Case 1:18-cv-01519-MN Document 144-7 Filed 06/04/20 Page 1 of 15 PageID #: 6241
`Case 1:18—cv-01519—MN Document 144-7 Filed 06/04/20 Page 1 of 15 PageID #: 6241
`
`EXHIBIT 7
`
`EXHIBIT 7
`
`
`
`
`
`
`
`
`
`

`

`6/3/2020
`
`Rapid7 Announces Fourth Quarter and Full-Year 2019 Financial Results | Rapid7 Inc
`Case 1:18-cv-01519-MN Document 144-7 Filed 06/04/20 Page 2 of 15 PageID #: 6242
`
`About
`
`For Customers
`
`Free Tools
`
`Investor Relations
`
`Overview SEC Filings
`
`Press Releases
`
`Events & Presentations
`
`Annual Reports
`
`Leadership & Governance
`
`Stock
`
`Resources
`
`Analyst Coverage
`
`PRESS RELEASE
`View printer-friendly version
`
`
`02/10/20
`
`<< Back
`
`Rapid7 Announces Fourth Quarter and Full-Year 2019
`Financial Results
`Annualized recurring revenue (ARR) of $338.7 million, an increase of 35% year-over-year
`Fourth quarter 2019 revenue of $91.6 million and full year 2019 revenue of $326.9 million
`Fourth quarter 2019 year-over-year revenue growth of 33% and full-year 2019 year-over-year revenue
`growth of 34%
`Customer growth of 16% year-over-year
`Guiding 2020 ARR year-over-year growth between 24% to 26% and year-over-year revenue growth
`between 21% and 24%
`
`https://investors.rapid7.com/news-releases/news-release-details/rapid7-announces-fourth-quarter-and-full-year-2019-financial
`
`1/14
`
`
`

`

`6/3/2020
`Rapid7 Announces Fourth Quarter and Full-Year 2019 Financial Results | Rapid7 Inc
`Case 1:18-cv-01519-MN Document 144-7 Filed 06/04/20 Page 3 of 15 PageID #: 6243
`BOSTON, Feb. 10, 2020 (GLOBE NEWSWIRE) -- Rapid7, Inc. (NASDAQ: RPD), a leading provider of security
`analytics and automation, today announced nancial results for the fourth quarter and full-year 2019.
`
`"Rapid7 capped o another great year in 2019 with strong full-year operating results. Our ARR grew by
`35% and we again exceeded the high end of our guidance with revenue growth of 34% while delivering
`a 9-point improvement in non-GAAP operating margin from the prior year," said Corey Thomas,
`Chairman and CEO of Rapid7.
`
`"These results reect a healthy demand environment and consistent execution. With a leading and well-
`diversied product portfolio, we see a large opportunity in front of us and are well positioned for future
`growth. As a result, for 2020, we expect strong ARR growth of 25%, at the midpoint, while continuing
`to deliver operating leverage."
`
`Fourth Quarter 2019 Financial Results and Other Metrics 
`
` 
` 
` 
` 
` 
`Annualized recurring revenue
`Number of customers
`ARR per customer
`Recurring revenue as a percentage of total revenue
`Renewal rate*
`
` 
`
` 
`
`$
`
`$
`
`2019
`
`2018
`
`% Change
`
`Three Months Ended December 31,
`   
`   
` 
` 
`   
`   
`(dollars in thousands)
` 
`  $
`251,819 
`338,714 
` 
` 
`7,808 
`9,022 
` 
`  $
`32.3 
`37.5 
`87%  
`83%    
`108%  
`119%    
`
`35%
`16%
`16%
`
`* For the three months ended December 31, 2018, our renewal rate was adjusted from 120%, as
`previously disclosed, to 119% based on a reclassication of certain upsells and cross-sells.
`
`2019
`
`2018
`
`2019
`
`2018
`
` 
` 
` 
` 
` 
` 
`Products revenue
`Maintenance and support revenue
`Professional services revenue
`
`Total revenue
`
` 
`North America revenue
`Rest of world revenue
`
`Total revenue
`
` 
`GAAP gross prot
`
` 
`
` 
`
`$
`
`$
` 
`$
`
`$
` 
`$
`
`GAAP gross margin
`https://investors.rapid7.com/news-releases/news-release-details/rapid7-announces-fourth-quarter-and-full-year-2019-financial
`
` 
` 
` 
`Year Ended December 31,
`Three Months Ended December 31,
` 
`   
`   
`   
`   
`   
`  % Change
`  % Change  
` 
` 
`   
`   
`   
`   
`   
`(in thousands, except per share data)
` 
`168,571 
`50,420 
` 
`47%   $
`261,119 
`  $
` 
`42,223 
`10,246 
` 
`(15)% 
`36,778 
` 
` 
`33,297 
`8,104 
` 
`7%  
`29,050 
` 
` 
`68,770 
` 
`33%   $
`326,947 
`  $ 244,091 
`   
`   
`   
`   
` 
`207,727 
` 
`30%   $
`  $
` 
`36,364 
` 
`50%  
` 
` 
` 
`33%   $
`  $ 244,091 
`   
`   
`   
`   
`   
`   
`  $
`  $ 173,008 
`49,484 
`235,801 
`72%    
` 
`72%  
`71%    
`
`74,326 
`8,671 
`8,651 
`91,648 
`
`76,258 
`15,390 
`91,648 
`
`  $
` 
` 
`  $
`   
`  $
` 
`  $
`   
`  $
`66,286 
`72%  
`
`58,488 
`10,282 
`68,770 
`
`274,481 
`52,466 
`326,947 
`
`55%
`(13)%
`(13)%
`34%
`
`32%
`44%
`34%
`
`2/14
`
`

