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Rapid7 Announces Second Quarter 2020 Financial Results

August 6, 2020 4:06 PM

BOSTON, Aug. 06, 2020 (GLOBE NEWSWIRE) -- Rapid7, Inc. (Nasdaq: RPD), a leading provider of security analytics and automation, today announced its financial results for the second quarter of 2020.

"Rapid7's solid execution drove results that exceeded expectations for both growth and profitability during the second quarter. Strong ARR per customer growth of 20% drove quarter ending ARR to $379.9 million as customers turn to Rapid7 to transform their security programs in these dynamic times, while non-GAAP operating income of $4.3 million reflects underlying leverage in our business," said Corey Thomas, Chairman and CEO of Rapid7.

"Even amidst an uncertain landscape, our consistent first half execution provides us confidence in raising full year guidance and achieving non-GAAP operating profit for the full year."

Board of Directors Announcement

Rapid7 is pleased to announce the appointment of Reeny Sondhi to its board of directors, effective August 4, 2020. Ms. Sondhi has served as the Chief Security Officer of Autodesk, Inc. since July 2018. Previously, she was Autodesk’s Vice President, Chief of Product and Cloud Security from August 2015 to July 2018.

"We are privileged to have Reeny join the Rapid7 board," said Corey Thomas, Chairman and CEO of Rapid7. "Reeny is an accomplished technology leader with deep expertise across cloud and security, and she brings the perspective of our customers to the boardroom."

Prior to joining Autodesk, from March 2005 to August 2015, Ms. Sondhi was employed by EMC Corporation where she served most recently as Senior Director, Security Engineering and Assurance. Ms. Sondhi holds a B.S. in electronics engineering from Government Engineering College, Bhopal and a post graduate diploma in management from Institute of Management Development and Research.

Second Quarter 2020 Financial Results and Other Metrics

Three Months Ended June 30,
2020 2019 % Change
(dollars in thousands)
Annualized recurring revenue$379,891 $290,016 31 %
Number of customers9,142 8,400 9 %
ARR per customer$41.6 $34.5 20 %
Recurring revenue as a percentage of total revenue91 % 87 %
Renewal rate(1)105 % 113 %

(1) For the three months ended June 30, 2019 our renewal rate was adjusted from 116%, as previously disclosed, to 113% based on a reclassification of certain upsells and cross-sells.


Three Months Ended June 30,
2020 2019 % Change
(in thousands, except per share data)
Products revenue (2)$92,430 $72,579 27 %
Professional services revenue6,482 6,380 2 %
Total revenue$98,912 $78,959 25 %
North America revenue$82,557 $66,301 25 %
Rest of world revenue16,355 12,658 29 %
Total revenue$98,912 $78,959
GAAP gross profit$69,831 $56,778
GAAP gross margin71 % 72 %
Non-GAAP gross profit$73,137 $59,158
Non-GAAP gross margin74 % 75 %
GAAP loss from operations$(15,732) $(12,180)
GAAP operating margin(16)% (15)%
Non-GAAP income from operations$4,265 $500
Non-GAAP operating margin4 % 1 %
GAAP net loss$(21,466) $(13,420)
GAAP net loss per share, basic and diluted$(0.42) $(0.28)
Non-GAAP net income$2,795 $1,093
Non-GAAP net income per share, basic$0.06 $0.02
Non-GAAP net income per share, diluted$0.05 $0.02
Adjusted EBITDA$7,556 $2,746
Cash provided by operating activities$442 $2,483

(2) Historically, we have presented revenue on our consolidated statement of operations as products, maintenance and support and professional services revenue. For the three months ended June 30, 2020, we have combined products and maintenance and support revenue together as products revenue on our consolidated statement of operations. Prior periods have been adjusted to conform with this presentation.

For additional details on the reconciliation of non-GAAP measures and certain other business metrics to their nearest comparable GAAP measures, please refer to the accompanying financial data tables included in this press release.

