Rapid7 (RPD) IPO Opens Up 67%

Today's IPO for Rapid7, Inc (Nasdaq: RPD) opened for trading at $26.75 after pricing 6,450,000 shares of common stock at a price to the public of $16 per share, above the expected $13 to $15 per share range.

In addition, Rapid7 has granted the underwriters a 30-day option to purchase up to an additional 967,500 shares to cover over-allotments, if any.

Morgan Stanley & Co. LLC and Barclays Capital Inc. are acting as joint book-running managers for the offering. Pacific Crest Securities, a division of KeyBanc Capital Markets Inc., William Blair & Company, L.L.C., Raymond James & Associates, Inc., and Cowen and Company, LLC are acting as co-managers.

Rapid7 is a leading provider of security data and analytics solutions that enable organizations to implement an active, analytics-driven approach to cyber security. We combine our extensive experience in security data and analytics and deep insight into attacker behaviors and techniques to make sense of the wealth of data available to organizations about their IT environments and users. Our solutions empower organizations to prevent attacks by providing visibility into vulnerabilities and to rapidly detect compromises, respond to breaches, and correct the underlying causes of attacks. Rapid7 is trusted by more than 3,900 organizations across 90 countries, including 30% of the Fortune 1000.

The company has experienced strong revenue growth with revenue increasing from $31.0 million in 2011 to $76.9 million in 2014, representing a 35% compound annual growth rate. They have strong visibility to revenue as 53% of the revenue recognized in 2014 was recorded on their balance sheet as deferred revenue as of December 31, 2013 and 85% of the revenue recognized in the first quarter of 2015 was recorded on their balance sheet as deferred revenue as of December 31, 2014. The company incurred a net loss of $32.6 million in 2014 as they continued to invest for growth given our large market opportunity.

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