Rapid7, Inc. 10-Q

Item 1. Financial Statements. RAPID7, INC. Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except share and per share data) March 31, 2026 December 31, 2025 Assets Current assets: Cash and cash equivalents $ 343,291 $ 246,664 Short-term investments 326,967 228,006 Accounts receivable, net of allowance for credit losses of $ 2,063 and $ 2,476 at March 31, 2026 and December 31, 2025, respectively 135,128 167,017 Deferred contract acquisition and fulfillment costs, current portion 47,342 48,370 Prepaid expenses and other current assets 47,617 47,230 Total current assets 900,345 737,287 Long-term investments — 184,119 Property and equipment, net 30,492 31,990 Operating lease right-of-use assets 44,250 45,485 Deferred contract acquisition and fulfillment costs, non-current portion 65,554 66,978 Goodwill 593,334 575,268 Intangible assets, net 67,567 65,105 Other assets 18,101 20,232 Total assets $ 1,719,643 $ 1,726,464 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 12,304 $ 11,041 Accrued expenses and other current liabilities 84,407 96,998 Convertible senior notes, current portion, net 597,574 — Operating lease liabilities, current portion 17,964 16,176 Deferred revenue, current portion 442,260 451,155 Total current liabilities 1,154,509 575,370 Convertible senior notes non-current portion, net 295,666 892,284 Operating lease liabilities, non-current portion 53,987 59,908 Deferred revenue, non-current portion 28,417 29,971 Other long-term liabilities 12,292 14,201 Total liabilities $ 1,544,871 $ 1,571,734 Stockholders’ equity: Preferred stock, $ 0.01 par value per share; 10,000,000 shares authorized at March 31, 2026 and December 31, 2025; 0 shares issued and outstanding at March 31, 2026 and December 31, 2025 $ — $ — Common stock, $ 0.01 par value per share; 100,000,000 shares authorized at March 31, 2026 and December 31, 2025; 67,342,257 and 66,417,175 shares issued at March 31, 2026 and December 31, 2025, respectively; 66,772,002 and 65,846,920 shares outstanding at March 31, 2026 and December 31, 2025, respectively 667 658 Treasury stock, at cost, 570,255 shares at March 31, 2026 and December 31, 2025 ( 4,765 ) ( 4,765 ) Additional paid-in-capital 1,142,304 1,120,963 Accumulated other comprehensive income (loss) 89 2,527 Accumulated deficit ( 963,523 ) ( 964,653 ) Total stockholders’ equity 174,772 154,730 Total liabilities and stockholders’ equity $ 1,719,643 $ 1,726,464 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 March 31, 2026 2025 Revenue: Product subscriptions $ 204,049 $ 203,935 Professional services 5,642 6,318 Total revenue 209,691 210,253 Cost of revenue: Product subscriptions 59,154 54,368 Professional services 5,595 5,112 Total cost of revenue 64,749 59,480 Total gross profit 144,942 150,773 Operating expenses: Research and development 48,354 47,888 Sales and marketing 78,934 79,400 General and administrative 18,212 23,586 Total operating expenses 145,500 150,874 Loss from operations ( 558 ) ( 101 ) Other income (expense), net: Interest income 5,612 5,758 Interest expense ( 2,498 ) ( 2,654 ) Other (expense) income, net ( 726 ) 1,802 Income before income taxes 1,830 4,805 Provision for income taxes 700 2,700 Net income $ 1,130 $ 2,105 Net income per share, basic $ 0.02 $ 0.03 Net income per share, diluted $ 0.02 $ 0.03 Weighted average common shares outstanding, basic 66,174,341 63,835,945 Weighted average common shares outstanding, diluted 66,904,992 64,224,415 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 (Loss) Income (Unaudited) (in thousands) Three Months Ended March 31, 2026 2025 Net income $ 1,130 $ 2,105 Other comprehensive (loss) income: Change in fair value of cash flow hedges ( 2,617 ) 1,815 Adjustment for net losses (gains) realized on cash flow hedges and included in net income, net of taxes 927 ( 325 ) Total change in unrealized (losses) gains on cash flow hedges ( 1,690 ) 1,490 Change in unrealized (losses) gains on investments ( 748 ) 134 Total other comprehensive (loss) income ( 2,438 ) 1,624 Comprehensive (loss) income $ ( 1,308 ) $ 3,729 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 RAPID7, INC. Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) Three Months Ended March 31, 2026 and 2025 (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, 2025 65,847 $ 658 571 $ ( 4,765 ) $ 1,120,963 $ 2,527 $ ( 964,653 ) $ 154,730 Stock-based compensation expense — — — — 18,717 — — 18,717 Issuance of common stock under employee stock purchase plan 498 5 — — 2,884 — — 2,889 Vesting of restricted stock units 462 5 — — ( 5 ) — — — Shares withheld for employee taxes ( 35 ) ( 1 ) — — ( 255 ) — — ( 256 ) Other comprehensive loss — — — — — ( 2,438 ) — ( 2,438 ) Net income — — — — — — 1,130 1,130 Balance, March 31, 2026 66,772 $ 667 571 $ ( 4,765 ) $ 1,142,304 $ 89 $ ( 963,523 ) $ 174,772 Common stock Treasury stock Additional paid-in-capital Accumulated other comprehensive loss Accumulated deficit Total stockholders’ deficit 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 — — — — 25,773 — — 25,773 Issuance of common stock under employee stock purchase plan 187 2 — — 4,444 — — 4,446 Vesting of restricted stock units 356 4 — — ( 4 ) — — — Shares withheld for employee taxes ( 37 ) — — — ( 1,303 ) — — ( 1,303 ) 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 Other comprehensive gain — — — — — 1,624 — 1,624 Net income — — — — — — 2,105 2,105 Balance, March 31, 2025 64,182 $ 642 571 $ ( 4,765 ) $ 1,042,355 $ 419 $ ( 985,929 ) $ 52,722 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 RAPID7, INC. