Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-37496

RAPID7, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware						35-2423994
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


120 Causeway Street
Boston,	MA	02114
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (617) 247-1717


Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	RPD	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Small Reporting Company	☐
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 31, 2024, there were 63,206,602 shares of the registrant’s common stock, $0.01 par value per share, outstanding.

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		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Income (Loss)	3
	Condensed Consolidated Statements of Changes in Stockholders' Deficit	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42
PART II.	OTHER INFORMATION	43
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	44
Item 6.	Exhibits	45
	Signatures	46

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

RAPID7, INC.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)


	September 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	222,571	$	213,629
Short-term investments	221,122		169,544
Accounts receivable, net of allowance for credit losses of $1,591 and $951 at September 30, 2024 and December 31, 2023, respectively	141,891		164,862
Deferred contract acquisition and fulfillment costs, current portion	49,710		45,008
Prepaid expenses and other current assets	37,328		41,407
Total current assets	672,622		634,450
Long-term investments	60,382		56,171
Property and equipment, net	33,936		39,642
Operating lease right-of-use assets	50,756		54,693
Deferred contract acquisition and fulfillment costs, non-current portion	72,392		76,601
Goodwill	575,165		536,351
Intangible assets, net	90,748		94,546
Other assets	18,530		12,894
Total assets	$	1,574,531	$	1,505,348
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	6,005	$	15,812
Accrued expenses and other current liabilities	82,319		85,025
Convertible senior notes, current portion, net	45,816		—
Operating lease liabilities, current portion	15,849		13,452
Deferred revenue, current portion	423,640		455,503
Total current liabilities	573,629		569,792
Convertible senior notes non-current portion, net	887,362		929,996
Operating lease liabilities, non-current portion	72,555		81,130
Deferred revenue, non-current portion	28,239		32,577
Other long-term liabilities	19,050		10,032
Total liabilities	$	1,580,835	$	1,623,527
Stockholders’ deficit:
Preferred stock, $0.01 par value per share; 100,000,000 shares authorized at September 30, 2024 and December 31, 2023; 0 shares issued and outstanding at September 30, 2024 and December 31, 2023	$	—	$	—
Common stock, $0.01 par value per share; 100,000,000 shares authorized at September 30, 2024 and December 31, 2023; 63,747,524 and 62,283,630 shares issued at September 30, 2024 and December 31, 2023, respectively; 63,177,945 and 61,714,051 shares outstanding at September 30, 2024 and December 31, 2023, respectively	632		617
Treasury stock, at cost, 569,579 shares at September 30, 2024 and December 31, 2023	(4,765)		(4,765)
Additional paid-in-capital	978,898		894,630
Accumulated other comprehensive income	1,929		1,344
Accumulated deficit	(982,998)		(1,010,005)
Total stockholders’ deficit	(6,304)		(118,179)
Total liabilities and stockholders’ deficit	$	1,574,531	$	1,505,348

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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RAPID7, INC.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenue:
Product subscriptions	$	205,593	$	189,876	$	602,578	$	545,349
Professional services	9,061		8,967		25,168		27,090
Total revenue	214,654		198,843		627,746		572,439
Cost of revenue:
Product subscriptions	56,653		51,261		166,290		150,597
Professional services	6,364		6,569		18,478		21,396
Total cost of revenue	63,017		57,830		184,768		171,993
Total gross profit	151,637		141,013		442,978		400,446
Operating expenses:
Research and development	44,565		39,940		125,611		137,048
Sales and marketing	74,521		75,699		225,121		239,322
General and administrative	18,590		17,866		60,837		64,961
Impairment of long-lived assets	—		3,553		—		30,784
Restructuring	—		19,996		—		19,996
Total operating expenses	137,676		157,054		411,569		492,111
Income (loss) from operations	13,961		(16,041)		31,409		(91,665)
Other income (expense), net:
Interest income	5,571		2,545		15,512		6,000
Interest expense	(2,837)		(56,515)		(8,180)		(62,005)
Other income (expense), net	2,811		(4,518)		681		(18,093)
Income (loss) before income taxes	19,506		(74,529)		39,422		(165,763)
Provision for income taxes	2,952		2,082		12,415		3,545
Net income (loss)	$	16,554	$	(76,611)	$	27,007	$	(169,308)
Net income (loss) per share, basic	$	0.26	$	(1.25)	$	0.43	$	(2.80)
Net income (loss) per share, diluted	$	0.22	$	(1.25)	$	0.36	$	(2.80)
Weighted-average common shares outstanding, basic	62,898,078		61,065,157		62,389,482		60,506,082
Weighted-average common shares outstanding, diluted	74,537,085		61,065,157		74,225,110		60,506,082

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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RAPID7, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net income (loss)	$	16,554	$	(76,611)	$	27,007	$	(169,308)
Other comprehensive income (loss):
Change in fair value of cash flow hedges	1,840		(1,120)		882		(481)
Adjustment for net (gains)/losses realized on cash flow hedges and included in net income (loss), net of taxes	(183)		(49)		(656)		531
Total change in unrealized gains (losses) on cash flow hedges	1,657		(1,169)		226		50
Change in unrealized gains on investments	1,123		97		359		539


Total other comprehensive income (loss)	2,780		(1,072)		585		589
Comprehensive income (loss)	$	19,334	$	(77,683)	$	27,592	$	(168,719)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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RAPID7, INC.

Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited)

Three Months Ended September 30, 2024 and 2023

(in thousands)


	Common stock			Treasury stock			Additional paid-in-capital		Accumulated other comprehensive loss		Accumulated deficit		Total stockholders’ deficit
	Shares	Amount		Shares	Amount
Balance, June 30, 2024	62,702	$	628	570	$	(4,765)	$	951,620	$	(851)	$	(999,552)	$	(52,920)
Stock-based compensation expense	—	—		—	—		23,739		—		—		23,739
Issuance of common stock under employee stock purchase plan	144	1					4,200						4,201
Vesting of restricted stock units	341	3		—	—		(3)		—		—		—
Shares withheld for employee taxes	(21)	—		—	—		(794)		—		—		(794)
Issuance of common stock upon exercise of stock options	11	—		—	—		136		—		—		136
Other comprehensive loss	—	—		—	—		—		2,780		—		2,780
Net income	—	—		—	—		—		—		16,554		16,554
Balance, September 30, 2024	63,177	$	632	570	$	(4,765)	$	978,898	$	1,929	$	(982,998)	$	(6,304)


	Common stock			Treasury stock			Additional paid-in-capital		Accumulated other comprehensive loss		Accumulated deficit		Total stockholders’ deficit
	Shares	Amount		Shares	Amount
Balance, June 30, 2023	60,940	$	609	570	$	(4,765)	$	846,326	$	250	$	(953,442)	$	(111,022)
Stock-based compensation expense	—	—		—	—		23,719		—		—		23,719
Issuance of common stock under employee stock purchase plan	152	2		—	—		5,147		—		—		5,149
Vesting of restricted stock units	338	3		—	—		(3)		—		—		—
Shares withheld for employee taxes	(29)	—		—	—		(1,421)		—		—		(1,421)
Issuance of common stock upon exercise of stock options	21	—		—	—		302		—		—		302
Purchase of capped calls related to convertible senior notes	—	—		—	—		(36,570)		—		—		(36,570)
Repurchase and inducement of convertible senior notes	—	—		—	—		35,881		—		—		35,881
Other comprehensive gain	—	—		—	—		—		(1,072)		—		(1,072)
Net loss	—	—		—	—		—		—		(76,611)		(76,611)
Balance, September 30, 2023	61,422	$	614	570	$	(4,765)	$	873,381	$	(822)	$	(1,030,053)	$	(161,645)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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RAPID7, INC.

Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited)

Nine Months Ended September 30, 2024 and 2023

(in thousands)


	Common stock			Treasury stock			Additional paid-in-capital		Accumulated other comprehensive loss		Accumulated deficit		Total stockholders’ deficit
	Shares	Amount		Shares	Amount
Balance, December 31, 2023	61,714	$	617	570	$	(4,765)	$	894,630	$	1,344	$	(1,010,005)	$	(118,179)
Stock-based compensation expense	—	—		—	—		77,381		—		—		77,381
Issuance of common stock under employee stock purchase plan	292	3		—	—		9,243		—		—		9,246
Vesting of restricted stock units	1,123	11		—	—		(11)		—		—		—
Shares withheld for employee taxes	(83)	—		—	—		(3,883)		—		—		(3,883)
Issuance of common stock upon exercise of stock options	131	1		—	—		1,538		—		—		1,539


Other comprehensive loss	—	—		—	—		—		585		—		585
Net income	—	—		—	—		—		—		27,007		27,007
Balance, September 30, 2024	63,177	$	632	570	$	(4,765)	$	978,898	$	1,929	$	(982,998)	$	(6,304)


	Common stock			Treasury stock			Additional paid-in-capital		Accumulated other comprehensive loss		Accumulated deficit		Total stockholders’ deficit
	Shares	Amount		Shares	Amount
Balance, December 31, 2022	59,720	$	597	487	$	(4,764)	$	746,249	$	(1,411)	$	(860,745)	$	(120,074)
Stock-based compensation expense	—	—		—	—		84,513		—		—		84,513
Issuance of common stock under employee stock purchase plan	330	4		—	—		11,319		—		—		11,323
Vesting of restricted stock units	1,139	10		—	—		(10)		—		—		—
Shares withheld for employee taxes	(82)	—		—	—		(4,012)		—		—		(4,012)
Issuance of common stock upon exercise of stock options	208	2		—	—		2,982		—		—		2,984
Issuance of common stock in relation to an acquisition	107	1		—	—		(1)		—		—		—
Repurchase of common stock in relation to acquisition	—	—		83	(1)		1		—		—		—
Reclassification of 2023 capped calls from equity to derivative asset	—	—		—	—		33,029		—		—		33,029
Purchase of capped calls related to convertible senior notes	—	—		—	—		(36,570)		—		—		(36,570)
Repurchase and inducement of convertible senior notes	—	—		—	—		35,881		—		—		35,881
Other comprehensive gain	—	—		—	—		—		589		—		589
Net loss	—	—		—	—		—		—		(169,308)		(169,308)
Balance, September 30, 2023	61,422	$	614	570	$	(4,765)	$	873,381	$	(822)	$	(1,030,053)	$	(161,645)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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RAPID7, INC.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net income (loss)	$	27,007	$	(169,308)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	33,457		34,528
Amortization of debt issuance costs	3,325		3,061
Stock-based compensation expense	76,896		84,836
Impairment of long-lived assets	—		30,784
Change in fair value of derivative assets	—		15,511
Deferred income taxes	1,840		—
Induced conversion expense	—		53,889
Other	(4,534)		5,626
Changes in assets and liabilities:
Accounts receivable	22,432		12,428
Deferred contract acquisition and fulfillment costs	(493)		(9,488)
Prepaid expenses and other assets	6,062		5,433
Accounts payable	(10,450)		(1,255)
Accrued expenses	(17,413)		(17,968)
Deferred revenue	(37,112)		(6,367)
Other liabilities	6,880		(898)
Net cash provided by operating activities	107,897		40,812
Cash flows from investing activities:
Business acquisitions, net of cash acquired	(37,198)		(34,841)
Purchases of property and equipment	(2,242)		(3,999)
Capitalization of internal-use software	(10,414)		(13,033)
Purchases of investments	(242,494)		(194,013)
Sales and maturities of investments	192,500		100,700
Other investing activities	360		—
Net cash used in investing activities	(99,488)		(145,186)
Cash flows from financing activities:
Proceeds from issuance of convertible senior notes, net of issuance costs paid of $7,200	—		292,800
Purchase of capped calls related to convertible senior notes	—		(36,570)
Payments for repurchase of convertible senior notes	—		(199,998)
Payments related to business acquisitions	—		(2,250)
Proceeds from capped call settlement	—		17,518
Taxes paid related to net share settlement of equity awards	(3,883)		(4,012)
Proceeds from employee stock purchase plan	9,246		11,323
Proceeds from stock option exercises	1,436		2,984
Net cash provided by financing activities	6,799		81,795
Effect of exchange rate changes on cash ,cash equivalents and restricted cash	770		(2,010)
Net increase (decrease) in cash, cash equivalents and restricted cash	15,978		(24,589)
Cash, cash equivalents and restricted cash, beginning of period	214,130		207,804
Cash, cash equivalents and restricted cash, end of period	$	230,108	$	183,215
Supplemental cash flow information:
Cash paid for interest on convertible senior notes	$	5,840	$	1,165
Cash paid for income taxes, net of refunds	$	7,073	$	4,087
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	222,571	$	182,727
Restricted cash included in other assets and prepaid expenses and other current assets	7,537		488
Total cash, cash equivalents and restricted cash	$	230,108	$	183,215

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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RAPID7, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1. Description of Business, Basis of Presentation and Consolidation and Significant Accounting Policies

Description of Business

Rapid7, Inc. and subsidiaries (“we,” “us” or “our”) are advancing security with visibility, analytics, and automation delivered through our platform solutions. 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.

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared by us in accordance with accounting principles generally accepted in the United States of America (“GAAP”), as well as pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), regarding interim financial reporting. Accordingly, certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 26, 2024.

The condensed consolidated financial statements include our results of operations and those of our wholly-owned subsidiaries and reflect all adjustments (consisting solely of normal, recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented. All intercompany transactions and balances have been eliminated in consolidation. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The management estimates include, but are not limited to the determination of standalone selling prices in revenue transactions with multiple performance obligations, the estimated period of benefit for deferred contract acquisition costs, the useful lives and recoverability of long-lived assets, the valuation for credit losses, the valuation of stock-based compensation, the fair value of assets acquired and liabilities assumed in business combinations, the valuation of contingent consideration, the incremental borrowing rate for operating leases and the valuation for deferred tax assets. We base our estimates on historical experience and on various other assumptions that we believe are reasonable. Actual results could differ from those estimates.

Significant Accounting Policies

Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. Except for the inclusion of a description of contingent consideration within our Business Combinations policy, as noted below, there have been no changes to the significant accounting policies included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Business Combinations

We allocate the fair value of purchase consideration to the tangible asset acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair value these identifiable assets and liabilities is recorded as goodwill. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the fair value of these assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the final determination of the fair value of assets acquired or liabilities assumed any subsequent adjustments are recorded to the consolidated statements of operations. Determining the fair value of the tangible assets acquired, liabilities assumed and intangible assets requires management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, cash flows that an asset is expected to generate in the future, technology migration curves, discount rates, and useful lives. While we use our best estimates and judgements, our estimates are inherently uncertain and subject to refinement.

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Contingent consideration arising from business combinations is recorded at fair value as a liability on the acquisition date and remeasured at each reporting date. Changes in fair value are recorded in general and administrative expense in the consolidated statements of operations. Determining the fair value of the contingent consideration each period requires management to make assumptions and judgments. These estimates involve inherent uncertainties, and if different assumptions had been used, the fair value of contingent consideration could have been materially different from the amounts recorded.

Acquisition-related transaction costs are expensed as incurred.

Restricted Cash

As of September 30, 2024, we had $7.5 million of restricted cash recorded on our condensed consolidated balance sheet in prepaid expenses and other current assets and other assets in letters of credit outstanding as collateral for certain office space leases.

Recent Accounting Pronouncements

Accounting Pronouncements Not Yet Effective

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). This new guidance is designed to enhance the transparency and decision usefulness of income tax disclosures. The amendments of this update are related to the rate reconciliation and income taxes paid, requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. We do not plan to early adopt this standard. We are currently evaluating the effect of adopting this standard on our disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures (“ASU 2023-07”), to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses on an interim and annual basis. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods for the fiscal years beginning after December 15, 2024, and should be applied on a retrospective basis to all periods presented. Early adoption is permitted. We do not plan to early adopt this standard. We are currently evaluating the effect of adopting this standard on our disclosures.

Note 2. Revenue from Contracts with Customers

We generate revenue primarily from: (1) product subscriptions from the sale of cloud-based subscriptions, managed services, term software licenses, content subscriptions and maintenance and support associated with our software licenses and (2) professional services from the sale of our deployment and training services related to our solutions, incident response services, penetration testing and security advisory services.

Product Subscriptions

Product subscriptions consists primarily of revenue from our cloud-based subscription, managed services offerings, term software licenses, content subscriptions and maintenance and support associated with our software licenses.

•We generate cloud-based subscription revenue primarily from sales of subscriptions to access our cloud platform, together with related support services to our customers. These arrangements do not provide the customer with the right to take possession of our software operating on our cloud platform at any time. Instead, customers are granted continuous access to our cloud platform over the contractual period. Revenue is recognized over time on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our cloud-based subscription contracts generally have annual or multi-year contractual terms which are billed in advance of the annual subscription period and are non-cancellable.

•Managed services offerings consist of fees generated when we operate our software and provide our capabilities on behalf of our customers. Revenue is recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our managed services offerings generally have annual or multi-year contractual terms which are billed in advance of the annual subscription period and are non-cancellable.

•For our term software licenses where the utility to the customer is dependent on the continued delivery of content subscriptions, we recognize the license revenue over the contractual term of the content subscription.

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•Content subscriptions and our maintenance and support services are sold with our term software licenses. Revenue related to our content subscriptions associated with our software licenses is recognized ratably over the contractual period.

Professional Services

All of our professional services are considered distinct performance obligations when sold stand alone or with other products. The majority of our professional services contracts have terms of one year or less. For the majority of these contracts, revenue is recognized over time based upon the proportion of work performed to date.

Contract Balances

Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are recognized as revenue over the contractual period consistent with the above methodology. For the three months ended September 30, 2024 and 2023, we recognized revenue of $184.6 million and $174.3 million, respectively, and for the nine months ended September 30, 2024 and 2023, we recognized $398.3 million and $366.5 million, respectively, that was included in the corresponding contract liability balance at the beginning of the periods presented. Deferred revenue that will be realized during the succeeding 12-month period is recorded as current, and the remaining deferred revenue is recorded as non-current.

We receive payments from customers based upon contractual billing schedules. Accounts receivable are recorded when the right to consideration becomes unconditional. Unbilled receivables include amounts related to our contractual right to consideration for both completed and partially completed performance obligations that have not been invoiced. If the right to consideration is based on satisfaction of another performance obligation in the contract other than the passage of time, we record a contract asset. As of September 30, 2024 and December 31, 2023, unbilled receivables of $3.6 million and $2.0 million, respectively, are included in prepaid expenses and other current assets in our consolidated balance sheet. As of September 30, 2024 and December 31, 2023, we had no contract assets recorded on our condensed consolidated balance sheet.

Transaction Price Allocated to the Remaining Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied as of September 30, 2024. The estimated revenues do not include unexercised contract renewals.


	Next Twelve Months		Thereafter
	(in thousands)
Product subscriptions	$	556,284	$	268,636
Professional services	16,785		6,410
Total	$	573,069	$	275,046

Note 3. Business Combinations

Noetic Cyber, Inc.

On July 3, 2024, we acquired Noetic Cyber, Inc, (“Noetic”) a provider of cyber asset attack surface management, to extend Rapid7’s security operations platform by unlocking more accessible and accurate asset inventory in order to provide customers more comprehensive visibility to their attack surface, for a purchase price with an aggregate fair value of $51.0 million. The purchase consideration consisted of $38.6 million in cash paid at closing, $12.1 million of contingent consideration and $0.4 million of deferred cash payments. The deferred cash payments will be held by Rapid7 to satisfy certain post-closing purchase price adjustments.

Subject to the terms of the merger agreement, we are required to pay consideration of up to $20.0 million to Noetic shareholders based on the achievement of certain performance targets (the “Earnout Consideration”), measured annually upon the first, second and third anniversaries of the closing date of the transaction (the “Earnout Period”). If all performance targets are achieved, approximately $13.1 million of Earnout Consideration will be paid in cash, and the remaining $6.9 million of Earnout Consideration will be issued to certain employees in the form of shares of our common stock subject to continued employment requirements over the Earnout Period. The approximate $6.9 million of the Earnout Consideration that is subject to continued employment will be recognized as stock-based compensation expense over the required employment period. The fair value of the portion of the Earnout Consideration that is not subject to continued employment is included as part of purchase consideration at the date of the acquisition. As of July 3, 2024, we determined the fair value of the contingent purchase consideration to be $12.1 million. The fair value of the contingent purchase consideration will be reassessed each reporting

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period and any required adjustment will be recorded to general and administrative expense. As of September 30, 2024, the fair value of the contingent purchase consideration was $12.2 million of which $6.8 million was recorded within accrued expenses and other current liabilities and $5.4 million was recorded within other liabilities in our condensed consolidated balance sheet. In the three and nine months ended September 30, 2024, we recorded $0.2 million of accretion expense related to the contingent purchase consideration to general and administrative expense.

In connection with the acquisition, we expect to issue an aggregate value of $2.3 million of our common stock to two key employees of Noetic in three installments over a 36-month period following the closing date of the transaction, subject to continued employment requirements (the “Key Employee Consideration”) and therefore will be recognized as stock-based compensation expense over the required employment period.

The number of shares to be issued at each issuance date for both the Earnout Consideration and the Key Employee Consideration shares will be determined by dividing the aggregate value by the fair market value of our common stock on the issuance date, and therefore will be liability-classified until the final issuance dates. In the three and nine months ended September 30, 2024, we recognized stock-based compensation expense related to such shares in the amount of $0.7 million.

The following table summarizes the preliminary allocation of purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date (in thousands):


Consideration:
Cash	$	38,597
Deferred cash consideration	397
Contingent consideration	12,055
Fair value of total consideration transferred	$	51,049

Recognized amount of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	$	1,296
Accounts receivable	510
Prepaid and other current assets	102
Property and equipment, net	19
Accrued expenses and other current liabilities	(220)
Deferred revenue	(910)
Other long-term liabilities	(62)
Intangible asset	11,500
Total identifiable net assets assumed	$	12,235
Goodwill	38,814
Total purchase price allocation	$	51,049

We identified developed technology as the sole acquired intangible asset. The estimated fair value of the developed technology intangible asset was $11.5 million which was based on a valuation using a probability weighted expected return model (“PWERM”). The estimated useful life of the developed technology is 7 years.

The excess of the purchase price over the tangible assets acquired, identifiable intangible asset acquired and assumed liabilities was recorded as goodwill. We believe that the amount of goodwill reflects the expected synergistic benefits of being able to leverage the integration of the technology acquired with our existing product offerings and being able to successfully market and sell these new features to our customer base. The goodwill was allocated to our one reporting unit. The acquired goodwill and intangible asset were not deductible for tax purposes.

