“We are maintaining our full-year revenue guidance range of $853 million to $863 million, representing revenue growth of 1% to 2%.”

In context

“Timothy M. Adams (CFO): Thank you, Corey, and good afternoon to everyone. We appreciate you taking the time to join us on today's call. 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 second quarter of 2025 with $840 million in ARR, representing growth of 3% over the prior year. Revenue and profitability were above our guided ranges, and we continue to see healthy growth in detection and response and early progress in Exposure Command adoption. While the customer spending environment remains mixed, particularly in North American mid-market, the operating discipline and flexibility we built into our business model continues to serve us well, and we remain focused on executing against our long-term strategy to deliver durable growth and expand free cash flow over time. Turning to our financial results for the second quarter. Year-over-year ARR growth in the second quarter was split fairly evenly between new and existing customers, ending the second quarter with 11,643 customers globally and average ARR per customer of $72,000. Second quarter revenue of $214 million grew 3% year-over-year and exceeded our guided range. Product subscription revenue grew 4% year-over-year to $208 million, supported by favorable bookings linearity in the quarter. Professional services declined year-over-year, consistent with our decision to deemphasize certain lower-margin services. International revenue represented 25% of total revenue and grew 10% over the prior year. On profitability measures, our product gross margin was 76% and total gross margin was 74%. Sales and marketing expenses were 33% of revenue, in line with the prior year. R&D and G&A expenses were 17% and 6% of revenue, respectively, compared to 15% and 7% in the prior year. Operating income for the second quarter was $36 million and above our guidance range, driven by timing of spending as we continue to focus on making targeted growth investments, as well as scaling our India innovation center during the second half. Adjusted EBITDA was $43 million in the quarter and non-GAAP net income per share was $0.58. Turning to our balance sheet and cash flow statement. We ended the second quarter with cash, cash equivalents, and investments of $600 million compared to $592 million at the end of the first quarter. In May, we fully repaid the remaining $46 million balance of our 2025 convertible notes. We generated free cash flow of $42 million in the second quarter, bringing our year-to-date free cash flow to $67 million. Additionally, we entered into a new $200 million revolving credit facility. While we have no immediate plans to draw on it, the facility adds incremental flexibility and reinforces our already strong liquidity position. This brings us to our outlook for the remainder of the year. For the full year 2025, we are narrowing our full-year ARR guidance range to $850 million to $865 million compared to our prior range of $850 million to $880 million. Additionally, we expect Q3 ending ARR of approximately $840 million, with net new ARR for the year weighted heavily to the fourth quarter. As Corey said, we will continue to target stronger pipeline conversion rates in the back half. We believe it's prudent to provide this additional context given ongoing macro uncertainty and the seasonal weighting of Q4. We are maintaining our full-year revenue guidance range of $853 million to $863 million, representing revenue growth of 1% to 2%. Recurring product revenue growth will continue to outpace total revenue growth, partially offset by year-over-year declines in professional services. We are also reiterating our full-year operating income range of $125 million to $135 million as well as our full-year free cash flow range of $125 million to $135 million. We now expect non-GAAP net income per share of $1.90 to $2.03 based on approximately 75.8 million diluted weighted average shares outstanding. For the third quarter, we expect revenue in the range of $215 million to $217 million, up roughly 1% from the prior year. We expect non-GAAP operating income between $29 million to $31 million and non-GAAP net income per share of $0.44 to $0.47 based on approximately 75.8 million diluted weighted average shares outstanding. To close, we remain focused on disciplined execution as we manage through a dynamic environment. We continue to see a resilient detection and response business, growing customer interest in our platform strategy, and a durable model that supports both innovation and strong free cash flow generation. We believe these fundamentals position us well for long-term value creation.”