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Three Months Ended March 31, 2026 2025 Cash flows from operating activities: Net income $ 1,130 $ 2,105 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,210 11,665 Amortization of debt issuance costs 1,045 1,019 Stock-based compensation expense 19,890 27,151 Deferred income taxes ( 1,220 ) — Other 1,489 ( 1,153 ) Changes in assets and liabilities: Accounts receivable 31,405 27,668 Deferred contract acquisition and fulfillment costs 2,453 5,295 Prepaid expenses and other assets 1,632 ( 1,995 ) Accounts payable 2,342 ( 6,555 ) Accrued expenses ( 14,753 ) ( 20,325 ) Deferred revenue ( 11,114 ) ( 12,874 ) Other liabilities ( 5,692 ) ( 2,244 ) Net cash provided by operating activities $ 39,817 $ 29,757 Cash flows from investing activities: Business acquisitions, net of cash acquired ( 23,345 ) — Purchases of property and equipment ( 2,081 ) ( 1,361 ) Capitalization of internal-use software ( 4,319 ) ( 3,719 ) Purchases of investments — ( 144,461 ) Sales and maturities of investments 85,000 69,000 Other investing activities — 1,328 Net cash provided by (used in) investing activities $ 55,255 $ ( 79,213 ) Cash flows from financing activities: Taxes paid related to net share settlement of equity awards ( 255 ) ( 1,303 ) Proceeds from employee stock purchase plan 2,889 4,446 Proceeds from stock option exercises — 1,589 Net cash provided by financing activities $ 2,634 $ 4,732 Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 1,079 ) 1,334 Net increase (decrease) in cash, cash equivalents and restricted cash $ 96,627 $ ( 43,390 ) Cash, cash equivalents and restricted cash, beginning of period 246,664 342,101 Cash, cash equivalents and restricted cash, end of period $ 343,291 $ 298,711 Supplemental cash flow information: Cash paid for interest on convertible senior notes 2,625 1,571 Cash paid for income taxes, net of payments 782 992 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents 343,291 291,462 Restricted cash included in prepaid expenses and other current assets — 7,249 Total cash, cash equivalents and restricted cash $ 343,291 $ 298,711 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 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”) specialize in AI-powered managed cybersecurity operations, trusted to advance organizations’ cyber resilience. Open and extensible, the Rapid7 Command Platform integrates security data, enriching it with AI, threat intelligence, and 25 years of expertise and innovation to reduce risk and disrupt attackers. With deep expertise in preemptive managed detection and response (MDR), Rapid7 unifies exposure and detection to transform the cybersecurity operations of more than 11,500 customers worldwide. 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, 2025 filed with the SEC on February, 19, 2026. The unaudited 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 months ended March 31, 2026 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 condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the condensed 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 Stock-Based Compensation Stock-based compensation expense related to PSU awards with a market condition are measured at fair value using a Monte Carlo simulation model and the expense related to these awards is recognized on a straight-line basis, over the requisite service period of the awards, which is generally the vesting term. 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, 2025. There have been no other changes to the significant accounting policies during the three months ended March 31, 2026 . 6 Recent Accounting Pronouncements Accounting Pronouncements Recently Adopted Effective January 1, 2026, the Company adopted ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets ("ASU 2025-05"). This guidance is designed to reduce the cost and complexity of the pre-existing application of the current expected credit loss (Topic 326). It does this by introducing a practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of current accounts receivable; and a separate accounting policy election to consider collection activity after the balance sheet date when estimating expected credit losses. We adopted the standard prospectively and elected the practical expedient but did not adopt the accounting policy election. The adoption of ASU 2025-05 did not have a material impact on the Company’s unaudited condensed consolidated financial statements. Accounting Pronouncements Not Yet Effective In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”). Entities are required to disaggregate any relevant expense caption presented on the face of the income statement within continuing operations into the following required natural expense categories, as applicable: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities or other depletion expenses. Such disclosures must be made on an annual and interim basis in a tabular format in the footnotes to the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2027. Early adoption is permitted. We do not plan to early adopt this standard and are currently evaluating the effect of adopting this standard. In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) : Clarifying the Effective Date (“ASU 2025-01”), which clarifies that all public business entities initially