In the three and nine months ended September 30, 2024, we recorded $0.1 million and $0.4 million, respectively, of acquisition-related transaction costs related to the acquisition of Noetic to general and administrative expense.

Our revenue and net loss attributable to the Noetic business for the three and nine months ended September 30, 2024 was not material.

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Minerva Labs Ltd.

On March 14, 2023, we acquired Minerva Labs Ltd. (“Minerva”), a leading provider of anti-evasion and ransomware prevention technology, for a purchase price with an aggregate fair value of $34.6 million. The purchase consideration consisted of $35 million paid in cash at closing and a $(0.4) million receivable for purchase price adjustments.

The assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. The excess of the purchase price over the assets acquired and liabilities assumed was recorded as goodwill. The fair value of net assets acquired, goodwill and intangible assets were $13.9 million, $20.7 million and $12.8 million, respectively. The goodwill was allocated to our one reporting unit. The acquired goodwill and intangible assets were not deductible for tax purposes.

In the first quarter of 2024, we sold acquired intellectual property through a non-cash intercompany transaction, which for the three and nine months ended September 30, 2024 resulted in $4.6 million of current tax expense and $1.8 million of deferred tax expense in Israel.

Note 4. Investments

Our investments, which are all classified as available-for-sale, consisted of the following:


	As of September 30, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
Description:
U.S government agencies	$	280,757	$	787	$	(40)	$	281,504
Total	$	280,757	$	787	$	(40)	$	281,504


	As of December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
Description:
U.S government agencies	$	222,820	$	467	$	(65)	$	223,222


Agency bonds	2,500		—		(7)		2,493

Total	$	225,320	$	467	$	(72)	$	225,715

As of September 30, 2024, our available-for-sale investments had maturities ranging from 1 to 20 months. As of December 31, 2023, our available-for-sale investments had maturities ranging from 1 to 18 months.

For all of our investments for which the amortized cost basis was greater than the fair value at September 30, 2024 and December 31, 2023, we have concluded that there is no plan to sell the security nor is it more likely than not that we would be required to sell the security before its anticipated maturity. In making the determination as to whether the unrealized loss is other-than-temporary, we considered the length of time and extent the investment has been in an unrealized loss position, the financial condition and near-term prospects of the issuers, the issuers’ credit rating and the time to maturity.

Note 5. Fair Value Measurements

We measure certain financial assets and liabilities at fair value. Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:

•Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

•Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability.

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We consider an active market to be one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, and consider an inactive market to be one in which there are infrequent or few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers.

The following table presents our financial assets and liabilities measured and recorded at fair value on a recurring basis using the above input categories:


	As of September 30, 2024
	Level 1		Level 2		Level 3		Total
	(in thousands)
Description:
Assets:
U.S. government agencies	$	281,504	$	—	$	—	$	281,504
Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets and other assets)	—		1,559		—		1,559
Total assets	$	281,504	$	1,559	$	—	$	283,063
Liabilities:
Contingent consideration (other current liabilities and other long-term liabilities)	—		—		12,238		12,238
Foreign currency forward contracts designated as cash flow hedges (other current liabilities and other long-term liabilities)	—		66		—		66
Total liabilities	$	—	$	66	$	12,238	$	12,304


	As of December 31, 2023
	Level 1		Level 2		Level 3		Total
	(in thousands)
Description:
Assets:
U.S. government agencies	$	223,222	$	—	$	—	$	223,222
Agency bonds	—		2,493		—		2,493
Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets and other assets)	—		1,322		—		1,322
Total assets	$	223,222	$	3,815	$	—	$	227,037
Liabilities:
Foreign currency forward contracts designated as cash flow hedges (other current liabilities)	—		55		—		55
Total liabilities	$	—	$	55	$	—	$	55

Cash and cash equivalents are excluded from the table above as carrying amounts reported in our condensed consolidated balance sheet equal or approximate fair value. As of September 30, 2024, the fair value of our 2.25%, 0.25% and 1.25% convertible senior notes due 2025, 2027 and 2029, as further described in Note 10, Debt, was $45.1 million, $547.1 million and $281.9 million, respectively, based upon quoted market prices. We consider the fair value of the Notes (as defined in Note 10, Debt) to be a Level 2 measurement due to limited trading activity of the Notes. As of September 30, 2024, the fair value of our contingent consideration, as further described in Note 3, Business Combinations, was $12.2 million and is classified as a Level 3 measurement based on inputs not observable in the market.

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Note 6. Property and Equipment

Property and equipment are recorded at cost and consist of the following:


	September 30,		December 31,
	2024		2023
	(in thousands)
Computer equipment and software	$	28,100	$	26,442
Furniture and fixtures	10,954		10,850
Leasehold improvements	56,878		56,151
Total	95,932		93,443
Less accumulated depreciation	(61,996)		(53,801)
Property and equipment, net	$	33,936	$	39,642

Depreciation expense was $2.7 million and $3.3 million for the three months ended September 30, 2024 and 2023, respectively, and $8.4 million and $10.9 million for the nine months ended September 30, 2024 and 2023, respectively.

Note 7. Goodwill and Intangibles

Goodwill was $575.2 million and $536.4 million as of September 30, 2024 and December 31, 2023, respectively. The following table displays the changes in the gross carrying amount of goodwill:


	Amount
	(in thousands)
Balance, December 31, 2023	$	536,351
Noetic acquisition	38,814
Balance, September 30, 2024	$	575,165

The following table presents details of our intangible assets which include acquired identifiable intangible assets and capitalized internal-use software costs:


	Weighted- Average Estimated Useful Life (years)	As of September 30, 2024						As of December 31, 2023
		Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
		(in thousands)
Intangible assets subject to amortization:
Developed technology	6.1	$	146,855	$	(89,770)	$	57,085	$	135,355	$	(77,031)	$	58,324
Customer relationships	4.5	12,000		(9,711)		2,289		12,000		(7,755)		4,245
Trade names	3.1	2,619		(2,514)		105		2,619		(2,379)		240
Total acquired intangible assets		161,474		(101,995)		59,479		149,974		(87,164)		62,810
Internal-use software	3.0	65,130		(33,861)		31,269		55,371		(23,635)		31,736
Total intangible assets		$	226,604	$	(135,856)	$	90,748	$	205,345	$	(110,799)	$	94,546

Amortization expense was $8.5 million and $8.3 million for the three months ended September 30, 2024 and 2023, respectively, and $25.1 million and $23.6 million for the nine months ended September 30, 2024 and 2023, respectively.

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Estimated future amortization expense of the acquired identifiable intangible assets and completed capitalized internal-use software costs as of September 30, 2024 was as follows (in thousands):


2024 (for the remaining three months)	$	8,429
2025	30,900
2026	21,149
2027	9,128
2028	3,243
2029 and thereafter	7,652
Total	$	80,501

The table above excludes the impact of $10.2 million of capitalized internal-use software costs for projects that have not been completed as of September 30, 2024, and therefore, all the costs associated with these projects have not been incurred.

Note 8. Deferred Contract Acquisitions and Fulfillment Costs

Deferred contract acquisition and fulfillment costs, which primarily consist of capitalized sales commissions, for the nine months ended September 30, 2024 and 2023 was as follows:


	Nine Months Ended September 30,
	2024		2023
	(in thousands)
Beginning balance	$	121,609	$	103,075
Capitalization of contract acquisition and fulfillment costs	39,850		39,904
Amortization of deferred contract acquisition and fulfillment costs	(39,357)		(30,416)
Ending balance	$	122,102	$	112,563

Note 9. Derivative and Hedging Activities

To mitigate our exposure to foreign currency fluctuations resulting from certain expenses denominated in certain foreign currencies, we enter into forward contracts that are designated as cash flow hedging instruments. These forward contracts have contractual maturities of twenty months or less, and as of September 30, 2024 and December 31, 2023, outstanding forward contracts had a total notional value of $52.4 million and $49.5 million, respectively. The notional value represents the gross amount of foreign currency that will be bought or sold upon maturity of the forward contract. During the three and nine months ended September 30, 2024, all cash flow hedges were considered effective. Refer to Note 5, Fair Value Measurements, for the fair values of our outstanding derivative instruments.

Note 10. Debt

Convertible Senior Notes

In May 2020, we issued $230.0 million aggregate principal amount of convertible senior notes due May 1, 2025 (the “2025 Notes”), in March 2021, we issued $600.0 million aggregate principal amount of convertible senior notes due March 15, 2027 (the “2027 Notes”), and in September 2023, we issued $300.0 million aggregate principal amount of convertible senior notes due March 15, 2029 (the “2029 Notes”) (collectively, the “Notes”). In September 2023, we used $201.0 million of the proceeds from the issuance of the 2029 Notes to repurchase and retire $184.0 million aggregate principal amount of the 2025 Notes and paid accrued and unpaid interest thereon. Further details of the Notes are as follows:


Issuance	Maturity Date	Interest Rate	First Interest Payment Date	Effective Interest Rate	Semi-Annual Interest Payment Dates	Initial Conversion Rate per $1,000 Principal	Initial Conversion Price		Number of Shares (in millions)
2025 Notes	May 1, 2025	2.25%	November 1, 2020	2.88%	May 1 and November 1	16.3875	$	61.02	0.8
2027 Notes	March 15, 2027	0.25%	September 15, 2021	0.67%	March 15 and September 15	9.6734	$	103.38	5.8
2029 Notes	March 15, 2029	1.25%	March 15, 2024	1.69%	March 15 and September 15	15.4213	$	64.85	4.6

The 2025 Notes, the 2027 Notes and the 2029 Notes are senior unsecured obligations, do not contain any financial covenants and are governed by indentures between the Company, as issuer, and U.S. Trust Company, Bank National Association, as

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trustee (the “Indentures”). The total net proceeds from the 2025 Notes, the 2027 Notes and the 2029 Notes offerings, after deducting initial purchase discounts and debt issuance costs, were $222.8 million, $585.0 million and $292.0 million, respectively.

For additional details on the terms of our Notes, see Note 11, Debt, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

As of September 30, 2024, the 2025 Notes, the 2027 Notes and the 2029 Notes were not convertible at the option of the holders.

The holders may convert the 2025 Notes, the 2027 Notes and the 2029 Notes at any time on or after November 1, 2024, December 15, 2026 and December 15, 2028, respectively, until the close of business on the second scheduled trading day immediately preceding the maturity date, regardless of the circumstances set forth above. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, in the manner and subject to the terms and conditions provided in the Indentures.

If we undergo a fundamental change (as set forth in the Indentures) at any time prior to the maturity date, holders of the Notes will have the right, at their option, to require us to repurchase for cash all or any portion of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, following certain corporate events that occur prior to the maturity date or following our issuance of a notice of redemption, in each case as described in the Indentures, we will increase the conversion rate for a holder of the Notes who elects to convert its Notes in connection with such a corporate event or during the related redemption period in certain circumstances.

Accounting for the Notes

In accounting for the issuance of the Notes, the principal less debt issuance costs are recorded as debt on our condensed consolidated balance sheet. The debt issuance costs are amortized to interest expense using the effective interest method over the contractual term of the Notes.

The net carrying amount of the Notes as of September 30, 2024 and December 31, 2023 was as follows (in thousands):


	2025 Notes						2027 Notes						2029 Notes
	Principal		Unamortized debt issuance costs		Total		Principal		Unamortized debt issuance costs		Total		Principal		Unamortized debt issuance costs		Total
Balance at December 31, 2023	$	45,992	$	(404)	$	45,588	$	600,000	$	(8,077)	$	591,923	$	300,000	$	(7,515)	$	292,485


Amortization of debt issuance costs	—		228		228		—		1,877		1,877		—		1,077		1,077
Balance at September 30, 2024	$	45,992	$	(176)	$	45,816	$	600,000	$	(6,200)	$	593,800	$	300,000	$	(6,438)	$	293,562

Interest expense related to the Notes was as follows (in thousands):


	Three Months Ended September 30,
	2024								2023
	2025 Notes		2027 Notes		2029 Notes		Total		2025 Notes		2027 Notes		2029 Notes		Total
Contractual interest expense	$	258	$	375	$	938	$	1,571	$	948	$	375	$	229	$	1,552
Amortization of debt issuance costs	79		634		455		1,168		289		631		73		$	993

Total interest expense	$	337	$	1,009	$	1,393	$	2,739	$	1,237	$	1,006	$	302	$	2,545


	Nine Months Ended September 30,
	2024								2023
	2025 Notes		2027 Notes		2029 Notes		Total		2025 Notes		2027 Notes		2029 Notes		Total
Contractual interest expense	$	776	$	1,125	$	2,812	$	4,713	$	3,536	$	1,125	$	229	$	4,890
Amortization of debt issuance costs	228		1,877		1,077		3,182		990		1,855		73		2,918

Total interest expense	$	1,004	$	3,002	$	3,889	$	7,895	$	4,526	$	2,980	$	302	$	7,808

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Capped Calls

In connection with the offering of the 2025 Notes, the 2027 Notes and the 2029 Notes, we entered into privately negotiated capped call transactions with certain counterparties (the “2025 Capped Calls”, “2027 Capped Calls” and “2029 Capped Calls”) (collectively, the “Capped Calls”).

The Capped Calls are expected to reduce potential dilution to our common stock upon conversion of a given series of notes and/or offset any cash payments that we are required to make in excess of the principal amount of converted notes of such series, as the case may be, with such reduction and/or offset subject to a cap. The Capped Calls are subject to adjustment upon the occurrence of certain specified extraordinary events affecting us, including merger events, tender offers and announcement events. In addition, the Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the Capped Calls, including nationalization, insolvency or delisting, changes in law, failures to deliver, insolvency filings and hedging disruptions.

The following table sets forth other key terms and premiums paid for the Capped Calls related to each series of Notes:


	Capped Calls Entered into in Connection with the Issuance of the 2025 Notes		Capped Calls Entered into in Connection with the Issuance of the 2027 Notes		Capped Calls Entered into in Connection with the Issuance of the 2029 Notes
Initial strike price, subject to certain adjustments	$	61.02	$	103.38	$	64.85
Cap price, subject to certain adjustments	$	93.88	$	159.04	$	97.88
Total premium paid (in thousands)	$	27,255	$	76,020	$	36,570
Expiration dates	March 4, 2025 - April 29, 2025		January 1, 2027 - March 11, 2027		February 13, 2029 - March 13, 2029

For additional details on the terms of our Capped Calls, see Note 11, Debt, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

For accounting purposes, the 2025 Capped Calls, the 2027 Capped Calls and the 2029 Capped Calls are separate transactions, and not part of the terms of the 2025 Notes, the 2027 Notes and the 2029 Notes. The 2025 Capped Calls, 2027 Capped Calls and 2029 Capped Calls are recorded in stockholders' equity and are not accounted for as derivatives.

Credit Agreement

In April 2020, we entered into a Credit and Security Agreement (the Credit Agreement), with KeyBank National Association (as amended, in December 2021) that provides for a $100.0 million revolving credit facility, with a letter of credit sublimit of $15.0 million and an accordion feature under which we can increase the credit facility to up to $150.0 million. We incurred fees of $0.4 million in connection with entering into the Credit Agreement. The fees are recorded in other current assets on the condensed consolidated balance sheet and are amortized on a straight-line basis over the contractual term of the arrangement. The commitment fee of 0.2% per annum on the unused portion of the credit facility is expensed as incurred and included within interest expense on the condensed consolidated statement of operations. The Credit Agreement contains certain financial covenants including a requirement that we maintain specified minimum recurring revenue and liquidity amounts.

The borrowings under the Credit Agreement bear interest, at our option, at a rate equal to either (i) term SOFR plus a credit spread adjustment of 0.10% per annum plus a margin of 2.50% per annum or (ii) the alternate base rate (subject to a floor), plus an applicable margin equal to 0% per annum.

As of September 30, 2024, we did not have any outstanding borrowings under the Credit Agreement.

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Note 11. Stock-Based Compensation

(a) General

Stock-based compensation expense for restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), stock options and purchase rights issued under our employee stock purchase plan was classified in the accompanying condensed consolidated statements of operations as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
Stock-based compensation expense:
Cost of revenue	$	3,001	$	2,527	$	8,707	$	8,348
Research and development	9,535		8,436		25,698		30,575
Sales and marketing	6,823		7,106		21,182		23,087
General and administrative	5,235		5,699		21,309		22,826
Total stock-based compensation expense	$	24,594	$	23,768	$	76,896	$	84,836

We recognize compensation cost of all awards on a straight-line basis over the applicable vesting period, which is generally three to four years.

Our Compensation Committee adopted and approved the performance goals, targets and payout formulas for our 2024 and 2023 bonus plans, including permitting our executive officers and certain other employees the opportunity to receive payment of their earned bonuses in the form of common stock (in lieu of cash). During the three months ended September 30, 2024 and 2023, we recognized stock-based compensation expense related to such bonuses in the amount of $0.2 million and $50 thousand, respectively, and during the nine months ended September 30, 2024 and 2023, we recognized stock-based compensation expense in the amount of $0.5 million and $1.1 million, respectively, based on the probable expected performance against the pre-established corporate financial objectives as of September 30, 2024 and 2023. For employees, including executive officers, who elect to receive their bonuses in the form of common stock (in lieu of cash), the payouts are expected to be made in the form of fully vested stock awards in the first quarter of the following year pursuant to our 2015 Equity Incentive Plan, as amended. The number of shares underlying such awards is determined by dividing the dollar value of the actual bonus award payment by the closing price per share of our common stock on the date of grant.

(b)Restricted Stock, Restricted Stock Units and Performance-Based Restricted Stock Units

RSUs and PSUs activity during the nine months ended September 30, 2024 was as follows:


	Shares	Weighted- Average Grant Date Fair Value








Unvested balance as of December 31, 2023	2,714,426	$	61.60
Granted	2,338,438	$	52.37
Vested	(1,122,737)	$	61.36
Forfeited	(824,443)	$	59.99
Unvested balance as of September 30, 2024	3,105,684	$	56.24

As of September 30, 2024, the unrecognized compensation expense related to our unvested RSUs and PSUs was $152.0 million. This unrecognized compensation expense will be recognized over an estimated weighted-average amortization period of 2.0 years.

In January 2024, our Compensation Committee awarded 279,570 PSUs that required the achievement of net annualized recurring revenue (“Net ARR”) and Adjusted EBITDA targets for the 2024 full-year to earn any payout. Net ARR is defined as the change in the annual value of all recurring revenue related to contracts in place at year end. In addition, the portion of the PSUs that are earned would be capped at a maximum of 200% of the target level payout and if certain net ARR or Adjusted EBITDA goals were not met, no PSUs will be earned. The PSUs have a performance period of one year and the earned PSUs will vest in three equal installments following each of the first, second and third anniversary of the vesting commencement date, subject to the participant’s continuous service as of

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each such date. In the three and nine months ended September 30, 2024, we recorded $0.4 million and $2.2 million, respectively, of stock-based compensation expense related to these PSUs based on estimated achievement of the performance criteria.

In July 2024, our Compensation Committee awarded 19,605 PSUs that required the achievement of certain milestones related to the integration of Noetic. The PSUs have three measurement and vesting dates through September 15, 2025, subject to the participant's continuous service as of each such date. If achievement of the milestones are not met, no PSUs will be earned. In the three and nine months ended September 30, 2024, we recorded $0.3 million of stock-based compensation expense related to these PSUs based on estimated achievement of the performance criteria.

(c)Stock Options

Stock option activity during the nine months ended September 30, 2024 was as follows:


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)








Outstanding as of December 31, 2023	716,270	$	12.26	1.97	$	32,115
Granted	—	—
Exercised	(131,742)	$	11.67		$	4,981
Forfeited/cancelled	(450)	$	7.73
Outstanding as of September 30, 2024	584,078	$	12.40	1.45	$	16,056
Vested and exercisable as of September 30, 2024	584,078	$	12.40	1.45	$	16,056

(d)Employee Stock Purchase Plan

Under the Rapid7, Inc. 2015 Employee Stock Purchase Plan (“ESPP”), employees may set aside up to 15% of their gross earnings, on an after-tax basis, to purchase our common stock at a discounted price, which is calculated at 85% of the lesser of: (i) the market value of our common stock at the beginning of each offering period and (ii) the market value of our common stock on the applicable purchase date.

On March 15, 2024, we issued 147,445 shares of common stock to employees, with a purchase price of either $33.78 or $39.78 per share, for aggregate proceeds of $5.0 million.

On September 13, 2024, we issued 144,445 shares of common stock to employees, with a purchase price of $29.08 per share, for aggregate proceeds of $4.2 million.

Note 12. Net Income (Loss) per Share

The following table summarizes the computation of basic and diluted net income (loss) per share of our common stock for the three months September 30, 2024 and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands, except share and per share data)
Numerator:
Net income (loss)	$	16,554	$	(76,611)	$	27,007	$	(169,308)
Denominator:
Weighted-average common shares outstanding, basic	62,898,078		61,065,157		62,389,482		60,506,082
Weighted-average common shares outstanding, diluted	74,537,085		61,065,157		74,225,110		60,506,082
Net income (loss) per share, basic	$	0.26	$	(1.25)	$	0.43	$	(2.80)
Net income (loss) per share, diluted	$	0.22	$	(1.25)	$	0.36	(2.80)

We intend to settle any conversion of our 2025 Notes, 2027 Notes and 2029 Notes in cash, shares, or a combination thereof. The dilutive impact of the Notes for our calculation of diluted net income (loss) per share is considered using the if-converted method. For the three and nine months ended September 30, 2024 and 2023, the shares underlying the Notes were not considered in the calculation of diluted net income (loss) per share as the effect would have been anti-dilutive.

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In connection with the issuance of the 2025 Notes, the 2027 Notes and the 2029 Notes, we entered into the 2025 Capped Calls, 2027 Capped Calls and 2029 Capped Calls, which were not included for the purpose of calculating the number of diluted shares outstanding, as their effect would have been anti-dilutive.

As of September 30, 2024 and 2023, the 2025 Notes, the 2027 Notes and the 2029 Notes were not convertible at the option of the holder. We had not received any conversion notices through the issuance date of our unaudited condensed consolidated financial statements. For disclosure purposes, we have calculated the potentially dilutive effect of the conversion spread, which is included in the table below. The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding for the respective periods below because they would have been anti-dilutive:


	Nine Months Ended September 30,
	2024	2023
Options to purchase common stock	584,078	723,632
Unvested restricted stock units	3,105,684	3,126,817
Common stock issued in conjunction to acquisitions	36,923	115,041
Shares to be issued under ESPP	18,332	20,802
Convertible senior notes	11,183,611	11,183,611
Total	14,928,628	15,169,903

Note 13. Commitments and Contingencies

(a)Warranty

We provide limited product warranties. Historically, any payments made under these provisions have been immaterial.

