Rapid7, Inc. 10-Q

Item 1. Financial Statements. RAPID7, INC. Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except share and per share data) September 30, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 130,613 $ 334,686 Short-term investments 276,515 187,025 Accounts receivable, net of allowance for credit losses of $ 2,595 and $ 1,833 at September 30, 2025 and December 31, 2024, respectively 141,339 168,242 Deferred contract acquisition and fulfillment costs, current portion 47,557 52,134 Prepaid expenses and other current assets 39,001 44,024 Total current assets 635,025 786,111 Long-term investments 227,418 37,274 Property and equipment, net 31,966 32,245 Operating lease right-of-use assets 47,536 48,877 Deferred contract acquisition and fulfillment costs, non-current portion 64,109 73,672 Goodwill 575,268 575,268 Intangible assets, net 69,877 85,719 Other assets 15,208 12,868 Total assets $ 1,666,407 $ 1,652,034 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 15,571 $ 18,908 Accrued expenses and other current liabilities 80,539 88,802 Convertible senior notes, current portion, net — 45,895 Operating lease liabilities, current portion 15,955 15,493 Deferred revenue, current portion 422,943 461,118 Total current liabilities 535,008 630,216 Convertible senior notes non-current portion, net 891,279 888,356 Operating lease liabilities, non-current portion 63,551 68,430 Deferred revenue, non-current portion 28,342 27,078 Other long-term liabilities 21,011 20,243 Total liabilities $ 1,539,191 $ 1,634,323 Stockholders’ equity: Preferred stock, $ 0.01 par value per share; 10,000,000 shares authorized at September 30, 2025 and December 31, 2024; 0 shares issued and outstanding at September 30, 2025 and December 31, 2024 $ — $ — Common stock, $ 0.01 par value per share; 100,000,000 shares authorized at September 30, 2025 and December 31, 2024; 65,908,155 and 64,067,220 shares issued at September 30, 2025 and December 31, 2024, respectively; 65,337,900 and 63,496,965 shares outstanding at September 30, 2025 and December 31, 2024, respectively 652 635 Treasury stock, at cost, 570,255 shares at September 30, 2025 and December 31, 2024 ( 4,765 ) ( 4,765 ) Additional paid-in-capital 1,096,652 1,011,080 Accumulated other comprehensive income (loss) 2,459 ( 1,205 ) Accumulated deficit ( 967,782 ) ( 988,034 ) Total stockholders’ equity 127,216 17,711 Total liabilities and stockholders’ equity $ 1,666,407 $ 1,652,034 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 Table of Contents 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, 2025 2024 2025 2024 Revenue: Product subscriptions $ 210,146 $ 205,593 $ 622,178 $ 602,578 Professional services 7,814 9,061 20,228 25,168 Total revenue 217,960 214,654 642,406 627,746 Cost of revenue: Product subscriptions 58,263 56,774 169,867 166,615 Professional services 6,721 6,383 17,656 18,528 Total cost of revenue 64,984 63,157 187,523 185,143 Total gross profit 152,976 151,497 454,883 442,603 Operating expenses: Research and development 46,914 44,976 142,029 126,792 Sales and marketing 79,296 74,821 237,943 226,042 General and administrative 20,863 18,883 65,615 62,013 Total operating expenses 147,073 138,680 445,587 414,847 Income from operations 5,903 12,817 9,296 27,756 Other income (expense), net: Interest income 6,167 5,571 17,439 15,512 Interest expense ( 2,585 ) ( 2,837 ) ( 7,866 ) ( 8,180 ) Other (expense) income, net ( 173 ) 2,811 5,586 681 Income before income taxes 9,312 18,362 24,455 35,769 (Benefit) provision for income taxes ( 497 ) 2,952 4,203 12,415 Net income $ 9,809 $ 15,410 $ 20,252 $ 23,354 Net income per share, basic $ 0.15 $ 0.24 $ 0.31 $ 0.37 Net income per share, diluted $ 0.15 $ 0.21 $ 0.31 $ 0.31 Weighted-average common shares outstanding, basic 64,967,114 62,898,078 64,404,649 62,389,482 Weighted-average common shares outstanding, diluted 65,181,941 74,537,085 64,691,079 74,225,110 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 Table of Contents RAPID7, INC. Condensed Consolidated Statements of Comprehensive Income (Unaudited) (in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net income $ 9,809 $ 15,410 $ 20,252 $ 23,354 Other comprehensive (loss) income: Change in fair value of cash flow hedges ( 2,156 ) 1,840 2,459 882 Adjustment for net losses (gains) realized on cash flow hedges and included in net income, net of taxes 827 ( 183 ) 973 ( 656 ) Total change in unrealized (losses) gains on cash flow hedges ( 1,329 ) 1,657 3,432 226 Change in unrealized gains on investments 274 1,123 232 359 Total other comprehensive (loss) income ( 1,055 ) 2,780 3,664 585 Comprehensive income $ 8,754 $ 18,190 $ 23,916 $ 23,939 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Table of Contents RAPID7, INC. Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited) Three Months Ended September 30, 2025 and 2024 (in thousands) Common stock Treasury stock Additional paid-in-capital Accumulated other comprehensive loss Accumulated deficit Total stockholders’ equity Shares Amount Shares Amount Balance, June 30, 2025 64,707 $ 646 571 $ ( 4,765 ) $ 1,068,643 $ 3,514 $ ( 977,591 ) $ 90,447 Stock-based compensation expense — — — — 25,293 — — 25,293 Issuance of common stock under employee stock purchase plan 198 2 — — 3,255 — — 3,257 Vesting of restricted stock units 458 4 — — ( 4 ) — — — Shares withheld for employee taxes ( 25 ) — — — ( 535 ) — — ( 535 ) Other comprehensive loss — — — — — ( 1,055 ) — ( 1,055 ) Net income — — — — — — 9,809 9,809 Balance, September 30, 2025 65,338 $ 652 571 $ ( 4,765 ) $ 1,096,652 $ 2,459 $ ( 967,782 ) $ 127,216 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 ) $ 957,996 $ ( 851 ) $ ( 1,005,616 ) $ ( 52,608 ) Stock-based compensation expense — — — — 25,738 — — 25,738 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 gain — — — — — 2,780 — 2,780 Net income — — — — — — 15,410 15,410 Balance, September 30, 2024 63,177 $ 632 570 $ ( 4,765 ) $ 987,273 $ 1,929 $ ( 990,206 ) $ ( 5,137 ) The accompanying notes are an integral part of these unaudited consolidated financial statements. 4 Table of Contents RAPID7, INC. Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited) Nine Months Ended September 30, 2025 and 2024 (in thousands) Common stock Treasury stock Additional paid-in-capital Accumulated other comprehensive loss Accumulated deficit Total stockholders’ equity Shares Amount Shares Amount Balance, December 31, 2024 63,497 $ 635 571 $ ( 4,765 ) $ 1,011,080 $ ( 1,205 ) $ ( 988,034 ) $ 17,711 Stock-based compensation expense — — — — 77,200 — — 77,200 Issuance of common stock under employee stock purchase plan 385 4 — — 7,699 — — 7,703 Vesting of restricted stock units 1,332 13 — — ( 13 ) — — — Shares withheld for employee taxes ( 87 ) ( 1 ) — — ( 2,434 ) — — ( 2,435 ) Vesting of equity awards previously classified as liabilities 22 — — — 777 — — 777 Issuance of common stock upon exercise of stock options 157 1 — — 1,588 — — 1,589 Issuance of common stock from acquisition 32 — — — 755 — — 755 Other comprehensive gain — — — — — 3,664 — 3,664 Net income — — — — — — 20,252 20,252 Balance, September 30, 2025 65,338 $ 652 571 $ ( 4,765 ) $ 1,096,652 $ 2,459 $ ( 967,782 ) $ 127,216 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 ) $ 898,185 $ 1,344 $ ( 1,013,560 ) $ ( 118,179 ) Stock-based compensation expense — — — — 80,549 — — 80,549 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 gain — — — — — 585 — 585 Net income — — — — — — 23,354 23,354 Balance, September 30, 2024 63,177 $ 632 570 $ ( 4,765 ) $ 987,273 $ 1,929 $ ( 990,206 ) $ ( 5,137 ) The accompanying notes are an integral part of these unaudited consolidated financial statements. 5 Table of Contents RAPID7, INC. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Nine Months Ended September 30, 2025 2024 Cash flows from operating activities: Net income $ 20,252 $ 23,354 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 34,254 33,457 Amortization of debt issuance costs 3,116 3,325 Stock-based compensation expense 81,059 80,549 Deferred income taxes ( 1,300 ) 1,840 Other ( 4,730 ) ( 4,534 ) Changes in assets and liabilities: Accounts receivable 25,911 22,432 Deferred contract acquisition and fulfillment costs 14,138 ( 493 ) Prepaid expenses and other assets ( 1,339 ) 6,062 Accounts payable ( 3,806 ) ( 10,450 ) Accrued expenses ( 11,578 ) ( 17,413 ) Deferred revenue ( 36,911 ) ( 37,112 ) Other liabilities ( 2,816 ) 6,880 Net cash provided by operating activities $ 116,250 $ 107,897 Cash flows from investing activities: Business acquisitions, net of cash acquired — ( 37,198 ) Purchases of property and equipment ( 6,446 ) ( 2,242 ) Capitalization of internal-use software ( 11,984 ) ( 10,414 ) Purchases of investments ( 503,038 ) ( 242,494 ) Sales and maturities of investments 227,500 192,500 Other investing activities 1,786 360 Net cash used in investing activities ( 292,182 ) ( 99,488 ) Cash flows from financing activities: Payment of debt issuance costs ( 1,693 ) — Payments for maturity of convertible senior notes ( 45,992 ) — Taxes paid related to net share settlement of equity awards ( 2,435 ) ( 3,883 ) Proceeds from employee stock purchase plan 7,703 9,246 Proceeds from stock option exercises 1,589 1,436 Net cash (used in) provided by financing activities ( 40,828 ) 6,799 Effect of exchange rate changes on cash ,cash equivalents and restricted cash 5,272 770 Net (decrease) increase in cash, cash equivalents and restricted cash $ ( 211,488 ) $ 15,978 Cash, cash equivalents and restricted cash, beginning of period 342,101 214,130 Cash, cash equivalents and restricted cash, end of period $ 130,613 $ 230,108 Supplemental cash flow information: Cash paid for interest on convertible senior