adopt ASU 2024-03 in the first annual period beginning after December 15, 2026, with interim adoption in annual periods beginning after December 15, 2027. We are currently evaluating the effect of adopting this standard on our disclosures. In November 2024, the FASB issued ASU 2024-04, Induced Conversions of Convertible Debt Instruments (“ASU 2024-04”). This new guidance is intended to improve the relevance and consistency in application of the induced conversion guidance in Subtopic 470-20 for (a) convertible debt instruments with cash conversion features and (b) debt instruments that are not currently convertible. ASU 2024-04 is effective for fiscal years beginning after December 15, 2026. Early adoption is permitted. We do not plan to early adopt this standard. We are currently evaluating the effect of adopting this standard on our disclosures. In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) : Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). The ASU modernizes the internal-use software guidance, including removing development “stages,” introducing a “probable-to-complete” recognition threshold and considerations of significant development uncertainty, superseding and relocating website development cost guidance, and enhancing disclosures (including applying certain ASC 360 disclosure requirements to capitalized software costs). ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual periods; early adoption is permitted with prospective, modified prospective, or retrospective transition alternatives. We do not plan to early adopt and are assessing the potential impact on capitalization timing, impairment assessments, useful lives, and expanded disclosures related to our internal-use software projects, including any cumulative-effect adjustments under the selected transition method. 7 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 consist of revenue from our cloud-based subscription, term software licenses, managed services offerings, 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 arrangements, 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 March 31, 2026 and 2025, we recognized revenue of $ 182.7 million and $ 185.6 million, respectively, that was included in the corresponding contract liability balance as of January 1 of each respective 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 would record a contract asset. As of March 31, 2026 and December 31, 2025, unbilled receivables of $ 3.4 million and $ 2.7 million, respectively, are included in prepaid expenses and other current assets in our unaudited condensed consolidated balance sheet. As of March 31, 2026 and December 31, 2025, we have no contract assets recorded on our unaudited condensed consolidated balance sheet. 8 Disaggregated Revenue by geographic location: Revenues by geographic area presented based upon the location of the customer are as follows (in thousands): Three Months Ended March 31, 2026 2025 United States $ 147,025 $ 150,550 Rest of world 62,666 59,703 Total $ 209,691 $ 210,253 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 March 31, 2026 (in thousands). The estimated revenues do not include unexercised contract renewals. Next Twelve Months Thereafter Product subscriptions $ 552,648 $ 274,418 Professional services 13,092 4,454 Total $ 565,740 $ 278,872 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 three months ended March 31, 2026 and 2025 (in thousands): Three Months Ended March 31, 2026 2025 Beginning balance $ 115,348 $ 125,806 Capitalization of contract acquisition and fulfillment costs 11,419 9,273 Amortization of deferred contract acquisition and fulfillment costs ( 13,871 ) ( 14,569 ) Ending balance $ 112,896 $ 120,510 Note 3. Business Combinations Kenzo Security, Inc. On March 26, 2026, we acquired all of the equity interest of Kenzo Security, Inc. ("Kenzo"), a United States-based agentic AI security platform built to scale autonomous security investigations , for a purchase price with an aggregate fair value of $ 25.5 million. The purchase consideration consisted of $ 24.2 million in cash paid at closing and $ 1.3 million of deferred cash payments related to certain indemnities outlined in the purchase agreement. The acquisition further enhances our Command Platform, accelerating managed detection and response ("MDR") services from AI-assisted workflows to AI-driven, machine-speed security operations. In connection with the acquisition, we committed to issue an aggregate value of $ 25.3 million of our common stock to two key employees of Kenzo (the "Key Employee Consideration"), subject to continued employment. These shares will be issued in three equal annual installments over a 36 -month period, starting on the first anniversary of the closing date of the transaction. The Key Employee Consideration will be recognized as stock-based compensation expense over the required employment period. For the three months ended March 31, 2026, we recognized stock-based compensation expense related to the Key Employee Consideration of approximately $ 0.1 million. The number of shares to be issued at each issuance date will be determined by dividing the aggregate value by the 30-day average closing price per share of our common stock as of the issuance date. The Company's obligations with respect to the Key Employee Consideration will be presented as a liability on our unaudited condensed consolidated balance sheet during the vesting period. 