`

`6/3/2020
`Rapid7 Announces Fourth Quarter and Full-Year 2019 Financial Results | Rapid7 Inc
`Case 1:18-cv-01519-MN Document 144-7 Filed 06/04/20 Page 4 of 15 PageID #: 6244
`Non-GAAP gross prot
`$
`68,554 
`  $
`51,138 
`   
`  $ 244,720 
`  $
`178,685 
`   
`75%  
`74%    
` 
`75%  
`73%    
`   
`   
`   
`   
`   
`  $
`   
`  $
`  $ (53,038)
`   
`(12,315)
`(10,812)
`(45,995)
`(13)% 
`(16)%   
` 
`(14)% 
`(22)%   
`785 
`  $
`(2,695)
`   
`  $
`2,404 
`  $
`(20,381)
`   
`1%  
`(4)%   
` 
`1%  
`(8)%   
`   
`   
`   
`   
`   
`  $
`   
`  $
`  $
`   
`  $
`   
`  $
`  $
`   
`  $
`   
`  $
`  $
`   
`  $
`   
`  $
`  $
`   
`  $
`   
`  $
`  $
`   
`   
`   
`   
`   
`   
`  $
`   
`  $
`  $
`   
`   
`   
`   
`   
`   
`  $
`   
`  $
`  $
`   
`   
`   
`   
`   
`   
`
`Non-GAAP gross margin
`
` 
`GAAP loss from operations
`
`GAAP operating margin
`Non-GAAP income (loss) from operations
`
`Non-GAAP operating margin
`
` 
`GAAP net loss
`GAAP net loss per share, basic and diluted
`Non-GAAP net income (loss)
`Non-GAAP net income (loss) per share, basic
`Non-GAAP net income (loss) per share, diluted
` 
`Adjusted EBITDA
` 
`Cash provided by (used in) operating activities
` 
`Recent Business Highlights
`
` 
`$
`
`$
`
` 
`$
`$
`$
`$
`$
` 
`$
` 
`$
` 
`
`(14,346)
`(0.29)
`1,484 
`0.03 
`0.03 
`
`3,654 
`
`7,824 
`  
`
`(13,020)
`(0.27)
`(2,368)
`(0.05)
`(0.05)
`
`(658)
`
`11,934 
`  
`
`(53,845)
`(1.10)
`4,306 
`0.09 
`0.08 
`
`(55,545)
`(1.20)
`(19,057)
`(0.41)
`(0.41)
`
`12,453 
`
`(13,428)
`
`(1,420)
`  
`
`6,066 
`  
`
`In November 2019, Forrester Consulting conducted a study on behalf of Rapid7 which highlighted
`that InsightVM customers could realize more than 300% ROI over a three-year period, over 20%
`reduction in false positives and 60% reduction in patching eorts compared to their incumbent
`vulnerability management solution.
`In December 2019, Rapid7 announced that InsightIDR, its cloud Security Information and Event
`Management (SIEM) oering is available for purchase in Amazon Web Services (AWS) Marketplace,
`highlighting Rapid7's ongoing commitment to helping
`its customers secure their cloud
`environments.
`In January 2020, Frost & Sullivan recognized Rapid7 with its 2019 Global SOAR Company of the year
`award, highlighting Rapid7's focus on mid-market enterprises.
`
`Please see investors.rapid7.com for our Financial Metrics spreadsheet.
`
`For additional details on the reconciliation of non-GAAP measures and certain other business metrics to
`their nearest comparable GAAP measures, please refer to the accompanying nancial data tables
`included in this press release.
`
`First Quarter and Full-Year 2020 Guidance
`
`Rapid7 anticipates annualized recurring revenue, revenue, non-GAAP (loss) income from operations, and
`non-GAAP net (loss) income per share to be in the following ranges:
`
`First Quarter and Full-Year 2020 Guidance (in millions, except per share data)
` 
` 
`
`   
`
` 
`
` 
`
`https://investors.rapid7.com/news-releases/news-release-details/rapid7-announces-fourth-quarter-and-full-year-2019-financial
`
`3/14
`
`