notes 5,768 5,840 Cash paid for income taxes, net of payments 7,124 7,073 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents 130,613 222,571 Restricted cash included in other assets — 7,537 Total cash, cash equivalents and restricted cash $ 130,613 $ 230,108 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 Table of Contents 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. Immaterial Correction of an Error During the fourth quarter of 2024, we identified an immaterial error related to stock-based compensation expense associated with certain restricted stock units (“RSUs”) and performance stock units (“PSUs”) granted during fiscal years 2023 and 2024 attributable to an improper valuation of the underlying awards, resulting in an understatement of stock-based compensation expense in 2023 and 2024. Based on an analysis of quantitative and qualitative factors in accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, and as described further in Note 15, Immaterial Correction of an Error, we evaluated the errors and determined the related impacts were not material to our consolidated financial statements for the prior periods when they occurred, but that correcting the cumulative errors in the period detected would have been material to our results of operations for that period. Accordingly, we revised previously reported comparative financial information presented herein for such immaterial errors . 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 unaudited 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, 2024 filed with the SEC on February 28, 2025. 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, 2025 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, 2024. There have been no changes to the significant accounting policies during the nine-month period ended September 30, 2025. 7 Table of Contents Recent Accounting Pronouncements In December 2023, the FASB issued 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, with early adoption permitted. The Company is currently evaluating the effect of adopting this ASU. 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. • 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. These contracts generally 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, 2025 and 2024, we recognized revenue of $ 192.7 million and $ 184.6 million, respectively, that was included in the contract liability balance as of June 30 of each respective year. For the nine months ended September 30, 2025 and 2024, we recognized $ 413.4 million and $ 398.3 million, respectively, that was included in the contract liability balance as of December 31 of the respective preceding year. 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 8 Table of Contents record a contract asset. As of September 30, 2025 and December 31, 2024, unbilled receivables of $ 3.1 million and $ 2.5 million, respectively, are included in prepaid expenses and other current assets in our consolidated balance sheet. As of September 30, 2025 and December 31, 2024, we had no contract assets recorded on our unaudited condensed consolidated balance sheet. Disaggregated Revenue by Geographic Location: Net revenues by geographic area presented based upon the location of the customer are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 United States $ 154,778 $ 156,218 $ 458,535 $ 458,667 Rest of world 63,182 58,436 183,871 169,079 Total $ 217,960 $ 214,654 $ 642,406 $ 627,746 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, 2025 (in thousands). The estimated revenues do not include unexercised contract renewals. Next Twelve Months Thereafter Product subscriptions $ 556,086 $ 262,110 Professional services 15,312 4,087 Total $ 571,398 $ 266,197 Deferred Contract Acquisition and Fulfillment Costs The following table summarizes the activity of the deferred contract acquisition and fulfillment costs, which primarily consist of capitalized sales commissions, for the nine months ended September 30, 2025 and 2024 (in thousands): Nine Months Ended September 30, 2025 2024 Beginning balance $ 125,806 $ 121,609 Capitalization of contract acquisition and fulfillment costs 29,377 39,850 Amortization of deferred contract acquisition and fulfillment costs ( 43,517 ) ( 39,357 ) Ending balance $ 111,666 $ 122,102 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 $ 51.2 million . The purchase consideration consisted of $ 38.6 million in cash paid at closing, $ 12.1 million of contingent consideration and $ 0.5 million of deferred cash payments. The deferred cash payments were held by Rapid7 to satisfy certain post-closing purchase price adjustments and payment was made during the fourth quarter of 2024. 