9 The preliminary allocation of the purchase price is based on our initial estimates of the fair values of assets acquired and liabilities assumed and is subject to revision. The primary areas of the purchase price allocation that are not yet finalized relate to the fair values of the developed technology intangible asset and goodwill. These valuations are pending the completion of third-party appraisals. The following table summarizes the preliminary allocation of purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date (in thousands): Consideration: Cash $ 24,167 Deferred cash consideration 1,348 Fair value of total consideration transferred $ 25,515 Recognized amount of identifiable assets acquired and liabilities assumed: Cash and cash equivalents $ 821 Accounts receivable 134 Prepaid and other current assets 46 Property and equipment, net 10 Accrued expenses and other current liabilities ( 10 ) Deferred revenue ( 152 ) Other long-term liabilities ( 600 ) Intangible asset 7,200 Total identifiable net assets assumed $ 7,449 Goodwill 18,066 Total purchase price allocation $ 25,515 We identified developed technology as the sole acquired intangible asset. The estimated fair value of the developed technology intangible asset was $ 7.2 million with an estimated useful life of the developed technology is 6 years, which was based on a preliminary valuation using a probability weighted expected return model (“PWERM”). As part of the PWERM, we made certain assumptions regarding the present value of the after-tax cash flows attributed to the developed technology at discount rate which reflected any risks associated with the developed technology and our weighted average cost of capital. Any future adjustments made to the fair value of the developed technology, any assets acquired, or liabilities assumed will be adjusted in the period they are determined and recognized with a corresponding adjustment to goodwill. The excess of the purchase price over the tangible assets acquired, identifiable intangible asset acquired and assumed liabilities was recorded as goodwill. We believe that the amount of goodwill reflects the expected synergistic benefits of being able to leverage the integration of the technology acquired with our existing product offerings and being able to successfully market and sell these new features to our customer base. The goodwill was allocated to our one reporting unit. The acquired goodwill and intangible asset were not deductible for tax purposes. In the three months ended March 31, 2026, we recorded $ 0.5 million, of acquisition-related transaction costs related to the acquisition of Kenzo to general and administrative expense. Our revenue and net income attributable to the Kenzo business for the three months ended March 31, 2026 was not material. 10 Noetic Cyber, Inc. On July 3, 2024, we acquired Noetic Cyber, Inc, (“Noetic”) for an aggregate fair value of $ 51.2 million, which included a contingent consideration arrangement (the “Earnout Consideration”) of up to $ 20.0 million, measured annually over a three-year period (the "Earnout Period") based on the achievement of certain performance targets and continued employment requirements. If all performance targets are achieved, approximately $ 13.1 million of Earnout Consideration will be paid in cash, and the remaining $ 6.9 million will be settled in common stock, with the stock settled portion recognized as stock-based compensation expense over the required employment period. The cash-settled portion was included in purchase consideration at acquisition and is remeasured each reporting period, with changes recorded to general and administrative expense. On October 3, 2025, we distributed $ 6.0 million as Earnout Consideration related to the initial Earnout Period. Of this amount, $ 4.1 million was settled in cash, while the remaining $ 1.9 million was settled through the issuance of 94,229 common stock units. As of March 31, 2026 , the fair value of the contingent purchase c onsideration was $ 8.9 million which was recorded within accrued expenses and other current liabilities in our unaudited condensed consolidated balance sheet. For the three months ended March 31, 2026 , we recorded approximately $ 0.1 million of accretion expense related to the contingent purchase consideration to general and administrative expense. In the three months ended March 31, 2026 , we also recognized stock-based compensation expense related to these share-based awards in the amount of $ 1.0 million . Refer to our Annual Report on Form 10-K for the year ended December 31, 2025 for additional information regarding the Noetic business combination. Our revenue and net income attributable to the Noetic business for the three months ended March 31, 2026 was not material. Note 4. Investments Our investments, which are all classified as available-for-sale, consisted of the following (in thousands): As of March 31, 2026 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Description: U.S government agencies $ 327,013 $ 161 $ ( 207 ) $ 326,967 Total assets $ 327,013 $ 161 $ ( 207 ) $ 326,967 As of December 31, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Description: U.S government agencies $ 411,424 $ 701 $ — $ 412,125 Total assets $ 411,424 $ 701 $ — $ 412,125 As of March 31, 2026 and December 31, 2025, our available-for-sale investments had maturities ranging from one to eleven months and from one to fourteen months , respectively. On October 30, 2025, we entered into a $ 5.5 million investment in a privately-held cybersecurity company via a Simple Agreement for Future Equity (“SAFE”). The investment in the SAFE is accounted for at cost, subject to adjustments for impairment and observable changes in fair value, and is presented on the unaudited condensed consolidated balance sheets within the category of Other Assets. During the three months ended March 31, 2026, we did not identify any impairments or observable price changes that would require an adjustment to the carrying value. For all of our investments for which the amortized cost basis was greater than the fair value at March 31, 2026 and December 31, 2025, 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. 