Why Rapid7 (RPD) Is Down 23.3% After Cautious Guidance and CFO Appointment Despite Strong Q3

Rapid7 recently reported its third quarter 2025 earnings, highlighting revenue of US$217.96 million and new AI-driven product capabilities, while also announcing Rafe Brown as the incoming Chief Financial Officer effective in December. Despite exceeding revenue expectations and unveiling innovations, including an expanded Microsoft partnership, analyst sentiment has turned more cautious due to softer future guidance and increased pressure from industry competition. With Rapid7's leadership transition and advancement in AI-enhanced offerings, we'll examine how these developments reshape its investment narrative going forward.

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Rapid7 Investment Narrative Recap

To be a Rapid7 shareholder, you need to believe that the company’s investments in AI-driven security platforms and enterprise partnerships will outpace mounting competition and industry consolidation pressures. The latest earnings report slightly beat revenue expectations and showcased product innovation, but its softer near-term guidance and share price decline suggest the most important short-term catalyst, profitable execution of AI-enhanced solutions, remains challenged by ongoing execution risks and heightened competitive threats, making the impact of these results material for risk assessment.

Among recent announcements, Rapid7’s expanded partnership with Microsoft stands out for its direct relevance to product differentiation and market expansion. This integration aims to deliver comprehensive, AI-powered threat detection for Microsoft environments, potentially strengthening Rapid7’s enterprise value proposition at a time when larger competitors threaten its market share and pricing power.

Yet, in contrast, investors should also be aware of the risk posed by industry consolidation that increasingly favors larger, more comprehensive vendors…

Read the full narrative on Rapid7 (it's free!)

Rapid7's outlook anticipates $941.1 million in revenue and $65.7 million in earnings by 2028. This scenario relies on 3.2% annual revenue growth and a $37.7 million increase in earnings from the current $28.0 million.

Uncover how Rapid7's forecasts yield a $21.81 fair value, a 54% upside to its current price.

Exploring Other PerspectivesRPD Community Fair Values as at Nov 2025

Four members of the Simply Wall St Community place Rapid7’s fair value estimates between US$15.25 and US$26.99 per share. As market participants weigh funnel execution and margin pressures after recent guidance, your outlook may differ, compare several opinions for a fuller picture.

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Explore 4 other fair value estimates on Rapid7 - why the stock might be worth as much as 90% more than the current price!

Build Your Own Rapid7 Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

A great starting point for your Rapid7 research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision. Our free Rapid7 research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Rapid7's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include RPD.

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