Rapid7, Inc. · NASDAQ:RPD
Rapid7 — Investor Day (December 2017)
86 slides from Rapid7's investor day presentation, Dec 12, 2017
Slide 1: Investor & Analyst Day
Exhibit 99.2 INVESTOR & ANALYST DAY December 12, 2017
Slide 2: Jeff Bray
JEFF BRAY Vice id Investor Relati RAPID
Slide 3: Disclaimers
DISCLAIMERS Thi i ial posit Rapid. Inc. (Rapid7," “we.” “us” or “our’). including our ted revenue (ARR). 606 199 for our future events. market si g compound “AGR), our anticipated bookings. our 3nd our objectives for i tation and ks, uncertainties, assumptions, performance. or ly impl y f ject t of
Slide 4: Today's Agenda
TODAY'S AGENDA = Strategy & Vision - Corey Thomas, President & Chief Executive Officer = Product & Market - Lee Weiner, Chief Product Officer = Customer Panel (will not be webcast) = Growth Engine - Andrew Burton, Chief Operating Officer = Financial Overview - Jeff Kalowski, Chief Financial Officer
Slide 5: Corey Thomas
COREY THOMAS & Chief ive Officer RAPID/D
Slide 6: The Path Ahead
THE PATH AHEAD CAPTURE EXTEND the SecOps Our Analytics and ARR Growth of Opportaniey Automation Over 30% Cloud DELIVER Growth and Leverage
Slide 7: Massive Untapped Cyber Security Opportunity
= — MASSIVE UNTAPPED ~ aoe CYBER SECURITY OPPORTUNITY Sa
Slide 8: Last Year's: Overinvestment in the Symptoms
LAST 10 YEARS: OVERINVESTMENT IN THE SYMPTOMS \ Market Mindshare Customer Investments
Slide 9: Changing Customer Behavior
CHANGING CUSTOMER BEHAVIOR BROAD IT INITIATIVES PLANNED FOR 2017 n , : IT Automation 35% 66 The technology categories that will see the | 7 Network technology upgrade 31% fastest spending growth over the 2015-2020 i . Compliance 31% forecast period are | Big data/business analytics | 30% device vuln
Slide 10: Understanding the Shift
UNDERSTANDING THE SHIFT EXPANDING SECURITY MANAGEMENT GAP Decades Backlog in Security Maintenance Growth in devices per user Expanding applications per user Low IT headcount budget growth Major cybersecurity skills gap Common Vulnerabi & Exposures (CVE’s) in National ulberabiieh Database 93,606 90,0
Slide 11: Next Year's: Major Investment in Security Management
NEXT 10 YEARS: MAJOR INVESTMENT IN SECURITY MANAGEMENT \ Market Mindshare Customer Investments Ce
Slide 12: Changes in Security Management
CHANGES IN SECURITY MANAGEMENT YESTERDAY'S IT ENVIRONMENT Ticketing Identity Patch & Config Vulnerability Assessment SIEM DIGITAL TRANSFORMATION Cloud DevOps Security SECOPS EMERGES FROM THE CONVERGENCE OF IT OPS, DEVOPS & SECURITY SecOps Service Management Federated Identity
Slide 13: Emergence of SecOps
EM ERGENCE OF. SECOPS | Visibility - Analytics Automation a
Slide 14: Our Mission
OUR MISSION Lead the emerging SecOps movement through our multi-product Analytics and Automation Cloud RAPIDP
Slide 15: Land with Differentiated Solutions
LAND WITH DIFFERENTIATED SOLUTIONS Position Disruptor Potential Average Subscription ARR Mid Market Sources of Growth | ‘°dacy Displacement Enterprise Expansion Leader Leader Application Vulnerability Security Management -$35k -S40K Mid Market Mid Market Legacy Displacement Legacy Displacement Manag
Slide 16: Powerful Analytics and Automation Cloud
POWERFUL ANALYTICS AND AUTOMATION CLOUD InsightVM InsightIDR InsightAppSec Komand | InsightOps CLOUD BASED SERVICES SHARED PLATFORM ‘SERVICES SEARCH ANALYZE VISUALIZE REPORT INTEGRATE SATA ANALYTICAL POOLS HIGH VOLUME STORAGE ‘Srocessine USER ATTRIBUTION DEVICE ATTRIBUTION DATA NORMALIZATION CONTEXT