11 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. 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 March 31, 2026 Level 1 Level 2 Level 3 Total Description: Assets: U.S. government agencies $ 326,967 $ — $ — $ 326,967 Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets) — 626 — 626 Total assets $ 326,967 $ 626 $ — $ 327,593 Liabilities: Contingent consideration (other current liabilities) — — 8,947 8,947 Total liabilities $ — $ — $ 8,947 $ 8,947 As of December 31, 2025 Level 1 Level 2 Level 3 Total Description: Assets: U.S. government agencies $ 412,125 $ — $ — $ 412,125 Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets) — 1,868 — 1,868 Total assets $ 412,125 $ 1,868 $ — $ 413,993 Liabilities: Contingent consideration (other current liabilities) — — 8,864 8,864 Total liabilities $ — $ — $ 8,864 $ 8,864 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 March 31, 2026, 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 $ 563.4 million and $ 251.3 million, respectively, based upon quoted market prices. We consider the fair value of the Notes (as defined in Note 9, Debt ) to be a 12 Level 2 measurement due to limited trading activity of the Notes. As of March 31, 2026, the fair value of our contingent consideration, as further described in Note 3, Business Combinations, was $ 8.9 million and is classified as a Level 3 measurement based on inputs not observable in the market. Our SAFE investment, as described in Note 4 , Investments , is accounted for as an equity investment under the measurement alternative per ASC 321 as there was no readily determinable fair value. The SAFE had a carrying amount of $ 5.5 million as of March 31, 2026 . Note 6. Property and Equipment Property and equipment are recorded at cost and consist of the following (in thousands): As of March 31, 2026 As of December 31, 2025 Computer equipment and software $ 23,375 $ 23,728 Furniture and fixtures 11,942 11,893 Leasehold improvements 61,456 61,456 Total 96,773 97,077 Less accumulated depreciation ( 66,281 ) ( 65,087 ) Property and equipment, net $ 30,492 $ 31,990 We recorded depreciation expense of $ 2.4 million and $ 2.8 million for the three months ended March 31, 2026 and 2025, respectively. During the three months ended March 31, 2026, we wrote off $ 0.8 million of fully depreciated computer equipment and software, in accordance with our policy as described in Note 2, Summary of Significant Accounting Policies , included in our Annual Report on Form 10-K for the year ended December 31, 2025. Note 7. Goodwill and Intangibles Goodwill was $ 593.3 million as of March 31, 2026 and $ 575.3 million as of December 31, 2025. The following table displays the changes in the gross carrying amount of goodwill (in thousands): Carrying Amount Balance at December 31, 2025 $ 575,268 Kenzo acquisition 18,066 Balance at March 31, 2026 $ 593,334 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 March 31, 2026 As of December 31, 2025 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 $ 154,055 $ ( 116,309 ) $ 37,746 $ 146,855 $ ( 111,886 ) $ 34,969 Customer relationships 6.0 12,000 ( 11,976 ) 24 12,000 ( 11,906 ) 94 Trade names 0.0 2,619 ( 2,619 ) — 2,619 ( 2,619 ) — Total acquired intangible assets 168,674 ( 130,904 ) 37,770 161,474 ( 126,411 ) 35,063 Internal-use software 3.0 88,031 ( 58,234 ) 29,797 83,934 ( 53,892 ) 30,042 Total intangible assets $ 256,705 $ ( 189,138 ) $ 67,567 $ 245,408 $ ( 180,303 ) $ 65,105 Intangible assets are expensed on a straight-line basis over the useful life of the asset. Amortization expense was $ 8.8 million and $ 8.9 million for the three months ended March 31, 2026 and 2025, respectively. 13 Estimated future amortization expense of the acquired identifiable intangible assets and completed capitalized internal-use software costs as of March 31, 2026 was as follows (in thousands): 2026 (for the remaining nine months) $ 22,491 2027 19,345 2028 8,944 2029 4,587 2030 4,443 2031 and thereafter 2,653 Total $ 62,463 The table above excludes the impact of $ 5.1 million of capitalized internal-use software costs for projects that have not been completed as of March 31, 2026, and therefore, all the costs associated with these projects have not been incurred. 