Recent Business Highlights

Third Quarter and Full-Year 2020 Guidance

Rapid7 anticipates annualized recurring revenue, revenue, non-GAAP income (loss) from operations, and non-GAAP net loss per share to be in the following ranges:

Third Quarter 2020 Full-Year 2020
(dollars in millions)
Annualized recurring revenue $404.0 to$420.0
Year-over-year growth 19 %to24 %
Revenue$100.7 to$102.3 $399.0 to$403.0
Year-over-year growth21 %to23 % 22 %to23 %
Non-GAAP (loss) income from operations$(0.5) to$0.5 $0.0 to$2.0
Non-GAAP net loss per share$(0.06) to$(0.04) $(0.14) to$(0.10)
Weighted average shares outstanding 51.3 51.0

The guidance provided above is forward-looking in nature. Actual results may differ materially. See the cautionary note regarding “Forward-Looking Statements” below. Guidance for the third quarter and full-year 2020 does not include any potential impact of foreign exchange gains or losses. The weighted average shares outstanding for the third quarter and full-year 2020 represent basic shares outstanding given our projected non-GAAP net loss. In addition, fluctuations in Rapid7’s quarterly operating results may be particularly pronounced in the current economic environment due to the uncertainty caused by, and the unprecedented nature of, the current COVID-19 pandemic, whose severity, duration and ultimate impact is difficult to predict at this time. The primary set of drivers of Rapid7’s actual financial performance relative to the ranges provided will be a function of how long portions of the economy remain closed, especially if there are broad regional or systematic closures as a result of a sustained pandemic resurgence, and the pace of recovery. The guidance provided above is based on a number of assumptions, estimates and expectations as of the date of this press release and, while presented with numerical specificity, this guidance is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond Rapid7's control and are based upon specific assumptions with respect to future business decisions or economic conditions, some of which may change. Rapid7 undertakes no obligation to update guidance after this date.

Non-GAAP guidance excludes estimates for stock-based compensation expense, amortization of acquired intangible assets, amortization of debt discount and issuance costs, and certain other items. Rapid7 has provided a reconciliation of each non-GAAP guidance measure to the most comparable GAAP measures in the financial statement tables included in this press release. The reconciliation does not reflect any items that are unknown at this time, such as acquisition-related expenses and litigation-related expenses for the third and fourth quarters of 2020, which we are not able to predict without unreasonable effort due to their inherent uncertainty.

Conference Call and Webcast Information

Rapid7 will host a conference call today, August 6, 2020, to discuss its results at 4:30 p.m. Eastern Time. The call will be accessible by telephone at 877-357-4230 (domestic) or 629-228-0721 (international). The call will also be available live via webcast on Rapid7's website at https://investors.rapid7.com. A telephone replay of the conference call will be available at 855-859-2056 or 404-537-3406 (access code 9256427) until August 13, 2020. A webcast replay will be available at https://investors.rapid7.com.

About Rapid7

Rapid7 (Nasdaq: RPD) is advancing security with visibility, analytics, and automation delivered through our Insight cloud. Our solutions simplify the complex, allowing security teams to work more effectively with IT and development to reduce vulnerabilities, monitor for malicious behavior, investigate and shut down attacks, and automate routine tasks. Over 9,100 customers rely on Rapid7 technology, services, and research to improve security outcomes and securely advance their organizations. For more information, visit our website, check out our blog, or follow us on Twitter.

Non-GAAP Financial Measures and Other Metrics

To supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States, or GAAP, we provide investors with certain non-GAAP financial measures and other metrics, which we believe are helpful to our investors. We use these non-GAAP financial measures and other metrics for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We also use certain non-GAAP financial measures as performance measures under our executive bonus plan. We believe that these non-GAAP financial measures and other metrics provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making.

While our non-GAAP financial measures are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, you should review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures included below, and not rely on any single financial measure to evaluate our business.

Non-GAAP Financial Measures

We disclose the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP net income (loss) per share and adjusted EBITDA. We also disclose non-GAAP gross margin and non-GAAP operating margin derived from these financial measures.

We define non-GAAP gross profit, non-GAAP income (loss) from operations, non-GAAP net income (loss) and non-GAAP net income (loss) per share as the respective GAAP balances excluding the effect of stock-based compensation expense, amortization of acquired intangible assets, amortization of debt discount and issuance costs and certain other items such as acquisition-related expenses and litigation-related expenses. Non-GAAP net income (loss) per basic and diluted share is calculated as non-GAAP net income (loss) divided by the weighted average shares used to compute net income (loss) per share, with the number of weighted average shares decreased to reflect the anti-dilutive impact of the capped call transactions entered into in connection with our convertible senior notes.