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 9 Table of Contents 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, 2025 , the fair value of the contingent purchase c onsideration was $ 13.0 million of which $ 7.2 million was recorded within accrued expenses and other current liabilities and $ 5.8 million was reco rded within other liabilities in our unaudited condensed consolidated balance sheet. For the three and nine months ended September 30, 2025 , we recorded approximately $ 0.2 million and $ 0.6 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”), which therefore will be recognized as stock-based compensation expense over the required employment period. In June 2025, the Company issued 31,911 shares of common stock as the first installment of common stock issued to the two key Noetic employees. The number of shares to be issued at each issuance date for both the Earnout Consideration and the Key Employee Consideration 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, 2025 , we recognized stock-based compensation expense related to such shares in the amount of $ 1.1 million and $ 3.1 million . The following table summarizes the 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 500 Contingent consideration 12,055 Fair value of total consideration transferred $ 51,152 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 38,917 Total purchase price allocation $ 51,152 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. Our revenue and net income attributable to the Noetic business for the three and nine months ended September 30, 2025 were not material. 10 Table of Contents Note 4. Investments Our investments, which are all classified as available-for-sale, consisted of the following (in thousands): As of September 30, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Description: U.S government agencies $ 503,589 $ 516 $ ( 172 ) $ 503,933 Total assets $ 503,589 $ 516 $ ( 172 ) $ 503,933 As of December 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Description: U.S government agencies 224,187 328 ( 216 ) 224,299 Total assets $ 224,187 $ 328 $ ( 216 ) $ 224,299 As of September 30, 2025 and December 31, 2024, our available-for-sale investments had maturities ranging from one to nineteen and from one to seventeen months , respectively. For all of our investments for which the amortized cost basis was greater than the fair value at September 30, 2025 and December 31, 2024, 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. 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. 11 Table of Contents The following table presents our financial assets and liabilities measured and recorded at fair value on a recurring basis using the above input categories (in thousands): As of September 30, 2025 Level 1 Level 2 Level 3 Total Description: Assets: U.S. government agencies $ 503,933 $ — $ — $ 503,933 Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets) — 2,167 — 2,167 Total assets $ 503,933 $ 2,167 $ — $ 506,100 Liabilities: Contingent consideration (other current liabilities and other long-term liabilities) — — 12,972 12,972 Total liabilities $ — $ — $ 12,972 $ 12,972 As of December 31, 2024 Level 1 Level 2 Level 3 Total Description: Assets: U.S. government agencies $ 224,299 $ — $ — $ 224,299 Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets and other assets) — 96 — 96 Total assets $ 224,299 $ 96 $ — $ 224,395 Liabilities: Contingent consideration (other current liabilities and other long-term liabilities) — — 12,422 12,422 Foreign currency forward contracts designated as cash flow hedges (other current liabilities and other long term liabilities) — 1,415 — 1,415 Total liabilities $ — $ 1,415 $ 12,422 $ 13,837 Cash and cash equivalents are excluded from the table above as carrying amounts reported in our unaudited condensed consolidated balance sheet equal or approximate fair value. As of September 30, 2025, the fair value of our 0.25 % and 1.25 % convertible senior notes due 2027 and 2029, as further described in Note 9, Debt , was $ 560.6 million and $ 264.9 million, respectively, based upon quoted market prices. We consider the fair value of the Notes (as defined in Note 9, Debt ) to be a Level 2 measurement due to limited trading activity of the Notes. As of September 30, 2025, the fair value of our contingent consideration, as further described in Note 3, Business Combinations, was $ 13.0 million and is classified as a Level 3 measurement based on inputs not observable in the market. 