Rapid7, Inc. (NASDAQ:RPD) Is About To Turn The Corner

Rapid7, Inc. (NASDAQ:RPD) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Rapid7, Inc. provides cybersecurity solutions under the Rapid7, Nexpose, and Metasploit brand names. The US$2.5b market-cap company’s loss lessened since it announced a US$149m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$46m, as it approaches breakeven. As path to profitability is the topic on Rapid7's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Rapid7

Rapid7 is bordering on breakeven, according to the 23 American Software analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$26m in 2024. The company is therefore projected to breakeven around 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 59% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Rapid7 given that this is a high-level summary, however, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Rapid7 is it currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

There are key fundamentals of Rapid7 which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Rapid7, take a look at Rapid7's company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:

1. Valuation: What is Rapid7 worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Rapid7 is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Rapid7’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.