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 fifteen months or less, and as of March 31, 2026 and December 31, 2025, outstanding forward contracts had a total notional value of $ 55.7 million and $ 78.8 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 months ended March 31, 2026 and 2025, 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 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 $1000 principal Initial Conversion Price Number of shares (in millions) 2027 Notes March 15, 2027 0.25 % September 15, 2021 0.67 % March 15 and September 15 9.6734 103.38 5.8 2029 Notes March 15, 2029 1.25 % March 15, 2024 1.69 % March 15 and September 15 15.4213 64.85 4.6 The 2027 Notes and the 2029 Notes are senior unsecured obligations, do not contain any financial covenants and are governed by indentures between us, as issuer, and U.S. Bank Trust Company, 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 March 31, 2026, 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 14 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 10, Debt , to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. Accounting for the Notes In accounting for the issuance of the Notes, the principal less debt issuance costs are recorded as debt on our consolidated balance sheet. The debt issuance costs are amortized to interest expense using the effective interest method over the contractual term of the Notes. The net carrying amount of the Notes as of March 31, 2026 and December 31, 2025 was as follows (in thousands): 2027 Notes 2029 Notes Principal Unamortized debt issuance costs Total Principal Unamortized debt issuance costs Total Balance at December 31, 2025 $ 600,000 $ ( 3,044 ) $ 596,956 $ 300,000 $ ( 4,672 ) $ 295,328 Amortization of debt issuance costs — 619 619 — 338 338 Balance at March 31, 2026 $ 600,000 $ ( 2,425 ) $ 597,575 $ 300,000 $ ( 4,334 ) $ 295,666 Interest expense related to the Notes was as follows (in thousands): Three Months Ended March 31, 2026 2025 2027 Notes 2029 Notes Total 2025 Notes 2027 Notes 2029 Notes Total Contractual interest expense $ 375 $ 938 $ 1,313 $ 259 $ 375 $ 937 $ 1,571 Amortization of debt issuance costs 619 338 957 72 615 332 1,019 Total interest expense $ 994 $ 1,276 $ 2,270 $ 331 $ 990 $ 1,269 $ 2,590 Capped Calls We entered into privately negotiated capped call transactions with certain counterparties in connection with the issuance of the 2027 Notes (the "2027 Capped Calls") and the 2029 Notes (the “2029 Capped Calls” together with the 2027 Capped Calls, 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 2027 Notes Capped Calls Entered into in Connection with the Issuance of the 2029 Notes Initial strike price, subject to certain adjustments $ 103.38 $ 64.85 Cap price, subject to certain adjustments $ 159.04 $ 97.88 Total premium paid (in thousands) $ 76,020 $ 36,570 Expiration dates January 1, 2027 - March 11, 2027 February 13, 2029 - March 13, 2029 For additional details on the terms of our Capped Calls, see Note 10, Debt , to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. For accounting purposes, the 2027 Capped Calls and the 2029 Capped Calls are separate transactions, and not part of the terms of the 2027 Notes and the 2029 Notes. The 2027 Capped Calls and 2029 Capped Calls are recorded in stockholders' equity and are not accounted for as derivatives. 15 Credit Agreement On June 25, 2025 (the "Closing Date"), we entered into a credit agreement (the "Credit Agreement"), by and among us, 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), which we currently would be able to utilize, if needed. 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 our total net leverage ratio and that of our 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 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 our net leverage ratio. As of March 31, 2026, we did not have any outstanding borrowings under the Credit Agreement. We recorded less than $ 0.1 million of amortization of debt issuance costs related to the Credit Agreement for the three months ended March 31, 2026. As of March 31, 2026, we had a total of $ 5.6 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, purchase rights issued under our employee stock purchase plan, and earnout consideration and key employee consideration shares related to acquisitions was classified in the accompanying unaudited condensed consolidated statements of operations as follows (in thousands): Three Months Ended March 31, 2026 2025 Stock-based compensation expense: Cost of revenue $ 1,716 $ 2,264 Research and development 8,406 10,386 Sales and marketing 5,071 7,241 General and administrative 4,697 7,260 Total stock-based compensation expense $ 19,890 $ 27,151 We recognize stock-based compensation expense for all awards on a straight-line basis over the applicable vesting period, which is generally three to four years . Our Compensation Committee adopted and approved the performance goals, targets and payout formulas for our 2026 and 2025 bonus plans. In 2025, this approval included 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), which was subsequently eliminated by the Compensation Committee in the fourth quarter of 2025 and not offered in 2026. For the three months ended March 31, 2025, we recognized stock-based compensation expense related to such bonuses in the amount of $ 0.3 million, based on the probable expected performance against the pre-established corporate financial objectives as of March 31, 2025. 