Key Highlights

  • Rapid7 (NASDAQ:RPD) was quoted at USD 16.80 in premarket trading on November 5, 2026, up 11.7% on the premarket quote.
  • Third quarter Revenue was USD 212.4 million, down 2.5% year on year, while annual Recurring Revenue was USD 819.7 million, down 2.2%.
  • Non-GAAP diluted EPS was USD 0.60 and GAAP Net Income was USD 3.5 million, or USD 0.05 per diluted share.
  • Cash, cash equivalents and government securities stood at USD 731.6 million on September 30, 2026.

Third Quarter Results Drive the Move

Rapid7 (NASDAQ:RPD) reported third quarter 2026 results on November 4, 2026, ahead of a 4:30 p.m. ET conference call. Total revenue was USD 212.4 million, down 2.5% year on year, and product subscriptions revenue was USD 206.1 million, down 1.9%. Annual recurring revenue, the annualized value of active subscription contracts, was USD 819.7 million, down 2.2%. Profit came in well ahead of the top line: GAAP income from operations was USD 9.0 million, non-GAAP income from operations was USD 46.2 million, and non-GAAP net income was USD 47.4 million, or USD 0.60 per diluted share. In premarket trading on November 5, 2026, per the premarket quote, the shares were at USD 16.80, up 11.7%.

Margins, Cash and Management Rationale

GAAP net income was USD 3.5 million, or USD 0.05 per diluted share, after USD 10.0 million of restructuring expense in the quarter. Operating Cash Flow was USD 30.1 million and free cash flow was USD 26.5 million, which is operating cash flow less Capital spending. For the nine months ended September 30, 2026, revenue was USD 633.0 million, operating cash flow was USD 106.9 million and free cash flow was USD 91.8 million. Chief Executive Officer Wael Mohamed said the company took decisive action last quarter to focus resources and energy on its core business, and added that it is not declaring victory but building proof and intends to earn confidence across quarters. Guidance for the fourth quarter calls for revenue of USD 208 million to USD 210 million, down 4% to 3%, and non-GAAP diluted EPS of USD 0.53 to USD 0.55. Full year 2026 guidance is revenue of USD 841 million to USD 843 million, down 2%, non-GAAP income from operations of USD 140 million to USD 142 million, and non-GAAP diluted EPS of USD 1.94 to USD 1.96. Annual recurring revenue is guided to about USD 812 million at year end, down 3%.

Risks and What to Watch Next

The central issue is growth. Revenue and recurring revenue are both shrinking, and the guidance implies a further decline in the fourth quarter, so the market is rewarding profitability and cash generation rather than expansion. A gap of USD 37.2 million between non-GAAP and GAAP operating income, simple arithmetic on two published numbers, shows how much adjusted profit depends on exclusions such as restructuring. The Balance Sheet gives room: USD 731.6 million of cash and government securities compares with a Market Value near USD 1.4 billion at the premarket quote, simple arithmetic on the quoted price and the 82.1 million non-GAAP diluted share count guided for the fourth quarter. Premarket moves can reverse once regular trading opens. Watch the next recurring revenue print and whether the guided decline narrows.

Where Things Stand

Rapid7 (NASDAQ:RPD) is up 11.7% premarket because the third quarter showed stronger profit and cash flow than a shrinking Top Line would suggest, with non-GAAP EPS of USD 0.60 and free cash flow of USD 26.5 million. The case remains unproven: revenue fell 2.5%, annual recurring revenue fell 2.2%, and fourth quarter guidance points to a further decline. Management itself said it is building proof across quarters. The next catalyst is the fourth quarter report, where recurring revenue and the USD 841 million to USD 843 million full year revenue range will be tested. A premarket quote is not a close and can fade.