What changed in this filing

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Item 1. Business

2021-02-26 compared with 2020-02-28 · 79 added, 44 removed, 250 unchanged (33% of the section changed)

Rapid7 is a leading cyber security solutions provider, on a mission to make successful security tools and practices accessible to all.

Rapid7 Insight Platform technology, expert services, and thought-leading research enables over 9,000 customers to improve their security programs so that they can safely advance and innovate.

In the nearly 20 years that Rapid7 has been in business, security companies and trends have come and gone, while broader technology innovation continues to advance rapidly.

Rapid7 is advancing security with visibility, analytics, and automation delivered through our Insight Platform.

Our solutions simplify the complex, allowing security teams to work more effectively with IT and development to reduce vulnerabilities, monitor for misconfigurations and malicious behavior, investigate and shut down attacks, and automate routine tasks.

In the 20 years that Rapid7 has been in business, security companies and trends have come and gone, while broader technology innovation continues to advance rapidly.

Every company is now a technology company, and rampant innovation inevitably creates security risk.

The migration of businesses to the cloud and ubiquitous connected devices present security teams with an increasingly complex, ever-changing, and unpredictable attack surface.

The migration of businesses to the cloud, more distributed workforces and ubiquitous connected devices present security teams with an increasingly complex, ever-changing, and unpredictable attack surface.

We believe as cybersecurity challenges continue to rise exponentially, two key factors can prevent organizations from effectively managing their growing security exposure.

First, the tools to manage complex security problems are often complicated to use.

First, the tools to manage complex security problems are often equally complicated to use.

Second, there is a scarcity of cybersecurity professionals who are qualified to successfully manage these sophisticated tools.

These two factors compound the difficulties that resource-constrained organizations face when attempting to minimize their security exposure, meet security compliance regulations and provide visibility to their leadership.

The expanding divide between risk created through innovation and risk managed by security teams is called the Security Achievement Gap.

We call the expanding divide between risk created through innovation and risk effectively managed by security teams the Security Achievement Gap.

We believe Rapid7 is uniquely positioned to improve how customer security challenges are addressed.

Our solutions simplify the complex, allowing teams to more effectively reduce vulnerabilities, monitor malicious behavior, investigate and shut down attacks, and automate routine tasks.

All of our solutions and services are built with and supported by the expertise of our dedicated team of security researchers and consultants, who bring knowledge of attacker behavior and emerging vulnerabilities directly to customers.

We also continue to invest in further simplifying our technology to improve usability, lowering the barrier to managing security for teams and organizations who lack resources.

We also continue to invest in further simplifying our technology to improve usability, lowering the barrier for teams and organizations who lack resources to manage their security posture.

While our security technology is the foundation of our mission to make successful security accessible to all, technology alone will not solve today’s cybersecurity challenges.

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Our Solutions

We offer products across the four main pillars of on our Insight Platform:

We offer products across multiple pillars on our Insight Platform:

• Vulnerability Risk Management:

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• Incident Detection and Response:

Our Incident Detection and Response (IDR) solutions are designed to enable organizations to rapidly detect and respond to cyber security incidents and breaches across physical, virtual and cloud assets.

Equipped with user behavior analytics (UBA), attacker behavior analytics (ABA), end-point detection and response (EDR) and deception technology, our Security Information and Event Management (SIEM) is designed to provide comprehensive network visibility and accelerate threat investigation and response.

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Our industry-leading Incident Detection and Response (IDR) solutions are designed to enable organizations to rapidly detect and respond to cyber security incidents and breaches across physical, virtual and cloud assets.

Equipped with user behavior analytics (UBA), attacker behavior analytics (ABA), network traffic analysis (NTA), end-point detection and response (EDR) and deception technology, our Security Information and Event Management (SIEM) solution is designed to provide comprehensive network visibility and accelerate threat investigation and response.

• Application Security:

Our Application Security offerings provide dynamic application security testing and run-time application security monitoring and protection solutions that are designed to continuously analyze web applications for security vulnerabilities throughout a customer’s software development life cycle.

• Cloud Security:

Our Cloud Security solutions are designed to effectively manage and protect cloud and container environments.