`

`6/3/2020
` 
`Annualized recurring revenue
`Year-over-year growth
`Revenue
`Year-over-year growth
`Non-GAAP (loss) income from operations
`Non-GAAP net (loss) income per share
`Weighted average shares outstanding
`
` 
` 
`$
`
`$
`$
` 
`
`Rapid7 Announces Fourth Quarter and Full-Year 2019 Financial Results | Rapid7 Inc
`Case 1:18-cv-01519-MN Document 144-7 Filed 06/04/20 Page 5 of 15 PageID #: 6245
`First Quarter 2020
`Full-Year 2020
` 
` 
` 
`  $
`420.0 
` 
`$
` 
` 
` 
`24% 
`to $
`to $
`  $
`396.0 
`91.6 
`93.2 
`25% to
`27% 
`21% to
`(6.3)
`to $
`(5.3)   $
`7.0 
`to $
`(0.13)
`to $
`(0.11)   $
`0.11 
`to $
`50.2 
`   
` 
`
`426.8 
`26%
`404.0 
`24%
`11.0 
`0.18 
`55.0  
`
` 
`
` 
`
`Guidance for the rst quarter and full-year 2020 does not include any potential impact of foreign
`exchange gains or losses. The weighted average shares outstanding for the rst quarter of 2020
`represent basic shares outstanding given our projected non-GAAP net loss. The weighted average
`shares outstanding for full year 2020 represent non-GAAP diluted shares outstanding given our
`projected non-GAAP net income.
`
`Non-GAAP guidance excludes estimates for stock-based compensation expense, amortization of
`acquired intangible assets, amortization of debt discount and issuance costs, and certain non-recurring
`items. Rapid7 has provided a reconciliation of  each non-GAAP guidance measure to the most
`comparable GAAP measures in the nancial statement tables included in this press release. The
`reconciliation does not reect any items that are unknown at this time, such as acquisition-related
`expenses, follow-on public oering costs, and litigation-related expenses which we are not able to
`predict without unreasonable eort due to their inherent uncertainty.
`
`Conference Call and Webcast Information
`
`Rapid7 will host a conference call today, February 10, 2020, to discuss its results at 4:30 p.m. Eastern
`Time. The call will be accessible by telephone at 877-357-4230 (domestic) or 629-228-0721
`(international). The call will also be available live via webcast on the Company’s website at
`http://investors.rapid7.com. A telephone replay of the conference call will be available at 855-859-2056
`or 404-537-3406 (access code 1729437) until February 18, 2020. A webcast replay will be available at
`http://investors.rapid7.com. 
`
`About Rapid7
`
`Rapid7 (Nasdaq: RPD) is advancing security with visibility, analytics, and automation delivered through
`our Insight cloud. Our solutions simplify the complex, allowing security teams to work more eectively
`with IT and development to reduce vulnerabilities, monitor for malicious behavior, investigate and shut
`down attacks, and automate routine tasks. Over 9,000 customers rely on Rapid7 technology, services,
`and research to improve security outcomes and securely advance their organizations. For more
`information, visit our website, check out our blog, or follow us on Twitter.
`
`Non-GAAP Financial Measures and Other Business Metrics
`
`https://investors.rapid7.com/news-releases/news-release-details/rapid7-announces-fourth-quarter-and-full-year-2019-financial
`
`4/14
`
`

`

`6/3/2020
`Rapid7 Announces Fourth Quarter and Full-Year 2019 Financial Results | Rapid7 Inc
`Case 1:18-cv-01519-MN Document 144-7 Filed 06/04/20 Page 6 of 15 PageID #: 6246
`To supplement our consolidated nancial statements, which are prepared and presented in accordance
`with generally accepted accounting principles in the United States, or GAAP, we provide investors with
`certain non-GAAP nancial measures and other metrics, which we believe are helpful to our investors.
`We use these non-GAAP nancial measures and other metrics for nancial and operational decision-
`making purposes and as a means to evaluate period-to-period comparisons. We also use certain non-
`GAAP nancial measures as performance measures under our executive bonus plan. We believe that
`these non-GAAP nancial measures and other metrics provide useful information about our operating
`results, enhance the overall understanding of past nancial performance and future prospects and allow
`for greater transparency with respect to metrics used by our management in its nancial and
`operational decision-making.
`
`While our non-GAAP nancial measures are an important tool for nancial and operational decision-
`making and for evaluating our own operating results over dierent periods of time, you should review
`the reconciliation of our non-GAAP nancial measures to the comparable GAAP nancial measures
`included below, and not rely on any single nancial measure to evaluate our business.
`
`Non-GAAP Financial Measures
`We disclose the following non-GAAP nancial measures: non-GAAP gross prot, non-GAAP income
`(loss) from operations, non-GAAP net income (loss), non-GAAP net income (loss) per share and adjusted
`EBITDA.
`
`We dene non-GAAP gross prot, non-GAAP income (loss) from operations, non-GAAP net income
`(loss) and non-GAAP net income (loss) per share as the respective GAAP balances excluding the eect
`of stock-based compensation expense, amortization of acquired intangible assets, amortization of debt
`discount and issuance costs and certain other items such as acquisition-related expenses, follow-on
`public oering costs, and litigation-related expenses. Non-GAAP net income (loss) per basic and
`dilutive share is calculated as non-GAAP net income (loss) divided by the weighted average shares used
`to compute net income (loss) per share, with the number of weighted average shares decreased to
`reect the anti-dilutive impact of the capped call transactions entered into in connection with the
`1.25% convertible senior note issued in August 2018.
`
`We believe these non-GAAP nancial measures are useful to investors in assessing our operating
`performance due to the following factors:
`
`Stock-based compensation expense. We exclude stock-based compensation expense because of
`varying available valuation methodologies, subjective assumptions and the variety of equity
`instruments that can impact our non-cash expense. We believe that providing non-GAAP nancial
`measures that exclude stock-based compensation expense allows for more meaningful comparisons
`between our operating results from period to period.
`
`https://investors.rapid7.com/news-releases/news-release-details/rapid7-announces-fourth-quarter-and-full-year-2019-financial
`
`5/14
`
`