12 Table of Contents Note 6. Property and Equipment Property and equipment are recorded at cost and consist of the following (in thousands): As of September 30, 2025 As of December 31, 2024 Computer equipment and software $ 34,064 $ 28,789 Furniture and fixtures 11,168 10,960 Leasehold improvements 58,653 57,051 Total 103,885 96,800 Less accumulated depreciation ( 71,919 ) ( 64,555 ) Property and equipment, net $ 31,966 $ 32,245 We recorded depreciation expense of $ 2.3 million and $ 2.7 million for the three months ended September 30, 2025 and 2024, respectively, and $ 7.5 million and $ 8.4 million for the nine months ended September 30, 2025 and 2024, respectively. Note 7. Goodwill and Intangibles Goodwill was $ 575.3 million as of September 30, 2025 and December 31, 2024. The following table presents details of our intangible assets which include acquired identifiable intangible assets and capitalized internal-use software costs (in thousands): As of September 30, 2025 As of December 31, 2024 Weighted-Average Estimated Useful Life (years) Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value Intangible assets subject to amortization: Developed technology 6.3 $ 146,855 $ ( 107,463 ) $ 39,392 $ 146,855 $ ( 94,193 ) $ 52,662 Customer relationships 4.3 12,000 ( 11,835 ) 165 12,000 ( 10,363 ) 1,637 Trade names 5.0 2,619 ( 2,619 ) — 2,619 ( 2,559 ) 60 Total acquired intangible assets 161,474 ( 121,917 ) 39,557 161,474 ( 107,115 ) 54,359 Internal-use software 3.0 79,812 ( 49,492 ) 30,320 68,878 ( 37,518 ) 31,360 Total intangible assets $ 241,286 $ ( 171,409 ) $ 69,877 $ 230,352 $ ( 144,633 ) $ 85,719 Intangible assets are expensed on a straight-line basis over the useful life of the asset. Amortization expense was $ 8.9 million and $ 8.5 million for the three months ended September 30, 2025 and 2024, respectively, and $ 26.8 million and $ 25.1 million for the nine months ended September 30, 2025 and 2024, respectively. Estimated future amortization expense of the acquired identifiable intangible assets and completed capitalized internal-use software costs as of September 30, 2025 was as follows (in thousands): 2025 (for the remaining three months) $ 8,641 2026 27,607 2027 15,217 2028 5,103 2029 3,243 2030 and thereafter 4,409 Total $ 64,220 The table above excludes the impact of $ 5.7 million of capitalized internal-use software costs for projects that have not been completed as of September 30, 2025, and therefore, all the costs associated with these projects have not been incurred. 13 Table of Contents Note 8. 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 nineteen months or less, and as of September 30, 2025 and December 31, 2024, outstanding forward contracts had a total notional value of $ 84.6 million and $ 50.4 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, 2025 and 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 9. 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 On May 1, 2025, the Company paid $ 46.5 million to redeem the outstanding portion of the 2025 Notes, including the outstanding principal amount and accrued interest through the maturity date of 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 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. As of September 30, 2025, the 2027 Notes and the 2029 Notes were not convertible at the option of the holders. The holders may convert the 2027 Notes and the 2029 Notes at any time on or after 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. 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, 2024. Accounting for the Notes In accounting for the issuance of the Notes, the principal less debt issuance costs are recorded as debt on our unaudited 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. 14 Table of Contents The net carrying amount of the Notes as of September 30, 2025 and December 31, 2024 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, 2024 $ 45,992 $ ( 97 ) $ 45,895 $ 600,000 $ ( 5,564 ) $ 594,436 $ 300,000 $ ( 6,080 ) $ 293,920 Amortization of debt issuance costs — 97 97 — 1,880 1,880 — 1,043 1,043 Principal payment upon maturity ( 45,992 ) — ( 45,992 ) — — — — — — Balance at September 30, 2025 $ — $ — $ — $ 600,000 $ ( 3,684 ) $ 596,316 $ 300,000 $ ( 5,037 ) $ 294,963 Interest expense related to the Notes was as follows (in thousands): Three Months Ended September 30, 2025 2024 2025 Notes 2027 Notes 2029 Notes Total 2025 Notes 2027 Notes 2029 Notes Total Contractual interest expense $ — $ 375 $ 938 $ 1,313 $ 258 $ 375 $ 938 $ 1,571 Amortization of debt issuance costs — 639 363 1,002 79 634 455 1,168 Total interest expense $ — $ 1,014 $ 1,301 $ 2,315 $ 337 $ 1,009 $ 1,393 $ 2,739 Nine Months Ended September 30, 2025 2024 2025 Notes 2027 Notes 2029 Notes Total 2025 Notes 2027 Notes 2029 Notes Total Contractual interest expense $ 345 $ 1,125 $ 2,813 $ 4,283 $ 776 $ 1,125 $ 2,812 $ 4,713 Amortization of debt issuance costs 97 1,880 1,043 3,020 228 1,877 1,077 3,182 Total interest expense $ 442 $ 3,005 $ 3,856 $ 7,303 $ 1,004 $ 3,002 $ 3,889 $ 7,895 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 The 2025 Capped Calls expired in full on April 29, 2025. The Company did not elect to exercise any portion of the 2025 Capped Calls prior to expiration. 15 Table of Contents 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, 2024. 