(b)Litigation and Claims

From time to time, we may be a party to litigation or subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

(c)Indemnification Obligations

We agree to standard indemnification provisions in the ordinary course of business. Pursuant to these provisions, we agree to indemnify, hold harmless and reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally our customers, in connection with any United States patent, copyright or other intellectual property infringement claim by any third party arising from the use of our products or services in accordance with the agreement or arising from our gross negligence, willful misconduct or violation of the law (provided that there is not gross or willful misconduct on the part of the other party) with respect to our products or services. The term of these indemnification provisions is generally perpetual from the time of execution of the agreement. We carry insurance that covers certain third-party claims relating to our services and limits our exposure. We have never incurred costs to defend lawsuits or settle claims related to these indemnification provisions.

As permitted under Delaware law, we have entered into indemnification agreements with our officers and directors, indemnifying them for certain events or occurrences while they serve as officers or directors of the company.

(d)Income Taxes

From time to time, we may receive income tax assessments from taxing authorities asserting additional tax liabilities owed by the Company. During the quarter ended June 30, 2024, we received an initial assessment from the Israel Tax Authority (“ITA”) of approximately 324 million Israeli New Shekels (approximately $87 million, based upon the exchange rate between the Israeli New Shekel and the US Dollar as of September 30, 2024) related to fiscal year 2021. Based on our interpretation of the regulations and available case law, we believe that the tax positions we have taken on our filed tax return in Israel are sustainable and we intend to defend our position through all available means. As such, we have not recorded any impact of the ITA assessment in our condensed consolidated financial statements as of and for the three and nine months ended September 30, 2024. We are continuing to monitor developments related to

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this matter and its impact on our existing income tax reserves for all open years. If we are unsuccessful in sustaining our tax position in this matter, our financial condition and results of operations would be adversely affected.

Note 14. Segment Information and Information about Geographic Areas

We operate in one segment. Our chief operating decision maker is our Chief Executive Officer, who makes operating decisions, assesses performance and allocates resources on a consolidated basis.

Net revenues by geographic area presented based upon the location of the customer are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
North America	$	163,730	$	155,190	$	480,392	$	448,753
Rest of world	50,924		43,653		147,354		123,686
Total	$	214,654	$	198,843	$	627,746	$	572,439

Property and equipment, net by geographic area was as follows:


	As of September 30, 2024		As of December 31, 2023
	(in thousands)
North America	$	23,915	$	27,609
Rest of world	10,021		12,033
Total	$	33,936	$	39,642

Note 15. Restructuring

On August 7, 2023, our board of directors approved a restructuring plan that was designed to improve operational efficiencies, reduce operating costs and better align the Company’s workforce with current business needs, top strategic priorities and key growth opportunities (collectively, the “Restructuring Plan”). The Restructuring Plan included a reduction of the Company’s workforce by approximately 16%.

During the first quarter of 2024, the execution of the Restructuring Plan was completed and we recorded $(0.2) million of restructuring charges within general and administrative expense in the condensed consolidated statements of operations. Additionally, during the second quarter of 2024, the remaining payments were made, resulting in no remaining restructuring liability.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (1) our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and (2) the audited consolidated financial statements and the related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2023 included in our Annual Report on Form 10-K, filed with the SEC on February 26, 2024. Forward-looking statements in this review are qualified by the cautionary statement included under the next sub-heading, “Special Note Regarding Forward-Looking Statements”.

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including the sections entitled “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Statements that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements concerning the following:

• our ability to continue to add new customers, maintain existing customers and sell new products and professional services to new and existing customers;

• uncertain impacts that changes in overall level of software spending and ongoing volatility in the global economy as well as effects of inflation and increased interest rates may have on our business, strategy, operating results, financial condition and cash flows;

• the effects of increased competition as well as innovations by new and existing competitors in our market;

• our ability to adapt to technological change and effectively enhance, innovate and scale our solutions;

• our ability to effectively manage or sustain our growth and to attain and sustain profitability;

• our ability to diversify our sources of revenue;

• potential acquisitions and integration of complementary business and technologies;

• our expected use of proceeds from future issuances of equity or convertible debt securities;

• our ability to maintain, or strengthen awareness of, our brand;

• perceived or actual security, integrity, reliability, quality or compatibility problems with our solutions, including related to security breaches in our customers; systems, unscheduled downtime or outages;

• statements regarding future revenue, hiring plans, expenses, capital expenditures, capital requirements and stock performance;

• our ability to meet publicly announced guidance or other expectations about our business, key metrics and future operating results;

• our ability to maintain an adequate annualized recurring revenue growth;

• our ability to attract and retain qualified employees and key personnel and further expand our overall headcount;

• our ability to grow, both domestically and internationally;

• our ability to stay abreast of new or modified laws and regulations that currently apply or become applicable to our business both in the United States and internationally;

• our ability to maintain, protect and enhance our intellectual property;

• costs associated with defending intellectual property infringement and other claims; and

• the future trading prices of our common stock and the impact of securities analysts’ reports on these prices.

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These statements represent the beliefs and assumptions of our management based on information currently available to us. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included under Part II, Item 1A. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances that occur after the date of this report.

As used in this report, the terms “Rapid7,” the “company,” “we,” “us,” and “our” mean Rapid7, Inc. and its subsidiaries unless the context indicates otherwise.

Overview

Rapid7 is a global cybersecurity software and services provider on a mission to offer customers greater clarity and control of their attack surface through our comprehensive and consolidated security offerings. For more than twenty years, Rapid7 has partnered with customers across the globe representing a diverse range of industries and sizes to improve the efficacy and productivity of their security operations (“SecOps”). In today's rapidly evolving IT environment, customers are encountering escalating challenges due to the proliferation of cyberattacks leveraging artificial intelligence (“AI”), targeted automation, and a widening spectrum of attackers and techniques. To fortify their security posture, organizations will require greater visibility, advanced capabilities leveraging increased expertise, and integrated data to effectively anticipate, identify, and respond to exposure-led threats.

Through our security operations platform, anchored on our cloud security, security information and event management (“SIEM”), advanced detection and response, and vulnerability management offerings, we believe that Rapid7 is poised to expand the capabilities of today's SecOps teams. Rapid7 extends and expands the expertise of the Security Operations Center (“SOC") across information security, cloud operations, development, and IT teams, enabling them to better understand the attacker and leverage that information to take control of their fragmented attack surface. Enriched by years of managed services expertise, our integrated security operations platform enables SecOps teams to move away from a reactive approach, reduce their attack surface, and enhance response efficiency with a deep contextual understanding of their environment.

In the past few years, we have observed the industry undergoing a customer-driven shift to consolidated security platforms. As part of this transition, customers are moving away from cloud security as a specialized function towards cloud security as an integrated capability for SecOps teams. We view this as a demand driver for integrated SecOps, and believe that we have an opportunity to be a leader in delivering integrated risk and threat management across on-premise, cloud, and external attack surfaces. As we have shifted our strategic focus to SecOps consolidation, we are focused on continuing to drive innovation across our core products and capabilities to accelerate customer value and provide a frictionless and integrated cloud security experience.

As the threat landscape continues to grow in complexity, customers are demonstrating demand for integrated expertise to support them in effectively managing their security technologies. The convergence of these key trends – security consolidation, integrated cloud security, and expertise driven outcomes – are the foundation of what we view as the new extended SOC. Our focus is to be the leading provider of integrated security solutions for the extended SOC by providing risk and threat management within the context of overall security.

We market and sell our products and professional services to organizations of all sizes globally, including mid-market businesses, enterprises, non-profits, educational institutions and government agencies. Our customers span a wide variety of industries such as technology, energy, financial services, healthcare and life sciences, manufacturing, media and entertainment, retail, education, real estate, transportation, government and professional services. As of September 30, 2024, we had over 11,000 customers in 146 countries, including 45% of the Fortune 100. Our revenue was not concentrated with any individual customer and no customer represented more than 2% of our revenue for three and nine months ended September 30, 2024 or 2023.

Recent Developments

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the first, second and third anniversaries of the closing date of the transaction (the “Earnout Period”). If all performance targets are achieved, approximately $13.1 million of Earnout Consideration will be paid in cash, and the remaining $6.9 million of Earnout Consideration will be issued to certain employees in the form of shares of our common stock subject to continued employment requirements over the Earnout Period. The approximate $6.9 million of the Earnout Consideration that is subject to continued employment will be recognized as stock-based compensation expense over the required employment period. The fair value of the portion of the Earnout Consideration that is not subject to continued employment is included as part of purchase consideration at the date of the acquisition. As of July 3, 2024, we determined the fair value of the contingent purchase consideration to be $12.1 million. The fair value of the contingent purchase consideration will be reassessed each reporting period and any required adjustment will be recorded to general and administrative expense. As of September 30, 2024, the fair value of the contingent purchase consideration was $12.2 million.

In connection with the acquisition, we will issue an aggregate value of $2.3 million of our common stock to two key employees of Noetic in three installments over a 36-month period following the closing date of the transaction, subject to continued employment requirements.

Our Business Model

We offer our products through a variety of delivery models to meet the needs of our diverse customer base, including:

•Cloud-based subscriptions, which provide our software capabilities to our customers through cloud access and on a subscription basis. Our InsightIDR, InsightCloudSec, InsightVM, InsightAppSec, InsightConnect and Threat Command products are offered as cloud-based subscriptions, with an option for a one or multi-year term.

•Managed services, through which we operate our products and provide our capabilities on behalf of our customers. Our Managed Vulnerability Management, Managed Detection and Response, and Managed Application Security products are offered on a managed service basis, pursuant to one or multi-year agreements.

•Licensed on-premise software consists of term licenses. When licensed on-premise software is purchased, maintenance and support and content subscriptions, as applicable, are bundled with the license for the term period. Our Nexpose and Metasploit products are offered through term software licenses with an option for one or multi-year terms. Our maintenance and support provides our customers with telephone and web-based support and ongoing bug fixes and repairs during the term of the maintenance and support agreement, and our customers who purchase our Nexpose and Metasploit products also purchase content subscriptions, which provide them with real-time access to the latest vulnerabilities and exploits.

Additionally, we offer our products through our consolidation offerings, which unify our products and services to our customers in a single package. Our Threat Complete and Cloud Risk Complete packages are offered as cloud based subscriptions, with an option for a one or multi-year term. Our Managed Threat Complete Offering is offered on a managed service basis, generally pursuant to one or multi-year agreements.

For the three months ended September 30, 2024 and 2023, recurring revenue, defined as revenue from term software licenses, content subscriptions, managed services, cloud-based subscriptions and maintenance and support, was 96%, and 95%, respectively, of total revenue. For the nine months ended September 30, 2024 and 2023, recurring revenue was 96% and 95%, respectively, of total revenue.

Key Metrics

We monitor the following key metrics to help us measure and evaluate the effectiveness of our operations and as a means to evaluate period-to-period comparisons. We believe that both management and investors benefit from referring to these key metrics as supplemental information in assessing our performance and when planning, forecasting, and analyzing future periods. These key metrics also facilitate management's internal comparisons to our historical performance as well as comparisons to certain competitors' operating results. We believe these key metrics are useful to investors both because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and also because they are used by institutional investors and the analyst community to help evaluate the health of our business:

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	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	(dollars in thousands)
Total revenue	$	214,654		$	198,843		$	627,746		$	572,439
Year-over-year growth	8.0		%	13.1		%	9.7		%	14.3		%
Non-GAAP income from operations	$	43,952		$	36,773		$	123,513		$	60,723
Non-GAAP operating margin	20.5		%	18.5		%	19.7		%	10.6		%
Free cash flow	$	38,502		$	(582)		$	95,241		$	23,780


	As of September 30,
	2024			2023
	(dollars in thousands)
Annualized recurring revenue (“ARR”)	$	823,104		$	776,760
Year-over-year growth	6.0		%	13.6		%
Number of customers	11,619			11,412
Year-over-year growth	2		%	5.8		%
ARR per customer	$	70.8		$	68.1
Year-over-year growth	4.1		%	7.4		%

Total Revenue and Growth. We are focused on driving continued revenue growth through increased sales of our products and professional services to new and existing customers. We monitor total revenue and believe it is useful to investors as a measure of the overall success of our business.

Non-GAAP Income from Operations and Non-GAAP Operating Margin. We monitor non-GAAP income from operations and non-GAAP operating margin, non-GAAP financial measures, to analyze our financial results. We believe non-GAAP income from operations and non-GAAP operating margin are useful to investors, as supplements to U.S. GAAP measures, in evaluating our ongoing operational performance and enhancing an overall understanding of our past financial performance and allowing for greater transparency with respect to metrics used by our management in its financial and operational decision-making. See Non-GAAP Financial Results below for further information on non-GAAP income from operations and a reconciliation of non-GAAP income from operations to the comparable GAAP financial measure.

Free Cash Flow. Free cash flow is a non-GAAP measure that we define as cash provided by operating activities less purchases of property and equipment and capitalization of internal-use software costs. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after necessary capital expenditures. See Non-GAAP Financial Results below for a reconciliation of non-GAAP free cash flow to the comparable GAAP financial measure.

Annualized Recurring Revenue and Growth. Annualized Recurring Revenue (“ARR”) is defined as the annual value of all recurring revenue related to contracts in place at the end of the quarter. 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, which can be impacted by contract start and end dates and renewal rates, and does not include revenue reported as professional services revenue in our consolidated statement of operations. We use ARR and believe it is useful to investors as a measure of the overall success of our business.

Number of Customers. We believe that the size of our customer base is an indicator of our global market penetration and that our net customer additions are an indicator of the growth of our business. We define a customer as any entity that has an active Rapid7 recurring revenue contract as of the specified measurement date, excluding only InsightOps and Logentries customers with a contract value less than $2,400 per year.

ARR per Customer. ARR per customer is defined as ARR divided by the number of customers at the end of the period.

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Non-GAAP Financial Results

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we provide investors with certain non-GAAP financial measures, including non-GAAP gross profit, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per share, adjusted EBITDA and free cash flow. The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons, and use certain non-GAAP financial measures as performance measures under our executive bonus plan. We believe that these non-GAAP financial measures 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.

We define non-GAAP gross profit, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income and non-GAAP net income per share as the respective GAAP balances excluding the effect of stock-based compensation expense, amortization of acquired intangible assets, amortization of debt issuance costs and certain other items such as acquisition-related expenses, impairment of long-lived assets, change in the fair value of derivative assets, restructuring expense, induced conversion expense and discrete tax items. Non-GAAP net income per basic and diluted share is calculated as non-GAAP net income divided by the weighted average shares used to compute net income per share, with the number of weighted average shares decreased, when applicable, 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.

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

•Amortization of debt issuance costs. The expense for the amortization of 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.

•Induced conversion expense. In conjunction with the third quarter of 2023 partial repurchase of our 2025 Notes, we incurred a non-cash induced conversion expense of $53.9 million. We exclude induced conversion expense because this amount is not indicative of the performance of, or trends in, our business and neither is comparable to the prior period nor predictive of future results.

•Change in fair value of derivative assets. The change in fair value of derivative assets related to our capped calls settlement is a non-cash item and we believe the exclusion of this other income (expense) provides a more useful comparison of our operational performance in different periods.

•Impairment of long-lived assets. Impairment of long-lived assets consists of impairment charges allocated to the carrying amount of certain operating right-of-use assets and the associated leasehold improvements when the carrying amounts exceed their respective fair values and we believe the exclusion of the impairment charges provides a more useful comparison of our operational performance in different periods.

•Restructuring expense. We exclude non-ordinary course restructuring expenses related to the restructuring plan we announced in August 2023, which was concluded in the first quarter of 2024 (the "Restructuring Plan") because we do not believe these charges are indicative of our core operating performance and we believe the exclusion of the restructuring expense provides a more useful comparison of our performance in different periods. For further

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information see Note 15, Restructuring, in the Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

•Discrete tax items. We exclude certain discrete tax items such as income tax expenses or benefits that are not related to ongoing business operations in the current year and adjustments to uncertain tax position reserves as these charges are not indicative of our ongoing operating results, and they are not considered when we are forecasting our 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 diluted share, when applicable, to provide investors with useful information in evaluating our financial performance on a per share basis.

We define adjusted EBITDA as net income (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, (8) acquisition-related expenses, (9) impairment of long-lived assets and (10) restructuring expense. 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.

The following tables reconcile GAAP gross profit to non-GAAP gross profit for the three and nine months ended September 30, 2024, and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
GAAP total gross profit	$	151,637	$	141,013	$	442,978	$	400,446
Stock-based compensation expense	3,001		2,527		8,707		8,348
Amortization of acquired intangible assets	4,410		4,775		12,739		13,993
Non-GAAP total gross profit	$	159,048	$	148,315	$	464,424	$	422,787


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
GAAP gross profit – product subscriptions	$	148,940	$	138,615	$	436,288	$	394,752
Stock-based compensation expense	2,564		1,940		7,460		6,332
Amortization of acquired intangible assets	4,410		4,775		12,739		13,993
Non-GAAP gross profit – product subscriptions	$	155,914	$	145,330	$	456,487	$	415,077


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
GAAP gross profit – professional services	$	2,697	$	2,398	$	6,690	$	5,694
Stock-based compensation expense	437		587		1,247		2,016
Non-GAAP gross profit – professional services	$	3,134	$	2,985	$	7,937	$	7,710

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The following table reconciles GAAP income (loss) from operations to non-GAAP income from operations for the three and nine months ended September 30, 2024, and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
GAAP income (loss) from operations	$	13,961	$	(16,041)	$	31,409	$	(91,665)
Stock-based compensation expense	24,594		23,768		76,896		84,836
Amortization of acquired intangible assets	5,107		5,497		14,830		16,409
Acquisition-related expenses(1)	290		—		568		363
Impairment of long-lived assets	—		3,553		—		30,784
Restructuring expense(2)	—		19,996		(190)		19,996
Non-GAAP income from operations	$	43,952	$	36,773	$	123,513	$	60,723

(1) For the three and nine months ended September 30, 2024, acquisition-related expenses included $0.2 million of accretion expense related to contingent consideration recorded in connection with our July 2024 acquisition of Noetic.

(2) For the nine months ended September 30, 2024, restructuring expense was recorded within general and administrative expense in our condensed consolidated statement of operations.

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The following table reconciles GAAP net income (loss) to non-GAAP net income for the three and nine months ended September 30, 2024, and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands, except share and per share data)
GAAP net income (loss)	$	16,554	$	(76,611)	$	27,007	$	(169,308)
Stock-based compensation expense	24,594		23,768		76,896		84,836
Amortization of acquired intangible assets	5,107		5,497		14,830		16,409
Acquisition-related expenses	290		—		568		363
Amortization of debt issuance costs	1,217		1,041		3,325		3,061
Induced conversion expense	—		53,889		—		53,889
Change in fair value of derivative assets	—		2,851		—		15,511
Impairment of long-lived assets	—		3,553		—		30,784
Restructuring expense	—		19,996		(190)		19,996
Discrete tax items					6,360
Non-GAAP net income	$	47,762	$	33,984	$	128,796	$	55,541
Interest expense of convertible senior notes (1)	1,571		604		4,714		1,354
Numerator for non-GAAP earnings per share calculation	$	49,333	$	34,588	$	133,510	$	56,895

Weighted average shares used in GAAP earnings per share calculation, basic	62,898,078		61,065,157		62,389,482		60,506,082
Dilutive effect of convertible senior notes (1)	11,183,611		6,960,346		11,183,611		6,960,346
Dilutive effect of employee equity incentive plans (2)	455,396		873,718		652,017		1,919,771
Weighted average shares used in non-GAAP earnings per share calculation, diluted	74,537,085		68,899,221		74,225,110		69,386,199

Non-GAAP net income per share:
Basic	$	0.76	$	0.56	$	2.06	$	0.92
Diluted	$	0.66	$	0.50	$	1.80	$	0.82

(1) We use the if-converted method to compute diluted earnings per share with respect to our Notes. There was no add-back of interest expense or additional dilutive shares related to the Notes where the effect was anti-dilutive. On an if-converted basis, for the three and nine months ended September 30, 2024 and 2023, the 2025 Notes, the 2027 Notes and the 2029 Notes were dilutive.

(2) We use the treasury method to compute the dilutive effect of employee equity incentive plan awards.

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The following table reconciles GAAP net income (loss) to adjusted EBITDA for the three and nine months ended September 30, 2024, and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
GAAP net income (loss)	$	16,554	$	(76,611)	$	27,007	$	(169,308)
Interest income	(5,571)		(2,545)		(15,512)		(6,000)
Interest expense	2,837		56,515		8,180		62,005
Other (income) expense, net	(2,811)		4,518		(681)		18,093
Provision for income taxes	2,952		2,082		12,415		3,545
Depreciation expense	2,718		3,343		8,401		10,929
Amortization of intangible assets	8,520		8,306		25,056		23,599
Stock-based compensation expense	24,594		23,768		76,896		84,836
Acquisition-related expenses	290		—		568		363
Impairment of long-lived assets	—		3,553		—		30,784
Restructuring expense	—		19,996		(190)		19,996
Adjusted EBITDA	$	50,083	$	42,925	$	142,140	$	78,842

The following table reconciles net cash provided by operating activities to free cash flow for the three and nine months ended September 30, 2024, and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
Net cash provided by operating activities	$	43,969	$	3,665	$	107,897	$	40,812
Less: Purchases of property and equipment	(1,342)		(295)		(2,242)		(3,999)
Less: Capitalized internal-use software costs	(4,125)		(3,952)		(10,414)		(13,033)
Free cash flow	$	38,502	$	(582)	$	95,241	$	23,780

Components of Results of Operations

Revenue

We generate revenue primarily from selling products and professional services through a variety of delivery models to meet the needs of our diverse customer base.

Product subscriptions

We generate product subscriptions revenue from the sale of (1) cloud-based subscriptions, (2) managed services offerings, which utilize our products and (3) software licenses with related maintenance and support and content subscription, as applicable. Software license revenue consists of revenues from term licenses. When software licenses are purchased, maintenance and support and content subscription, as applicable, are bundled with the license for the term period.

Professional Services

We generate professional service revenue from the sale of deployment and training services related to our products, incident response services and security advisory services.

Cost of Revenue

Our total cost of revenue consists of the costs of product subscriptions and professional services, as noted below. In addition, cost of revenue includes overhead costs for depreciation, facilities, IT, information security, and recruiting. Our IT overhead costs include IT personnel compensation costs and costs associated with our IT infrastructure. All overhead costs are allocated based on relative headcount.