`

`6/3/2020
`Rapid7 Announces Fourth Quarter and Full-Year 2019 Financial Results | Rapid7 Inc
`Case 1:18-cv-01519-MN Document 144-7 Filed 06/04/20 Page 7 of 15 PageID #: 6247
`Amortization of acquired intangible assets. We believe that excluding the impact of amortization of
`acquired intangible assets allows for more meaningful comparisons between operating results from
`period to period as the intangible assets are valued at the time of acquisition and are amortized over
`several years after the acquisition.
`
`Amortization of debt discount and issuance costs. In August 2018, we issued $230 million of convertible
`senior notes, which bear interest at an annual xed rate of 1.25%. The imputed interest rate of the
`convertible senior notes was approximately 7.37%. This is a result of the debt discount recorded for the
`conversion feature that is required to be separately accounted for as equity, and debt issuance costs,
`which reduce the carrying value of the convertible debt instrument. The debt discount is amortized as
`interest expense together with the issuance costs of the debt. The expense for the amortization of debt
`discount and debt issuance costs is a non-cash item, and we believe the exclusion of this interest
`expense provides a more useful comparison of our operational performance in dierent periods.
`
`Litigation-related expenses. We exclude certain litigation-related expenses consisting of professional
`fees and related costs incurred by us related to signicant litigation outside the ordinary course of
`business. We believe it is useful to exclude such expenses because we do not consider such amounts to
`be part of our ongoing operations.
`
`Acquisition-related expenses and follow-on public oering costs. We exclude acquisition-related
`expenses and follow-on public oering costs as costs that are unrelated to the current operations and
`neither are comparable to the prior period nor predictive of future results.
`
`Anti-dilutive impact of capped call transaction. In connection with the issuance of our convertible
`senior notes, we entered into capped call transactions to oset potential dilution from the embedded
`conversion feature in the notes. Although we cannot reect the anti-dilutive impact of the capped call
`transactions under GAAP, we do reect the anti-dilutive impact of the capped call transactions in non-
`GAAP net income (loss) per basic and diluted share to provide investors with useful information in
`evaluating the nancial performance of the company on a per share basis.
`
`Adjusted EBITDA (non-GAAP).  Adjusted EBITDA is a non-GAAP measure that we dene as net loss
`before (1) interest income, (2) interest expense, (3) other income (expense), net, (4) provision for income
`taxes, (5) depreciation expense, (6) amortization of intangible assets, (7) stock-based compensation
`expense, and (8) certain other items.  We believe that the use of adjusted EBITDA is useful to investors
`and other users of our nancial statements in evaluating our operating performance because it provides
`them with an additional tool to compare business performance across companies and across periods.
`Adjusted EBITDA should not be considered as a substitute for other measures of nancial performance
`reported in accordance with GAAP. There are limitations to using this non-GAAP nancial measure,
`including that other companies may calculate this measure dierently than we do, that it does not
`
`https://investors.rapid7.com/news-releases/news-release-details/rapid7-announces-fourth-quarter-and-full-year-2019-financial
`
`6/14
`
`