By combining continuous real-time monitoring with automation, our solutions quickly assess an organization's security and compliance posture and automate remediation of misconfigurations and policy violations to help deliver continuous security and compliance across multi-cloud environments.

• Security Orchestration and Automation Response:

Our Security Orchestration and Automation Response (SOAR) solutions allow security teams to connect disparate solutions within their cyber security, IT and development operations and build automated workflows, without requiring code, to eliminate repetitive, manual and labor-intensive tasks, resulting in measurable time and cost savings.

Finally, to complement our products, we offer a range of managed services based on our software solutions and professional services, including incident response services, security advisory services, and deployment and training.

Finally, to complement our products, we offer a range of managed services based on our software solutions and professional services, including penetration testing services, incident response services, security advisory services, and deployment and training.

Insight Platform

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The platform was built using our extensive experience in collecting and analyzing data to enable our customers to create and manage analytics-driven cyber security risk management programs.

By utilizing our powerful, proprietary analytics to assess and understand the context and relationships around users, IT assets and cyber threats within a customer’s environment, our solutions make it easier for teams to manage vulnerabilities, monitor for malicious behavior, investigate and shutdown attacks, and automate operations.

By utilizing our powerful, proprietary analytics to assess and understand the context and relationships around users, IT assets and cyber threats within a customer’s environment, our solutions make it easier for teams to identify and remediate vulnerabilities, monitor for misconfigurations and malicious behavior, investigate and shutdown attacks, and automate operations.

Our Insight Platform provides a high level of scalability.

We leverage on-premise deployment models and cloud technologies to achieve a scalable delivery model with a high degree of redundancy, fault tolerance, and cost-effectiveness.

We leverage cloud technologies to achieve a scalable delivery model with a high degree of redundancy, fault tolerance, and cost-effectiveness.

We also designed our Insight Platform to provide a secure environment for our customers' data.

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We developed our platform with flexible processing technologies that employ both agentless data collection and our own internally-developed endpoint agent technology, which enables rapid and seamless integration of our products into our customers’ modern IT environments and provides security and IT professionals with instant visibility into their dynamic and rapidly-expanding IT ecosystem.

Our lightweight endpoint agents are designed to automatically collect data from all endpoints, even those from remote workers and sensitive assets that cannot be actively scanned, or that rarely join the corporate network.

Our lightweight endpoint Insight Agent is designed to automatically collect data from all endpoints, even those from remote workers and sensitive assets that cannot be actively scanned, or that rarely join the corporate network.

• Endpoint Detection and Visibility:

With a universal lightweight agent and endpoint scanning, the Insight Platform provides real-time detection and the ability to proactively remediate IT environments, before a potential attack happens.

• Network Traffic Analysis:

Network flow data illuminates environments and helps accelerate investigations.

Our lightweight Network Sensor passively analyzes raw traffic to increase visibility into user activity, pinpoint real threats, and accelerate investigation with granular detail of attacker movement.

• Cloud and Virtual Infrastructure Assessment:

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As organizations grow and infrastructure becomes more complex, maintaining visibility into attack surface becomes more challenging.

Our platform directly integrates with Project Sonar, a Rapid7 research project that regularly scans the public internet, to gain insights into global exposure to common vulnerabilities.

Our platform directly integrates with Project

Sonar, a Rapid7 research project that regularly scans the public internet, to gain insights into global exposure to common vulnerabilities.

This capability also enables security professionals to identify previously unknown, externally facing assets connected to the internet.

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Our Insight Platform addresses these challenges with the following features:

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• User and Attacker Behavior Analytics:

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With a highly specialized team of penetration testing, incident response, threat hunting and security operation center experts, we believe we are uniquely positioned to stay ahead of emerging threats and help detect threats quickly across a customer’s entire IT ecosystem.

Our Insight Platform unites technology stack and allows security operations teams to connect disparate solutions within their cyber security, IT and development operations.

Our Insight Platform unites technology stacks and allows security operations teams to connect disparate solutions within their cyber security, IT and development operations.

• Built-in Workflows:

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Our Insight Platform products are available globally and reduce the need for customers to manage large, complex, data infrastructure.