We believe these non-GAAP financial measures are useful to investors in assessing our operating performance due to the following factors:

Stock-based compensation expense. We exclude stock-based compensation expense because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact our non-cash expense. We believe that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between our operating results from period to period.

Amortization of acquired intangible assets. We believe that excluding the impact of amortization of acquired intangible assets allows for more meaningful comparisons between operating results from period to period as the intangible assets are valued at the time of acquisition and are amortized over several years after the acquisition.

Amortization of debt discount and issuance costs. The expense for the amortization of debt discount and debt issuance costs related to our convertible senior notes and revolving credit facility is a non-cash item, and we believe the exclusion of this interest expense provides a more useful comparison of our operational performance in different periods.

Litigation-related expenses. We exclude certain litigation-related expenses consisting of professional fees and related costs incurred by us related to significant litigation outside the ordinary course of business. We believe it is useful to exclude such expenses because we do not consider such amounts to be part of our ongoing operations.

Acquisition-related expenses. We exclude acquisition-related expenses as costs that are unrelated to the current operations and neither are comparable to the prior period nor predictive of future results.

Anti-dilutive impact of capped call transaction. Our capped calls transactions are intended to offset potential dilution from the conversion features in our convertible senior notes. Although we cannot reflect the anti-dilutive impact of the capped call transactions under GAAP, we do reflect the anti-dilutive impact of the capped call transactions in non-GAAP net income (loss) per basic and diluted share to provide investors with useful information in evaluating our financial performance on a per share basis.

Adjusted EBITDA (non-GAAP). Adjusted EBITDA is a non-GAAP measure that we define as net loss before (1) interest income, (2) interest expense, (3) other income (expense), net, (4) provision for income taxes, (5) depreciation expense, (6) amortization of intangible assets, (7) stock-based compensation expense, and (8) certain other items. We believe that the use of adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods.

Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact upon our reported financial results. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in our business and an important part of the compensation provided to our employees.

Other Metrics

Annualized Recurring Revenue (ARR). ARR is defined as the annual value of all recurring revenue related contracts in place at the end of the period. ARR should be viewed independently of revenue and deferred revenue as ARR is an operating metric and is not intended to be combined with or replace these items. ARR is not a forecast of future revenue and can be impacted by contract start and end dates and renewal rates, and does not include revenue reported as perpetual license or professional services revenue in our consolidated statement of operations.

Number of Customers. We define a customer as any entity that has (1) an active Rapid7 contract or a contract that expired within 90 days or less of the applicable measurement date; and for Logentries products, those customers with a contract value equal to or greater than $2,400 per year, or (2) purchased Rapid7 professional services within the 12 months preceding the applicable measurement date.

ARR per Customer. We define ARR per customer as ARR divided by the number of customers at the end of the period.

Recurring Revenue. We define recurring revenue as revenue from term software licenses, content subscriptions, managed services, cloud-based subscriptions and maintenance and support.

Renewal Rate. We calculate our renewal rate by dividing the dollar value of renewed customer agreements, including upsells and cross-sells of additional products, but excluding professional services, in a trailing 12-month period by the dollar value of the corresponding customer agreements.

Cautionary Language Concerning Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, the statements regarding our financial guidance for the third quarter and full year 2020, the assumptions underlying such guidance and the timing of global economic recovery and the anticipated impact of COVID-19 on our guidance, business, financial condition and results of operations. Our use of the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. The events described in our forward-looking statements are subject to a number of risks and uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Risks that could cause or contribute to such differences include, but are not limited to, risks arising from the ongoing COVID-19 pandemic, fluctuations in our quarterly results, failure to meet our publicly announced guidance or other expectations about our business, our rapid growth and ability to sustain our revenue growth rate, the ability of our products and professional services to correctly detect vulnerabilities, our customers renewal of their subscriptions with us, competition in the markets in which we operate, market growth, our ability to innovate and manage our growth, our sales cycles, our ability to integrate acquired companies, including DivvyCloud, our ability to operate in compliance with applicable laws as well as other risks and uncertainties set forth in the “Risk Factors” section of our most recent Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (the “SEC”) on May 8, 2020 and in the subsequent reports that we file with the Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those expressed in any forward-looking statements we may make. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.