`

`6/3/2020
`Rapid7 Announces Fourth Quarter and Full-Year 2019 Financial Results | Rapid7 Inc
`Case 1:18-cv-01519-MN Document 144-7 Filed 06/04/20 Page 8 of 15 PageID #: 6248
`reect our capital expenditures or future requirements for capital expenditures and that it does not
`reect changes in, or cash requirements for, our working capital and excludes some items that are cash
`based.
`
`Other Metrics
`Annualized Recurring Revenue (ARR). ARR is dened as the annual value of all recurring revenue related
`contracts in place at the end of the period. ARR should be viewed independently of revenue and
`deferred revenue as ARR is an operating metric and is not intended to be combined with or replace
`these items. ARR is not a forecast of future revenue and can be impacted by contract start and end
`dates and renewal rates, and does not include revenue reported as perpetual license or professional
`services revenue in our consolidated statement of operations.
`
`Number of Customers. We dene a customer as any entity that has (1) an active Rapid7 contract or a
`contract that expired within 90 days or less of the applicable measurement date; and for Logentries
`products, those customers with a contract value equal to or greater than $2,400 per year, or
`(2) purchased Rapid7 professional services within the 12 months preceding the applicable measurement
`date.
`
`ARR per Customer. We dene ARR per customer as ARR divided by the number of customers at the end
`of the period.
`
`Recurring Revenue. We dene recurring revenue as revenue from term software licenses, content
`subscriptions, managed services, cloud-based subscriptions and maintenance and support.
`
`Renewal Rate. We calculate our renewal rate by dividing the dollar value of renewed customer
`agreements, including upsells and cross-sells of additional products, but excluding professional
`services, in a trailing 12-month period by the dollar value of the corresponding customer agreements.
`
`Cautionary Language Concerning Forward-Looking Statements
`
`This press release includes forward-looking statements. All statements contained in this press release
`other than statements of historical facts, including, without limitation, statements regarding our
`anticipated future nancial and business performance for the rst quarter and full-year 2020, market
`opportunities, future growth and operating leverage are forward-looking statements. The words
`“anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “opportunity,” “will” and similar
`expressions are intended to identify forward-looking statements. We have based these forward-looking
`statements largely on our current expectations and projections about future events and nancial trends
`that we believe may aect our nancial condition, results of operations, business strategy, short-term
`and long-term business operations and objectives and nancial needs. These forward-looking
`statements are subject to a number of risks and uncertainties, including, without limitation, risks
`
`https://investors.rapid7.com/news-releases/news-release-details/rapid7-announces-fourth-quarter-and-full-year-2019-financial
`
`7/14
`
`

`

`6/3/2020
`Rapid7 Announces Fourth Quarter and Full-Year 2019 Financial Results | Rapid7 Inc
`Case 1:18-cv-01519-MN Document 144-7 Filed 06/04/20 Page 9 of 15 PageID #: 6249
`related to our rapid growth and ability to sustain our revenue growth rate, the ability of our products
`and professional services to correctly detect vulnerabilities, competition in the markets in which we
`operate, market growth, our ability to innovate and manage our growth, our ability to integrate
`acquired operations, our ability to operate in compliance with applicable laws as well as other risks and
`uncertainties set forth in the “Risk Factors” section of our Quarterly Report on Form 10-Q led with the
`Securities and Exchange Commission for the quarter ended September 30, 2019 led with the Securities
`and Exchange Commission on November 5, 2019, and subsequent reports that we le with the
`Securities and Exchange Commission.  Moreover, we operate in a very competitive and rapidly changing
`environment. New risks emerge from time to time. It is not possible for our management to predict all
`risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or
`combination of factors, may cause actual results to dier materially from those contained in any
`forward-looking statements we may make. In light of these risks, uncertainties and assumptions, we
`cannot guarantee future results, levels of activity, performance, achievements or events and
`circumstances reected in the forward-looking statements will occur. We are under no duty to update
`any of these forward-looking statements after the date of this press release to conform these
`statements to actual results or revised expectations, except as required by law. You should, therefore,
`not rely on these forward-looking statements as representing our views as of any date subsequent to
`the date of this press release.
`
`Investor contact:
`
`Neeraj Mahajan, CFA
`Vice President, Investor Relations
`investors@rapid7.com
`(857) 990-4074
`
`Press contact:
`
`Caitlin Doherty
`press@rapid7.com
`(857) 990-4240
`
` 
`
`RAPID7, INC. 
`Consolidated Balance Sheets (Unaudited)  
`(in thousands)
`
` 
`
` 
`
` 
`
` 
`
` 
` 
`Assets
`Current assets:
`Cash and cash equivalents
`Short-term investments
`https://investors.rapid7.com/news-releases/news-release-details/rapid7-announces-fourth-quarter-and-full-year-2019-financial
`
`8/14
`
` 
` 
` 
` 
`  December 31, 2019  December 31, 2018
`   
`   
`   
`   
`  $
`123,413    $
`
`99,565 
`
`