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 On June 25, 2025 (the "Closing Date"), the Company entered into a credit agreement (the "Credit Agreement"), by and among the Company, Rapid7 LLC, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, that provides for a $ 200.0 million revolving credit facility with a letter of credit sublimit of $ 20.0 million. The Credit Agreement allows for incremental facilities up to the greater of $ 141 million or 75 % of Consolidated EBITDA (as defined in the Credit Agreement). Additional incremental facilities may be incurred, subject to certain conditions. We incurred fees of $ 1.7 million in connection with entering into the Credit Agreement. The fees are recorded in other current and non-current assets on the consolidated balance sheet and are amortized on a straight-line basis over the contractual term of the arrangement. Under the terms of the Credit Agreement, we are required to pay a commitment fee on the unused portion of the credit facility. The commitment fee rate is determined by the total net leverage ratio of the Company and its subsidiaries, ranging from 0.20 % to 0.25 % per annum on the unused portion of the credit facility. The commitment fee is expensed as incurred and included within interest expense on the condensed consolidated statement of operations. The Credit Agreement matures on the fifth anniversary of the Closing Date or, if certain specified liquidity conditions are not satisfied, 91 days prior to the earliest maturity date of either the 2027 or the 2029 Notes. The Credit Agreement also contains certain affirmative and negative covenants, including a requirement to maintain a minimum interest coverage ratio for the duration of the Credit Agreement and a maximum net leverage ratio. The borrowings under the Credit Agreement bear interest at a variable annual rate based on either the Secured Overnight Financing Rate (SOFR) subject to a floor of zero or alternate base rate plus, in each case, a fixed margin, which varies depending on the Company’s net leverage ratio. As of September 30, 2025, we did not have any outstanding borrowings under the Credit Agreement. The Company recorded $ 0.1 million of amortization of debt issuance costs related to the Credit Agreement for the three and nine months ended September 30, 2025. As of September 30, 2025, we had a total of $ 6.0 million in letters of credit outstanding as collateral for certain office space leases which reduce the amount of borrowing availability under our Credit Agreement. Note 10. 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 unaudited condensed consolidated statements of operations as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Stock-based compensation expense: Cost of revenue $ 2,457 $ 3,141 $ 7,301 $ 9,082 Research and development 9,399 9,946 30,037 26,879 Sales and marketing 7,255 7,123 21,948 22,103 General and administrative 7,216 5,528 21,773 22,485 Total stock-based compensation expense $ 26,327 $ 25,738 $ 81,059 $ 80,549 The Company recognizes compensation cost of all awards on a straight-line basis over the applicable vesting period, which is generally three to four years . The Company's Compensation Committee adopted and approved the performance goals, targets and payout formulas for the 2025 and 2024 bonus plans, including permitting 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 16 Table of Contents months ended September 30, 2025, the Company recognized a reduction to stock-based compensation expense related to such bonus of less than $ 0.1 million resulting from a revision in estimated achievement of the pre-established corporate objectives. During the three months ended September 30, 2024, the Company recognized an expense of $ 0.4 million. The reversal of expense recognized during the three months ended September 30, 2025 reflects a revision in the estimated achievement of the pre-established corporate financial objectives. During the nine months ended September 30, 2025 and 2024, the Company recognized stock-based compensation expense in the amount of $ 0.7 million and $ 0.5 million, respectively, based on the probable expected performance against the pre-established corporate financial objectives as of September 30, 2025 and 2024. 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, 2025 was as follows: Restricted Stock Weighted Average Grant Date Fair Value Unvested balance as of December 31, 2024 2,853,235 $ 57.25 Granted 2,673,501 $ 32.30 Vested ( 1,354,588 ) $ 54.30 Forfeited ( 544,223 ) $ 51.11 Unvested balance as of September 30, 2025 3,627,925 $ 40.85 As of September 30, 2025, the unrecognized compensation expense related to our unvested RSUs and PSUs was $ 68.0 million. This unrecognized compensation expense will be recognized over an estimated weighted-average amortization period of 1.08 years. In January 2025, our Compensation Committee awarded 181,067 PSUs that required the achievement of net annualized recurring revenue (“Net ARR”) and Adjusted EBITDA targets for the 2025 fiscal-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 each such date. In the three and nine months ended September 30, 2025, we recorded $ 0.7 million and $ 1.8 million, respectively, of stock-based compensation expense related to these PSUs based on estimated achievement of the performance criteria. 