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Cost of Product Subscriptions

Cost of product subscriptions consists of personnel and related costs for our content, support, managed service and cloud operations teams, including salaries and other payroll related costs, bonuses, stock-based compensation and allocated overhead costs. Also included in cost of products are software license fees, cloud computing costs and internet connectivity expenses directly related to delivering our products, amortization of contract fulfillment costs, as well as amortization of certain intangible assets including internally developed software.

Cost of Professional Services

Cost of professional services consists of personnel and related costs for our professional services team, including salaries and other payroll related costs, bonuses, stock-based compensation, costs of contracted third-party vendors, travel and entertainment expenses and allocated overhead costs.

We expect our cost of revenue to increase on an absolute dollar basis as we continue to grow our revenue.

Gross Margin

Gross margin, or gross profit as a percentage of revenue, has been and will continue to be affected by a variety of factors, including the average sales price of our products and services, transaction volume growth, the mix of revenue between software licenses, cloud-based subscriptions, managed services and professional services and changes in cloud computing costs.

We expect our gross margins to fluctuate over time depending on the factors described above.

Operating Expenses

Operating expenses consist of research and development, sales and marketing, general and administrative expenses and restructuring. Operating expenses include overhead costs for depreciation, facilities, IT, information security and recruiting. Our IT overhead costs include IT personnel compensation costs and costs associated with our IT infrastructure. All overhead costs are allocated based on relative headcount.

Research and Development Expense

Research and development expense consists of personnel costs for our research and development team, including salaries and other payroll related costs, bonuses and stock-based compensation. Additional expenses include third-party infrastructure costs, travel and entertainment, consulting and professional fees for third-party development resources as well as allocated overhead costs.

We expect research and development expense to decrease as a percentage of total revenue in the near term.

Sales and Marketing Expense

Sales and marketing expense consists of personnel costs for our sales and marketing team, including salaries and other payroll related costs, commissions, including amortization of deferred commissions, bonuses and stock-based compensation. Additional expenses include marketing activities and promotional events, travel and entertainment, training costs, amortization of certain intangible assets and allocated overhead costs.

We expect sales and marketing expense to decrease as a percentage of total revenue in the near term.

General and Administrative Expense

General and administrative expense consists of personnel costs for our executive, legal, human resources, and finance and accounting departments, including salaries and other payroll related costs, bonuses and stock-based compensation. Additional expenses include travel and entertainment, professional fees, litigation-related expenses, insurance, acquisition-related expenses, amortization of certain intangible assets and allocated overhead costs.

We expect general and administrative expense to decrease as a percentage of total revenue in the near term.

Impairment of Long-Lived Assets

Impairment of long-lived assets consists of impairment charges allocated to the carrying amount of certain operating right-of-use assets and the associated leasehold improvements when the carrying amounts exceed their respective fair values.

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Interest Income

Interest income consists primarily of interest income on our cash and cash equivalents and our short and long-term investments.

Interest Expense

Interest expense consists primarily of contractual interest expense, amortization of debt issuance costs related to our convertible senior notes and revolving credit facility and induced conversion expense. We expect interest expense in the near term to represent contractual interest expense and amortization of debt issuance costs related to our convertible senior notes and revolving credit facility.

Other Income (Expense), Net

Other income (expense), net consists primarily of the change in fair value of derivative assets and unrealized and realized gains and losses related to changes in foreign currency exchange rates.

Provision for Income Taxes

Provision for income taxes consists of domestic and foreign taxes on income and withholding taxes. We maintain a substantially full valuation allowance for domestic and certain foreign deferred tax assets, including net operating loss carryforwards and tax credits. Based on our history of losses, we expect to maintain this substantially full valuation allowance for the foreseeable future as it is more likely than not that some or all of those deferred tax assets may not be realized.

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Results of Operations


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
Consolidated Statement of Operations Data:
Revenue:
Product subscriptions	$	205,593	$	189,876	$	602,578	$	545,349
Professional services	9,061		8,967		25,168		27,090
Total revenue	214,654		198,843		627,746		572,439
Cost of revenue:(1)
Product subscriptions	56,653		51,261		166,290		150,597
Professional services	6,364		6,569		18,478		21,396
Total cost of revenue	63,017		57,830		184,768		171,993
Operating expenses:(1)
Research and development	44,565		39,940		125,611		137,048
Sales and marketing	74,521		75,699		225,121		239,322
General and administrative	18,590		17,866		60,837		64,961
Impairment of long-lived assets	—		3,553		—		30,784
Restructuring	—		19,996		—		19,996
Total operating expenses	137,676		157,054		411,569		492,111
Income (loss) from operations	13,961		(16,041)		31,409		(91,665)
Interest income	5,571		2,545		15,512		6,000
Interest expense	(2,837)		(56,515)		(8,180)		(62,005)
Other expense, net	2,811		(4,518)		681		(18,093)
Income (loss) before income taxes	19,506		(74,529)		39,422		(165,763)
Provision for income taxes	2,952		2,082		12,415		3,545
Net income (loss)	$	16,554	$	(76,611)	$	27,007	$	(169,308)

(1) Cost of revenue and operating expenses include stock-based compensation expense and depreciation and amortization expense as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
Stock-based compensation expense:
Cost of revenue	$	3,001	$	2,527	$	8,707	$	8,348
Research and development	9,535		8,436		25,698		30,575
Sales and marketing	6,823		7,106		21,182		23,087
General and administrative	5,235		5,699		21,309		22,826
Total stock-based compensation expense	$	24,594	$	23,768	$	76,896	$	84,836


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
Depreciation and amortization expense:
Cost of revenue	$	8,332	$	8,213	$	24,558	$	23,246
Research and development	804		1,010		2,502		3,285
Sales and marketing	1,671		1,889		5,073		6,009
General and administrative	431		537		1,324		1,988
Total depreciation and amortization expense	$	11,238	$	11,649	$	33,457	$	34,528

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The following table sets forth our condensed consolidated statements of operations data expressed as a percentage of revenue:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Condensed Consolidated Statement of Operations Data:
Revenue:
Product subscriptions	95.8	%	95.5	%	96.0	%	95.3	%
Professional services	4.2		4.5		4.0		4.7
Total revenue	100.0		100.0		100.0		100.0
Cost of revenue:
Product subscriptions	26.4		25.8		26.5		26.3
Professional services	3.0		3.3		2.9		3.8
Total cost of revenue	29.4		29.1		29.4		30.0	%
Operating expenses:
Research and development	20.8		20.1		20.0		23.9
Sales and marketing	34.7		38.2		35.9		41.8
General and administrative	8.6		9.0		9.7		11.3
Impairment of long-lived assets	—		1.8	%	—		5.4
Restructuring	—		10.1	%	—		3.5
Total operating expenses	64.1		79.0		65.6		86.0
Income (loss) from operations	6.5		(8.1)		5.0		(16.0)
Interest income	2.6		1.3		2.5		1.0
Interest expense	(1.3)		(28.4)		(1.3)		(10.8)
Other income (expense), net	1.3		(2.3)		0.1		(3.2)
Income (loss) before income taxes	9.1		(37.5)		6.3		(29.0)
Provision for income taxes	1.4		1.0		2.0		0.6
Net income (loss)	7.7	%	(38.5)	%	4.3	%	(29.6)	%

Comparison of the Three Months Ended September 30, 2024 and 2023

Revenue


	Three Months Ended September 30,				Change
	2024		2023		$		%
	(dollars in thousands)
Revenue:
Product subscriptions	$	205,593	$	189,876	$	15,717	8.3	%
Professional services	9,061		8,967		94		1.0	%
Total revenue	$	214,654	$	198,843	$	15,811	8.0	%

Total revenue increased by $15.8 million in the three months ended September 30, 2024 compared to the same period in 2023 and consisted of a $2.4 million increase in revenue from new customers and a $13.4 million increase in revenue from existing customers. The $13.4 million increase in revenue from existing customers was due to an increase in revenue from renewals, upsells and cross-sells as a result of the continued growth of our existing customer base. Revenue from new customers represents the revenue recognized from the customer's initial purchase.

The increase in total revenue in the three months ended September 30, 2024 compared to the same period in 2023 was comprised of $8.5 million generated from sales in North America and $7.3 million generated from sales from the rest of the world.

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Cost of Revenue


	Three Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
Cost of revenue:
Product subscriptions	$	56,653		$	51,261		$	5,392	10.5	%
Professional services	6,364			6,569			(205)		(3.1)	%
Total cost of revenue	$	63,017		$	57,830		$	5,187	9.0	%
Gross margin %:
Product subscriptions	72.4		%	73.0		%
Professional services	29.8		%	26.7		%
Total gross margin %	70.6		%	70.9		%

Total cost of revenue increased by $5.2 million in the three months ended September 30, 2024 compared to the same period in 2023, primarily due to a $4.7 million increase in cloud computing costs related to growing cloud-based subscription and managed services revenue, a $0.6 million increase in amortization expense for capitalized internally-developed software and a $0.8 million increase in other expenses.

Total gross margin percentage decreased for the three months ended September 30, 2024 compared to the same period in 2023. The decrease in product subscriptions gross margin for the three months ended September 30, 2024 was primarily due to an increase in cloud computing costs. The increase in professional services gross margin for the three months ended September 30, 2024 was primarily due to a decrease in personnel costs.

Operating Expenses

Research and Development Expense


	Three Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
Research and development	$	44,565		$	39,940		$	4,625	11.6	%
% of revenue	20.8		%	20.1		%

Research and development expense increased by $4.6 million in the three months ended September 30, 2024 compared to the same period in 2023, primarily due to a $2.8 million increase in personnel costs, inclusive of a $1.2 million increase in stock-based compensation expense, resulting from an increase in headcount including the employees acquired in the acquisition of Noetic in July 2024, and a $1.8 million increase in other expenses.

Sales and Marketing Expense


	Three Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
Sales and marketing	$	74,521		$	75,699		$	(1,178)	(1.6)	%
% of revenue	34.7		%	38.2		%

Sales and marketing expense decreased by $1.2 million in the three months ended September 30, 2024 compared to the same period in 2023, primarily due to a $3.3 million decrease in personnel costs, inclusive of a $0.3 million decrease in stock-based compensation expense, resulting from a decrease in headcount primarily due to our Restructuring Plan, and a $0.2 million decrease in other expenses. These decreases were partially offset by a $2.3 million increase in commission expense.

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General and Administrative Expense


	Three Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
General and administrative	$	18,590		$	17,866		$	724	4.1	%
% of revenue	8.6		%	9.0		%

General and administrative expense increased by $0.7 million in the three months ended September 30, 2024 compared to the same period in 2023, primarily due to a $0.7 million increase in professional fees.

Impairment of Long-Lived Assets


	Three Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
Impairment of long-lived assets	$	—		$	3,553		$	(3,553)	(100.0)	%
% of revenue	—		%	1.8		%

Impairment of long-lived assets expense of $3.6 million in the three months ended September 30, 2023 related to an impairment charge recorded after a triggering event related to a change in usage of certain idle office spaces located in Plano Texas, Los Angeles, California and Toronto, Canada indicated that the carrying value of our right of use and other lease-related assets may not be fully recoverable.

Restructuring


	Three Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
Restructuring	$	—		$	19,996		$	(19,996)	(100.0)	%
% of revenue	—		%	10.1		%

Restructuring expense of $20.0 million in the three months ended September 30, 2023 was recorded as a result of restructuring charges consisting of employee transition, notice period and severance payments and employee benefits and related facilitation costs related to our Restructuring Plan. Refer to Note 15, Restructuring, in the Notes to our condensed consolidated financial statements for further details on our Restructuring Plan.

Interest Income


	Three Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
Interest income	$	5,571		$	2,545		$	3,026	118.9	%
% of revenue	2.6		%	1.3		%

Interest income increased by $3.0 million in the three months ended September 30, 2024 compared to the same period in 2023 primarily due to higher interest income as a result of an increase in cash and cash equivalents and investments.

Interest Expense


	Three Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
Interest expense	$	(2,837)		$	(56,515)		$	53,678	(95.0)	%
% of revenue	(1.3)		%	(28.4)		%

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Interest expense decreased in the three months ended September 30, 2024 compared to the same period in 2023 primarily due to $53.9 million of induced conversion expense incurred in the third quarter of 2023 in conjunction with the partial repurchase of the 2025 Notes.

Other Income (Expense), Net


	Three Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
Other income (expense), net	$	2,811		$	(4,518)		$	7,329	(162.2)	%
% of revenue	1.3		%	(2.3)		%

Other income (expense), net increased by $7.3 million in the three months ended September 30, 2024 compared to the same period in 2023 primarily due to increases in realized and unrealized foreign currency gains, primarily related to the Euro and British Pound Sterling, partially offset by $2.9 million of expense for the change in fair value on derivative assets related to our 2023 capped calls settlement in the prior period.

Provision for Income Taxes


	Three Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
Provision for income taxes	$	2,952		$	2,082		$	870	41.8	%
% of revenue	1.4		%	1.0		%

Provision for income taxes increased by $0.9 million in the three months ended September 30, 2024 compared to the same period in 2023 primarily due to an increase in taxes associated with our international operations.

Comparison of the Nine Months Ended September 30, 2024 and 2023

Revenue


	Nine Months Ended September 30,				Change
	2024		2023		$		%
	(dollars in thousands)
Revenue:
Product subscriptions	$	602,578	$	545,349	$	57,229	10.5	%
Professional services	25,168		27,090		(1,922)		(7.1)	%
Total revenue	$	627,746	$	572,439	$	55,307	9.7	%

Total revenue increased by $55.3 million in the nine months ended September 30, 2024 compared to the same period in 2023 and consisted of a $5.9 million increase in revenue from new customers and a $49.4 million increase in revenue from existing customers. The $49.4 million increase in revenue from existing customers was due to an increase in revenue from renewals, upsells and cross-sells as a result of the continued growth of our existing customer base. Revenue from new customers represents the revenue recognized from the customer's initial purchase.

The increase in total revenue in the nine months ended September 30, 2024 compared to the same period in 2023 was comprised of $31.6 million generated from sales in North America and $23.7 million generated from sales from the rest of the world.

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Cost of Revenue


	Nine Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
Cost of revenue:
Product subscriptions	$	166,290		$	150,597		$	15,693	10.4	%
Professional services	18,478			21,396			(2,918)		(13.6)	%
Total cost of revenue	$	184,768		$	171,993		$	12,775	7.4	%
Gross margin %:
Products	72.4		%	72.4		%
Professional services	26.6		%	21.0		%
Total gross margin %	70.6		%	70.0		%

Total cost of revenue increased by $12.8 million in the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to a $15.8 million increase in cloud computing costs related to growing cloud-based subscription and managed services revenue, a $3.0 million increase in amortization expense for capitalized internally-developed software and a $0.4 million increase in other expenses. These increases were partially offset by a $6.4 million decrease in personnel costs resulting from a decrease in headcount primarily due to our Restructuring Plan.

Total gross margin percentage increased in the nine months ended September 30, 2024 compared to the same period in 2023. The gross margin percentage for product subscriptions was consistent in the nine months ended September 30, 2024 compared to the same period in 2023. The increase in professional services gross margin in the nine months ended September 30, 2024 was primarily due to a decrease in personnel costs.

Operating Expenses

Research and Development Expense


	Nine Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
Research and development	$	125,611		$	137,048		$	(11,437)	(8.3)	%
% of revenue	20.0		%	23.9		%

Research and development expense decreased by $11.4 million in the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to a $10.8 million decrease in personnel costs, inclusive of a $4.9 million decrease in stock-based compensation expense, resulting from an overall decrease in headcount, primarily due to our Restructuring Plan, and a $3.0 million decrease due to a write-off of a capitalized internal-use software project in the prior period. These decreases were partially offset by a $2.4 million increase in other expenses.

Sales and Marketing Expense


	Nine Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
Sales and marketing	$	225,121		$	239,322		$	(14,201)	(5.9)	%
% of revenue	35.9		%	41.8		%

Sales and marketing expense decreased by $14.2 million in the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to a $15.7 million decrease in personnel costs, inclusive of a $1.9 million decrease in stock-based compensation expense, resulting from an overall decrease in headcount primarily due to our Restructuring Plan, a $1.7 million decrease in marketing and advertising expenses and a $3.6 million decrease in other expenses. These decreases were partially offset by a $6.8 million increase in commission expense.

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General and Administrative Expense


	Nine Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
General and administrative	$	60,837		$	64,961		$	(4,124)	(6.3)	%
% of revenue	9.7		%	11.3		%

General and administrative expense decreased by $4.1 million in the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to a $3.5 million decrease in personnel costs, inclusive of a $1.4 million decrease in stock-based compensation expense, resulting from a decrease in headcount primarily due to our Restructuring Plan, a $1.6 million decrease in professional fees and a $0.4 million decrease in other expenses.

Impairment of Long-Lived Assets


	Nine Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
Impairment of long-lived assets	$	—		$	30,784		$	(30,784)	100.0	%
% of revenue	—		%	5.4		%

Impairment of long-lived assets expense of $30.8 million in the nine months ended September 30, 2023 was recorded after a triggering event related to a change in usage of certain idle office space at our corporate headquarters in Boston, Massachusetts as well as idle office spaces located in Plano, Texas, Los Angeles, California and Toronto, Canada indicated that the carrying value of our right of use and other lease-related assets may not be fully recoverable.

Restructuring


	Nine Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
Restructuring	$	—		$	19,996		$	(19,996)	100.0	%
% of revenue	—		%	3.5		%

Restructuring expense of $20.0 million in the nine months ended September 30, 2023 was recorded as a result of restructuring charges consisting of employee transition, notice period and severance payments and employee benefits and related facilitation costs related to our Restructuring Plan. Refer to Note 15, Restructuring, in the Notes to our condensed consolidated financial statements for further details on our Restructuring Plan.

Interest Income


	Nine Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
Interest income	$	15,512		$	6,000		$	9,512	158.5	%
% of revenue	2.5		%	1.0		%

Interest income increased by $9.5 million in the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to higher interest income as a result of an increase in cash and cash equivalents and investments.

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Interest Expense


	Nine Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
Interest expense	$	(8,180)		$	(62,005)		$	53,825	(86.8)	%
% of revenue	(1.3)		%	(10.8)		%

Interest expense decreased in the nine months ended September 30, 2024 compared to the same period in 2023 primarily due to $53.9 million of induced conversion expense incurred in the third quarter of 2023 in conjunction with the partial repurchase of the 2025 Notes.

Other Income (Expense), Net


	Nine Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
Other income (expense), net	$	681		$	(18,093)		$	18,774	(103.8)	%
% of revenue	0.1		%	(3.2)		%

Other income (expense), net increased by $18.8 million in the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to a $15.5 million expense for the change in fair value on derivative assets related to our 2023 capped calls settlement in the prior period as well as increases in realized and unrealized foreign currency gains, primarily related to the Euro and British Pound Sterling.

Provision for Income Taxes


	Nine Months Ended September 30,						Change
	2024			2023			$		%
	(dollars in thousands)
Provision for income taxes	$	12,415		$	3,545		$	8,870	250.2	%
% of revenue	2.0		%	0.6		%

Provision for income taxes increased by $8.9 million in the nine months ended September 30, 2024 compared to the same period in 2023 primarily due to $6.4 million of tax expense recorded for an intercompany sale of intellectual property as part of post-acquisition strategy related to the acquisition of Minerva Lab Ltd. and a $2.5 million increase in domestic and international taxes.

Liquidity and Capital Resources

As of September 30, 2024, we had $222.6 million in cash and cash equivalents, $281.5 million in investments that have maturities ranging from one to twenty months and an accumulated deficit of $1.0 billion. Since our inception, we have generated significant losses and we may generate losses for the foreseeable future. Our principal sources of liquidity are cash and cash equivalents, investments, cash flow provided by operating activities and our Credit and Security Agreement (the “Credit Agreement”). To date, we have financed our operations primarily through private and public equity financings, issuance of convertible senior notes and through cash generated by operating activities.

We believe that our existing cash and cash equivalents, our investments, our available borrowings under our Credit Agreement and cash generated by operating activities will be sufficient to meet our operating and capital requirements for at least the next 12 months. Our foreseeable cash needs, in addition to our recurring operating expenses, include our expected capital expenditures to support expansion of our infrastructure and workforce, office facilities lease obligations, purchase commitments, including our cloud infrastructure services (including with Amazon Web Services (“AWS”)), potential future acquisitions of technology businesses and any election we make to redeem our convertible senior notes.

Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the expansion of sales and marketing activities, particularly internationally, the introduction of new and enhanced products and service offerings, the cost of any future acquisitions of technology or businesses and any election we make to redeem our convertible senior notes. In the event that additional financing is required from outside sources, we may be unable to raise the funds on acceptable terms, if at all. If we are unable to raise additional capital on terms satisfactory to us when we require it, our business, operating results and financial condition could be adversely affected.

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Cash Flows

The following table shows a summary of our cash flows for the nine months ended September 30, 2024 and 2023:


	Nine Months Ended September 30,
	2024		2023
	(in thousands)
Cash, cash equivalents and restricted cash at beginning of period	$	214,130	$	207,804
Net cash provided by operating activities	107,897		40,812
Net cash used in investing activities	(99,488)		(145,186)
Net cash provided by financing activities	6,799		81,795
Effects of exchange rates on cash, cash equivalents and restricted cash	770		(2,010)
Cash, cash equivalents and restricted cash at end of period	$	230,108	$	183,215

Uses of Funds

Our historical uses of cash have primarily consisted of cash used for operating activities such as expansion of our sales and marketing operations, research and development activities and other working capital needs, as well as cash used for business acquisitions and purchases of property and equipment, including leasehold improvements for our facilities.

Operating Activities

Operating activities provided $107.9 million of cash and cash equivalents in the nine months ended September 30, 2024, which reflects continued growth in revenue partially offset by our continued investments in our operations and the timing of working capital adjustments. Cash provided by operating activities reflected our net income of $27.0 million and non-cash charges of $111.0 million related primarily to depreciation and amortization, stock-based compensation expense, deferred income taxes, amortization of debt issuance costs and other non-cash charges, partially offset by a decrease in our net operating assets and liabilities of $30.1 million. The change in our net operating assets and liabilities was primarily due to a decrease in deferred revenue and the timing of payments of operating expenses, including payout of annual bonuses and year-end commissions and other compensation costs and accounts payable, partially offset by a decrease in accounts receivable due to an increase in cash collections from our customers.