`

`6/3/2020
`
`Accounts receivable, net
`Deferred contract acquisition and fulfillment costs, current portion
`Prepaid expenses and other current assets
`Total current assets
`Long-term investments
`Property and equipment, net
`Operating lease right-of-use assets
`Deferred contract acquisition and fulfillment costs, non-current portion
`Goodwill
`Intangible assets, net
`Other assets
`Total assets
`Liabilities and Stockholders’ Equity
`Current liabilities:
`Accounts payable
`Accrued expenses
`Operating lease liabilities, current portion
`Deferred revenue, current portion
`Other current liabilities
`Total current liabilities
`Convertible senior notes, net
`Operating lease liabilities, non-current portion
`Deferred revenue, non-current portion
`Other long-term liabilities
`Total liabilities
`Stockholders’ equity:
`Common stock
`Treasury stock
`Additional paid-in-capital
`Accumulated other comprehensive loss
`Accumulated deficit
`Total stockholders’ equity
`Total liabilities and stockholders’ equity
`
`Rapid7 Announces Fourth Quarter and Full-Year 2019 Financial Results | Rapid7 Inc
`Case 1:18-cv-01519-MN Document 144-7 Filed 06/04/20 Page 10 of 15 PageID #: 6250
` 
`116,158   
`159,210 
` 
`87,927   
`74,935 
` 
`17,047   
`12,321 
` 
`20,051   
`9,746 
` 
`364,596   
`355,777 
` 
`22,887   
`44,892 
` 
`50,670   
`17,523 
` 
`60,984   
`— 
` 
`34,213   
`27,634 
` 
`97,866   
`88,420 
` 
`28,561   
`23,955 
` 
`5,136   
`1,168 
`  $
`664,913    $
`559,369 
`   
`   
`   
`   
`  $
`6,836    $
` 
`41,021   
` 
`7,179   
` 
`231,518   
` 
`119   
` 
`286,673   
` 
`185,200   
` 
`72,294   
` 
`36,226   
` 
`1,352   
` 
`581,745   
`   
`   
` 
`499   
` 
`(4,764)  
` 
`605,650   
` 
`213   
` 
`(518,430)  
` 
`83,168   
`  $
`664,913    $
`
`7,048 
`37,376 
`— 
`189,855 
`707 
`234,986 
`174,688 
`— 
`58,716 
`3,660 
`472,050 
`
`476 
`(4,764)
`556,223 
`(31)
`(464,585)
`87,319 
`559,369 
`
` 
`
` 
`
` 
`
` 
`
` 
`
` 
` 
` 
`Revenue:
`Products
`Maintenance and support
`Professional services
`
`RAPID7, INC.
`Consolidated Statements of Operations (Unaudited)
`(in thousands, except share and per share data)
` 
` 
`Three Months Ended December 31,
` 
`2019
`2018
` 
` 
`   
`   
`  $
`74,326      $
` 
`8,671     
` 
`8,651     
`
` 
` 
`   
`     
`50,420        $
`10,246       
`8,104       
`
` 
`Year Ended December 31,
`2019
`2018
` 
`   
`261,119      $
`36,778     
`29,050     
`
`168,571   
`42,223   
`33,297   
`
`https://investors.rapid7.com/news-releases/news-release-details/rapid7-announces-fourth-quarter-and-full-year-2019-financial
`
`9/14
`
`

