Rapid7 Earnings: Firm Closes Out Fiscal 2023 With Keen Emphasis on Profitability

We maintain our $45 fair value estimate for no-moat Rapid7 after the firm reported fourth-quarter 2023 results above guidance and our expectations. In our view, the outlook provided for 2024 skews conservative on the top line. However, it implies attractive bottom-line expansion thanks to cost-structure improvements. While we see secular tailwinds in Rapid7’s favor, along with a more stable demand environment, we remain wary of the firm’s hypercompetitive market and exposure to macroeconomic swings. While shares traded down sharply afterhours, we continue to view the stock as slightly overvalued.