Operating activities provided $40.8 million of cash and cash equivalents in the nine months ended September 30, 2023, which reflects continued growth in revenue partially offset by our continued investments in our operations and the timing of working capital adjustments. Cash provided by operating activities reflected our net loss of $169.3 million and non-cash charges of $228.2 million related primarily to depreciation and amortization, stock-based compensation expense, impairment of long-lived assets, change in fair value of derivative assets, amortization of debt issuance costs and other non-cash charges, partially offset by a decrease in our net operating assets and liabilities of $18.1 million. The change in our net operating assets and liabilities was primarily due to a $18.0 million decrease in accrued expenses, primarily as a result of the payout of annual bonuses and year-end commissions, a $6.4 million decrease in deferred revenue, a $1.2 million decrease in accounts payable, a $0.9 million decrease in other liabilities and a $9.5 million increase in deferred contract acquisition and fulfillment costs, which each had a negative impact on operating cash flow. These factors were offset by a $12.4 million decrease in accounts receivable due to an increase in collections, and a $5.5 million decrease in prepaid expenses, which each had a positive impact on operating cash flow.

Investing Activities

Investing activities used $99.5 million of cash in the nine months ended September 30, 2024, consisting of $49.9 million in purchases of investments, net of sales/maturities, $37.2 million of cash paid for the acquisition of Noetic, $10.4 million for capitalization of internal-use software costs, and $2.2 million in capital expenditures to purchase computer equipment and leasehold improvements, partially offset by proceeds of $0.4 million for other investing activities.

Investing activities used $145.2 million of cash in the nine months ended September 30, 2023, consisting of $93.4 million in purchases of investments, net of sales and maturities, $34.8 million of cash paid for the acquisition of Minerva, $13.0 million for capitalization of internal-use software costs and $4.0 million in capital expenditures to purchase computer equipment and leasehold improvements.

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Financing Activities

Financing activities provided $6.8 million of cash in the nine months ended September 30, 2024, which consisted primarily of $9.2 million in proceeds from the issuance of common stock purchased by employees under the Rapid7, Inc. 2015 Employee Stock Purchase Plan (“ESPP”) and $1.4 million in proceeds from the exercise of stock options, partially offset by $3.8 million in withholding taxes paid for the net share settlement of equity awards.

Financing activities provided $81.8 million of cash in the nine months ended September 30, 2023, which consisted primarily of $292.8 million in proceeds from the issuance of the 2029 Notes, net of issuance costs paid of $7.2 million, $17.5 million in proceeds from the settlement of the 2023 Capped Calls, $11.3 million in proceeds from the issuance of common stock purchased by employees under the ESPP and $3.0 million in proceeds from the exercise of stock options, partially offset by $200.0 million for the repurchase and conversion of the 2025 Notes, $36.6 million for the purchase of the 2029 Capped Calls, $4.0 million in withholding taxes paid for the net share settlement of equity awards and $2.2 million in payments related to the acquisition of IntSights.

Contractual Obligations and Commitments

As of September 30, 2024, there were no additional material changes from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 26, 2024 (the “Annual Report”).

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We do not engage in off-balance sheet financing arrangements. In addition, we do not engage in trading activities involving non-exchange traded contracts. We therefore believe that we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

Critical Accounting Estimates

Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and disclosures. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates. There have been no material changes to our critical accounting estimates from those disclosed in our Annual Report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Foreign Currency Exchange Risk

Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. A majority of our customers enter into contracts that are denominated in U.S. dollars. Our expenses are generally denominated in the currencies of the countries where our operations are located, which is primarily in the United States and to a lesser extent in the United Kingdom, other Euro-zone countries within mainland Europe, Canada, Australia, Israel, Singapore and Japan. Our results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign currency exchange rates. The effect of a hypothetical 10% adverse change in foreign currency exchange rates on monetary assets and liabilities as of September 30, 2024 would not have been material to our financial condition or results of operations. We enter into forward contracts designated as cash flow hedges to manage the foreign currency exchange rate risk associated with certain of our foreign currency denominated expenditures. The effectiveness of our existing hedging transactions and the availability and effectiveness of any hedging transactions we may decide to enter into in the future may be limited, and we may not be able to successfully hedge our exposure, which could adversely affect our financial condition and operating results. For further information, see Note 9, Derivatives and Hedging Activities, in the Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in foreign currency rates.

Interest Rate Risk

As of September 30, 2024, we had cash and cash equivalents of $222.6 million consisting of bank deposits and money market funds and investments of $281.5 million consisting of U.S. government agencies. Our investments are made for capital preservation purposes. We do not enter into investments for trading or speculative purposes.

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Our cash and cash equivalents and investments are subject to market risk due to changes in interest rates, which may affect our interest income and the fair value of our investments. Due in part to these factors, our future investment income may fluctuate due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. However, because we classify our investments as available-for-sale securities, no gains or losses are recognized due to the changes in interest rates unless securities are sold prior to maturity or declines in fair value are determined to be other-than-temporary.

The fair values of our convertible senior notes are subject to interest rate risk, market risk and other factors due to the conversion features of the notes. The fair values of the convertible senior notes may increase or decrease for various reasons, including fluctuations in the market price of our common stock, fluctuations in market interest rates and fluctuations in general economic conditions. The interest and market value changes affect the fair values of the convertible senior notes but do not impact our financial position, cash flows or results of operations due to the fixed nature of the debt obligation. Based upon the quoted market price as of September 30, 2024, the fair values of our 2025 Notes, 2027 Notes and 2029 Notes were $45.1 million, $547.1 million and $281.9 million, respectively.

As of September 30, 2024, the effect of a hypothetical 10% increase or decrease in interest rates would not have had a material impact on our financial statements.

Inflation Risk

As of September 30, 2024, we do not believe that inflation had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of the design and operations of our disclosure controls and procedures as of September 30, 2024. Based on the evaluation of our disclosure controls and procedures as of September 30, 2024, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Inherent Limitations of Internal Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we are a party to litigation or subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business, financial condition or results of operations. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors.

Except as follows below, there have been no material changes to the risk factors disclosed in Part 1, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on February 26, 2024 (the “Annual Report”) and in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024, filed with the SEC on August 7, 2024 (the “Q2 Quarterly Report”). Our operations and financial results are subject to various risks and uncertainties that, if they materialize, could adversely affect our business, financial condition and results of operations. In that event, the trading price of our common stock could decline. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors described in Part I, Item 1A. “Risk Factors” of our Annual Report and Q2 Quarterly Report. We may disclose additional changes to risk factors or disclose additional factors from time to time in our future filings with the SEC. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business.

Our business could be negatively affected as a result of actions of activist stockholders or others.

We may be subject to actions or proposals from stockholders or others that may not align with our business strategies or the interests of our other stockholders. Such activist stockholders frequently propose to involve themselves in the governance, strategic direction and operations of companies, including companies' efforts regarding environmental, sustainability and governance standards. For example, JANA Partners Management, LP, an activist investor, has reported, as of September 2024 that it holds an approximate 5.8% beneficial ownership interest in our outstanding common stock. Responding to actions from activist stockholders can be costly and time-consuming, disrupt our business and operations, and divert the attention of our board of directors, management, and employees from the pursuit of our business strategies. Such activities could interfere with our ability to execute our strategic plan. Activist stockholders or others may create perceived uncertainties as to the future direction of our business or strategy which may be exploited by our competitors and may make it more difficult to attract and retain qualified personnel and potential customers, and may affect our relationships with current customers, vendors, investors, and other third parties. In addition, a proxy contest for the election of directors at our annual meeting would require us to incur significant legal fees and proxy solicitation expenses and require significant time and attention by management and our board of directors. The perceived uncertainties as to our future direction also could affect the market price and volatility of our securities.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) Recent Sales of Unregistered Equity Securities

None.

(b) Use of Proceeds from Initial Public Offering of Common Stock

None.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

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Item 5. Other Information.

Rule 10b5-1 Trading Plans and Non-Rule 10b5-1 Trading Arrangements

Certain of our executive officers and directors may execute purchases and sales of our securities through Rule 10b5-1 equity trading plans and “non-Rule 10b5-1 equity trading arrangements” (as defined in Item 408(c) of Regulation S-K).

During the three months ended September 30, 2024, the executive officers set forth below terminated or modified a 10b5-1 equity trading plan, or adopted, terminated, or modified any “non-Rule 10b5-1 equity trading arrangement”.

Name and Position

Action

Adoption or Transaction Date

Type of Trading Arrangement

Number of Shares of Common Stock to be Sold

Expiration Date

Corey Thomas, Chief Executive Officer (1)

Adoption

September 4, 2024

Rule 10b5-1*

358,620**

December 31, 2025***

Christina Luconi, Chief People Officer

Adoption

September 13, 2024

Rule 10b5-1*

34,039**

May 1, 2025***

(1) Mr. Thomas' plan includes the sale of 8,620 shares that were gifted to Ancore Foundation, Inc., a charitable foundation of which Mr. Thomas is a director.

* Contract, instruction or written plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act.

** Represents the maximum number of shares that may be sold pursuant to the Rule 10b5-1 trading arrangement in amounts and prices determined in accordance with a formula set forth in the plan. The actual number of shares sold will be dependent on the satisfaction of certain conditions as set forth in the written plan.

*** The Rule 10b5-1 trading arrangement will terminate on the earlier of the date all the shares under the plan are sold and the

expiration date indicated, subject to early termination for specified events set forth in the plan.

During the three months ended September 30, 2024, other than noted above, none of our executive officers or directors terminated or modified a 10b5-1 equity trading plan, or adopted, terminated, or modified any “non-Rule 10b5-1 equity trading arrangement”.

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Item 6. Exhibits.


Exhibit Number						Description

3.1						Amended and Restated Certificate of Incorporation of Rapid7, Inc., as of June 3, 2020 (incorporated by reference Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-37496), filed on August 10, 2020).
3.2						Amended and Restated Bylaws of Rapid7, Inc., as of June 3, 2020 (incorporated by reference to Exhibit 3.2 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-37496), filed with the Securities and Exchange Commission on August 10, 2020).
31.1*						Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**						Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**						Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Schema Document.
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104						Cover Page Interactive Data file (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)


*			Filed herewith.
**			This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	RAPID7, INC.

Date: November 7, 2024	By:	/s/ Corey E. Thomas
		Name: Corey E. Thomas
		Title: Chief Executive Officer
		(Principal Executive Officer)

Date: November 7, 2024	By:	/s/ Tim Adams
		Name: Tim Adams
		Title: Chief Financial Officer
		(Principal Financial Officer)

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Corey E. Thomas, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Rapid7, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2024

By:

/s/ Corey E. Thomas

Name: Corey E. Thomas

Title: Chief Executive Officer

(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Tim Adams, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Rapid7, Inc.;

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2024

By:

/s/ Tim Adams

Name: Tim Adams

Title: Chief Financial Officer

(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Corey E. Thomas, Chief Executive Officer of Rapid7, Inc., do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge, the Quarterly Report on Form 10-Q of Rapid7, Inc. for the quarter ended September 30, 2024 (the “Report”):

(1)fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Rapid7, Inc. for the period presented herein.

Date: November 7, 2024

By:

/s/ Corey E. Thomas

Name: Corey E. Thomas

Title: Chief Executive Officer

(Principal Executive Officer)

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Tim Adams, Chief Financial Officer of Rapid7, Inc., do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge, the Quarterly Report on Form 10-Q of Rapid7, Inc. for the quarter ended September 30, 2024 (the “Report”):

(1)fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Rapid7, Inc. for the period presented herein.

Date: November 7, 2024

By:

/s/ Tim Adams

Name: Tim Adams

Title: Chief Financial Officer

(Principal Financial Officer)

Cover Page - shares	9 Months Ended
Cover Page - shares	Sep. 30, 2024	Oct. 31, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
Document Transition Report	false
Entity File Number	001-37496
Entity Registrant Name	RAPID7, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	35-2423994
Entity Address, Address Line One	120 Causeway Street
Entity Address, City or Town	Boston,
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02114
City Area Code	617
Local Phone Number	247-1717
Title of 12(b) Security	Common Stock, $0.01 par value per share
Trading Symbol	RPD
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		63,206,602
Entity Central Index Key	0001560327
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Amendment Flag	false

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 222,571	$ 213,629
Short-term investments	221,122	169,544
Accounts receivable, net of allowance for credit losses of $1,591 and $951 at September 30, 2024 and December 31, 2023, respectively	141,891	164,862
Deferred contract acquisition and fulfillment costs, current portion	49,710	45,008
Prepaid expenses and other current assets	37,328	41,407
Total current assets	672,622	634,450
Long-term investments	60,382	56,171
Property and equipment, net	33,936	39,642
Operating lease right-of-use assets	50,756	54,693
Deferred contract acquisition and fulfillment costs, non-current portion	72,392	76,601
Goodwill	575,165	536,351
Intangible assets, net	90,748	94,546
Other assets	18,530	12,894
Total assets	1,574,531	1,505,348
Current liabilities:
Accounts payable	6,005	15,812
Accrued expenses and other current liabilities	82,319	85,025
Convertible senior notes, current portion, net	45,816	0
Operating lease liabilities, current portion	15,849	13,452
Deferred revenue, current portion	423,640	455,503
Total current liabilities	573,629	569,792
Convertible senior notes non-current portion, net	887,362	929,996
Operating lease liabilities, non-current portion	72,555	81,130
Deferred revenue, non-current portion	28,239	32,577
Other long-term liabilities	19,050	10,032
Total liabilities	1,580,835	1,623,527
Stockholders’ deficit:
Preferred stock, $0.01 par value per share; 100,000,000 shares authorized at September 30, 2024 and December 31, 2023; 0 shares issued and outstanding at September 30, 2024 and December 31, 2023	0	0
Common stock, $0.01 par value per share; 100,000,000 shares authorized at September 30, 2024 and December 31, 2023; $63,747,524 and 62,283,630 shares issued at September 30, 2024 and December 31, 2023, respectively; $63,177,945 and $61,714,051 shares outstanding at September 30, 2024 and December 31, 2023, respectively	632	617
Treasury stock, at cost, 569,579 shares at September 30, 2024 and December 31, 2023	(4,765)	(4,765)
Additional paid-in-capital	978,898	894,630
Accumulated other comprehensive income	1,929	1,344
Accumulated deficit	(982,998)	(1,010,005)
Total stockholders’ deficit	(6,304)	(118,179)
Total liabilities and stockholders’ deficit	$ 1,574,531	$ 1,505,348

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Allowance for doubtful accounts receivable	$ 1,591	$ 951
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	100,000,000	100,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	63,747,524	62,283,630
Common stock, shares outstanding (in shares)	63,177,945	61,714,051
Treasury stock, at cost (in shares)	569,579	569,579

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Revenue:
Total revenue	$ 214,654	$ 198,843	$ 627,746	$ 572,439
Cost of revenue:
Total cost of revenue	63,017	57,830	184,768	171,993
Total gross profit	151,637	141,013	442,978	400,446
Operating expenses:
Research and development	44,565	39,940	125,611	137,048
Sales and marketing	74,521	75,699	225,121	239,322
General and administrative	18,590	17,866	60,837	64,961
Impairment of long-lived assets	0	3,553	0	30,784
Restructuring	0	19,996	0	19,996
Total operating expenses	137,676	157,054	411,569	492,111
Income (loss) from operations	13,961	(16,041)	31,409	(91,665)
Other income (expense), net:
Interest income	5,571	2,545	15,512	6,000
Interest expense	(2,837)	(56,515)	(8,180)	(62,005)
Other income (expense), net	2,811	(4,518)	681	(18,093)
Income (loss) before income taxes	19,506	(74,529)	39,422	(165,763)
Provision for income taxes	2,952	2,082	12,415	3,545
Net income (loss)	$ 16,554	$ (76,611)	$ 27,007	$ (169,308)
Net income (loss) per share, basic (in dollars per share)	$ 0.26	$ (1.25)	$ 0.43	$ (2.80)
Net income (loss) per share, diluted (in dollars per share)	$ 0.22	$ (1.25)	$ 0.36	$ (2.80)
Weighted-average common shares outstanding, basic (in Shares)	62,898,078	61,065,157	62,389,482	60,506,082
Weighted-average common shares outstanding, diluted (in Shares)	74,537,085	61,065,157	74,225,110	60,506,082
Product subscriptions
Revenue:
Total revenue	$ 205,593	$ 189,876	$ 602,578	$ 545,349
Cost of revenue:
Total cost of revenue	56,653	51,261	166,290	150,597
Professional services
Revenue:
Total revenue	9,061	8,967	25,168	27,090
Cost of revenue:
Total cost of revenue	$ 6,364	$ 6,569	$ 18,478	$ 21,396

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 16,554	$ (76,611)	$ 27,007	$ (169,308)
Other comprehensive income (loss):
Change in fair value of cash flow hedges	1,840	(1,120)	882	(481)
Adjustment for net (gains)/losses realized on cash flow hedges and included in net income (loss), net of taxes	(183)	(49)	(656)	531
Total change in unrealized gains (losses) on cash flow hedges	1,657	(1,169)	226	50
Change in unrealized gains on investments	1,123	97	359	539
Total other comprehensive income (loss)	2,780	(1,072)	585	589
Comprehensive income (loss)	$ 19,334	$ (77,683)	$ 27,592	$ (168,719)

Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) - USD ($) $ in Thousands	Total	Common stock	Treasury stock	Additional paid-in-capital	Accumulated other comprehensive loss	Accumulated deficit
Common stock, beginning balance (in shares) at Dec. 31, 2022		59,720,000
Beginning balance at Dec. 31, 2022	$ (120,074)	$ 597	$ (4,764)	$ 746,249	$ (1,411)	$ (860,745)
Treasury stock, beginning balance (in shares) at Dec. 31, 2022			487,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense	84,513			84,513
Issuance of common stock under employee stock purchase plan (in shares)		330,000
Issuance of common stock under employee stock purchase plan	11,323	$ 4		11,319
Vesting of restricted stock units (in shares)		1,139,000
Vesting of restricted stock units	0	$ 10		(10)
Shares withheld for employee taxes (in shares)		(82,000)
Shares withheld for employee taxes	(4,012)			(4,012)
Issuance of common stock upon exercise of stock options (in shares)		208,000
Issuance of common stock upon exercise of stock options	2,984	$ 2		2,982
Issuance of common stock in relation to an acquisition (in shares)		107,000
Issuance of common stock in relation to an acquisition	0	$ 1		(1)
Repurchase of common stock in relation to acquisition (in shares)			83,000
Repurchase of common stock in relation to acquisition	0		$ (1)	1
Reclassification of 2023 capped calls from equity to derivative asset	33,029			33,029
Purchase of capped calls related to convertible senior notes	(36,570)			(36,570)
Repurchase and inducement of convertible senior notes	35,881			35,881
Other comprehensive gain (loss)	589				589
Net income (loss)	(169,308)					(169,308)
Common stock, ending balance (in shares) at Sep. 30, 2023		61,422,000
Ending balance at Sep. 30, 2023	(161,645)	$ 614	$ (4,765)	873,381	(822)	(1,030,053)
Treasury stock, ending balance (in shares) at Sep. 30, 2023			570,000
Common stock, beginning balance (in shares) at Jun. 30, 2023		60,940,000
Beginning balance at Jun. 30, 2023	(111,022)	$ 609	$ (4,765)	846,326	250	(953,442)
Treasury stock, beginning balance (in shares) at Jun. 30, 2023			570,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense	23,719			23,719
Issuance of common stock under employee stock purchase plan (in shares)		152,000
Issuance of common stock under employee stock purchase plan	5,149	$ 2		5,147
Vesting of restricted stock units (in shares)		338,000
Vesting of restricted stock units	0	$ 3		(3)
Shares withheld for employee taxes (in shares)		(29,000)
Shares withheld for employee taxes	(1,421)			(1,421)
Issuance of common stock upon exercise of stock options (in shares)		21,000
Issuance of common stock upon exercise of stock options	302			302
Purchase of capped calls related to convertible senior notes	(36,570)			(36,570)
Repurchase and inducement of convertible senior notes	35,881			35,881
Other comprehensive gain (loss)	(1,072)				(1,072)
Net income (loss)	(76,611)					(76,611)
Common stock, ending balance (in shares) at Sep. 30, 2023		61,422,000
Ending balance at Sep. 30, 2023	$ (161,645)	$ 614	$ (4,765)	873,381	(822)	(1,030,053)
Treasury stock, ending balance (in shares) at Sep. 30, 2023			570,000
Common stock, beginning balance (in shares) at Dec. 31, 2023	61,714,051	61,714,000
Beginning balance at Dec. 31, 2023	$ (118,179)	$ 617	$ (4,765)	894,630	1,344	(1,010,005)
Treasury stock, beginning balance (in shares) at Dec. 31, 2023	569,579		570,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense	$ 77,381			77,381
Issuance of common stock under employee stock purchase plan (in shares)		292,000
Issuance of common stock under employee stock purchase plan	9,246	$ 3		9,243
Vesting of restricted stock units (in shares)		1,123,000
Vesting of restricted stock units	0	$ 11		(11)
Shares withheld for employee taxes (in shares)		(83,000)
Shares withheld for employee taxes	(3,883)			(3,883)
Issuance of common stock upon exercise of stock options (in shares)		131,000
Issuance of common stock upon exercise of stock options	1,539	$ 1		1,538
Other comprehensive gain (loss)	585				585
Net income (loss)	$ 27,007					27,007
Common stock, ending balance (in shares) at Sep. 30, 2024	63,177,945	63,177,000
Ending balance at Sep. 30, 2024	$ (6,304)	$ 632	$ (4,765)	978,898	1,929	(982,998)
Treasury stock, ending balance (in shares) at Sep. 30, 2024	569,579		570,000
Common stock, beginning balance (in shares) at Jun. 30, 2024		62,702,000
Beginning balance at Jun. 30, 2024	$ (52,920)	$ 628	$ (4,765)	951,620	(851)	(999,552)
Treasury stock, beginning balance (in shares) at Jun. 30, 2024			570,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense	23,739			23,739
Issuance of common stock under employee stock purchase plan (in shares)		144,000
Issuance of common stock under employee stock purchase plan	4,201	$ 1		4,200
Vesting of restricted stock units (in shares)		341,000
Vesting of restricted stock units	0	$ 3		(3)
Shares withheld for employee taxes (in shares)		(21,000)
Shares withheld for employee taxes	(794)			(794)
Issuance of common stock upon exercise of stock options (in shares)		11,000
Issuance of common stock upon exercise of stock options	136			136
Other comprehensive gain (loss)	2,780				2,780
Net income (loss)	$ 16,554					16,554
Common stock, ending balance (in shares) at Sep. 30, 2024	63,177,945	63,177,000
Ending balance at Sep. 30, 2024	$ (6,304)	$ 632	$ (4,765)	$ 978,898	$ 1,929	$ (982,998)
Treasury stock, ending balance (in shares) at Sep. 30, 2024	569,579		570,000