We offer the following cloud products across the four main pillars of Security Operations (SecOps):

We offer the following cloud products across the main pillars of Security Operations (SecOps):

Utilizing the power of our Insight Platform, InsightVM is designed to provide a fully available, scalable, and efficient way to collect vulnerability data, prioritize risk and automate remediation.

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The managed service is known as Managed Vulnerability Risk Management, which provides our resource constrained customers with a fully outsourced option for leveraging our innovation, expertise and technology.

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InsightIDR, our Incident Detection and Response (IDR) solution, is designed to enable organizations to rapidly detect and respond to cyber security incidents and breaches across physical, virtual and cloud assets.

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They can also use InsightIDR to take containment actions across Active Directory, Access Management, EDR, and firewall tools.

InsightIDR also offers modules for Enhanced Network Traffic Analysis and Enhanced Endpoint Telemetry.

Enhanced Network Traffic Analysis continuously monitors network traffic at any location or site across your network.

This data increases visibility across the attack surface and detects intrusions (or other potential security events) on the network.

Enhanced Endpoint Telemetry is the collection of detailed activity logs that are sent to InsightIDR each time a process starts on a monitored endpoint.

In short, these logs give visibility into all endpoint activity—whether events occurred before, during, or after a detection.

With this holistic view into endpoint activity, customers can unlock custom use cases and enrich investigations in InsightIDR.

InsightIDR is offered through a cloud-based subscription or as a managed service.

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Other Products

DivvyCloud is a Cloud Security Posture Management solution designed to minimize security and compliance risk for an organization’s cloud infrastructure.

DivvyCloud performs real-time, continuous discovery and analysis of cloud and container infrastructure resources allowing customers to identify security risks, threats and policy compliance violations such as

data breaches, malicious insiders, account hijacking, insecure interfaces, and weak authentication.

The product then takes automatic action to remediate identified security and compliance issues based on user-defined and/or automated parameters before they are exploited.

DivvyCloud is offered on a term license subscription basis.

Nexpose is an on-premise version of our Vulnerability Risk Management solution, that enables customers to assess and remediate their overall exposure to cyber risk across their increasingly complex IT environments.

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Metasploit can be used to safely simulate attacks on an organization’s network in order to uncover vulnerabilities before they are exploited by cyber attackers and assess the effectiveness of an organization’s existing defenses, security controls and mitigation efforts.

The Metasploit open source framework is freely available and geared toward developers and security

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The Metasploit open source framework is freely available and geared toward developers and security researchers.

We also offer Metasploit Pro, the commercial penetration testing software based on the Metasploit framework, through term-based software licenses.

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With scalable and cost-effective architecture and the ability to bring together asset visibility and log management, InsightOps enables organizations to store and search structured, semi-structured and unstructured data in real time, enabling DevOps and IT professionals to centralize, search and monitor their log data in order to investigate anomalies, troubleshoot issues and conduct root cause analysis.

InsightOps is offered on a cloud-based subscription basis.

Professional Services

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We sell our solutions through direct inside and field sales team and indirect channel partner relationships.

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Our sales teams focus on both new customer acquisition as well as up-selling and cross-selling additional offerings to our existing customers.

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This data is used for security research, product development, and across our services to help protect and inform our customers, partners and community.

We share this data with validated educational and private security researchers, research partners, vetted threat sharing communities, and organizational security teams through our Open Data portal to foster collaboration and encourage discovery of new insights.

We share this data with validated educational

and private security researchers, research partners, vetted threat sharing communities, and organizational security teams through our Open Data portal to foster collaboration and encourage discovery of new insights.

We collect data for research purposes through two key areas:

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We publish a variety of reports including The National Exposure Index, The Industry Cyber Exposure Report and Under the Hoodie.

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National Exposure Index, published annually, is a census report that highlights the state of exposed internet services at the nation-state level and provides key trending information on the use of insecure protocols.

The National Exposure Index, published annually, is a census report that highlights the state of exposed internet services at the nation-state level and provides key trending information on the use of insecure protocols.