17 Table of Contents (c) Stock Options The following tables summarizes information about stock option activity during the reporting periods: Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2024 582,638 $ 12.38 $ 16,225 Granted — — Exercised ( 157,317 ) $ 10.10 $ 4,541 Forfeited/cancelled ( 200 ) $ 10.88 $ — Outstanding as of September 30, 2025 425,121 $ 13.23 0.8 $ 2,371 Vested and exercisable as of September 30, 2025 425,121 $ 13.23 0.8 $ 2,371 (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 shares 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 14, 2025, we issued 186,793 sha res of common stock to employees, with a purchase price of $ 23.79 per share, for aggregate proceeds of $ 4.4 million. On September 15, 2025, we issued 198,074 shares of common stock to employees with a purchase price of $ 16.52 per share, for aggregate proceeds of $ 3.3 million. Note 11. Income Taxes We provide for income taxes during interim periods based on our estimate of the effective tax rate for the year. Our effective tax rates for the three and nine months ended September 30, 2025 and 2024 are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Effective Tax Rate ( 5.3 ) % 16.1 % 17.2 % 34.7 % The primary reconciling items between the Federal statutory tax rate of 21% and our overall effective rate for the three and nine months ended September 30, 2025 were due to foreign taxes on our international operations, state income taxes, and the impact of valuation allowance on deferred tax assets. The primary reconciling items between the Federal statutory tax rate of 21% and our overall effective rate for the three and nine months ended September 30, 2025 were due to foreign taxes on our international operations, state income taxes, the impact of valuation allowance on deferred tax assets, and certain discrete items. On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act ("OBBBA"). The OBBBA changed the current tax law related to both corporate income taxes and deferred tax assets and liabilities, which the Company currently accounts for under ASC 740, Income taxes ("ASC 740") . The income tax effects of a change in tax law on current taxes related to current year ordinary income and changes to deferred taxes arising subsequent to the date of enactment are included in the annual effective tax rate, beginning in the period of enactment. The Company concluded the OBBBA did not have a material impact on the Company's provision for income tax. As a result of the application of OBBBA, the Company recorded a benefit to the tax provision for the three months ended September 30, 2025. 18 Table of Contents Note 12. Net Income per Share The following table summarizes the computation of basic and diluted net income per share of our common stock for the three and nine months ended September 30, 2025 and 2024 (in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Numerator: Net income attributable to common stockholders, basic and diluted $ 9,809 $ 15,410 $ 20,252 $ 23,354 Denominator: Weighted-average common shares outstanding, basic 64,967,114 62,898,078 64,404,649 62,389,482 Weighted-average effect of dilutive shares: Dilutive effect of employee equity incentive plans 214,827 455,396 286,430 652,017 Dilutive effect of convertible senior notes — 11,183,611 — 11,183,611 Weighted-average common shares outstanding, diluted 65,181,941 74,537,085 64,691,079 74,225,110 Net income per share attributable to common stockholders, basic $ 0.15 $ 0.24 $ 0.31 $ 0.37 Net income per share attributable to common stockholders, diluted $ 0.15 $ 0.21 $ 0.31 $ 0.31 We intend to settle any conversion of our 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 per share is considered using the if-converted method. For the three and nine months ended September 30, 2025, the shares underlying the Notes were not considered in the calculation of diluted net income per share as the effect would have been anti-dilutive. 