Investor contact:

Sunil Shah
Vice President, Investor Relations
[email protected]
(857) 990-4074

Press contact:

Caitlin Doherty
[email protected]
(857) 990-4240




RAPID7, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands)

June 30, 2020 December 31, 2019
Assets
Current assets:
Cash and cash equivalents $279,343 $123,413
Short-term investments 36,313 116,158
Accounts receivable, net 76,823 87,927
Deferred contract acquisition and fulfillment costs, current portion 18,439 17,047
Prepaid expenses and other current assets 20,708 20,051
Total current assets 431,626 364,596
Long-term investments 5,365 22,887
Property and equipment, net 48,904 50,670
Operating lease right-of-use assets 72,005 60,984
Deferred contract acquisition and fulfillment costs, non-current portion 35,815 34,213
Goodwill 213,686 97,866
Intangible assets, net 47,706 28,561
Other assets 5,304 5,136
Total assets $860,411 $664,913
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $7,078 $6,836
Accrued expenses 36,165 41,021
Operating lease liabilities, current portion 9,436 7,179
Deferred revenue, current portion 227,318 231,518
Other current liabilities — 119
Total current liabilities 279,997 286,673
Convertible senior notes, net 368,161 185,200
Operating lease liabilities, non-current portion 80,081 72,294
Deferred revenue, non-current portion 33,280 36,226
Other long-term liabilities 8,204 1,352
Total liabilities 769,723 581,745
Stockholders’ equity:
Common stock 509 499
Treasury stock (4,764) (4,764)
Additional paid-in-capital 657,678 605,650
Accumulated other comprehensive income 85 213
Accumulated deficit (562,820) (518,430)
Total stockholders’ equity 90,688 83,168
Total liabilities and stockholders’ equity $860,411 $664,913



RAPID7, INC.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Revenue:
Products$92,430 $72,579 $179,979 $138,424
Professional services6,482 6,380 13,273 13,720
Total revenue98,912 78,959 193,252 152,144
Cost of revenue:
Products23,118 16,637 44,373 31,006
Professional services5,963 5,544 12,422 11,148
Total cost of revenue29,081 22,181 56,795 42,154
Total gross profit69,831 56,778 136,457 109,990
Operating expenses:
Research and development26,120 19,626 50,322 37,491
Sales and marketing44,959 38,172 93,104 73,310
General and administrative14,484 11,160 28,583 21,113
Total operating expenses85,563 68,958 172,009 131,914
Loss from operations(15,732) (12,180) (35,552) (21,924)
Other income (expense), net:
Interest income208 1,582 1,256 3,313
Interest expense(5,917) (3,312) (9,379) (6,541)
Other income (expense), net210 (29) (237) (235)
Loss before income taxes(21,231) (13,939) (43,912) (25,387)
Provision for (benefit from) income taxes235 (519) 478 (294)
Net loss$(21,466) $(13,420) $(44,390) $(25,093)
Net loss per share, basic and diluted$(0.42) $(0.28) $(0.88) $(0.52)
Weighted-average common shares outstanding, basic and diluted50,695,706 48,451,562 50,411,508 48,141,474