16 (b) Restricted Stock, Restricted Stock Units and Performance-Based Restricted Stock Units Equity-classified RSUs and PSUs RSUs and PSUs activity classified as equity during the three months ended March 31, 2026 was as follows: Shares Weighted Average Grant Date Fair Value Unvested balance as of December 31, 2025 3,970,517 $ 33.48 Granted 3,084,595 6.43 Vested ( 462,447 ) 50.47 Forfeited ( 478,009 ) 33.93 Unvested balance as of March 31, 2026 6,114,656 $ 18.51 As of March 31, 2026, the unrecognized compensation expense related to our unvested equity-classified RSUs and PSUs was $ 98.8 million, which will be recognized over an estimated weighted average amortization period of 2.29 years. In March 2026, our Compensation Committee awarded 467,945 RSUs and 1,051,538 PSUs as inducement grants concurrently with the acquisition of Kenzo. The PSUs require the achievement of certain milestones based on our attainment of year over year managed MDR and security information and event management ("SIEM") annualized recurring revenue goals. The PSUs have two measurement and vesting dates through March 31, 2029, subject to the award recipients' continuous service as of each such date. If achievement of the milestones are not met, no PSUs will be earned. In the three months ended March 31, 2026, we recorded less than $ 0.1 million of stock-based compensation expense related to these PSUs based on estimated achievement of the performance criteria. In February 2026, our Compensation Committee awarded 567,108 PSUs based on achievement of total new annualized recurring revenue ("New ARR") and adjusted EBITDA (pre-bonus) targets for fiscal year 2026, with each metric weighted 50 %. New ARR is defined as the annual value of new recurring revenue from new and existing customer contracts executed during fiscal year 2026. Adjusted EBITDA Pre-Bonus is a non-GAAP measure that we define as net income before interest income, interest expense, other income (expense), net, provision for income taxes, depreciation expense, amortization of intangible assets, stock-based compensation expense, acquisition-related expenses, litigation-related expenses, impairment of long-lived assets, restructuring expense, and corporate bonus expense. Payout ranges from 0 %- 150 % of targets, with no PSUs earned if minimum performance thresholds are not achieved. The performance period is one year , and any earned PSUs will vest in three equal annual installments, subject to the participants' continuous service. For the three months ended March 31, 2026, we recorded $ 0.2 million of stock-based compensation expense related to these PSUs based on estimated achievement of the performance criteria. 17 Liability-classified PSUs PSUs activity classified as liability during the three months ended March 31, 2026 was as follows: Shares Weighted Average Grant Date Fair Value Unvested balance as of December 31, 2025 — $ — Granted 2,188,750 2.00 Unvested balance as of March 31, 2026 2,188,750 $ 2.00 As of March 31, 2026, the unrecognized compensation expense related to our unvested liability-classified PSUs was $ 4.2 million, which will be recognized over an estimated weighted average amortization period of 3.0 years. In March 2026, the Company's Compensation Committee granted 2,188,750 PSUs to executive officers and other key employees under the 2015 Plan. These PSUs were granted under two separate plan designs with distinct payout targets, with 726,250 shares issued under Plan 1 and 1,462,500 issued under Plan 2. These PSUs contain market-based performance conditions tied to the achievement of specified stock price hurdles for our common stock over a three-year performance period ending March 31, 2029. The PSUs are structured to be settled in cash upon vesting, unless the Compensation Committee makes a one-time irrevocable election to settle the awards in shares of Rapid7 common stock in lieu of cash. Once an election to settle the PSUs in common stock is made, it cannot be revoked, and the award will be settled exclusively in shares. Absent such an election, the awards will be settled in cash based on the fair market value of our common stock on the settlement date. The number of shares that may ultimately vest is based on the specified price hurdles when our common stock closes at or above the specified price for 30 consecutive calendar days. The PSUs are also subject to continued employment through the end of the performance period, except in the case of certain qualifying terminations. The stock price thresholds and related payout percentages between the two plans are as follows: Price Hurdles Below $15.00 $15.00 $17.50 $20.00 $25.00 $30.00 or Higher Plan 1 — % 50 % 75 % 100 % 125 % 150 % Plan 2 — % — % — % 100 % 125 % 150 % Given these PSUs contain a market-based vesting condition, we estimate the fair value of the awards using a Monte Carlo simulation model, which is required because the stock price hurdles affect the number of shares that will ultimately vest. The simulation models tens of thousands of potential stock price paths for the Company to estimate the probability of achieving various stock price hurdle outcomes. The expense is recognized over the requisite service period based on the award's fair value remeasured at each reporting date using a Monte Carlo simulation model, with cumulative expense adjusted in the period of each remeasurement to reflect changes in fair value. The following table summarizes the assumptions used in the Monte Carlo simulation model to estimate the fair value of the liability-classified PSUs as of March 31, 2026: Grant Date Plan 1 Plan 2 Expected term (in years) 3 3 Expected volatility 50.1 % 50.1 % Risk-free interest rate 3.85 % 3.85 % Expected dividend yield — % — % Fair value per unit $ 2.37 $ 1.81 As the awards default to cash settlement, the awards are classified as liabilities until such time as the