Slide 17: Powerful Analytics and Automation Cloud
POWERFUL ANALYTICS AND AUTOMATION CLOUD Ease of Ease of Ease of Land Expand Adoption
Slide 18: Where is Rapid7 on the journey
Where is Rapid7 on the journey Scale Analytics GTM Enable Automation Validate Automation Opportunity Disrupt VM Enable Consolidated Analytics Validate Analytics Opportunity
Slide 19: Gaining Momentum
GAINING MOMENTUM +30% 119% +15% Recurring Revenue Growth Renewal Rate Customer Growth 7 of top 10 SIEM VISIONARY 52 of Fortune 100 Technology in the 2017 Gartner Magic Fortune 100 Companies Companies Quadrant As of Q3 17
Slide 20: The Path Ahead
THE PATH AHEAD CAPTURE EXTEND the SecOps Our Analytics and Opportunity Automation Cloud V ARR Growth of Over 30% DELIVER Growth and Leverage
Slide 21: Lee Weiner
LEE WEINER Chief Product Officer RAPID
Slide 22: The Path Ahead
THE PATH AHEAD CAPTURE EXTEND the SecOps Our Analytics and Opportunity Automation Cloud V ARR Growth of Over 30% DELIVER Growth and Leverage
Slide 23: Emergence of SecOps
EM ERGENCE OF. SECOPS | Visibility - Analytics Automation a
Slide 24: The Challenge: Uncertainty Abounds
THE CHALLENGE: UNCERTAINTY ABOUNDS MEASURE & MANAGE ORGANIZATIONAL RISK = Endpoints, Assets, and Data = Resources, Talent & Productivity = Alert & Portal Fatigue = IT Control, Remediation, and Visibility = Attacker Sophistication & Reach
Slide 25: Research-Driven Advantage
RESEARCH-DRIVEN ADVANTAGE Metasploit Heisenberg Framework & Project Community The most used Global Honeypot penetration testing Network RAPID7 QUARTERLY THREAT REPORT : Vulnerability Project Disclosure & Sonar Attacker Modeling Internet-wide scans Team of security researchers
Slide 26: Rapid7's R&D Approach
RAPID7’S R&D APPROACH tht INNOVATE UNIFIED DATA EFFICIENTLY Collect once, use Platform enables hundreds of time innovation & location strategy
Slide 27: Powerful Analytics and Automation Cloud
POWERFUL ANALYTICS AND AUTOMATION CLOUD InsightVM InsightIDR InsightAppSec Komand | InsightOps CLOUD BASED SERVICES SHARED PLATFORM ‘SERVICES SEARCH ANALYZE VISUALIZE REPORT INTEGRATE SATA ANALYTICAL POOLS HIGH VOLUME STORAGE ‘Srocessine USER ATTRIBUTION DEVICE ATTRIBUTION DATA NORMALIZATION CONTEXT
Slide 28: Accelerating Product Innovation
ACCELERATING PRODUCT INNOVATION ji ] Userinsight B oma ey insightAppSec (3 logentries ) insi fastest Bentrics — Nexpose' row —_insightOps metasploit appspider insightIDR insightVM komand
Slide 29: InsightVM
insightVM Live Vulnerability and Endpoint Analytics ¥Y Collect insightVM Prioritize 4074 24851. <S Remediate RAPID
Slide 30: Prioritized Risk Remediation
Prioritized Risk Remediation Focus Context Aware Ia id > Dp j i ‘s Most Common Malnare Kas
Slide 31: Threat Centric Analytics
Threat Centric Simplified Analytics IT Workflow Integration enon FOr 080 Ww & bb insightVM create WannaCry WannaCry vulnerable Assets by OS “Th bpecy 3.86k WannaCry Vulnerability Findings: Assets With Wannacry Vuerabities ‘apa Cad RAPID)
Slide 32: InsightIDR
insightIDR Detect attacks earlier !e Unify A\ Detect © Prioritize
Slide 33: Gartner 2017 SIEM Magic Quadrant
Gartner 2017 SIEM Magic Quadrant Rapid7 highest ranked “Visionary” in first placement on Magic Quadrant “Easy deployment and immediate benefits.” — CISO in the Services Industry “Unlike other SIEM solutions, you don't need a dedicated FTE for this one. Simple, elegant.” — VP, Information Security Of
