Rapid7's Revenue Decline Widens After Restructuring Costs

The Tip Desk · November 11, 2026 · 2 min read

Third-quarter revenue was $212.4 million, down 2.5% from a year earlier, as non-GAAP operating income reached $46.2 million.

Rapid7, Inc. (RPD), an AI-powered managed cybersecurity operations company, reported third-quarter 2026 revenue of $212.4 million, down 2.5% from a year earlier, after a 1.5% year-over-year decline in the second quarter.

Product subscriptions, the bulk of the business, were $206.1 million, down 1.9% from a year earlier. Annualized recurring revenue was $819.7 million, down 2.2% from a year earlier.

GAAP income from operations was $9.0 million, up from $3.0 million in the prior quarter. Non-GAAP income from operations was $46.2 million, up from $28.9 million. The company recorded $10.0 million of restructuring expense in the quarter after initiating a plan in the second quarter that affected about 12% of the workforce. GAAP net income was $3.5 million, or $0.05 a share. Non-GAAP net income was $47.4 million, or $0.60 a share.

Chief executive Wael Mohamed said the company took decisive action the prior quarter to focus resources on its core business and that it delivered on some early goals in a multi-quarter journey. He said the company is operating with greater discipline, the core business is becoming more stable, and the cash-generation outlook for the year remains on track.

Research and development expense was $39.6 million, down from $46.9 million a year earlier. Sales and marketing was $65.6 million, down from $79.3 million. General and administrative expense was $23.6 million. GAAP gross profit was $147.9 million. Non-GAAP gross margin was 72%.

Net cash provided by operating activities was $30.1 million. Free cash flow was $26.5 million. Total cash, cash equivalents, and government securities were $731.6 million as of September 30, 2026. Convertible senior notes due within a year were $598.8 million on the balance sheet.

In October the company launched Rapid7 Intelligence, a unified engine combining threat intelligence, vulnerability research, and Rapid7 Labs, and previewed Autonomous SOC at a Boston customer summit. It said hundreds of customers are already using Kenzo-powered capabilities as it builds toward Autonomous SOC. The company said it serves approximately 11,800 customers worldwide.

Rapid7 anticipates fourth-quarter 2026 ARR of approximately $812 million, revenue of $208 million to $210 million, non-GAAP income from operations of $40 million to $42 million, and non-GAAP diluted earnings of $0.53 to $0.55 a share. Full-year 2026 revenue is expected at $841 million to $843 million and free cash flow at approximately $130 million.

Mohamed said turning the quarter’s execution into durable growth is the work ahead.