The Industry Cyber Exposure Index details the attack surface, insecure service presence, email safety configurations, malware infection rates and internet supply-chain risks of Fortune 500 companies.

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and for Logentries products, those customers with a contract value equal to or greater than $2,400 per year, or (2) purchased Rapid7 professional services within the 12 months preceding the applicable measurement date.

Our customers span a wide variety of industries including technology, energy, financial services, healthcare and life sciences, manufacturing, media and entertainment, retail, education, real estate, transportation, government and professional services, with customers in the finance industry representing our largest industry in 2019 at 15% of our revenue.

In 2019, 52% of our revenue was generated from large enterprises, which we define as organizations that have either annual revenue greater than $1.0 billion or more than 2,500 employees, and the balance was generated from middle-market and small organizations.

Our customers span a wide variety of industries including technology, energy, financial services, healthcare and life sciences, manufacturing, media and entertainment, retail, education, real estate, transportation, government and professional services, with customers in the services industry representing our largest industry in 2020 at 16% of our revenue.

In 2020, 49% of our revenue was generated from enterprises, which we define as organizations that have either annual revenue greater than $1.0 billion or more than 2,500 employees, and the balance was generated from middle-market and small organizations.

Our revenue is not concentrated with any individual customer and no customer represented more than 1% of our revenue in 2020, 2019 or 2018.

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Our primary competitors in Vulnerability Risk Management include Qualys and Tenable;

in Incident Detection and Response (SIEM) include Splunk, Micro Focus and LogRhythm;

in Incident Detection and Response (SIEM) include Splunk, Micro Focus, LogRhythm and Microsoft (Sentinel);

in Application Security include Micro Focus and IBM;

in Security Orchestration and Automation Response include Phantom (Splunk) and Demisto (Palo Alto Networks);

and finally, while the competition in our professional services business is diverse, our competitors include FireEye’s Mandiant, SecureWorks and NCC Group.

in Cloud Security include Prisma (Palo Alto Networks) and CloudGuard (Check Point Software Technologies) and finally, while the competition in our professional services business is diverse, our competitors include FireEye’s Mandiant, SecureWorks and NCC Group.

We compete on the basis of a number of factors, including:

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In addition, we expect that there is likely to be continued consolidation in our industry that could lead to increased price competition and other forms of competition.

Government Regulations

We are subject to various federal, state and international laws and regulations that affect our business, including those relating to the privacy and security of customer and employee personal information and export or import of our products to certain countries, governments or entities.

Additional laws in all of these areas are likely to be passed in the future, which could result in significant limitations on or changes to the ways in which we can collect, use, host, store or transmit the personal information and data of our customers or employees, communicate with our customers, and deliver products and services, may significantly increase our compliance costs.

Intellectual Property

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We file patent applications to protect our intellectual property and have a number of patent applications pending.

We require our employees, consultants and other third

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parties to enter into confidentiality and proprietary rights agreements and control access to software, documentation and other proprietary information.

We require our employees, consultants and other third parties to enter into confidentiality and proprietary rights agreements and control access to software, documentation and other proprietary information.

Although we rely on intellectual property rights, including trade secrets, patents, copyrights and trademarks, as well as contractual protections to establish and protect our proprietary rights, we believe that factors such as the technological and creative skills of our personnel, creation of new modules, features and functionality, and frequent enhancements to our solutions are more essential to establishing and maintaining our technology leadership position.

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We believe our continuing research and product development are not materially dependent on any single license or other agreement with a third party relating to the development of our products.

Human Capital

Rapid7 is dedicated to making the best in security operations achievable for all, and our employees are critical to achieving this mission.

In order to continue to innovate, compete and succeed in our highly competitive and rapidly evolving market, it is crucial that we continue to attract and retain experienced employees.

As part of these efforts, we strive to offer a competitive compensation and benefits program, foster a community where everyone feels included and empowered to do their best work, and give employees the opportunity to give back to their communities and make a social impact.

As of December 31, 2020, we had 1,847 full-time employees, including 341 in product and service delivery and support, 742 in sales and marketing, 517 in research and development and 247 in general and administrative.

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We believe our employee relations are good and we have not experienced any work stoppages.

