“Therefore, we are reiterating our full-year 2023 ARR guidance of $815 million to $825 million, representing year-over-year growth of 14% to 16%.”

In context

“Tim Adams (CFO): Thank you, Corey, and good afternoon to everyone on today's call. Thank you for joining us. Before I turn to the results, a quick reminder that except for revenue, all financial results we will discuss today are non-GAAP financial measures unless otherwise stated. Additionally, reconciliations between our GAAP and non-GAAP results can be found in our earnings press release. Rapid7 ended the first quarter of 2023 with $728 million in ARR, representing growth of 16% year-over-year, and consistent with our expectations. We continue to see year-over-year growth driven in large part by our anchor offerings of detection and response, cloud security, and vulnerability management, which represent the foundational capabilities of our Threat Complete and Cloud Risk Complete consolidation offerings. The breadth and effectiveness of our insight platform, along with our ability to drive value with our complete offerings are resonating with customers as they continue to navigate an evolving budgetary environment. We see ARR growth coming from both new and existing customers, with ARR per customer that grew 9% over the prior year to $66,000. While our global customer base grew 6% year-over-year to over 11,000 customers. As Corey mentioned earlier, over 20% of our new ARR in the first quarter was driven either by a Threat Complete or Cloud Risk Complete offering. We see traction here both with landing new customers and expanding with our current customers with new ARR for complete deals, seeing healthy contributions from each type of customer. First quarter revenue of $183 million grew 16% over the prior year and exceeded the high end of our guidance range. Over 95% of revenue in the quarter was recurring, and product revenue grew 17% over the prior year to $174 million. International revenue grew 21% year-over-year and represented 21% of total revenue, while North America grew 15% over the prior year. Turning to our operating and profitability measures for the quarter. Product gross margin was 76% in the first quarter, and overall gross margin was 73%. Both were within our stated range of expectations, which is mid-70s for product gross margin and low-70s for overall gross margin. Sales and marketing expenses represented 39% of revenue compared to 43% in the prior period. R&D and G&A expenses were 20% and 8% of revenue, respectively, compared to 23% and 9% in the first quarter of last year. We delivered strong first quarter operating income of $11 million above the high end of our guided range. Our adjusted EBITDA was $17 million in the quarter and diluted net income per share was $0.16. Moving to our balance sheet and cash flow statement. We ended the first quarter with cash, cash equivalents, and investments of $270 million. Cash flow from operations was $6 million, and free cash flow was ahead of our expectations and just below breakeven. This brings us to our outlook. We continue to believe that the largest drivers of ARR growth performance this year will be related to executional improvement, including continued momentum for our consolidated offerings, as well as the impact of the broader macroeconomic environment on customer buying behavior. We are pleased that our first quarter results track to the plan across all metrics despite a noisy environment. Therefore, we are reiterating our full-year 2023 ARR guidance of $815 million to $825 million, representing year-over-year growth of 14% to 16%. We are raising total revenue guidance for the full year to $773 million to $779 million, reflecting outperformance in the first quarter. This range represents growth of 13% to 14% with high single-digit growth contribution from our professional services revenue. On profitability, we are also raising our operating income guidance of $59 million to $63 million for the full year, which represents operating margin expansion of at least 300 basis points. The increase reflects the portion of the first quarter outperformance that was unrelated to the timing of spend. We expect full-year net income per share in the range of $0.83 to $0.89 based on an estimated 67.6 million diluted weighted average shares outstanding. For free cash flow, we continue to expect approximately $80 million for the full year, which is approximately double our 2022 level and reflects over 400 basis points of free cash flow margin expansion. Moving to our outlook for the second quarter of 2023, we expect total revenue in the range of $187 million to $189 million. We expect non-GAAP operating income for the second quarter in the range of $7 million to $9 million and non-GAAP net income per share of $0.09 to $0.12, which is based on 67.4 million diluted weighted average shares outstanding. Thank you for taking time to join us on the call today. And with that, we will open the line for questions. Operator?”