Slide 34: Vast Data Collection
Vast Data Collection Behavioral Analytics Simplified Experience
Slide 35: Slide 35
Slide 36: Endpoint Data
C4 ENDPOINT DATA od RK DATA =z a) | RAW L¢ pr
Slide 37: Automated Context
Automated Context Simplified © Workflow INSTALLED senvice 1422-9866 to Integrate IT Ops 2 COUNTRIES IN 54 MINUTES 21 SECONDS. ‘
Slide 38: InsightAppSec
insightAppSec —- Cloud-powered application el security analysis Bee Orman tet) VY Collect Prioritize Z Remediate RAPIDID
Slide 39: Immediate Visibility
Immediate Visibility Prioritized Remediation Integrate Devops insightAppSec 7 of Se Scan (Sep 13 2017 4:00 PM) > corerae Report FE Sean Lope (6 73 High 124 3245 Vulnerabi Vulnerability Risk Crawled Links Network Requests
Slide 40: InsightOps
insightOps IT Operations & Analytics te: Search A\ Ask © Find
Slide 41: Visual Search
Visual Search Si Thitzxe| puis tulitiallth —_ = ale? Investigate Issues
Slide 42: Emergence of SecOps
EM ERGENCE OF. SECOPS | Visibility - Analytics Automation a
Slide 43: InsightVM Projects
Project Name Solutions Resolved Assets Affect. from assets with expiring ss! oD 17. 4412 768 High Risk MS assets ED 66% 1284 201 High risk 34x, of 218 209 Linux highest risk assets el 0% of 625 101 Linux Riskiest Assets aaa 0% 0 of 625 101 Expand Card >
Slide 44: Microsoft System Center, BigFix
> Microsoft® _ System Center Configuration Manager BIGFIX
Slide 45: @security
@security Koot TB) ate, secirty team. vuinerabtties were found in a recent network scan, me Type Daily Network Scan ‘Automatic Time Elapsed 9/6/2017.7:004M Minute Ikhatl in Qcacuritw [kbot] in @security ( InsightvM: 127 Vulnerabilities Patched inprogress: See the results in insightVM bot The patch p
Slide 46: Komand
komand by RAPIDID Orchestration and automation for IT and security teams ~ Orchestrate ce 4 Automate | Accelerate
Slide 47: Rapid7 Managed Services
RAPID’7 MANAGED SERVICES - Extend your team with the talent and tech to move your security program forward. A Rapid7 Managed Detection & Response 24x7 SOC Services Rapid7 Managed Vulnerability Management Prioritized Remediation Planning Rapid7 Managed AppSec Advanced AppSec for smaller teams RAPID
Slide 48: Partner Ecosystem
PARTNER ECOSYSTEM Rapid7 has more than 80 Platform integrations with partners DATA DATA DATA COLLABORATION WORKFLOW INGESTION PARTNERS PARTNERS PARTNERS Two-way data sharing IT security integration Enhances analytics ‘Single pane of glass’ Streamlines correction Enables detection Enhanced platform v
Slide 49: Total Addressable Market
TOTAL ADDRESSABLE MARKET $10B IT Operations Analytics - Public Cloud = Forensics & Incident $8B Management = SIEM m= Policy & Compliance = Vulnerability Assessment $48 - Application = Vulnerability Assessment - Device $28 1B 2016 2017 2018 2019 2020 2016-2020 1016-2020 $6.9B of TAM in 2017 Anticipat
Slide 50: Emergence of SecOps
EM ERGENCE OF. SECOPS | Visibility - Analytics Automation a
Slide 51: Break
BREAK Webcast will return at 3:25 EST
Slide 52: The Path Ahead
THE PATH AHEAD CAPTURE EXTEND the SecOps Our Analytics and Opportunity Automation Cloud DRIVE ARR Growth of Over 30% DELIVER Growth and Leverage
Slide 53: Andrew Burton
ANDREW BURTON Chief Operating Officer RAPID
Slide 54: The Path Ahead
THE PATH AHEAD CAPTURE EXTEND the SecOps Our Analytics and Opportunity Automation Cloud DRIVE ARR Growth of Over 30% DELIVER Growth and Leverage
