.5%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: R7D (€56) is trading below our estimate of fair value (€60.03)

Significantly Below Fair Value: R7D is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: R7D is unprofitable, so we can't compare its PE Ratio to the Software industry average.

PE vs Market: R7D is unprofitable, so we can't compare its PE Ratio to the German market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate R7D's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: R7D is overvalued based on its PB Ratio (36.1x) compared to the DE Software industry average (3.1x).


Next Steps

Future Growth

How is Rapid7 forecast to perform in the next 1 to 3 years based on estimates from 15 analysts?

13.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: R7D is forecast to remain unprofitable over the next 3 years.

Earnings vs Market: R7D is forecast to remain unprofitable over the next 3 years.

High Growth Earnings: R7D is forecast to remain unprofitable over the next 3 years.

Revenue vs Market: R7D's revenue (17.1% per year) is forecast to grow faster than the German market (4.8% per year).

High Growth Revenue: R7D's revenue (17.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: R7D's Return on Equity is forecast to be high in 3 years time (25.9%)


Next Steps

Past Performance

How has Rapid7 performed over the past 5 years?

17.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: R7D is currently unprofitable.

Growing Profit Margin: R7D is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: R7D is unprofitable, but has reduced losses over the past 5 years at a rate of 17.6% per year.

Accelerating Growth: Unable to compare R7D's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: R7D is unprofitable, making it difficult to compare its past year earnings growth to the Software industry (14.6%).


Return on Equity

High ROE: R7D has a negative Return on Equity (-60.94%), as it is currently unprofitable.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Rapid7's financial position?


Financial Position Analysis

Short Term Liabilities: R7D's short term assets ($339.9M) exceed its short term liabilities ($246.8M).

Long Term Liabilities: R7D's short term assets ($339.9M) exceed its long term liabilities ($293.6M).


Debt to Equity History and Analysis

Debt Level: R7D's debt to equity ratio (211.7%) is considered high.

Reducing Debt: R7D had negative shareholder equity 5 years ago, but is now positive and has therefore improved.


Balance Sheet

Inventory Level: R7D has a low level of unsold assets or inventory.

Debt Coverage by Assets: R7D's debt is covered by short term assets (assets are 1.9x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: R7D has sufficient cash runway for more than 3 years based on its current free cash flow.

Forecast Cash Runway: Insufficient data to determine if R7D has enough cash runway if its free cash flow continues to grow or shrink based on historical rates.


Next Steps

Dividend

What is Rapid7's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.3%markettop25%3.6%industryaverage1.2%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate R7D's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate R7D's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if R7D's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if R7D's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of R7D's dividend in 3 years as they are not forecast to pay a notable one for the German market.


Next Steps

Management

What is the CEO of Rapid7's salary, the management and board of directors tenure and is there insider trading?

3.5yrs

Average management tenure


CEO

Corey Thomas (43yo)

7.3yrs

Tenure

US$5,036,352

Compensation

Mr. Corey E. Thomas serves as Director at LPL Financial Holdings Inc. since May 08, 2019. He has been the Chief Executive Officer at Rapid7, Inc., since October 2012 and its Chairman since February 24, 201 ...


CEO Compensation Analysis

Compensation vs Market: Corey's total compensation ($USD5.04M) is above average for companies of similar size in the German market ($USD2.07M).

Compensation vs Earnings: Corey's compensation has increased whilst the company is unprofitable.


Management Age and Tenure

3.5yrs

Average Tenure

46yo

Average Age

Experienced Management: R7D's management team is considered experienced (3.5 years average tenure).


Board Age and Tenure

3.4yrs

Average Tenure

53.5yo

Average Age

Experienced Board: R7D's board of directors are considered experienced (3.4 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Sell€470,22728 May 19
Timothy McAdam
EntityIndividual
Shares10,000
Max Price€47.02
Sell€1,362,11726 Feb 19
Goose Rocks Beach Partners, L.P.
EntityCompany
Shares33,567
Max Price€40.58
Sell€430,00726 Feb 19
David Yuan
EntityIndividual
Shares10,600
Max Price€40.57
Sell€1,229,45720 Feb 19
Technology Crossover Ventures
EntityCompany
Shares30,367
Max Price€40.51
Sell€719,25120 Feb 19
Drew Family Trust
EntityCompany
Shares17,780
Max Price€40.45
Sell€1,160,12920 Feb 19
Robert Trudeau
EntityIndividual
Shares28,665
Max Price€41.14

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 5.8%.