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash flows from operating activities:
Net income (loss)	$ 27,007	$ (169,308)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	33,457	34,528
Amortization of debt issuance costs	3,325	3,061
Stock-based compensation expense	76,896	84,836
Impairment of long-lived assets	0	30,784
Change in fair value of derivative assets	0	15,511
Deferred income taxes	1,840	0
Induced conversion expense	0	53,889
Other	(4,534)	5,626
Changes in assets and liabilities:
Accounts receivable	22,432	12,428
Deferred contract acquisition and fulfillment costs	(493)	(9,488)
Prepaid expenses and other assets	6,062	5,433
Accounts payable	(10,450)	(1,255)
Accrued expenses	(17,413)	(17,968)
Deferred revenue	(37,112)	(6,367)
Other liabilities	6,880	(898)
Net cash provided by operating activities	107,897	40,812
Cash flows from investing activities:
Business acquisitions, net of cash acquired	(37,198)	(34,841)
Purchases of property and equipment	(2,242)	(3,999)
Capitalization of internal-use software	(10,414)	(13,033)
Purchases of investments	(242,494)	(194,013)
Sales and maturities of investments	192,500	100,700
Other investing activities	360	0
Net cash used in investing activities	(99,488)	(145,186)
Cash flows from financing activities:
Proceeds from issuance of convertible senior notes, net of issuance costs paid of $7,200	0	292,800
Purchase of capped calls related to convertible senior notes	0	(36,570)
Payments for repurchase of convertible senior notes	0	(199,998)
Payments related to business acquisitions	0	(2,250)
Proceeds from capped call settlement	0	17,518
Taxes paid related to net share settlement of equity awards	(3,883)	(4,012)
Proceeds from employee stock purchase plan	9,246	11,323
Proceeds from stock option exercises	1,436	2,984
Net cash provided by financing activities	6,799	81,795
Effect of exchange rate changes on cash ,cash equivalents and restricted cash	770	(2,010)
Net increase (decrease) in cash, cash equivalents and restricted cash	15,978	(24,589)
Cash, cash equivalents and restricted cash, beginning of period	214,130	207,804
Cash, cash equivalents and restricted cash, end of period	230,108	183,215
Supplemental cash flow information:
Cash paid for interest on convertible senior notes	5,840	1,165
Cash paid for income taxes, net of refunds	7,073	4,087
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	222,571	182,727
Restricted cash included in other assets and prepaid expenses and other current assets	7,537	488
Total cash, cash equivalents and restricted cash	$ 230,108	$ 183,215

Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Convertible Debt
Payments of debt issuance costs	$ 7,200	$ 7,200

Description of Business, Basis of Presentation and Consolidation and Significant Accounting Policies	9 Months Ended
	Sep. 30, 2024
Accounting Policies [Abstract]
Description of Business, Basis of Presentation and Consolidation and Significant Accounting Policies	Note 1. Description of Business, Basis of Presentation and Consolidation and Significant Accounting Policies Description of Business Rapid7, Inc. and subsidiaries (“we,” “us” or “our”) are advancing security with visibility, analytics, and automation delivered through our platform solutions. 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. Basis of Presentation and Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared by us in accordance with accounting principles generally accepted in the United States of America (“GAAP”), as well as pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), regarding interim financial reporting. Accordingly, certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 26, 2024. The condensed consolidated financial statements include our results of operations and those of our wholly-owned subsidiaries and reflect all adjustments (consisting solely of normal, recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented. All intercompany transactions and balances have been eliminated in consolidation. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The management estimates include, but are not limited to the determination of standalone selling prices in revenue transactions with multiple performance obligations, the estimated period of benefit for deferred contract acquisition costs, the useful lives and recoverability of long-lived assets, the valuation for credit losses, the valuation of stock-based compensation, the fair value of assets acquired and liabilities assumed in business combinations, the valuation of contingent consideration, the incremental borrowing rate for operating leases and the valuation for deferred tax assets. We base our estimates on historical experience and on various other assumptions that we believe are reasonable. Actual results could differ from those estimates. Significant Accounting Policies Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. Except for the inclusion of a description of contingent consideration within our Business Combinations policy, as noted below, there have been no changes to the significant accounting policies included in our Annual Report on Form 10-K for the year ended December 31, 2023. Business Combinations We allocate the fair value of purchase consideration to the tangible asset acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair value these identifiable assets and liabilities is recorded as goodwill. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the fair value of these assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the final determination of the fair value of assets acquired or liabilities assumed any subsequent adjustments are recorded to the consolidated statements of operations. Determining the fair value of the tangible assets acquired, liabilities assumed and intangible assets requires management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, cash flows that an asset is expected to generate in the future, technology migration curves, discount rates, and useful lives. While we use our best estimates and judgements, our estimates are inherently uncertain and subject to refinement. Contingent consideration arising from business combinations is recorded at fair value as a liability on the acquisition date and remeasured at each reporting date. Changes in fair value are recorded in general and administrative expense in the consolidated statements of operations. Determining the fair value of the contingent consideration each period requires management to make assumptions and judgments. These estimates involve inherent uncertainties, and if different assumptions had been used, the fair value of contingent consideration could have been materially different from the amounts recorded. Acquisition-related transaction costs are expensed as incurred. Restricted Cash As of September 30, 2024, we had $7.5 million of restricted cash recorded on our condensed consolidated balance sheet in prepaid expenses and other current assets and other assets in letters of credit outstanding as collateral for certain office space leases. Recent Accounting Pronouncements Accounting Pronouncements Not Yet Effective In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). This new guidance is designed to enhance the transparency and decision usefulness of income tax disclosures. The amendments of this update are related to the rate reconciliation and income taxes paid, requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. We do not plan to early adopt this standard. We are currently evaluating the effect of adopting this standard on our disclosures. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures (“ASU 2023-07”), to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses on an interim and annual basis. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods for the fiscal years beginning after December 15, 2024, and should be applied on a retrospective basis to all periods presented. Early adoption is permitted. We do not plan to early adopt this standard. We are currently evaluating the effect of adopting this standard on our disclosures.

Revenue from Contracts with Customers

9 Months Ended

Sep. 30, 2024

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Note 2. Revenue from Contracts with Customers

Product Subscriptions

Professional Services

Contract Balances

Transaction Price Allocated to the Remaining Performance Obligations


	Next Twelve Months		Thereafter
	(in thousands)
Product subscriptions	$	556,284	$	268,636
Professional services	16,785		6,410
Total	$	573,069	$	275,046

Note 8. Deferred Contract Acquisitions and Fulfillment Costs

Deferred contract acquisition and fulfillment costs, which primarily consist of capitalized sales commissions, for the nine months ended September 30, 2024 and 2023 was as follows:


	Nine Months Ended September 30,
	2024		2023
	(in thousands)
Beginning balance	$	121,609	$	103,075
Capitalization of contract acquisition and fulfillment costs	39,850		39,904
Amortization of deferred contract acquisition and fulfillment costs	(39,357)		(30,416)
Ending balance	$	122,102	$	112,563

Business Combinations

9 Months Ended

Sep. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Business Combinations

Note 3. Business Combinations

Noetic Cyber, Inc.

The following table summarizes the preliminary allocation of purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date (in thousands):


Consideration:
Cash	$	38,597
Deferred cash consideration	397
Contingent consideration	12,055
Fair value of total consideration transferred	$	51,049

Recognized amount of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	$	1,296
Accounts receivable	510
Prepaid and other current assets	102
Property and equipment, net	19
Accrued expenses and other current liabilities	(220)
Deferred revenue	(910)
Other long-term liabilities	(62)
Intangible asset	11,500
Total identifiable net assets assumed	$	12,235
Goodwill	38,814
Total purchase price allocation	$	51,049

Our revenue and net loss attributable to the Noetic business for the three and nine months ended September 30, 2024 was not material.

Minerva Labs Ltd.

Investments

9 Months Ended

Sep. 30, 2024

Investments, Debt and Equity Securities [Abstract]

Investments

Note 4. Investments

Our investments, which are all classified as available-for-sale, consisted of the following:


	As of September 30, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
Description:
U.S government agencies	$	280,757	$	787	$	(40)	$	281,504
Total	$	280,757	$	787	$	(40)	$	281,504


	As of December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
Description:
U.S government agencies	$	222,820	$	467	$	(65)	$	223,222


Agency bonds	2,500		—		(7)		2,493

Total	$	225,320	$	467	$	(72)	$	225,715

Fair Value Measurements

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 5. Fair Value Measurements

•Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

•Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability.

The following table presents our financial assets and liabilities measured and recorded at fair value on a recurring basis using the above input categories:


	As of September 30, 2024
	Level 1		Level 2		Level 3		Total
	(in thousands)
Description:
Assets:
U.S. government agencies	$	281,504	$	—	$	—	$	281,504
Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets and other assets)	—		1,559		—		1,559
Total assets	$	281,504	$	1,559	$	—	$	283,063
Liabilities:
Contingent consideration (other current liabilities and other long-term liabilities)	—		—		12,238		12,238
Foreign currency forward contracts designated as cash flow hedges (other current liabilities and other long-term liabilities)	—		66		—		66
Total liabilities	$	—	$	66	$	12,238	$	12,304


	As of December 31, 2023
	Level 1		Level 2		Level 3		Total
	(in thousands)
Description:
Assets:
U.S. government agencies	$	223,222	$	—	$	—	$	223,222
Agency bonds	—		2,493		—		2,493
Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets and other assets)	—		1,322		—		1,322
Total assets	$	223,222	$	3,815	$	—	$	227,037
Liabilities:
Foreign currency forward contracts designated as cash flow hedges (other current liabilities)	—		55		—		55
Total liabilities	$	—	$	55	$	—	$	55

Property and Equipment

9 Months Ended

Sep. 30, 2024

Property, Plant and Equipment [Abstract]

Property and Equipment

Note 6. Property and Equipment

Property and equipment are recorded at cost and consist of the following:


	September 30,		December 31,
	2024		2023
	(in thousands)
Computer equipment and software	$	28,100	$	26,442
Furniture and fixtures	10,954		10,850
Leasehold improvements	56,878		56,151
Total	95,932		93,443
Less accumulated depreciation	(61,996)		(53,801)
Property and equipment, net	$	33,936	$	39,642

Goodwill and Intangibles

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangibles

Note 7. Goodwill and Intangibles

Goodwill was $575.2 million and $536.4 million as of September 30, 2024 and December 31, 2023, respectively. The following table displays the changes in the gross carrying amount of goodwill:


	Amount
	(in thousands)
Balance, December 31, 2023	$	536,351
Noetic acquisition	38,814
Balance, September 30, 2024	$	575,165

The following table presents details of our intangible assets which include acquired identifiable intangible assets and capitalized internal-use software costs:


	Weighted- Average Estimated Useful Life (years)	As of September 30, 2024						As of December 31, 2023
		Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
		(in thousands)
Intangible assets subject to amortization:
Developed technology	6.1	$	146,855	$	(89,770)	$	57,085	$	135,355	$	(77,031)	$	58,324
Customer relationships	4.5	12,000		(9,711)		2,289		12,000		(7,755)		4,245
Trade names	3.1	2,619		(2,514)		105		2,619		(2,379)		240
Total acquired intangible assets		161,474		(101,995)		59,479		149,974		(87,164)		62,810
Internal-use software	3.0	65,130		(33,861)		31,269		55,371		(23,635)		31,736
Total intangible assets		$	226,604	$	(135,856)	$	90,748	$	205,345	$	(110,799)	$	94,546

Estimated future amortization expense of the acquired identifiable intangible assets and completed capitalized internal-use software costs as of September 30, 2024 was as follows (in thousands):


2024 (for the remaining three months)	$	8,429
2025	30,900
2026	21,149
2027	9,128
2028	3,243
2029 and thereafter	7,652
Total	$	80,501

Deferred Contract Acquisition and Fulfillment Costs

9 Months Ended

Sep. 30, 2024

Revenue from Contract with Customer [Abstract]

Deferred Contract Acquisition and Fulfillment Costs

Note 2. Revenue from Contracts with Customers

Product Subscriptions

Professional Services

Contract Balances

Transaction Price Allocated to the Remaining Performance Obligations


	Next Twelve Months		Thereafter
	(in thousands)
Product subscriptions	$	556,284	$	268,636
Professional services	16,785		6,410
Total	$	573,069	$	275,046

Note 8. Deferred Contract Acquisitions and Fulfillment Costs

Deferred contract acquisition and fulfillment costs, which primarily consist of capitalized sales commissions, for the nine months ended September 30, 2024 and 2023 was as follows:


	Nine Months Ended September 30,
	2024		2023
	(in thousands)
Beginning balance	$	121,609	$	103,075
Capitalization of contract acquisition and fulfillment costs	39,850		39,904
Amortization of deferred contract acquisition and fulfillment costs	(39,357)		(30,416)
Ending balance	$	122,102	$	112,563

Derivative and Hedging Activities	9 Months Ended
Derivative and Hedging Activities	Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivatives and Hedging Activities	Note 9. Derivative and Hedging Activities To mitigate our exposure to foreign currency fluctuations resulting from certain expenses denominated in certain foreign currencies, we enter into forward contracts that are designated as cash flow hedging instruments. These forward contracts have contractual maturities of twenty months or less, and as of September 30, 2024 and December 31, 2023, outstanding forward contracts had a total notional value of $52.4 million and $49.5 million, respectively. The notional value represents the gross amount of foreign currency that will be bought or sold upon maturity of the forward contract. During the three and nine months ended September 30, 2024, all cash flow hedges were considered effective. Refer to Note 5, Fair Value Measurements, for the fair values of our outstanding derivative instruments.

Debt

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Debt

Note 10. Debt

Convertible Senior Notes


Issuance	Maturity Date	Interest Rate	First Interest Payment Date	Effective Interest Rate	Semi-Annual Interest Payment Dates	Initial Conversion Rate per $1,000 Principal	Initial Conversion Price		Number of Shares (in millions)
2025 Notes	May 1, 2025	2.25%	November 1, 2020	2.88%	May 1 and November 1	16.3875	$	61.02	0.8
2027 Notes	March 15, 2027	0.25%	September 15, 2021	0.67%	March 15 and September 15	9.6734	$	103.38	5.8
2029 Notes	March 15, 2029	1.25%	March 15, 2024	1.69%	March 15 and September 15	15.4213	$	64.85	4.6

For additional details on the terms of our Notes, see Note 11, Debt, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

As of September 30, 2024, the 2025 Notes, the 2027 Notes and the 2029 Notes were not convertible at the option of the holders.

Accounting for the Notes

The net carrying amount of the Notes as of September 30, 2024 and December 31, 2023 was as follows (in thousands):


	2025 Notes						2027 Notes						2029 Notes
	Principal		Unamortized debt issuance costs		Total		Principal		Unamortized debt issuance costs		Total		Principal		Unamortized debt issuance costs		Total
Balance at December 31, 2023	$	45,992	$	(404)	$	45,588	$	600,000	$	(8,077)	$	591,923	$	300,000	$	(7,515)	$	292,485


Amortization of debt issuance costs	—		228		228		—		1,877		1,877		—		1,077		1,077
Balance at September 30, 2024	$	45,992	$	(176)	$	45,816	$	600,000	$	(6,200)	$	593,800	$	300,000	$	(6,438)	$	293,562

Interest expense related to the Notes was as follows (in thousands):


	Three Months Ended September 30,
	2024								2023
	2025 Notes		2027 Notes		2029 Notes		Total		2025 Notes		2027 Notes		2029 Notes		Total
Contractual interest expense	$	258	$	375	$	938	$	1,571	$	948	$	375	$	229	$	1,552
Amortization of debt issuance costs	79		634		455		1,168		289		631		73		$	993

Total interest expense	$	337	$	1,009	$	1,393	$	2,739	$	1,237	$	1,006	$	302	$	2,545


	Nine Months Ended September 30,
	2024								2023
	2025 Notes		2027 Notes		2029 Notes		Total		2025 Notes		2027 Notes		2029 Notes		Total
Contractual interest expense	$	776	$	1,125	$	2,812	$	4,713	$	3,536	$	1,125	$	229	$	4,890
Amortization of debt issuance costs	228		1,877		1,077		3,182		990		1,855		73		2,918

Total interest expense	$	1,004	$	3,002	$	3,889	$	7,895	$	4,526	$	2,980	$	302	$	7,808

Capped Calls

The following table sets forth other key terms and premiums paid for the Capped Calls related to each series of Notes:


	Capped Calls Entered into in Connection with the Issuance of the 2025 Notes		Capped Calls Entered into in Connection with the Issuance of the 2027 Notes		Capped Calls Entered into in Connection with the Issuance of the 2029 Notes
Initial strike price, subject to certain adjustments	$	61.02	$	103.38	$	64.85
Cap price, subject to certain adjustments	$	93.88	$	159.04	$	97.88
Total premium paid (in thousands)	$	27,255	$	76,020	$	36,570
Expiration dates	March 4, 2025 - April 29, 2025		January 1, 2027 - March 11, 2027		February 13, 2029 - March 13, 2029

For additional details on the terms of our Capped Calls, see Note 11, Debt, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Credit Agreement

As of September 30, 2024, we did not have any outstanding borrowings under the Credit Agreement.

Stock-Based Compensation

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Note 11. Stock-Based Compensation

(a) General


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
Stock-based compensation expense:
Cost of revenue	$	3,001	$	2,527	$	8,707	$	8,348
Research and development	9,535		8,436		25,698		30,575
Sales and marketing	6,823		7,106		21,182		23,087
General and administrative	5,235		5,699		21,309		22,826
Total stock-based compensation expense	$	24,594	$	23,768	$	76,896	$	84,836

We recognize compensation cost of all awards on a straight-line basis over the applicable vesting period, which is generally three to four years.

(b)Restricted Stock, Restricted Stock Units and Performance-Based Restricted Stock Units

RSUs and PSUs activity during the nine months ended September 30, 2024 was as follows:


	Shares	Weighted- Average Grant Date Fair Value








Unvested balance as of December 31, 2023	2,714,426	$	61.60
Granted	2,338,438	$	52.37
Vested	(1,122,737)	$	61.36
Forfeited	(824,443)	$	59.99
Unvested balance as of September 30, 2024	3,105,684	$	56.24

(c)Stock Options

Stock option activity during the nine months ended September 30, 2024 was as follows:


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)








Outstanding as of December 31, 2023	716,270	$	12.26	1.97	$	32,115
Granted	—	—
Exercised	(131,742)	$	11.67		$	4,981
Forfeited/cancelled	(450)	$	7.73
Outstanding as of September 30, 2024	584,078	$	12.40	1.45	$	16,056
Vested and exercisable as of September 30, 2024	584,078	$	12.40	1.45	$	16,056

(d)Employee Stock Purchase Plan

On March 15, 2024, we issued 147,445 shares of common stock to employees, with a purchase price of either $33.78 or $39.78 per share, for aggregate proceeds of $5.0 million.

On September 13, 2024, we issued 144,445 shares of common stock to employees, with a purchase price of $29.08 per share, for aggregate proceeds of $4.2 million.

Net Income (Loss) per Share

9 Months Ended

Sep. 30, 2024

Earnings Per Share [Abstract]

Net Income (Loss) per Share

Note 12. Net Income (Loss) per Share

The following table summarizes the computation of basic and diluted net income (loss) per share of our common stock for the three months September 30, 2024 and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands, except share and per share data)
Numerator:
Net income (loss)	$	16,554	$	(76,611)	$	27,007	$	(169,308)
Denominator:
Weighted-average common shares outstanding, basic	62,898,078		61,065,157		62,389,482		60,506,082
Weighted-average common shares outstanding, diluted	74,537,085		61,065,157		74,225,110		60,506,082
Net income (loss) per share, basic	$	0.26	$	(1.25)	$	0.43	$	(2.80)
Net income (loss) per share, diluted	$	0.22	$	(1.25)	$	0.36	(2.80)


	Nine Months Ended September 30,
	2024	2023
Options to purchase common stock	584,078	723,632
Unvested restricted stock units	3,105,684	3,126,817
Common stock issued in conjunction to acquisitions	36,923	115,041
Shares to be issued under ESPP	18,332	20,802
Convertible senior notes	11,183,611	11,183,611
Total	14,928,628	15,169,903

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Note 13. Commitments and Contingencies (a)Warranty We provide limited product warranties. Historically, any payments made under these provisions have been immaterial. (b)Litigation and Claims From time to time, we may be a party to litigation or subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. (c)Indemnification Obligations We agree to standard indemnification provisions in the ordinary course of business. Pursuant to these provisions, we agree to indemnify, hold harmless and reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally our customers, in connection with any United States patent, copyright or other intellectual property infringement claim by any third party arising from the use of our products or services in accordance with the agreement or arising from our gross negligence, willful misconduct or violation of the law (provided that there is not gross or willful misconduct on the part of the other party) with respect to our products or services. The term of these indemnification provisions is generally perpetual from the time of execution of the agreement. We carry insurance that covers certain third-party claims relating to our services and limits our exposure. We have never incurred costs to defend lawsuits or settle claims related to these indemnification provisions. As permitted under Delaware law, we have entered into indemnification agreements with our officers and directors, indemnifying them for certain events or occurrences while they serve as officers or directors of the company. (d)Income Taxes From time to time, we may receive income tax assessments from taxing authorities asserting additional tax liabilities owed by the Company. During the quarter ended June 30, 2024, we received an initial assessment from the Israel Tax Authority (“ITA”) of approximately 324 million Israeli New Shekels (approximately $87 million, based upon the exchange rate between the Israeli New Shekel and the US Dollar as of September 30, 2024) related to fiscal year 2021. Based on our interpretation of the regulations and available case law, we believe that the tax positions we have taken on our filed tax return in Israel are sustainable and we intend to defend our position through all available means. As such, we have not recorded any impact of the ITA assessment in our condensed consolidated financial statements as of and for the three and nine months ended September 30, 2024. We are continuing to monitor developments related to this matter and its impact on our existing income tax reserves for all open years. If we are unsuccessful in sustaining our tax position in this matter, our financial condition and results of operations would be adversely affected.

Segment Information and Information about Geographic Areas

9 Months Ended

Sep. 30, 2024

Segment Reporting [Abstract]

Segment Information and Information about Geographic Areas

Note 14. Segment Information and Information about Geographic Areas

We operate in one segment. Our chief operating decision maker is our Chief Executive Officer, who makes operating decisions, assesses performance and allocates resources on a consolidated basis.