RAPID7, INC.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Cash flows from operating activities:
Net loss$(21,466) $(13,420) $(44,390) $(25,093)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization5,576 3,944 10,419 7,371
Amortization of debt discount and issuance costs4,264 2,594 7,007 5,104
Stock-based compensation expense16,446 10,430 29,793 19,064
Provision for doubtful accounts481 916 1,008 1,353
Deferred income taxes— (761) — (761)
Foreign currency re-measurement loss(248) (58) 199 191
Other non-cash (income) expense(9) (568) (147) (1,290)
Changes in operating assets and liabilities:
Accounts receivable(11,773) (10,180) 10,835 4,549
Deferred contract acquisition and fulfillment costs(2,478) (2,078) (2,994) (3,172)
Prepaid expenses and other assets1,638 (3,394) 1,773 (9,334)
Accounts payable(3,873) 2,118 137 2,184
Accrued expenses7,126 6,378 (7,437) (7,312)
Deferred revenue4,675 7,038 (11,996) (5,066)
Other liabilities83 (476) (980) 1,129
Net cash provided by (used in) operating activities442 2,483 (6,773) (11,083)
Cash flows from investing activities:
Business acquisition, net of cash acquired(125,771) (14,621) (125,771) (14,621)
Purchases of property and equipment(1,199) (9,249) (3,955) (17,712)
Capitalization of internal-use software costs(1,474) (1,551) (2,948) (3,152)
Purchases of investments(24,987) (9,403) (49,259) (72,432)
Sales/maturities of investments32,675 67,564 146,599 140,302
Net cash (used in) provided by investing activities(120,756) 32,740 (35,334) 32,385
Cash flows from financing activities:
Proceeds from issuance of convertible senior notes, net of issuance costs paid of $6,500223,500 — 223,500 —
Purchase of capped calls related to convertible senior notes(27,255) — (27,255) —
Payments of debt issuance costs(248) — (248) —
Taxes paid related to net share settlement of equity awards(1,917) (1,860) (3,450) (2,839)
Proceeds from employee stock purchase plan— — 3,346 2,634
Proceeds from stock option exercises2,167 3,340 3,728 6,058
Net cash provided by financing activities196,247 1,480 199,621 5,853
Effect of exchange rate changes on cash, cash equivalents and restricted cash259 (3) (301) (151)
Net increase in cash, cash equivalents and restricted cash76,192 36,700 157,213 27,004
Cash, cash equivalents and restricted cash, beginning of period204,434 89,869 123,413 99,565
Cash, cash equivalents and restricted cash, end of period$280,626 $126,569 $280,626 $126,569



RAPID7, INC.
GAAP to Non-GAAP Reconciliation (Unaudited)
(in thousands, except share and per share data)

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
GAAP gross profit$69,831 $56,778 $136,457 $109,990
Add: Stock-based compensation expense11,131 718 2,062 1,291
Add: Amortization of acquired intangible assets22,175 1,662 3,833 3,020
Non-GAAP gross profit$73,137 $59,158 $142,352 $114,301
Non-GAAP gross margin73.9 % 74.9 % 73.7 % 75.1 %
GAAP gross profit - Products$69,312 $55,942 $135,606 $107,418
Add: Stock-based compensation expense710 373 1,283 650
Add: Amortization of acquired intangible assets2,175 1,662 3,833 3,020
Non-GAAP gross profit - Products$72,197 $57,977 $140,722 $111,088
Non-GAAP gross margin - Products78.1 % 79.9 % 78.2 % 80.3 %
GAAP gross profit - Professional services$519 $836 $851 $2,572
Add: Stock-based compensation expense421 345 779 641
Non-GAAP gross profit - Professional services$940 $1,181 $1,630 $3,213
Non-GAAP gross margin - Professional services14.5 % 18.5 % 12.3 % 23.4 %
GAAP loss from operations$(15,732) $(12,180) $(35,552) $(21,924)
Add: Stock-based compensation expense116,446 10,430 29,793 19,064
Add: Amortization of acquired intangible assets22,285 1,698 3,975 3,095
Add: Acquisition-related expenses3831 297 1,138 514
Add: Litigation-related expenses4435 255 978 328
Non-GAAP income from operations$4,265 $500 $332 $1,077
GAAP net loss$(21,466) $(13,420) $(44,390) $(25,093)
Add: Stock-based compensation expense116,446 10,430 29,793 19,064
Add: Amortization of acquired intangible assets22,285 1,698 3,975 3,095
Add: Acquisition-related expenses3831 297 1,138 514
Add: Litigation-related expenses4435 255 978 328
Add: Amortization of debt discount and issuance costs4,264 2,594 7,007 5,104
Add: Release of valuation allowance, acquisition-related— (761) — (761)
Non-GAAP net income (loss)$2,795 $1,093 $(1,499) $2,251
Reconciliation of net (loss) income per share, basic
GAAP net loss per share, basic$(0.42) $(0.28) $(0.88) $(0.52)
Non-GAAP adjustments to net loss0.48 0.30 0.85 0.57
Non-GAAP net (loss) income per share, basic$0.06 $0.02 $(0.03) $0.05
Reconciliation of net (loss) income per share, diluted
GAAP net loss per share, diluted$(0.42) $(0.28) $(0.88) $(0.52)
Non-GAAP adjustments to net loss0.47 0.30 0.85 0.56
Non-GAAP net (loss) income per share, diluted$0.05 $0.02 $(0.03) $0.04
Weighted average shares used in GAAP per share calculation, basic and diluted50,695,706 48,451,562 50,411,508 48,141,474
Weighted average shares used in non-GAAP per share calculation:
Basic50,695,706 48,451,562 50,411,508 48,141,474
Diluted53,063,261 52,035,868 50,411,508 51,611,858
1 Includes stock-based compensation expense as follows:
Cost of revenue$1,131 $718 $2,062 $1,291
Research and development6,389 4,054 11,034 7,228
Sales and marketing4,345 2,942 8,023 5,406
General and administrative4,581 2,716 8,674 5,139
2 Includes amortization of acquired intangible assets as follows:
Cost of revenue$2,175 $1,662 $3,833 $3,020
Sales and marketing80 35 112 73
General and administrative30 1 30 2
3 Includes acquisition-related expenses as follows:
General and administrative$831 $297 $1,138 $514
4 Includes litigation-related expenses as follows:
General and administrative$435 $255 $978 $328