Slide 55: Drive +30% ARR Growth
DRIVE +30% ARR GROWTH Scaling Our Customer Growth Engine Strengthening Our Land & Expand Model Improving Customer Economics with Our Cloud Platform RAPIDP
Slide 56: Growth Drivers
GROWTH DRIVERS Add New +15% Customers Na ait pay 3.1x Expand 1 5x Up-Sell Incense init Spend Wallet Share ~72isarsevce *As of Q317
Slide 57: Customer Acquisition & Growth Engine
CUSTOMER ACQUISITION & GROWTH ENGINE Addressable Market Penetration 100% 90% ° Significant opportunity for 80% new account growth ° Leverage existing relationships for up-sell and cross-sell North America Row «Enterprise = Mid-Market m Total 17 a
Slide 58: Customer Growth Engine
CUSTOMER GROWTH ENGINE Compelling Customer Economics
Slide 59: Land with Differentiated Solutions
LAND WITH DIFFERENTIATED SOLUTIONS Position Disruptor Potential Average Subscription ARR Mid Market Sources of Growth | ‘°dacy Displacement Enterprise Expansion Leader Leader Application Vulnerability Security Management -$35k -S40K Mid Market Mid Market Legacy Displacement Legacy Displacement Manag
Slide 60: Strengthening Our Land Engine
STRENGTHENING OUR LAND ENGINE EMERGING GROWTH CORE GROWTH AREAS AREAS Continue Mid-Market Continue Disruption Growth & Optimization with New ettennds +33% YoY IDR Bookings Expand and Mature +1 00% YoY Enterprise Coverage Le AU ISS canna for seats Expand and Mature 31 % of International Coverage a +3
Slide 61: Land & Expand
LAND & EXPAND FORTUNE 500 TECHNOLOGY COMPANY $1,200,000 = LANDED with Nexpose $1,000,000 $800,000 11.4x origina! a $600,000 r | = EXPANDED: Multiple Upsells for Purchase Amount ae $400,000 Additional Coverage $200,000 $0 Year 1 Year 2 Year 3 Year 4 Year 5 ‘Initial Year Bookings ™ Cumulative Follow-o
Slide 62: SecOps Fuels Our Expand Engine
SECOPS FUELS OUR EXPAND ENGINE Ease of Ease of Deployment Adoption COMMON COMPONENTS ANALYTICS & VISIBLITY Accelerate Time to 2nd Fuel Growth 48% +185% Higher Upsell Billings for of IDR Customers Get Platform Customers Their VM on our Platform eee anne wes iY Asof 9/30/17 Operationalizing Security A
Slide 63: Land & Expand
LAND & EXPAND FORTUNE 500 CONSUMER STAPLES COMPANY = LANDED with Nexpose, Metasploit = EXPANDED: = Upsell Additional Coverage = Multiple Cross-Sells, including Cloud Products $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 5.6x orsin Purchase Amount Year 1 Year 2 Year 3 Year 4 Year 5 ‘= In
Slide 64: Land & Expand Cohort: 3.1x Increase
LAND & EXPAND COHORT: 3.1x INCREASE ‘i itial Year Pur wise Year 3. (2011 & 2012) = Initial Year Bookings = Cumulative Follow-on Bookings Nee 8 lll
Slide 65: Product Breadth Enables Expansion
PRODUCT BREADTH ENABLES EXPANSION Top 25 deals through YTD Q3 17 Upsell/Cross-Sell Upsell/Cross-Sell Upsell/Cross-Sell Upsell/Cross-Sell Upsell/Cross-Sell Upsell/Cross-Sell psell Upsell/Cross-Sell Cross-Sell lew BB cross-seit Upsell/Cross-Sell Upsel Upsell/Cross-Sell Technology 2 2 Upsell/Cross-Sell
Slide 66: Our Cloud Provides Global Scale
OUR CLOUD PROVIDES GLOBAL SCALE a@a insight instances = Germany + Ireland = Japan soc's = US = UK S.& OFFICES e = Austin = Boston = Los Angeles = Toronto + Belfast + Dublin + Reading = Singapore = Tokyo = Sydney + Bangalore + Paris = Hong Kong
Slide 67: Our Cloud Adoption Is Accelerating