Net revenues by geographic area presented based upon the location of the customer are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
North America	$	163,730	$	155,190	$	480,392	$	448,753
Rest of world	50,924		43,653		147,354		123,686
Total	$	214,654	$	198,843	$	627,746	$	572,439

Property and equipment, net by geographic area was as follows:


	As of September 30, 2024		As of December 31, 2023
	(in thousands)
North America	$	23,915	$	27,609
Rest of world	10,021		12,033
Total	$	33,936	$	39,642

Restructuring	9 Months Ended
Restructuring	Sep. 30, 2024
Restructuring and Related Activities [Abstract]
Restructuring	Note 15. Restructuring On August 7, 2023, our board of directors approved a restructuring plan that was designed to improve operational efficiencies, reduce operating costs and better align the Company’s workforce with current business needs, top strategic priorities and key growth opportunities (collectively, the “Restructuring Plan”). The Restructuring Plan included a reduction of the Company’s workforce by approximately 16%. During the first quarter of 2024, the execution of the Restructuring Plan was completed and we recorded $(0.2) million of restructuring charges within general and administrative expense in the condensed consolidated statements of operations. Additionally, during the second quarter of 2024, the remaining payments were made, resulting in no remaining restructuring liability.

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net income (loss)	$ 16,554	$ (76,611)	$ 27,007	$ (169,308)

Insider Trading Arrangements

3 Months Ended

9 Months Ended

Sep. 30, 2024

Trading Arrangements, by Individual

Material Terms of Trading Arrangement

Name and Position

Action

Adoption or Transaction Date

Type of Trading Arrangement

Number of Shares of Common Stock to be Sold

Expiration Date

Corey Thomas, Chief Executive Officer (1)

Adoption

September 4, 2024

Rule 10b5-1*

358,620**

December 31, 2025***

Christina Luconi, Chief People Officer

Adoption

September 13, 2024

Rule 10b5-1*

34,039**

May 1, 2025***

(1) Mr. Thomas' plan includes the sale of 8,620 shares that were gifted to Ancore Foundation, Inc., a charitable foundation of which Mr. Thomas is a director.

* Contract, instruction or written plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act.

*** The Rule 10b5-1 trading arrangement will terminate on the earlier of the date all the shares under the plan are sold and the

expiration date indicated, subject to early termination for specified events set forth in the plan.

Non-Rule 10b5-1 Arrangement Adopted

false

Rule 10b5-1 Arrangement Terminated

false

Non-Rule 10b5-1 Arrangement Terminated

false

Corey Thomas [Member]

Trading Arrangements, by Individual

Name

Corey Thomas

Title

Chief Executive Officer

Rule 10b5-1 Arrangement Adopted

true

September 4, 2024

December 31, 2025***

483 days

358,620

Christina Luconi [Member]

Trading Arrangements, by Individual

Name

Christina Luconi

Title

Chief People Officer

Rule 10b5-1 Arrangement Adopted

true

September 13, 2024

May 1, 2025***

230 days

34,039

Description of Business, Basis of Presentation and Consolidation and Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2024
Accounting Policies [Abstract]
Basis of Presentation and Consolidation	Basis of Presentation and Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared by us in accordance with accounting principles generally accepted in the United States of America (“GAAP”), as well as pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), regarding interim financial reporting. Accordingly, certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 26, 2024. The condensed consolidated financial statements include our results of operations and those of our wholly-owned subsidiaries and reflect all adjustments (consisting solely of normal, recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented. All intercompany transactions and balances have been eliminated in consolidation. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year.
Use of Estimates	Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The management estimates include, but are not limited to the determination of standalone selling prices in revenue transactions with multiple performance obligations, the estimated period of benefit for deferred contract acquisition costs, the useful lives and recoverability of long-lived assets, the valuation for credit losses, the valuation of stock-based compensation, the fair value of assets acquired and liabilities assumed in business combinations, the valuation of contingent consideration, the incremental borrowing rate for operating leases and the valuation for deferred tax assets. We base our estimates on historical experience and on various other assumptions that we believe are reasonable. Actual results could differ from those estimates.
Business Combinations	Business Combinations We allocate the fair value of purchase consideration to the tangible asset acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair value these identifiable assets and liabilities is recorded as goodwill. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the fair value of these assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the final determination of the fair value of assets acquired or liabilities assumed any subsequent adjustments are recorded to the consolidated statements of operations. Determining the fair value of the tangible assets acquired, liabilities assumed and intangible assets requires management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, cash flows that an asset is expected to generate in the future, technology migration curves, discount rates, and useful lives. While we use our best estimates and judgements, our estimates are inherently uncertain and subject to refinement. Contingent consideration arising from business combinations is recorded at fair value as a liability on the acquisition date and remeasured at each reporting date. Changes in fair value are recorded in general and administrative expense in the consolidated statements of operations. Determining the fair value of the contingent consideration each period requires management to make assumptions and judgments. These estimates involve inherent uncertainties, and if different assumptions had been used, the fair value of contingent consideration could have been materially different from the amounts recorded. Acquisition-related transaction costs are expensed as incurred.
Restricted Cash	Restricted Cash As of September 30, 2024, we had $7.5 million of restricted cash recorded on our condensed consolidated balance sheet in prepaid expenses and other current assets and other assets in letters of credit outstanding as collateral for certain office space leases.
Recent Accounting Pronouncements	Recent Accounting Pronouncements Accounting Pronouncements Not Yet Effective In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). This new guidance is designed to enhance the transparency and decision usefulness of income tax disclosures. The amendments of this update are related to the rate reconciliation and income taxes paid, requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. We do not plan to early adopt this standard. We are currently evaluating the effect of adopting this standard on our disclosures. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures (“ASU 2023-07”), to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses on an interim and annual basis. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods for the fiscal years beginning after December 15, 2024, and should be applied on a retrospective basis to all periods presented. Early adoption is permitted. We do not plan to early adopt this standard. We are currently evaluating the effect of adopting this standard on our disclosures.
Revenue	Product Subscriptions Product subscriptions consists primarily of revenue from our cloud-based subscription, managed services offerings, term software licenses, content subscriptions and maintenance and support associated with our software licenses. •We generate cloud-based subscription revenue primarily from sales of subscriptions to access our cloud platform, together with related support services to our customers. These arrangements do not provide the customer with the right to take possession of our software operating on our cloud platform at any time. Instead, customers are granted continuous access to our cloud platform over the contractual period. Revenue is recognized over time on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our cloud-based subscription contracts generally have annual or multi-year contractual terms which are billed in advance of the annual subscription period and are non-cancellable. •Managed services offerings consist of fees generated when we operate our software and provide our capabilities on behalf of our customers. Revenue is recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our managed services offerings generally have annual or multi-year contractual terms which are billed in advance of the annual subscription period and are non-cancellable. •For our term software licenses where the utility to the customer is dependent on the continued delivery of content subscriptions, we recognize the license revenue over the contractual term of the content subscription. •Content subscriptions and our maintenance and support services are sold with our term software licenses. Revenue related to our content subscriptions associated with our software licenses is recognized ratably over the contractual period. Professional Services All of our professional services are considered distinct performance obligations when sold stand alone or with other products. The majority of our professional services contracts have terms of one year or less. For the majority of these contracts, revenue is recognized over time based upon the proportion of work performed to date. Contract Balances Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are recognized as revenue over the contractual period consistent with the above methodology. For the three months ended September 30, 2024 and 2023, we recognized revenue of $184.6 million and $174.3 million, respectively, and for the nine months ended September 30, 2024 and 2023, we recognized $398.3 million and $366.5 million, respectively, that was included in the corresponding contract liability balance at the beginning of the periods presented. Deferred revenue that will be realized during the succeeding 12-month period is recorded as current, and the remaining deferred revenue is recorded as non-current. We receive payments from customers based upon contractual billing schedules. Accounts receivable are recorded when the right to consideration becomes unconditional. Unbilled receivables include amounts related to our contractual right to consideration for both completed and partially completed performance obligations that have not been invoiced. If the right to consideration is based on satisfaction of another performance obligation in the contract other than the passage of time, we record a contract asset. As of September 30, 2024 and December 31, 2023, unbilled receivables of $3.6 million and $2.0 million, respectively, are included in prepaid expenses and other current assets in our consolidated balance sheet. As of September 30, 2024 and December 31, 2023, we had no contract assets recorded on our condensed consolidated balance sheet.

Revenue from Contracts with Customers (Tables)

9 Months Ended

Sep. 30, 2024

Revenue from Contract with Customer [Abstract]

Summary of Estimated Revenue Expected to be Recognized in Future Related to Performance Obligations


	Next Twelve Months		Thereafter
	(in thousands)
Product subscriptions	$	556,284	$	268,636
Professional services	16,785		6,410
Total	$	573,069	$	275,046

Business Combinations (Tables)

9 Months Ended

Sep. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Summary of Preliminary Fair Value of Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary allocation of purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date (in thousands):


Consideration:
Cash	$	38,597
Deferred cash consideration	397
Contingent consideration	12,055
Fair value of total consideration transferred	$	51,049

Recognized amount of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	$	1,296
Accounts receivable	510
Prepaid and other current assets	102
Property and equipment, net	19
Accrued expenses and other current liabilities	(220)
Deferred revenue	(910)
Other long-term liabilities	(62)
Intangible asset	11,500
Total identifiable net assets assumed	$	12,235
Goodwill	38,814
Total purchase price allocation	$	51,049

Investments (Tables)

9 Months Ended

Sep. 30, 2024

Investments, Debt and Equity Securities [Abstract]

Summary of Investments Classified as Available-for-sale

Our investments, which are all classified as available-for-sale, consisted of the following:


	As of September 30, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
Description:
U.S government agencies	$	280,757	$	787	$	(40)	$	281,504
Total	$	280,757	$	787	$	(40)	$	281,504


	As of December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
Description:
U.S government agencies	$	222,820	$	467	$	(65)	$	223,222


Agency bonds	2,500		—		(7)		2,493

Total	$	225,320	$	467	$	(72)	$	225,715

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Summary of Financial Assets and Liabilities Measured and Recorded at Fair Value on Recurring Basis

The following table presents our financial assets and liabilities measured and recorded at fair value on a recurring basis using the above input categories:


	As of September 30, 2024
	Level 1		Level 2		Level 3		Total
	(in thousands)
Description:
Assets:
U.S. government agencies	$	281,504	$	—	$	—	$	281,504
Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets and other assets)	—		1,559		—		1,559
Total assets	$	281,504	$	1,559	$	—	$	283,063
Liabilities:
Contingent consideration (other current liabilities and other long-term liabilities)	—		—		12,238		12,238
Foreign currency forward contracts designated as cash flow hedges (other current liabilities and other long-term liabilities)	—		66		—		66
Total liabilities	$	—	$	66	$	12,238	$	12,304


	As of December 31, 2023
	Level 1		Level 2		Level 3		Total
	(in thousands)
Description:
Assets:
U.S. government agencies	$	223,222	$	—	$	—	$	223,222
Agency bonds	—		2,493		—		2,493
Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets and other assets)	—		1,322		—		1,322
Total assets	$	223,222	$	3,815	$	—	$	227,037
Liabilities:
Foreign currency forward contracts designated as cash flow hedges (other current liabilities)	—		55		—		55
Total liabilities	$	—	$	55	$	—	$	55

Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2024

Property, Plant and Equipment [Abstract]

Summary of Property and Equipment

Property and equipment are recorded at cost and consist of the following:


	September 30,		December 31,
	2024		2023
	(in thousands)
Computer equipment and software	$	28,100	$	26,442
Furniture and fixtures	10,954		10,850
Leasehold improvements	56,878		56,151
Total	95,932		93,443
Less accumulated depreciation	(61,996)		(53,801)
Property and equipment, net	$	33,936	$	39,642

Goodwill and Intangibles (Tables)

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The following table displays the changes in the gross carrying amount of goodwill:


	Amount
	(in thousands)
Balance, December 31, 2023	$	536,351
Noetic acquisition	38,814
Balance, September 30, 2024	$	575,165

Schedule of Identifiable Intangible Assets

The following table presents details of our intangible assets which include acquired identifiable intangible assets and capitalized internal-use software costs:


	Weighted- Average Estimated Useful Life (years)	As of September 30, 2024						As of December 31, 2023
		Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
		(in thousands)
Intangible assets subject to amortization:
Developed technology	6.1	$	146,855	$	(89,770)	$	57,085	$	135,355	$	(77,031)	$	58,324
Customer relationships	4.5	12,000		(9,711)		2,289		12,000		(7,755)		4,245
Trade names	3.1	2,619		(2,514)		105		2,619		(2,379)		240
Total acquired intangible assets		161,474		(101,995)		59,479		149,974		(87,164)		62,810
Internal-use software	3.0	65,130		(33,861)		31,269		55,371		(23,635)		31,736
Total intangible assets		$	226,604	$	(135,856)	$	90,748	$	205,345	$	(110,799)	$	94,546

Schedule of Estimated Amortization Expense

Estimated future amortization expense of the acquired identifiable intangible assets and completed capitalized internal-use software costs as of September 30, 2024 was as follows (in thousands):


2024 (for the remaining three months)	$	8,429
2025	30,900
2026	21,149
2027	9,128
2028	3,243
2029 and thereafter	7,652
Total	$	80,501

Deferred Contract Acquisition and Fulfillment Costs (Tables)

9 Months Ended

Sep. 30, 2024

Revenue from Contract with Customer [Abstract]

Summary of Capitalized Contract Cost

Deferred contract acquisition and fulfillment costs, which primarily consist of capitalized sales commissions, for the nine months ended September 30, 2024 and 2023 was as follows:


	Nine Months Ended September 30,
	2024		2023
	(in thousands)
Beginning balance	$	121,609	$	103,075
Capitalization of contract acquisition and fulfillment costs	39,850		39,904
Amortization of deferred contract acquisition and fulfillment costs	(39,357)		(30,416)
Ending balance	$	122,102	$	112,563

Debt (Tables)

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Summary of Long-term Debt Instruments

Further details of the Notes are as follows:


Issuance	Maturity Date	Interest Rate	First Interest Payment Date	Effective Interest Rate	Semi-Annual Interest Payment Dates	Initial Conversion Rate per $1,000 Principal	Initial Conversion Price		Number of Shares (in millions)
2025 Notes	May 1, 2025	2.25%	November 1, 2020	2.88%	May 1 and November 1	16.3875	$	61.02	0.8
2027 Notes	March 15, 2027	0.25%	September 15, 2021	0.67%	March 15 and September 15	9.6734	$	103.38	5.8
2029 Notes	March 15, 2029	1.25%	March 15, 2024	1.69%	March 15 and September 15	15.4213	$	64.85	4.6

Summary of Liability and Equity Components of Convertible Debt

The net carrying amount of the Notes as of September 30, 2024 and December 31, 2023 was as follows (in thousands):


	2025 Notes						2027 Notes						2029 Notes
	Principal		Unamortized debt issuance costs		Total		Principal		Unamortized debt issuance costs		Total		Principal		Unamortized debt issuance costs		Total
Balance at December 31, 2023	$	45,992	$	(404)	$	45,588	$	600,000	$	(8,077)	$	591,923	$	300,000	$	(7,515)	$	292,485


Amortization of debt issuance costs	—		228		228		—		1,877		1,877		—		1,077		1,077
Balance at September 30, 2024	$	45,992	$	(176)	$	45,816	$	600,000	$	(6,200)	$	593,800	$	300,000	$	(6,438)	$	293,562

Interest expense related to the Notes was as follows (in thousands):


	Three Months Ended September 30,
	2024								2023
	2025 Notes		2027 Notes		2029 Notes		Total		2025 Notes		2027 Notes		2029 Notes		Total
Contractual interest expense	$	258	$	375	$	938	$	1,571	$	948	$	375	$	229	$	1,552
Amortization of debt issuance costs	79		634		455		1,168		289		631		73		$	993

Total interest expense	$	337	$	1,009	$	1,393	$	2,739	$	1,237	$	1,006	$	302	$	2,545


	Nine Months Ended September 30,
	2024								2023
	2025 Notes		2027 Notes		2029 Notes		Total		2025 Notes		2027 Notes		2029 Notes		Total
Contractual interest expense	$	776	$	1,125	$	2,812	$	4,713	$	3,536	$	1,125	$	229	$	4,890
Amortization of debt issuance costs	228		1,877		1,077		3,182		990		1,855		73		2,918

Total interest expense	$	1,004	$	3,002	$	3,889	$	7,895	$	4,526	$	2,980	$	302	$	7,808

Summary of Other Key Terms and Premiums Paid for the Capped Calls Related to Each Series of Notes

The following table sets forth other key terms and premiums paid for the Capped Calls related to each series of Notes:


	Capped Calls Entered into in Connection with the Issuance of the 2025 Notes		Capped Calls Entered into in Connection with the Issuance of the 2027 Notes		Capped Calls Entered into in Connection with the Issuance of the 2029 Notes
Initial strike price, subject to certain adjustments	$	61.02	$	103.38	$	64.85
Cap price, subject to certain adjustments	$	93.88	$	159.04	$	97.88
Total premium paid (in thousands)	$	27,255	$	76,020	$	36,570
Expiration dates	March 4, 2025 - April 29, 2025		January 1, 2027 - March 11, 2027		February 13, 2029 - March 13, 2029

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

Summary of Stock-Based Compensation Expense


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
Stock-based compensation expense:
Cost of revenue	$	3,001	$	2,527	$	8,707	$	8,348
Research and development	9,535		8,436		25,698		30,575
Sales and marketing	6,823		7,106		21,182		23,087
General and administrative	5,235		5,699		21,309		22,826
Total stock-based compensation expense	$	24,594	$	23,768	$	76,896	$	84,836

Summary of Restricted Stock and Restricted Stock Unit Activity

RSUs and PSUs activity during the nine months ended September 30, 2024 was as follows:


	Shares	Weighted- Average Grant Date Fair Value








Unvested balance as of December 31, 2023	2,714,426	$	61.60
Granted	2,338,438	$	52.37
Vested	(1,122,737)	$	61.36
Forfeited	(824,443)	$	59.99
Unvested balance as of September 30, 2024	3,105,684	$	56.24

Summary of Stock Option Activity

Stock option activity during the nine months ended September 30, 2024 was as follows:


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)








Outstanding as of December 31, 2023	716,270	$	12.26	1.97	$	32,115
Granted	—	—
Exercised	(131,742)	$	11.67		$	4,981
Forfeited/cancelled	(450)	$	7.73
Outstanding as of September 30, 2024	584,078	$	12.40	1.45	$	16,056
Vested and exercisable as of September 30, 2024	584,078	$	12.40	1.45	$	16,056

Net Income (Loss) per Share (Tables)

9 Months Ended

Sep. 30, 2024

Earnings Per Share [Abstract]

Summary of Basic and Diluted Net Income (Loss) Per Share of Common Stock

The following table summarizes the computation of basic and diluted net income (loss) per share of our common stock for the three months September 30, 2024 and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands, except share and per share data)
Numerator:
Net income (loss)	$	16,554	$	(76,611)	$	27,007	$	(169,308)
Denominator:
Weighted-average common shares outstanding, basic	62,898,078		61,065,157		62,389,482		60,506,082
Weighted-average common shares outstanding, diluted	74,537,085		61,065,157		74,225,110		60,506,082
Net income (loss) per share, basic	$	0.26	$	(1.25)	$	0.43	$	(2.80)
Net income (loss) per share, diluted	$	0.22	$	(1.25)	$	0.36	(2.80)

Summary of Anti-Dilutive Securities Excluded from Computation Diluted Weighted Average Shares Outstanding

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding for the respective periods below because they would have been anti-dilutive:


	Nine Months Ended September 30,
	2024	2023
Options to purchase common stock	584,078	723,632
Unvested restricted stock units	3,105,684	3,126,817
Common stock issued in conjunction to acquisitions	36,923	115,041
Shares to be issued under ESPP	18,332	20,802
Convertible senior notes	11,183,611	11,183,611
Total	14,928,628	15,169,903

Segment Information and Information about Geographic Areas (Tables)

9 Months Ended

Sep. 30, 2024

Segment Reporting [Abstract]

Summary of Net Revenues of Customer by Geographic Area

Net revenues by geographic area presented based upon the location of the customer are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
North America	$	163,730	$	155,190	$	480,392	$	448,753
Rest of world	50,924		43,653		147,354		123,686
Total	$	214,654	$	198,843	$	627,746	$	572,439

Summary of Property and Equipment, Net by Geographic Area

Property and equipment, net by geographic area was as follows:


	As of September 30, 2024		As of December 31, 2023
	(in thousands)
North America	$	23,915	$	27,609
Rest of world	10,021		12,033
Total	$	33,936	$	39,642

Description of Business, Basis of Presentation and Consolidation and Significant Accounting Policies (Details) $ in Millions	Sep. 30, 2024 USD ($)
Accounting Policies [Abstract]
Restricted cash	$ 7.5

Revenue from Contracts with Customers - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Disaggregation of Revenue [Line Items]
Liability, revenue recognized	$ 184,600,000	$ 174,300,000	$ 398,300,000	$ 366,500,000
Unbilled receivables	3,600,000		3,600,000		$ 2,000,000
Contract assets	$ 0		$ 0		$ 0
Professional Service
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, contractual period			1 year

Revenue from Contracts with Customers - Summary of Estimated Revenue Expected to be Recognized in Future Related to Performance Obligations (Details) $ in Thousands	Sep. 30, 2024 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-10-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Total	$ 573,069
Revenue recognition period	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-10-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Total	$ 275,046
Revenue recognition period
Product subscriptions \| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-10-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Total	$ 556,284
Revenue recognition period	12 months
Product subscriptions \| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-10-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Total	$ 268,636
Revenue recognition period
Professional services \| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-10-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Total	$ 16,785
Revenue recognition period	12 months
Professional services \| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-10-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Total	$ 6,410
Revenue recognition period