RAPID7, INC.
Reconciliation of Net Loss to Adjusted EBITDA (Unaudited)
(in thousands)

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
GAAP net loss$(21,466) $(13,420) $(44,390) $(25,093)
Interest income(208) (1,582) (1,256) (3,313)
Interest expense5,917 3,312 9,379 6,541
Other (income) expense, net(210) 29 237 235
Provision for income taxes235 (519) 478 (294)
Depreciation expense2,740 2,056 5,415 3,906
Amortization of intangible assets2,836 1,888 5,004 3,465
Stock-based compensation expense16,446 10,430 29,793 19,064
Acquisition-related expenses831 297 1,138 514
Litigation-related expenses435 255 978 328
Adjusted EBITDA$7,556 $2,746 $6,776 $5,353



RAPID7, INC.
Third Quarter and Full-Year 2020 Guidance
GAAP to Non-GAAP Reconciliation
(in millions, except per share data)

Third Quarter 2020 Full-Year 2020
Reconciliation of GAAP to Non-GAAP (loss) income from operations:
Anticipated GAAP loss from operations$(19.8) to$(18.8) $(74.1) to$(72.1)
Add: Anticipated stock-based compensation expense16.7 to16.7 62.9 to62.9
Add: Anticipated amortization of acquired intangible assets2.6 to2.6 9.1 to9.1
Add: Anticipated acquisition-related expenses— to— 1.1 to1.1
Add: Anticipated litigation-related expenses— to— 1.0 to1.0
Anticipated non-GAAP (loss) income from operations$(0.5) to$0.5 $— to$2.0
Reconciliation of GAAP to Non-GAAP net loss:
Anticipated GAAP net loss$(27.7) to$(26.7) $(98.8) to$(96.8)
Add: Anticipated stock-based compensation expense16.7 to16.7 62.9 to62.9
Add: Anticipated amortization of acquired intangible assets2.6 to2.6 9.1 to9.1
Add: Anticipated acquisition-related expenses— to— 1.1 to1.1
Add: Anticipated litigation-related expenses— to— 1.0 to1.0
Add: Anticipated amortization of debt discount and issuance costs5.2 to5.2 17.4 to17.4
Anticipated non-GAAP net loss$(3.2) to$(2.2) $(7.3) to$(5.3)
Anticipated GAAP net loss per share$(0.54) $(0.52) $(1.94) $(1.90)
Anticipated non-GAAP net loss per share$(0.06) $(0.04) $(0.14) $(0.10)
Weighted average shares used in GAAP and non-GAAP per share calculation, basic and diluted 51.3 51.0

The reconciliation does not reflect any items that are unknown at this time, such as acquisition-related expenses and litigation-related expenses for the third and fourth quarters of 2020, which we are not able to predict without unreasonable effort due to their inherent uncertainty.

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