Rapid7 (RPD) Stock: Why It Rose 19% After Earnings and What's Next

Quick answer

Rapid7 traded at $17.90 at 4:25pm ET after hours on Nov 4, 2026, up 19.0% from a $15.04 close, after its third-quarter profit came in about a third above its own guide. Non-GAAP operating income was $46.2 million against guidance of $34 million to $36 million, and non-GAAP earnings of $0.60 a share beat the consensus of about $0.46. Revenue of $212.4 million topped the roughly $209.0 million expected, and annualized recurring revenue (ARR) of $819.7 million beat the company's guide of about $812 million, although both still fell from a year earlier. Rapid7 raised its full-year earnings guide to $1.94 to $1.96 a share, from $1.78 to $1.83. There was no news of a sale, a strategic review or another leadership change; this was the second quarter under chief executive Wael Mohamed, who took over on June 1.

Our view: Bullish through February 10, 2027, around when Rapid7 reported fourth-quarter results this year; the new date is not set. The case for the stock: profit beat the guide by about $11 million at the midpoint and the full-year earnings guide rose by about 8%; ARR beat the company's own guide; and at $17.90 the stock trades at about 9 times the new 2026 earnings guide, with free cash flow of about $130 million a year against a market value near $1.2 billion. The case against: ARR and revenue are still shrinking, and the fourth-quarter guide calls for ARR to fall again to about $812 million; $600 million of convertible notes come due on March 15, 2027, which would use most of the $731.6 million of cash; and the stock had already tripled from its April low of $4.97 before this report. We think the case for carries more weight. The fourth-quarter guide is in line with what analysts expected, so the raise is the third-quarter beat carried through, not a hope, and the company guided third-quarter ARR below what it then delivered. We would move off Bullish if the stock closes back below $15.04, if fourth-quarter ARR comes in below about $812 million, or if Rapid7 handles the 2027 notes in a way that issues a large number of new shares. This is a view on direction over that window, not a recommendation to trade the stock.

Rapid7 daily closing price from Sep 21 to Nov 4, 2026, with the Oct 26 jump, the Nov 3 close and the Nov 4 after-hours price marked

Key takeaways

Rapid7 traded at $17.90 at 4:25pm ET after hours on Nov 4, 2026, up 19.0% from a $15.04 close, after third-quarter non-GAAP operating income of $46.2 million came in well above its $34 million to $36 million guide.
Non-GAAP earnings were $0.60 a share against about $0.46 expected, and revenue of $212.4 million topped the roughly $209.0 million consensus, though it still fell 2.5% from a year earlier.
Annualized recurring revenue fell 2.2% to $819.7 million, but that beat the company's own guide of about $812 million; it guided fourth-quarter ARR back to about $812 million.
The full-year guide rose to non-GAAP earnings of $1.94 to $1.96 a share, from $1.78 to $1.83, while free cash flow stays at about $130 million and $600 million of convertible notes come due on March 15, 2027.
Our view is Bullish through February 10, 2027: profit is rising faster than analysts expected under a new chief executive, and the stock trades at about 9 times the new 2026 earnings guide.

Table of contents

Nov 4, 2026: profit runs ahead of the plan
The numbers
The bull case
The risks
What comes next

Nov 4, 2026: profit runs ahead of the plan

Rapid7 closed Nov 3 at $14.84. Premarket trading was thin, between $14.80 and $15.15. The stock opened at $14.65, made its low of $14.58 at 9:33am and its high of $15.83 around 10:17am, then closed at $15.04, up 1.3%, on about 1.8 million shares. That matched the rest of the group: Tenable rose 0.7%, Qualys 0.2%, SentinelOne 1.6% and the First Trust cybersecurity fund CIBR 0.1%, while CrowdStrike fell 1.5%. At the close, RSI(14) stood at 54, the shares sat 15.1% above their 50-day average and 58.5% above their 200-day average, volume was 0.9 times its 20-day average, and the stock was 19.0% below its 52-week high of $18.56.

The release came out at 4:05pm, ahead of a 4:30pm call. Within minutes the stock traded above $17, and at 4:25pm it was $17.90, with an after-hours range so far of $15.04 to $18.14. More of today's biggest stock moves are on our movers page.

What moved the stock:

Profit beat the guide by a wide margin. Non-GAAP operating income of $46.2 million compares with $36.9 million a year earlier and a guide of $34 million to $36 million. The non-GAAP operating margin rose to about 21.8% from about 16.9%, as the restructuring that began in the second quarter, which affected about 12% of staff, came through in costs.
Earnings and the full-year guide went up. Non-GAAP earnings were $0.60 a share against $0.57 a year earlier and about $0.46 expected. The full-year guide now calls for non-GAAP operating income of $140 million to $142 million, up from $129 million to $133 million, and earnings of $1.94 to $1.96 a share, against a consensus of about $1.80 before the report.
ARR held up better than promised. ARR fell 2.2% to $819.7 million, down from $824.0 million in the second quarter, but ahead of the roughly $812 million the company had guided in August.
The tone stayed careful. Mohamed said the company is "operating with greater discipline," but added, "We are not declaring victory." He called this "a multi-quarter journey."