`

`6/3/2020
`
`Rapid7 Announces Fourth Quarter and Full-Year 2019 Financial Results | Rapid7 Inc
`Case 1:18-cv-01519-MN Document 144-7 Filed 06/04/20 Page 11 of 15 PageID #: 6251
` 
`91,648     
`68,770       
`326,947     
`244,091   
`Total revenue
`Cost of revenue:
`   
`   
`     
`   
` 
`17,016     
`11,430       
`59,684     
`Products
` 
`2,454     
`1,921       
`8,495     
`Maintenance and support
` 
`5,892     
`5,935       
`22,967     
`Professional services
` 
`25,362     
`19,286       
`91,146     
`Total cost of revenue
` 
`66,286     
`49,484       
`235,801     
`Total gross profit
`Operating expenses:
`   
`   
`     
`   
` 
`21,719     
`17,828       
`79,364     
`Research and development
` 
`44,508     
`32,531       
`157,722     
`Sales and marketing
` 
`12,374     
`9,937       
`44,710     
`General and administrative
` 
`78,601     
`60,296       
`281,796     
`Total operating expenses
`Loss from operations
` 
`(12,315)    
`(10,812)      
`(45,995)    
`Other income (expense), net:
`   
`   
`     
`   
` 
`1,253     
`1,709       
`6,014     
`Interest income
` 
`(3,449)    
`(3,253)      
`(13,389)    
`Interest expense
` 
`294     
`(269)      
`(433)    
`Other income (expense), net
`Loss before income taxes
` 
`(14,217)    
`(12,625)      
`(53,803)    
` 
`129     
`395       
`42     
`Provision for income taxes
`Net loss
`  $
`(14,346)     $
`(13,020)       $
`(53,845)     $
`Net loss per share, basic and diluted
`  $
`(0.29)     $
`(0.27)       $
`(1.10)     $
`Weighted-average common shares outstanding, basic and
`diluted
`
`39,810   
`7,678   
`23,595   
`71,083   
`173,008   
`
`67,743   
`123,310   
`34,993   
`226,046   
`(53,038)  
`
`3,229   
`(4,934)  
`(336)  
`(55,079)  
`466   
`(55,545)  
`(1.20)  
`
` 
`
`49,604,522     
`
`47,397,034       
`
`48,731,791     
`
`46,456,825   
`
` 
`
` 
`
` 
`
` 
`RAPID7, INC.
`Consolidated Statements of Cash Flows (Unaudited)
`(in thousands)
` 
`
` 
`
` 
`
` 
`
` 
`
` 
`Three Months Ended December
`31,
` 
`   
`(14,346)   $
`
`2019
`
` 
` 
`   
`  $
`
`2018
`
` 
` 
`   
`(13,020)   $
`
`Year Ended December 31,
`2019
`2018
` 
`   
`(53,845)   $
`
`(55,545)
`
`   
` 
` 
` 
` 
` 
` 
` 
`   
` 
` 
`
`   
`4,559   
`2,730   
`11,174   
`459   
`116   
`(315)  
`(254)  
`   
`(25,660)  
`(5,903)  
`
`   
`3,360   
`2,535   
`6,594   
`260   
`(69)  
`191   
`(161)  
`   
`(20,972)  
`(6,405)  
`
`   
`16,528   
`10,513   
`40,664   
`2,241   
`(645)  
`255   
`(1,889)  
`   
`(14,800)  
`(11,306)  
`
`11,097 
`3,831 
`27,593 
`740 
`(69)
`757 
`(506)
`
`(1,685)
`(12,790)
`
`https://investors.rapid7.com/news-releases/news-release-details/rapid7-announces-fourth-quarter-and-full-year-2019-financial
`
`10/14
`
` 
` 
`Cash ows from operating activities:
`Net loss
`Adjustments to reconcile net loss to net cash provided by (used in)
`operating activities:
`Depreciation and amortization
`Amortization of debt discount and issuance costs
`Stock-based compensation expense
`Provision for doubtful accounts
`Deferred income taxes
`Foreign currency re-measurement (gain) loss
`Other non-cash items
`Changes in operating assets and liabilities:
`Accounts receivable
`Deferred contract acquisition and fulfillment costs
`
`

`

`Rapid7 Announces Fourth Quarter and Full-Year 2019 Financial Results | Rapid7 Inc
`6/3/2020
`Case 1:18-cv-01519-MN Document 144-7 Filed 06/04/20 Page 12 of 15 PageID #: 6252
` 
`(3,813)  
`2,147   
`(13,691)  
`Prepaid expenses and other assets
` 
`(1,040)  
`3,110   
`92   
`Accounts payable
` 
`9,581   
`8,192   
`4,759   
`Accrued expenses
` 
`30,810   
`25,183   
`18,686   
`Deferred revenue
` 
`(274)  
`989   
`1,018   
`Other liabilities
` 
`7,824   
`11,934   
`(1,420)  
`Net cash provided by (used in) operating activities
`Cash ows from investing activities:
`   
`   
`   
`   
` 
`—   
`(14,460)  
`(14,607)  
`Business acquisitions, net of cash acquired
` 
`(2,375)  
`(4,409)  
`(29,428)  
`Purchases of property and equipment
` 
`(1,401)  
`(760)  
`(6,087)  
`Capitalization of internal-use software costs
` 
`(33,839)  
`(54,476)  
`(148,047)  
`Purchases of investments
` 
`37,693   
`30,650   
`214,980   
`Sales/maturities of investments
` 
`78   
`(43,455)  
`16,811   
`Net cash provided by (used in) investing activities
`Cash ows from nancing activities:
`   
`   
`   
`   
`Proceeds from issuance of convertible senior notes, net of
` 
`issuance costs paid of $6,879
`Purchase of capped calls related to convertible senior notes  
`Proceeds from follow-on public offering, net of offering costs
` 
`of $608
`Taxes paid related to net share settlement of equity awards  
` 
`Proceeds from employee stock purchase plan
` 
`Proceeds from stock option exercises
` 
`Net cash provided by financing activities
`Eect of exchange rate changes on cash, cash equivalents and
`restricted cash
`Net increase (decrease) in cash, cash equivalents and
`restricted cash
`Cash, cash equivalents and restricted cash, beginning of period
`Cash, cash equivalents and restricted cash, end of period
`
`—   
`—   
`
`—   
`(2,026)  
`—   
`2,295   
`269   
`
`317   
`
`8,488   
`114,925   
`123,413    $
`
` 
`
` 
` 
`  $
`
`    
`
`(408)  
`—   
`
`—   
`(485)  
`—   
`1,085   
`192   
`
`(266)  
`
`—   
`—   
`
`—   
`(6,952)  
`5,521   
`10,219   
`8,788   
`
`(331)  
`
`(31,595)  
`131,160   
`99,565    $
`
`23,848   
`99,565   
`123,413    $
`
`(287)
`3,675 
`6,018 
`22,870 
`367 
`6,066 
`
`(14,460)
`(12,813)
`(3,265)
`(233,421)
`70,226 
`(193,733)
`
`223,121 
`(26,910)
`
`30,907 
`(2,197)
`3,637 
`7,606 
`236,164 
`
`(694)
`
`47,803 
`51,762 
`99,565 
`
` 
`
` 
`
` 
` 
`Total gross prot (GAAP)
`
`Add: Stock-based compensation expense
`1
`Add: Amortization of acquired intangible assets
`Total gross prot (non-GAAP)
`
`2
`
` 
` 
`  $
` 
` 
`  $
` 
`  $
` 
` 
`  $
`
`Gross margin (non-GAAP)
`Gross profit (GAAP) - Products
`Add: Stock-based compensation expense
`Add: Amortization of acquired intangible assets
`Total gross profit (non-GAAP) - Products
`Gross margin (non-GAAP) - Products
`https://investors.rapid7.com/news-releases/news-release-details/rapid7-announces-fourth-quarter-and-full-year-2019-financial
`
` 
`RAPID7, INC. 
`GAAP to Non-GAAP Reconciliation (Unaudited) 
`(in thousands, except share and per share data)
` 
` 
`Three Months Ended December
`31,
`2019
` 
`  $
`66,286 
` 
`610 
` 
`1,658 
`  $
`68,554 
`74.8% 
`57,310 
`  $
`209 
` 
`1,658 
` 
`59,177 
`  $
`
` 
`
` 
`
` 
`
` 
`
` 
`
` 
`2018
` 
`  $
`49,484 
` 
`371 
` 
`1,283 
`  $
`51,138 
`74.4% 
`38,990 
`  $
`69 
` 
`1,283 
` 
`40,342 
`  $
`
`Year Ended December 31,
`2019
`2018
` 
`235,801 
`  $
`173,008 
`2,580 
` 
`1,692 
`6,339 
` 
`3,985 
`244,720 
`  $
`178,685 
`74.9% 
`73.2%
`201,435 
`  $
`128,761 
`789 
` 
`493 
`6,339 
` 
`3,985 
`208,563 
`  $
`133,239 
`
`11/14
`
`

