Rapid7, Inc.

Second quarter fiscal 2026 results: total revenue was $210.9 million, down approximately 1.5% year over year; total ARR ended at $824 million; non-GAAP gross margin was 71.7%, down about 215 basis points year over year; non-GAAP operating income was $28.9 million, or 13.7% margin; non-GAAP EPS was $0.44; free cash flow was $31.9 million. Core platform solutions were over 80% of ARR and grew approximately 1% YoY, while detection and response grew approximately 5% YoY; total ARR declined due to noncore products. For Q3, management guided to ARR of about $812 million, revenue of $208 million to $210 million, non-GAAP operating income of $34 million to $36 million, and non-GAAP EPS of $0.44 to $0.47. For full-year 2026, Rapid7 raised non-GAAP operating income guidance to $129 million to $133 million, revenue guidance to $837 million to $841 million, non-GAAP EPS to $1.78 to $1.83, and reiterated about $130 million of free cash flow. Management said it expects about 20% non-GAAP operating margin in Q4 and about 20% non-GAAP operating margin exiting the year.

Wael Mohamed framed the company as a “good company ready to be great,” but said it has hit a ceiling because of how resources were being allocated. He emphasized a tighter focus on core offerings, especially detection and response and exposure management, plus an AI-first platform built on a common data backbone and agentic workflows. His tone was candid and urgent: the company is not broken, but it needs a multi-quarter reset, and investors should judge progress by execution, cash generation, and reinvestment.

Rafeal Edgar Brown highlighted that Q2 exceeded guidance across all guided metrics, with $824 million of ARR, $210.9 million of revenue, 71.7% non-GAAP gross margin, $28.9 million of non-GAAP operating income, $0.44 of non-GAAP EPS, and $31.9 million of free cash flow. He said the balance sheet ended with $702.6 million in cash, cash equivalents, and short-term investments, plus a $200 million undrawn credit facility, which positions the company to repay $600 million of convertible notes due in March 2027. He also said the restructuring should lift Q4 2026 operating margin to about 20%, expects restructuring charges of about $10 million to $11 million, and kept full-year free cash flow guidance at about $130 million because severance costs and reinvestment will offset much of the near-term cash benefit.

Analysts pressed on whether exposure management is missing coverage or functionality; management said the bigger issue is focus and investment, not that the market is closed to Rapid7. They also asked how quickly growth can reaccelerate while margins improve, and Wael said this is a multi-quarter process: stabilize cash generation, let noncore decline clear, strengthen the core, then return to growth. Other questions centered on the noncore portfolio, go-to-market changes, and the restructuring impact; management said customer-facing teams were protected where possible, the company will continue to support noncore customers, and most severance and cash effects fall in Q3 and Q4.