Bar chart of Rapid7 non-GAAP operating income: Q3 2025 actual $36.9 million, Q3 2026 guidance midpoint $35.0 million, Q3 2026 actual $46.2 million, Q4 2026 guidance midpoint $41.0 million

The numbers

Measure	Q3 2026	Q3 2025	Change
Revenue	$212.4 million	$218.0 million	-2.5%
ARR	$819.7 million	about $838 million	-2.2%
Non-GAAP operating income	$46.2 million	$36.9 million	+25%
Non-GAAP EPS	$0.60	$0.57	+5%
Free cash flow	$26.5 million	$30.1 million	-12%

Product subscription revenue fell 1.9% to $206.1 million. GAAP net income of $3.5 million, or $0.05 a share, included $10.0 million of restructuring charges and a $5.5 million write-down of a strategic investment. Operating cash flow was $30.1 million. Rapid7 serves about 11,800 customers. The fourth-quarter guide of $0.53 to $0.55 a share sits around the $0.54 that the old full-year consensus implied, and fourth-quarter revenue of $208 million to $210 million is close to the roughly $209 million implied, so the raise to the year comes from the third quarter. Our guide to how to read an earnings release covers how to separate a beat from a change in the outlook, and our page on guidance changes explains why the raise matters more than the quarter.

The bull case

This is the third report in a row where Rapid7's earnings have topped estimates. First-quarter earnings were $0.36 a share against about $0.30 expected. In August, second-quarter earnings of $0.44 a share beat estimates of $0.35, StockStory reported, and the stock closed up 15.2% the next day at $13.38. The new team has narrowed the business to detection and response and exposure management, cut costs, and kept ARR above its own guide. Earnings of $1.95 a share at the midpoint of the new guide put the stock at about 9 times this year's earnings even after the jump. Before the report the forward P/E was 8.3, and about 11.8% of the float was sold short, so part of the move can come from short sellers covering; our explainer on short interest and squeezes covers how that works.

Pay is tied to the stock. Mohamed's performance award covers 2,125,000 shares that vest at price hurdles from $15.00 to $30.00 or higher, according to the June 1 filing. JANA Partners, the activist investor, also has a board seat: in March, Rapid7 agreed to nominate JANA's Kevin Galligan, under an agreement that runs until January 8, 2027 at the latest.

The risks

The top line is still falling. ARR fell 2.0% from a year earlier in the second quarter and 2.2% in the third, and the fourth-quarter guide calls for another drop to about $812 million, down 3%. Profit gains from cost cuts can run out if sales do not turn. The stock also trades above every analyst target: the consensus target is $11.65 and the highest is $15, and JPMorgan cut the stock to underweight on Sept 15.

The balance sheet needs work. The $600 million of 0.25% convertible notes due March 15, 2027 convert at $103.38 a share, so holders will want cash. Paying them from the $731.6 million on hand would leave about $130 million before new cash flow, with $300 million more due in 2029. Our explainer on the debt maturity wall covers how a refinancing like this can move a stock. The sector also swings on AI news: Rapid7 fell 6.7% on April 9, the day it set its 52-week low, after Anthropic's Claude Mythos model raised fears for security software, and rose 5% on Oct 21 as those fears eased, StockStory reported. On Oct 26 it jumped 20.3% to $17.93 without a company announcement, then gave most of that back by Nov 3.

What comes next

The fourth-quarter report and the first 2027 outlook are due around February 10, 2027. Before then, watch for analyst target changes after the call, how Rapid7 plans to handle the March 2027 notes, and any news when the JANA agreement ends in early January. Our page on post-earnings announcement drift covers why stocks that gap up on a clear change in profit often keep moving the same way. A close back below the $15.04 pre-report level would undercut the Bullish case.

Frequently asked questions

Why did Rapid7 stock rise on Nov 4, 2026?

Rapid7 traded at $17.90 at 4:25pm ET after hours, up 19.0% from its $15.04 close, after third-quarter results beat its own profit guide by about a third. Non-GAAP operating income was $46.2 million against guidance of $34 million to $36 million, non-GAAP earnings were $0.60 a share against about $0.46 expected, and the company raised its full-year earnings outlook.

What is Rapid7's guidance for the fourth quarter of 2026?

Rapid7 expects fourth-quarter ARR of about $812 million, down 3% from a year earlier, revenue of $208 million to $210 million, non-GAAP operating income of $40 million to $42 million and non-GAAP earnings of $0.53 to $0.55 a share. For the full year it now expects revenue of $841 million to $843 million and non-GAAP earnings of $1.94 to $1.96 a share.

Is Rapid7 still growing?

Not yet. Revenue fell 2.5% to $212.4 million and ARR fell 2.2% to $819.7 million from a year earlier. Chief executive Wael Mohamed said one quarter of stability is only a start and that the company is not declaring victory. The gains are in profit, after a restructuring that affected about 12% of staff.

Can Rapid7 repay its 2027 convertible notes?

Rapid7 had $731.6 million of cash, cash equivalents and government securities on Sept 30, 2026, against $600 million of 0.25% convertible notes due March 15, 2027. The conversion price is $103.38, far above the stock, so the notes are likely to be settled in cash or refinanced. A further $300 million of notes is due in 2029.

What is Dombey's view on Rapid7 stock?

Bullish through February 10, 2027, around when Rapid7 reported its last fourth-quarter results; the new date is not set. This is a view on direction over that window, not a recommendation to trade the stock.

What would change the view on Rapid7?

We would move off Bullish if the stock closes back below $15.04, its close before the report, if fourth-quarter ARR comes in below the roughly $812 million guide, or if the company handles the March 2027 notes in a way that issues a large number of new shares.

Sources

Article details

By James Whitfield, Head of Equity Research, Dombey Capital

Published November 4, 2026 · 6 min read · Event-Driven Investing