`

`6/3/2020
`
`Rapid7 Announces Fourth Quarter and Full-Year 2019 Financial Results | Rapid7 Inc
`Case 1:18-cv-01519-MN Document 144-7 Filed 06/04/20 Page 13 of 15 PageID #: 6253
` 
`79.6% 
`80.0% 
`79.9% 
`  $
`6,217 
`  $
`8,325 
`  $
`28,283 
`  $
` 
`160 
` 
`72 
` 
`616 
` 
`
`79.0%
`34,545 
`233 
`
`34,778 
`82.4%
`9,702 
`966 
`10,668 
`32.0%
`(53,038)
`27,593 
`4,144 
`115 
`205 
`600 
`(20,381)
`(55,545)
`27,593 
`4,144 
`115 
`205 
`600 
`— 
`3,831 
`(19,057)
`
` 
` 
`
`(1.20)
`0.79 
`(0.41)
`
`(1.20)
`0.79 
`(0.41)
`
`46,456,825 
`
`46,456,825 
`46,456,825 
`
`1,692 
`10,822 
`
`12/14
`
`Gross profit (GAAP) - Maintenance and support
`Add: Stock-based compensation expense
`Total gross profit (non-GAAP) - Maintenance and
`support
`Gross margin (non-GAAP) - Maintenance and support
`Gross profit (GAAP) - Professional services
`Add: Stock-based compensation expense
`Total gross profit (non-GAAP) - Professional services
`Gross margin (non-GAAP) - Professional services
`GAAP Loss from operations
`
`Add: Stock-based compensation expense
`1
`Add: Amortization of acquired intangible assets
`Add: Acquisition-related expenses
`3
`Add: Follow-on public offering costs
`Add: Litigation-related expenses
`5
`Non-GAAP Income (loss) from operations
`GAAP Net loss
`
`4
`
`2
`
`4
`
`2
`
`Add: Stock-based compensation expense
`1
`Add: Amortization of acquired intangible assets
`Add: Acquisition-related expenses
`3
`Add: Follow-on public offering costs
`Add: Litigation-related expenses
`5
`Add: Release of valuation allowance, acquisition-related
`Add: Amortization of debt discount and issuance costs
`Non-GAAP Net income (loss)
` 
`Reconciliation of net income (loss) per share, basic:
`GAAP net loss per share, basic
`
`Non-GAAP adjustment to net loss per share
`Non-GAAP net income (loss) per share, basic
` 
`Re