Compensation, Benefits and Well-being

Our compensation program is designed to attract and reward talented individuals who possess the skills necessary to support our business objectives, assist in the achievement of our strategic goals and create long-term value for our stockholders and fit within our company culture.

In addition to their base salary, eligible employees are compensated for their contributions to the Company’s goals with short-term incentives and long-term equity awards tied to the value of our stock price.

We believe that a compensation program with both short-term and long-term awards provides fair and competitive compensation and aligns employee and stockholder interests, including by incentivizing business and individual performance (pay for performance), motivating based on long-term company performance and integrating compensation with our business plans.

In addition to cash and equity compensation, we also offer employees a wide array of benefits such as life and health (medical, dental and vision) insurance, paid time off and retirement benefits.

We also provide emotional well-being services through our Employee Assistance Program.

In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees as well as the communities in which we operate.

This includes having the vast majority of our employees work from home, while implementing additional safety measures for employees continuing critical on-site work.

Diversity, Equity and Inclusion

We believe that a company culture focused on diversity and inclusion is a key driver of creativity and innovation and that diverse and inclusive teams make better business decisions, which ultimately drive better business outcomes.

We are committed

to recruiting, retaining and developing high-performing, innovative and engaged employees with diverse backgrounds and experiences.

In 2018, we launched a diversity initiative to increase the number of under-represented groups (women and people of color) to fifty percent of the employee base in the United States by the end of 2020.

We undertook to promote transparency by publishing our workforce demographic data internally and to increase thoughtful discussions across the Company, including holding unconscious bias training for our employees, further expanding efforts to recruit under-represented groups through referrals and by expanding beyond the traditional networks from which we recruited.

We are also focused on identifying and promoting diverse leaders through the organization at all levels and signed the Corporate Parity Pledge, which includes, among other things, a commitment to interview at least one woman and one person of color for every open role at the vice president level and above.

We have also directed our talent acquisition team to take the further step of interviewing at least one woman and/or person of color for every role we hire for.

These efforts yielded results.

At the end of 2020, we increased the percent of under-represented employees in the U.S.

to over 49%, with over 4% increases in each of the percent of women and the percent of people of color.

Additionally, in 2020, we completed a comprehensive employee pay equity survey for our U.S.

employees, with outside advisors using regression models to determine that women and people of color at Rapid7 were not paid less for the same job, level, and location, controlling for pay differentiators such as performance and tenure/experience.

We intend to conduct an analysis like this every few years.

Community Involvement

We aim to give back to the communities where we live and work, and believe that this commitment helps in our efforts to attract and retain employees.

We partner with a variety of STEM and inclusion-focused programs to promote technology education for all.

Beyond contributions of cash, we encourage employee volunteerism at all our locations by both designating a global day of service each fall, as well as more concentrated work throughout the year.

In 2020, working with the Tides Foundation, we created and funded the Rapid7 for Good Fund to direct charitable contributions to community organizations that focus on STEM education and diversity, equity and inclusion in technology, and in particular, cybersecurity.

Corporate Information

We were initially incorporated in July 2000 in Delaware.

Rapid7 LLC, a limited liability company organized under the laws of the Commonwealth of Massachusetts, was formed in January 2004.

In August 2004, pursuant to an exchange agreement among Rapid7 LLC and the stockholders of Rapid7, Inc., the stockholders exchanged their shares in Rapid7, Inc.

for equity interests in Rapid7 LLC, after which Rapid7, Inc.

was dissolved.

In August 2008, Rapid7 LLC was merged with and into Rapid7 LLC, a newly-formed Delaware limited liability company.

was reincorporated in Delaware in October 2011.

In a series of transactions in November 2011, equity holders of Rapid7 LLC exchanged their equity interests in Rapid7 LLC for capital stock in Rapid7, Inc.

and Rapid7 LLC became a wholly-owned subsidiary of Rapid7, Inc.

Our principal executive offices are located at 120 Causeway Street, Boston, Massachusetts.

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Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are made available free of charge on or through our website at investors.rapid7.com as soon as reasonably practicable after such reports are filed with, or furnished to, the SEC.

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What changed 10-K

Item 1. Business