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, 2025, the 2027 Notes and the 2029 Notes were not convertible at the option of the holder. As of September 30, 2024, 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: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Options to purchase common stock 5,130 584,078 991 584,078 Unvested restricted stock units 3,341,018 3,105,684 2,936,257 3,105,684 Common shares issued in conjunction with acquisitions 36,702 36,923 46,236 36,923 Shares to be issued under ESPP 75,326 18,332 75,326 18,332 Convertible senior notes 10,429,891 — 10,763,957 — Total 13,888,067 3,745,017 13,822,767 3,745,017 19 Table of Contents Note 13. Commitments and Contingencies (a) Purchase Obligations In January 2025, we amended our contract with a cloud services provider which increased our total purchase obligation to $ 660 million, including a minimum purchase commitment of $ 125.0 million in 2025, 2026, 2027, 2028 and 2029, and an additional $ 35.0 million obligation over the five-year period. (b) Warranty We provide limited product warranties. Historically, any payments made under these provisions have been immaterial. (c) 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. (d) 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 $ 97 million, based upon current exchange rates between the Israeli New Shekel and the US Dollar) 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 unaudited condensed consolidated financial statements as of and for the three and nine months ended September 30, 2025. 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. Note 14. Segment Information and Information about Geographic Areas We operate in a single reportable operating segment, providing product subscriptions and professional services to our customers. The operating segment’s accounting policies are consistent with those described in Note 1, Summary of Significant Accounting Policies . Our chief operating decision maker (“CODM”) is our Chief Executive Officer. One of the measures of profit or loss that is used by our CODM to assess performance and allocate resources is consolidated net income, as reported in the condensed consolidated statements of operations. Consolidated net income is used by our CODM in monitoring actual versus budgeted results as well as in benchmarking against our competitors, which are used in assessing performance of the segment. 20 Table of Contents The following table includes segment revenue, segment profit or loss, significant segment expenses and other segment expenses for the three and nine months ended September 30, 2025 and 2024 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Total revenue $ 217,960 $ 214,654 $ 642,406 $ 627,746 Adjusted total cost of revenue 1 58,103 55,606 166,952 163,322 Adjusted research and development 1 37,517 35,030 111,992 99,913 Adjusted sales and marketing 1 71,873 67,046 214,523 201,983 Adjusted general and administrative 1 13,563 13,020 43,782 39,305 Other segment expense, net 2 27,095 28,542 84,905 99,869 Net income $ 9,809 $ 15,410 $ 20,252 $ 23,354 1 Adjusted total cost of revenue excludes the impact of stock-based compensation expense and amortization of acquired intangible assets. Adjusted research and development excludes the impact of stock-based compensation expense. Adjusted sales and marketing excludes the impact of stock-based compensation and amortization of acquired intangible assets. Adjusted general and administrative excludes the impact of stock-based compensation, amortization of acquired intangible assets and acquisition-related expenses. 2 Other segment expenses include stock-based compensation expense, amortization of acquired intangible assets, acquisition-related expenses, restructuring expense, interest income, interest expense, other income (expense) and (benefit) provision for income taxes. See the unaudited condensed consolidated financial statements for other financial information regarding our operating segment. Property and equipment, net by geographic area was as follows (in thousands): As of September 30, 2025 As of December 31, 2024 United States $ 19,324 $ 22,613 Rest of World 12,642 9,632 Total $ 31,966 $ 32,245 Note 15. Immaterial Correction of an Error During the fourth quarter of 2024, we identified an immaterial error related to stock-based compensation expense associated with certain RSUs and PSUs granted during fiscal years 2023 and 2024 attributable to an improper valuation of the underlying awards, resulting in an understatement of stock-based compensation expense in 2023 and 2024. In accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, the Company evaluated the errors and determined that the related impact was not material to results of operations or financial position for any historical annual or interim period. As a result, we have corrected the errors by adjusting prior period financial statements as of and for the three and nine months ended September 30, 2024. Refer to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 for detailed tables showing the effect of the immaterial error corrections to certain line items of our unaudited condensed consolidated statements of operations and unaudited condensed consolidated statements of cash flows for the interim period ended September 30, 2024. 21 Table of Contents