Specialist
Former executive at Rapid7 Inc
Agenda
- Rapid7’s (NASDAQ: RPD) operating environment and competitive positioning across vulnerability management vendors such as Qualys (NASDAQ: QLYS) and Tenable (NASDAQ: TENB) and cloud security vendors such as Wiz and Orca
- Revenue drivers and growth outlook amid macroeconomic headwinds
- Go-to-market strategy, adoption trends and customer segmentation
- Product roadmap and platform expansion opportunities
- Could Rapid7 be a viable takeover target?
Questions
1.
Could you describe Rapid7 as a company, including its value proposition and the core offerings across vulnerability management, MDR [managed detection and response], threat intelligence, cloud security, XDR [extended detection and response] and SIEM [security information and event management], and anything else that is important to consider?
2.
Could you provide a rough approximation of the revenue breakdown across Rapid7’s different offerings? There are so many of them, so I’d like to understand the offerings that are driving the most revenue today.
3.
Could you provide a rough estimate of the revenue contribution from the vulnerability management and the MDR services?
4.
In Q1 2023, Rapid7 noted faster-than-expected traction from the Managed Threat Complete and Cloud Risk Complete offerings, which made up over 20% of new business during that quarter. Thinking about the company’s various products and services, which do you think are growing the fastest and how do you see that impacting the overall revenue mix over time?
5.
Could you estimate a growth rate for MDR?
6.
Do you see the growth rate for MDR slowing down? How might this trend in H2 2023?
7.
Rapid7’s ARR grew 16% YoY in Q1 2023. In full-year 2023, ARR is expected to grow at 15% YoY. How would you characterise the company’s recent growth and what do you see as the primary drivers for that growth?
8.
Given the higher growth rate you mentioned for MDR, would it make sense to assume that growth for vulnerability management is flat? Could you discuss how much growth vulnerability management has seen recently?
9.
In which product lines would you expect Rapid7 to be experiencing the most exposure to macroeconomic headwinds and related revenue slowdown?
10.
Rapid7 claims that its recurring revenue potential for an average sized customer is USD 520,000 per year. Recent ARR per customer was reported as approximately USD 66,000 per year. That’s a fairly large gap between current spend and the wallet share it says that Rapid7 can achieve.
11.
Is the lack of integration across the platform something that customers or prospects were noticing? Was that an area of friction at all for trying to cross- or upsell?
12.
Which vendors come to mind that have executed better on the platform?
13.
Is the platform challenge being actively addressed in Rapid7’s R&D spend? How do you see the company attempting to improve this, if at all?
14.
Is there any particular product that you think is most responsible for driving expansion revenue today?
15.
There’s been recent discussion around Rapid7 as a potential takeover target by PE. What’s your view on this company as an acquisition target and your reaction to that news?
16.
You mentioned platform strategy and product being a key challenge that perhaps would be attended to if Rapid7 were acquired. What other key changes do you think would be made if that were to happen, thinking about investment priorities, shifts in OPEX or anything else that might be important during a takeover?
17.
You mentioned the potential need for a shift in Rapid7’s leadership, particularly due to a need for a change in product strategy and vision. What are your thoughts on the current management team?
18.
It sounds as if there’s some disorganisation or lack of a cohesive vision across the teams at Rapid7. Would you highlight any particular negative impact that’s come out of that?
19.
Thinking about Rapid7 as a potential takeout target, what’s your impression of the approach of cost expense management at the company? Does it seem as if there could be a lot of fat to cut at the company? How would you characterise the operating environment?
20.
Are there any functions in particular – thinking about sales, general administrative and so on – where you think Rapid7 has fat to cut?
21.
Could you describe Rapid7’s competitive positioning and differentiation, thinking about key competitors for cloud security products such as Wiz, Orca, Lacework or Prisma Cloud from Palo Alto?
22.
When Rapid7 comes up against the competitors you outlined, such as Wiz or Orca, in an RFP [request for proposal] or bake-off scenario, what’s a primary factor driving a win or a loss for Rapid7? Could you estimate win rates?
23.
You mentioned some talent departing Rapid7 to go to Orca and Wiz. Do you think talent drain is a significant challenge for the company right now? Where exactly is that talent going?
24.
Could you discuss how competition is trending for Rapid7 vs some of the more classic vulnerability management vendors such as Qualys and Tenable?