Business Combinations - Additional Information (Details) $ in Thousands			3 Months Ended		9 Months Ended
	Jul. 03, 2024 USD ($) employee installment	Mar. 14, 2023 USD ($) reportingUnit	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) reportingUnit	Sep. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)
Business Acquisition [Line Items]
Share-based payment arrangement, expense			$ 24,594	$ 23,768	$ 76,896	$ 84,836
Number of reporting units \| reportingUnit					1
Goodwill			575,165		$ 575,165		$ 536,351
General and administrative
Business Acquisition [Line Items]
Share-based payment arrangement, expense			5,235	$ 5,699	21,309	$ 22,826
Noetic Cyber, Inc,
Business Acquisition [Line Items]
Total consideration transferred	$ 51,049
Purchase consideration	38,597
Contingent consideration (up to)	12,100		12,100		12,100
Deferred cash consideration	397
Business combination contingent consideration payments	20,000
Business combination, contingent consideration, liability remaining	13,100
Business combination, earnout consideration	6,900
Value of equity to be issued	$ 2,300
Number of key employees \| employee	2
Number of Installments \| installment	3
Equity issuance period	36 months
Intangible asset	$ 11,500
Acquisition related transaction costs			100		400
Total identifiable net assets assumed	12,235
Goodwill	38,814
Noetic Cyber, Inc, \| General and administrative
Business Acquisition [Line Items]
Accretion expense			200		200
Noetic Cyber, Inc, \| Accrued Liabilities
Business Acquisition [Line Items]
Contingent consideration (up to)			12,200		12,200
Noetic Cyber, Inc, \| Other current liabilities
Business Acquisition [Line Items]
Contingent consideration (up to)			6,800		6,800
Noetic Cyber, Inc, \| Other Liabilities
Business Acquisition [Line Items]
Contingent consideration (up to)			5,400		5,400
Noetic Cyber, Inc, \| Developed technology
Business Acquisition [Line Items]
Share-based payment arrangement, expense	$ 700
Useful life (in years)	7 years
Minerva labs
Business Acquisition [Line Items]
Total consideration transferred		$ 34,600
Purchase consideration		35,000
Intangible asset		12,800
Receivable for purchase price adjustments		(400)
Total identifiable net assets assumed		13,900
Goodwill		$ 20,700
Minerva labs \| ISRAEL
Business Acquisition [Line Items]
Current foreign tax expense (benefit)			4,600		4,600
Deferred foreign income tax expense (benefit)			$ 1,800		$ 1,800
Minerva labs \| Developed technology
Business Acquisition [Line Items]
Number of reporting units \| reportingUnit		1

Business Combinations - Summary of Allocation of Purchase Price to Estimated Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Jul. 03, 2024	Sep. 30, 2024	Dec. 31, 2023
Consideration:
Contingent consideration	$ 12,055
Recognized amount of identifiable assets acquired and liabilities assumed:
Goodwill		$ 575,165	$ 536,351
Noetic Cyber, Inc,
Consideration:
Cash	38,597
Deferred cash consideration	397
Fair value of total consideration transferred	51,049
Recognized amount of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	1,296
Accounts receivable	510
Prepaid and other current assets	102
Property and equipment, net	19
Accrued expenses and other current liabilities	(220)
Deferred revenue	(910)
Other long-term liabilities	(62)
Intangible asset	11,500
Total identifiable net assets assumed	12,235
Goodwill	38,814
Total purchase price allocation	$ 51,049

Investments (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
Investments (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Debt and Equity Securities, FV-NI [Line Items]
Amortized Cost	$ 280,757	$ 225,320
Gross Unrealized Gains	787	467
Gross Unrealized Losses	(40)	(72)
Fair Value	$ 281,504	$ 225,715
Minimum
Debt and Equity Securities, FV-NI [Line Items]
Remaining maturity	1 month	1 month
Maximum
Debt and Equity Securities, FV-NI [Line Items]
Remaining maturity	20 months	18 months
U.S government agencies
Debt and Equity Securities, FV-NI [Line Items]
Amortized Cost	$ 280,757	$ 222,820
Gross Unrealized Gains	787	467
Gross Unrealized Losses	(40)	(65)
Fair Value	$ 281,504	223,222
Agency bonds
Debt and Equity Securities, FV-NI [Line Items]
Amortized Cost		2,500
Gross Unrealized Gains		0
Gross Unrealized Losses		(7)
Fair Value		$ 2,493

Fair Value Measurements - Summary of Financial Assets and Liabilities Measured and Recorded at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Assets:
Debt securities	$ 281,504	$ 225,715
The Notes, Due 2025 \| Convertible Debt
Liabilities:
Interest Rate	2.25%
Convertible debt, fair value disclosures	$ 45,100
The Notes, Due 2027 \| Convertible Debt
Liabilities:
Interest Rate	0.25%
Convertible debt, fair value disclosures	$ 547,100
The Notes, Due 2029 \| Convertible Debt
Liabilities:
Interest Rate	1.25%
Convertible debt, fair value disclosures	$ 281,900
U.S government agencies
Assets:
Debt securities	281,504	223,222
Agency bonds
Assets:
Debt securities		2,493
Level 3
Liabilities:
Contingent consideration (other current liabilities and other long-term liabilities)	12,200
Fair Value, Measurements, Recurring
Assets:
Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets and other assets)	1,559	1,322
Total assets	283,063	227,037
Liabilities:
Contingent consideration (other current liabilities and other long-term liabilities)	12,238
Foreign currency forward contracts designated as cash flow hedges (other current liabilities and other long-term liabilities)	66	55
Total liabilities	12,304	55
Fair Value, Measurements, Recurring \| U.S government agencies
Assets:
Debt securities	281,504	223,222
Fair Value, Measurements, Recurring \| Agency bonds
Assets:
Debt securities		2,493
Fair Value, Measurements, Recurring \| Level 1
Assets:
Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets and other assets)	0	0
Total assets	281,504	223,222
Liabilities:
Contingent consideration (other current liabilities and other long-term liabilities)	0
Foreign currency forward contracts designated as cash flow hedges (other current liabilities and other long-term liabilities)	0	0
Total liabilities	0	0
Fair Value, Measurements, Recurring \| Level 1 \| U.S government agencies
Assets:
Debt securities	281,504	223,222
Fair Value, Measurements, Recurring \| Level 1 \| Agency bonds
Assets:
Debt securities		0
Fair Value, Measurements, Recurring \| Level 2
Assets:
Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets and other assets)	1,559	1,322
Total assets	1,559	3,815
Liabilities:
Contingent consideration (other current liabilities and other long-term liabilities)	0
Foreign currency forward contracts designated as cash flow hedges (other current liabilities and other long-term liabilities)	66	55
Total liabilities	66	55
Fair Value, Measurements, Recurring \| Level 2 \| U.S government agencies
Assets:
Debt securities	0	0
Fair Value, Measurements, Recurring \| Level 2 \| Agency bonds
Assets:
Debt securities		2,493
Fair Value, Measurements, Recurring \| Level 3
Assets:
Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets and other assets)	0	0
Total assets	0	0
Liabilities:
Contingent consideration (other current liabilities and other long-term liabilities)	12,238
Foreign currency forward contracts designated as cash flow hedges (other current liabilities and other long-term liabilities)	0	0
Total liabilities	12,238	0
Fair Value, Measurements, Recurring \| Level 3 \| U.S government agencies
Assets:
Debt securities	$ 0	0
Fair Value, Measurements, Recurring \| Level 3 \| Agency bonds
Assets:
Debt securities		$ 0

Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 95,932	$ 93,443
Less accumulated depreciation	(61,996)	(53,801)
Property and equipment, net	33,936	39,642
Computer equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	28,100	26,442
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	10,954	10,850
Leasehold Improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 56,878	$ 56,151

Property and Equipment - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 2.7	$ 3.3	$ 8.4	$ 10.9

Goodwill and Intangibles - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 575,165		$ 575,165		$ 536,351
Amortization expense	8,500	$ 8,300	25,100	$ 23,600
Capitalized computer software exclude of gross	$ 10,200		$ 10,200

Goodwill and Intangibles - Schedule of Change in Gross Carrying Amount of Goodwill (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 536,351
Goodwill, ending balance	575,165
Noetic Acquisition
Goodwill [Roll Forward]
Noetic acquisition	$ 38,814

Goodwill and Intangibles - Schedule of Identifiable Intangible Assets (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Total acquired intangible assets, gross carrying amount	$ 161,474	$ 149,974
Total acquired intangible assets, accumulated amortization	(101,995)	(87,164)
Total acquired intangible assets, net book value	59,479	62,810
Accumulated Amortization	(135,856)	(110,799)
Total intangible assets, gross carrying amount	226,604	205,345
Intangible assets, net book value	$ 90,748	94,546
Developed technology
Finite-Lived Intangible Assets [Line Items]
Weighted- Average Estimated Useful Life (years)	6 years 1 month 6 days
Total acquired intangible assets, gross carrying amount	$ 146,855	135,355
Total acquired intangible assets, accumulated amortization	(89,770)	(77,031)
Total acquired intangible assets, net book value	$ 57,085	58,324
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Weighted- Average Estimated Useful Life (years)	4 years 6 months
Total acquired intangible assets, gross carrying amount	$ 12,000	12,000
Total acquired intangible assets, accumulated amortization	(9,711)	(7,755)
Total acquired intangible assets, net book value	$ 2,289	4,245
Trade names
Finite-Lived Intangible Assets [Line Items]
Weighted- Average Estimated Useful Life (years)	3 years 1 month 6 days
Total acquired intangible assets, gross carrying amount	$ 2,619	2,619
Total acquired intangible assets, accumulated amortization	(2,514)	(2,379)
Total acquired intangible assets, net book value	$ 105	240
Internal-use software
Finite-Lived Intangible Assets [Line Items]
Weighted- Average Estimated Useful Life (years)	3 years
Gross Carrying Amount	$ 65,130	55,371
Accumulated Amortization	(33,861)	(23,635)
Net Book Value	$ 31,269	$ 31,736

Goodwill and Intangibles - Schedule of Estimated Amortization Expense (Details $ in Thousands	Sep. 30, 2024 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2024 (for the remaining three months)	$ 8,429
2025	30,900
2026	21,149
2027	9,128
2028	3,243
2029 and thereafter	7,652
Total	$ 80,501

Deferred Contract Acquisition and Fulfillment Costs (Details) - Contract Acquisition And Fulfillment Costs - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Capitalized Contract Costs [Roll Forward]
Beginning balance	$ 121,609	$ 103,075
Capitalization of contract acquisition and fulfillment costs	39,850	39,904
Amortization of deferred contract acquisition and fulfillment costs	(39,357)	(30,416)
Ending balance	$ 122,102	$ 112,563

Derivative and Hedging Activities (Details) - Foreign currency forward contracts designated as cash flow hedges - Designated as Hedging Instrument - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Derivative [Line Items]
Term of contract	20 months	20 months
Notional amount	$ 52.4	$ 49.5

Debt - Additional Information (Details) - USD ($)	1 Months Ended				9 Months Ended
Debt - Additional Information (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2021	Mar. 31, 2021	May 31, 2020	Sep. 30, 2024	Sep. 30, 2023	Apr. 30, 2020
Debt Instrument [Line Items]
Proceeds from convertible debt					$ 0	$ 292,800,000
Convertible Debt \| Debt Covenant Three
Debt Instrument [Line Items]
Redemption price, percentage				100.00%
2025 Notes \| Convertible Debt
Debt Instrument [Line Items]
Face amount				$ 230,000,000
Converted amount	$ 201,000,000
Repurchased face amount	184,000,000					184,000,000
Proceeds from convertible debt				$ 222,800,000
2027 Notes \| Convertible Debt
Debt Instrument [Line Items]
Face amount			$ 600,000,000
Proceeds from convertible debt			$ 585,000,000
2029 Notes \| Convertible Debt
Debt Instrument [Line Items]
Face amount	300,000,000					$ 300,000,000
Proceeds from convertible debt	$ 292,000,000
Credit Agreement \| Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Sofr spread rate		0.10%
Basis spread on variable rate		2.50%
Credit Agreement \| Base Rate
Debt Instrument [Line Items]
Basis spread on variable rate		0.00%
Credit Agreement \| Revolving Credit Facility
Debt Instrument [Line Items]
Current borrowing capacity							$ 100,000,000
Credit sublimit							15,000,000
Fee amount		$ 400,000
Commitment fee percentage		0.20%
Credit Agreement \| Letter of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity							$ 150,000,000

Debt - Summary of Long-term Debt Instruments (Details) - Convertible Debt shares in Millions	9 Months Ended
	Sep. 30, 2024 shares $ / shares
2025 Notes
Debt Instrument [Line Items]
Interest Rate	2.25%
Effective Interest Rate	2.88%
Initial Conversion Rate per $1,000 Principal	0.0163875
Initial Conversion Price (in dollars per share) \| $ / shares	$ 61.02
Number of shares (in shares) \| shares	0.8
2027 Notes
Debt Instrument [Line Items]
Interest Rate	0.25%
Effective Interest Rate	0.67%
Initial Conversion Rate per $1,000 Principal	0.0096734
Initial Conversion Price (in dollars per share) \| $ / shares	$ 103.38
Number of shares (in shares) \| shares	5.8
2029 Notes
Debt Instrument [Line Items]
Interest Rate	1.25%
Effective Interest Rate	1.69%
Initial Conversion Rate per $1,000 Principal	0.0154213
Initial Conversion Price (in dollars per share) \| $ / shares	$ 64.85
Number of shares (in shares) \| shares	4.6

Debt - Summary of Liability and Equity Components of Convertible Debt (Details) - Convertible Debt - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Debt Instrument [Line Items]
Amortization of debt issuance costs	$ 1,168	$ 993	$ 3,182	$ 2,918
2025 Notes
Debt Instrument [Line Items]
Principal	45,992		45,992		$ 45,992
Unamortized debt issuance costs	(176)		(176)		(404)
Total	45,816		45,816		45,588
Amortization of debt issuance costs	79	289	228	990
2027 Notes
Debt Instrument [Line Items]
Principal	600,000		600,000		600,000
Unamortized debt issuance costs	(6,200)		(6,200)		(8,077)
Total	593,800		593,800		591,923
Amortization of debt issuance costs	634	631	1,877	1,855
2029 Notes
Debt Instrument [Line Items]
Principal	300,000		300,000		300,000
Unamortized debt issuance costs	(6,438)		(6,438)		(7,515)
Total	293,562		293,562		$ 292,485
Amortization of debt issuance costs	$ 455	$ 73	$ 1,077	$ 73

Debt - Summary of Interest Expense (Details) - Convertible Debt - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Debt Instrument [Line Items]
Contractual interest expense	$ 1,571	$ 1,552	$ 4,713	$ 4,890
Amortization of debt issuance costs	1,168	993	3,182	2,918
Total interest expense	2,739	2,545	7,895	7,808
2025 Notes
Debt Instrument [Line Items]
Contractual interest expense	258	948	776	3,536
Amortization of debt issuance costs	79	289	228	990
Total interest expense	337	1,237	1,004	4,526
2027 Notes
Debt Instrument [Line Items]
Contractual interest expense	375	375	1,125	1,125
Amortization of debt issuance costs	634	631	1,877	1,855
Total interest expense	1,009	1,006	3,002	2,980
2029 Notes
Debt Instrument [Line Items]
Contractual interest expense	938	229	2,812	229
Amortization of debt issuance costs	455	73	1,077	73
Total interest expense	$ 1,393	$ 302	$ 3,889	$ 302

Debt - Summary of Other Key Terms and Premiums Paid for the Capped Calls (Details) - Call Option $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($) $ / shares
Capped Calls Entered into in Connection with the Issuance of the 2025 Notes
Debt Instrument [Line Items]
Initial strike price, subject to certain adjustments (in dollars per share)	$ 61.02
Cap price, subject to certain adjustments (in dollars per share)	$ 93.88
Total premium paid (in thousands) \| $	$ 27,255
Capped Calls Entered into in Connection with the Issuance of the 2027 Notes
Debt Instrument [Line Items]
Initial strike price, subject to certain adjustments (in dollars per share)	$ 103.38
Cap price, subject to certain adjustments (in dollars per share)	$ 159.04
Total premium paid (in thousands) \| $	$ 76,020
Capped Calls Entered into in Connection with the Issuance of the 2029 Notes
Debt Instrument [Line Items]
Initial strike price, subject to certain adjustments (in dollars per share)	$ 64.85
Cap price, subject to certain adjustments (in dollars per share)	$ 97.88
Total premium paid (in thousands) \| $	$ 36,570

Stock-Based Compensation - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based payment arrangement, expense	$ 24,594	$ 23,768	$ 76,896	$ 84,836
Cost of revenue
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based payment arrangement, expense	3,001	2,527	8,707	8,348
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based payment arrangement, expense	9,535	8,436	25,698	30,575
Sales and marketing
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based payment arrangement, expense	6,823	7,106	21,182	23,087
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based payment arrangement, expense	$ 5,235	$ 5,699	$ 21,309	$ 22,826

Stock-Based Compensation - Additional Information (Details) $ / shares in Units, $ in Thousands			1 Months Ended		3 Months Ended		9 Months Ended
	Sep. 13, 2024 USD ($) $ / shares shares	Mar. 15, 2024 USD ($) $ / shares shares	Jul. 31, 2024 shares	Jan. 31, 2024 installment shares	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) shares	Sep. 30, 2023 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based payment arrangement, expense					$ 24,594	$ 23,768	$ 76,896	$ 84,836
Purchase price of common stock by employees percentage							85.00%
Issuance of common stock under employee stock purchase plan					4,201	5,149	$ 9,246	11,323
January 2024 Grant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of vesting installments \| installment				3
RSUs and PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, restricted stock					152,000		$ 152,000
Unrecognized compensation, recognition period							2 years
Granted (in shares) \| shares							2,338,438
Performance Stock Units \| January 2024 Grant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period				1 year
Share-based payment arrangement, expense					400		$ 2,200
Granted (in shares) \| shares				279,570
Maximum target payout in shares (percent)				200.00%
Performance Stock Units \| July 2024 Grant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based payment arrangement, expense					300		$ 300
Granted (in shares) \| shares			19,605
2015 Plan \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period							3 years
2015 Plan \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period							4 years
Employee withholding percentage							15.00%
2024 Bonus Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based payment arrangement, expense					$ 200	$ 50	$ 500
2023 Bonus Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based payment arrangement, expense								$ 1,100
Shares to be issued under ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of common stock under employee stock purchase plan (in shares) \| shares	144,445	147,445
Share issued, price per share (in dollars per share) \| $ / shares	$ 29.08
Issuance of common stock under employee stock purchase plan	$ 4,200	$ 5,000
Shares to be issued under ESPP \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share issued, price per share (in dollars per share) \| $ / shares		$ 33.78
Shares to be issued under ESPP \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share issued, price per share (in dollars per share) \| $ / shares		$ 39.78

Stock-Based Compensation - Summary of Restricted Stock, Restricted Stock Units and Performance-Based Restricted Stock Units (Details) - RSUs and PSUs	9 Months Ended
	Sep. 30, 2024 $ / shares shares
Shares
Unvested balance, Beginning balance (in shares) \| shares	2,714,426
Granted (in shares) \| shares	2,338,438
Vested (in shares) \| shares	(1,122,737)
Forfeited (in shares) \| shares	(824,443)
Unvested balance, Ending balance (in shares) \| shares	3,105,684
Weighted- Average Grant Date Fair Value
Beginning balance (in dollars per share) \| $ / shares	$ 61.60
Granted (in dollars per share) \| $ / shares	52.37
Vested (in dollars per share) \| $ / shares	61.36
Forfeited (in dollars per share) \| $ / shares	59.99
Ending Balance (in dollars per share) \| $ / shares	$ 56.24

Stock-Based Compensation - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Shares
Beginning balance (in shares)	716,270
Granted (in shares)	0
Exercised (in shares)	(131,742)
Forfeited/cancelled (in shares)	(450)
Ending balance (in shares)	584,078	716,270
Vested and exercisable (in shares)	584,078
Weighted Average Exercise Price
Beginning balance (in dollars per share)	$ 12.26
Granted (in dollars per share)	0
Exercised (in dollars per share)	11.67
Forfeited/cancelled (in dollars per share)	7.73
Ending balance (in dollars per share)	12.40	$ 12.26
Vested and exercisable (in dollars per share)	$ 12.40
Weighted Average Remaining Contractual Life (in years)
Outstanding	1 year 5 months 12 days	1 year 11 months 19 days
Vested and exercisable	1 year 5 months 12 days
Aggregate Intrinsic Value (in thousands)
Outstanding	$ 16,056	$ 32,115
Exercised	4,981
Vested and exercisable	$ 16,056

Net Income (Loss) per Share - Summary of Basic and Diluted Net Loss Per Share of Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Numerator:
Net income (loss)	$ 16,554	$ (76,611)	$ 27,007	$ (169,308)
Denominator:
Weighted-average common shares outstanding, basic (in Shares)	62,898,078	61,065,157	62,389,482	60,506,082
Weighted-average common shares outstanding, diluted (in Shares)	74,537,085	61,065,157	74,225,110	60,506,082
Net income (loss) per share, basic (in dollars per share)	$ 0.26	$ (1.25)	$ 0.43	$ (2.80)
Net income (loss) per share, diluted (in dollars per share)	$ 0.22	$ (1.25)	$ 0.36	$ (2.80)

Net Income (Loss) per Share - Summary of Antidilutive Securities Excluded From Computation Diluted Weighted Average Shares Outstanding (Details) - shares	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share amount (in shares)	14,928,628	15,169,903
Options to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share amount (in shares)	584,078	723,632
Unvested restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share amount (in shares)	3,105,684	3,126,817
Common stock issued in conjunction to acquisitions
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share amount (in shares)	36,923	115,041
Shares to be issued under ESPP
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share amount (in shares)	18,332	20,802
Convertible senior notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share amount (in shares)	11,183,611	11,183,611

Commitments and Contingencies (Details) - 3 months ended Jun. 30, 2024 ₪ in Millions, $ in Millions	ILS (₪)	USD ($)
Commitments and Contingencies Disclosure [Abstract]
Income tax examination amount assessed by taxing authorities	₪ 324	$ 87

Segment Information and Information about Geographic Areas - Additional Information (Details)	9 Months Ended
	Sep. 30, 2024 segment
Segment Reporting [Abstract]
Number of operating segments	1

Segment Information and Information about Geographic Areas - Summary of Net Revenues of Customer by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Revenues from External Customers and Long-Lived Assets [Line Items]
Total	$ 214,654	$ 198,843	$ 627,746	$ 572,439
North America
Revenues from External Customers and Long-Lived Assets [Line Items]
Total	163,730	155,190	480,392	448,753
Rest of world
Revenues from External Customers and Long-Lived Assets [Line Items]
Total	$ 50,924	$ 43,653	$ 147,354	$ 123,686

Segment Information and Information about Geographic Areas - Summary of Property and Equipment, Net By Geographic Area (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Revenues from External Customers and Long-Lived Assets [Line Items]
Total	$ 33,936	$ 39,642
North America
Revenues from External Customers and Long-Lived Assets [Line Items]
Total	23,915	27,609
Rest of world
Revenues from External Customers and Long-Lived Assets [Line Items]
Total	$ 10,021	$ 12,033

Restructuring (Details) - USD ($) $ in Thousands		3 Months Ended			9 Months Ended
Restructuring (Details) - USD ($) $ in Thousands	Aug. 07, 2023	Sep. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Restructuring and Related Activities [Abstract]
Workforce reduction percentage	16.00%
Restructuring charges		$ 0	$ (200)	$ (19,996)	$ 0	$ (19,996)

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