OUR CLOUD ADOPTION IS ACCELERATING Platform Customer Adoption 2,500 2,000 1,000 === Insight Platform Customers —»-% of Customers on Platform Recent acceleration of adoption driven by launch of InsightVM Increasing endpoint coverage accelerates visibility & analytics Additional adoption fueled by aut
Slide 68: Cloud Adoption Improves Customer Visibility
CLOUD ADOPTION IMPROVES CUSTOMER VISIBILITY Increasing Adoption Strong Customer Retention +125% 89% YoY Cloud Expiring Platform Adoption Renewal Rate —COCOCSC“‘CN™SCSCSC‘OSNSSOC#C”*s*s*‘“‘«@*«# “NRA
Slide 69: Cloud Adoption Enables Subscription
CLOUD ADOPTION ENABLES SUBSCRIPTION Perpetual Model Prioritizes Subscription Model Prioritizes Non-Recurring Revenue Recurring Revenue NEXPOSE: 35% Recurring
Slide 70: Subscription Improves Customer Economics
SUBSCRIPTION IMPROVES CUSTOMER ECONOMICS Potential ARR $190,000 = As of Q3 17, we had $22,043 in ARR per customer +8x— = Foran average-sized customer, we have $190,000 of recurring revenue $22,043 potential pre ia Ce
Slide 71: Improved Economics Accelerates Profitability
IMPROVED ECONOMICS ACCELERATES PROFITABILITY Recurring e Shift to Subscription & Expanding Improve LV Accelerate ES ae ind Cross- Landing Continue 2 aee ae = as
Slide 72: The Path Ahead
THE PATH AHEAD CAPTURE EXTEN Dy the SecOps Our Analytics and ARR Growth of Opportaniey Automation Over 30% Cloud DELIVER Growth and Leverage
Slide 73: Jeff Kalowski
JEFF KALOWSKI Chief Financial Officer RAPIDYD
Slide 74: The Path Ahead
THE PATH AHEAD CAPTURE EXTEN Dy the SecOps Our Analytics and ARR Growth of Opportaniey Automation Over 30% Cloud DELIVER Growth and Leverage
Slide 75: Growth History
GROWTH HISTORY $200m $1s0m +27% YoY $100m $50m $om -$50m 2012 2013 2014 2015 2016 Q315 YTD Q316 YTD Q317 YTD = Total Revenue = Loss from Operations (non-GAAP) = Cash from operating activities YC
Slide 76: Consistent Customer Growth Engine
CONSISTENT CUSTOMER GROWTH ENGINE Customer Growth +15% YoY
Slide 77: Increasing Recurring Revenue
INCREASING RECURRING REVENUE $60m 74.0% Recurring revenue is over 72.0% a 70% of total revenues lg Bo 70.5% zs 70.0% $50m $40m Em) 67.7% 2 68.0% i $30m — a 672% 5 OX a yA Recurring revenue ~ o% org | | i [| LL 66.0% is growing over 30% 65. 4% $20m = 64. 6% 64.0% $10m ees 60.0% m QS Q215 Qs15 ts QUI
Slide 78: Perpetual Model
PERPETUAL MODEL = For perpetual products, we amortize the value of the perpetual license over the contract life. = In addition, we receive 15% Maintenance & Support and 20% Content Subscription, which drives the majority of recurring revenue today = Perpetual & Support TO
Slide 79: Strong Customer Expansion Growth
STRONG CUSTOMER EXPANSION GROWTH Consistent CAGR Growth from 2010 to 2015 Cohorts 200m CAGR through $700m an 2016 $600m a 36% $500m 38% $400m 33% $300m 32% $200m 30% $100m 31% 2010 20n 2012 2013 20% 2015 2016 2017 {= 2010 Cohort 2011 Cohort 2012 Cohort =2013Cohort m2014Cohort =2015Cohort 2016 Cohort
Slide 80: Bookings by Product Family
BOOKINGS BY PRODUCT FAMILY Product Family New Bookings Mix Shifting Product Mix = Growth in IDR product sales to over 23% of quarterly new bookings = VM continues to show solid growth Qe Q2'16 Q316 Q416 Qn Q2'17 Q317 =VM «IDR miTSearch s Professional Services TO” RA
Slide 81: ARR Growth
Slide 82: VM Shift to Subscription
Slide 83: Cumulative Cash Comparison: Perpetual vs. SaaS
Slide 84: Revenue Comparison: Perpetual vs. SaaS
Slide 85: Annualized Recurring Revenue
Slide 86: Q&A Session