Management Team

  • Jeff Kalowski (63yo)

    Chief Financial Officer

    • Tenure: 3yrs
    • Compensation: US$623.55k
  • Christina Luconi (51yo)

    Chief People Officer

    • Tenure: 9yrs
    • Compensation: US$1.60m
  • Conan Reidy (46yo)

    Senior Vice President of Corporate Development and Strategic Alliances

    • Tenure: 2yrs
  • Tas Giakouminakis

    Co-Founder & CTO

    • Corey Thomas (43yo)

      Chairman & CEO

      • Tenure: 7.3yrs
      • Compensation: US$5.04m
    • Peter Kaes (38yo)

      Senior VP

      • Tenure: 3.5yrs
    • Neeraj Mahajan

      Vice President of Investor Relations

      • Andrew Burton (47yo)

        President & COO

        • Tenure: 1yrs
        • Compensation: US$3.75m
      • Lee Weiner (45yo)

        Chief Product Officer

        • Tenure: 6.8yrs
        • Compensation: US$2.94m
      • Caitlin Doherty

        Public Relations Manager


        Board Members

        • Ben Holzman (44yo)

          Independent Director

          • Tenure: 11.4yrs
          • Compensation: US$210.58k
        • Judy Bruner (60yo)

          Independent Director

          • Tenure: 3.3yrs
          • Compensation: US$215.77k
        • Ben Nye (53yo)

          Lead Independent Director

          • Tenure: 0.9yrs
          • Compensation: US$222.58k
        • Mike Berry (56yo)

          Independent Director

          • Tenure: 7.2yrs
          • Compensation: US$225.97k
        • Corey Thomas (43yo)

          Chairman & CEO

          • Tenure: 7.3yrs
          • Compensation: US$5.04m
        • Tom Schodorf (61yo)

          Independent Director

          • Tenure: 3.5yrs
          • Compensation: US$243.27k
        • Marc Brown (54yo)

          Independent Director

          • Tenure: 3.5yrs
          • Compensation: US$221.43k
        • Christina Kosmowski (43yo)

          Director

          • Tenure: 0.5yrs

        Company Information

        Rapid7, Inc.'s company bio, employee growth, exchange listings and data sources


        Key Information

        • Name: Rapid7, Inc.
        • Ticker: R7D
        • Exchange: DB
        • Founded: 2000
        • Industry: Systems Software
        • Sector: Software
        • Market Cap: US$3.075b
        • Listing Market Cap: US$2.788b
        • Shares outstanding: 49.38m
        • Website: https://www.rapid7.com

        Number of Employees


        Location

        • Rapid7, Inc.
        • 120 Causeway Street
        • Suite 400
        • Boston
        • Massachusetts
        • 2114
        • United States

        Listings

        TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
        RPDNasdaqGM (Nasdaq Global Market)YesCommon SharesUSUSDJul 2015
        R7DDB (Deutsche Boerse AG)YesCommon SharesDEEURJul 2015
        0KTXLSE (London Stock Exchange)YesCommon SharesGBUSDJul 2015

        Biography

        Rapid7, Inc. provides analytics solutions for security and information (IT) operations. Its vulnerability management solutions include InsightVM and Nexpose, which enable customers to assess and remediate their overall exposure to cyber risk; InsightAppSec, an insight platform based solution; AppSpider, an application security testing solution; and Metasploit, a penetration testing software solution. The company’s incident detection and response solutions comprise InsightIDR; Managed Detection and Response, an outsourced service; and incident response services that offer customers with access to security experts and experience. In addition, it provides Logentries for cyber security; InsightOps, which simplifies IT infrastructure monitoring and troubleshooting by centralizing data from customers’ network into a secure location; and Komand software. Further, the company provides consulting services in the areas of cyber security maturity assessment, incident response program development, penetration testing, security program development, Virtual CISO, IoT security, and threat modeling services. It offers its products through a combination of perpetual and term software licenses, cloud-based subscriptions, and managed services. The company serves clients in technology, energy, financial services, healthcare and life sciences, manufacturing, media and entertainment, retail, education, real estate, transportation, government, and professional services industries through sales teams, and indirect channel partner relationships, as well as directly in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. Rapid7, Inc. was incorporated in 2000 and is headquartered in Boston, Massachusetts. 


        Company Analysis and Financial Data Status

        All financial data provided by Standard & Poor's Capital IQ.
        DataLast Updated (UTC time)
        Company Analysis2020/01/25 22:52
        End of Day Share Price2020/01/24 00:00
        Earnings2019/09/30
        Annual Earnings2018/12/31


        Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.