Compensation Committee makes an irrevocable election to issue shares. As of March 31, 2026, the Compensation Committee has not approved a settlement in shares; therefore, these PSUs remain classified as a liability. The liability associated with these awards is initially measured at the estimated fair value of the award that is ultimately expected to vest on the grant date and is subsequently 18 remeasured to fair value at each reporting date until the earlier of (i) settlement in cash or (ii) the election to settle the PSUs in shares. Changes in fair value are recognized as compensation expense (or a reduction thereof) in the period of change. The stock-based compensation expense associated with these awards will be recognized over the three-year performance period associated with the awards. (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, 2025 223,232 $ 13.38 $ 498 Forfeited/cancelled ( 2,000 ) 12.80 Outstanding as of March 31, 2026 221,232 13.39 0.73 — Vested and exercisable as of March 31, 2026 221,232 $ 13.39 0.73 $ — (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 13, 2026, we issued 498,051 shares of common stock to employees, with a purchase price of $ 5.80 per share, for aggregate proceeds of $ 2.9 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 months ended March 31, 2026 and 2025 are as follows: Three Months Ended March 31, 2026 2025 Effective Tax Rate 38.3 % 56.2 % The primary reconciling items between the Federal statutory tax rate of 21% and our overall effective rate for the three months ended March 31, 2026 were due to foreign taxes on our international operations, US federal and state income taxes, the impact of valuation allowance on deferred tax assets, and a discrete tax benefit related to our acquisition of Kenzo. The primary reconciling items between the Federal statutory tax rate of 21% and our overall effective rate for the three months ended March 31, 2025 were due to foreign taxes on our international operations, state income taxes, and the impact of valuation allowance on deferred tax assets. 19 Note 12. Net Income (Loss) per Share The following table summarizes the computation of basic and diluted net income per share of our common stock for the three months ended March 31, 2026 and 2025 (in thousands, except share and per share data): Three Months Ended March 31, 2026 2025 Numerator: Net income (loss) attributable to common stockholders, basic and diluted $ 1,130 $ 2,105 Denominator: Weighted average common shares outstanding, basic 66,174,341 63,835,945 Weighted average effect of dilutive shares: Dilutive effect of equity incentive plans 730,651 388,471 Weighted average common shares outstanding, diluted 66,904,992 64,224,415 Net income (loss) per share attributable to common stockholders, basic $ 0.02 $ 0.03 Net income (loss) per share attributable to common stockholders, diluted $ 0.02 $ 0.03 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 months ended March 31, 2026 and 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 2027 Notes and the 2029 Notes, we entered into the 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 March 31, 2026, the 2027 Notes and the 2029 Notes were not convertible at the option of the holder. As of March 31, 2025, the 2025 Notes were convertible at the option of the holder, however, 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 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 March 31, 2026 2025 Common shares issued in conjunction with acquisitions 2,474,514 309,561 Shares to be issued under ESPP 78,198 18,620 Convertible senior notes 10,429,891 11,183,611 Total 12,982,603 11,511,792 20 Note 13. Commitments and Contingencies (a) Purchase Obligations During the three months ended March 31, 2026 there have been no material changes outside the ordinary course of business to the Company’s contractual obligations and commitments from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025. (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 Rapid7. (e) Income Taxes From time to time, we may receive income tax assessments from taxing authorities asserting additional tax liabilities owed. 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 $ 102 million, based upon exchange rates as of March 31, 2026 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 for the three months ended March 31, 2026. 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 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, 2025. 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 unaudited 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. 21 The following table includes segment revenue, segment profit or loss, significant segment expenses and other segment expenses for the three months ended March 31, 2026 and 2025 (in thousands): Three Months Ended March 31, 2026 2025 Total revenue $ 209,691 $ 210,253 Adjusted total cost of revenue (1) 58,610 52,793 Adjusted research and development (1) 39,948 37,502 Adjusted sales and marketing (1) 73,792 71,507 Adjusted general and administrative (1) 12,909 16,098 Other segment expense, net (2) 23,302 30,248 Net income $ 1,130 $ 2,105 (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, discrete tax benefit, interest income, interest expense, other income (expense) and 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 March 31, 2026 As of December 31, 2025 United States $ 16,888 $ 18,243 Rest of World 13,604 13,747 Total $ 30,492 $ 31,990 22