We feel now is a pretty good time to analyse Rapid7, Inc.'s (NASDAQ:RPD) business as it appears the company may be on the cusp of a considerable accomplishment. Rapid7, Inc. provides cybersecurity solutions under the Rapid7, Nexpose, and Metasploit brand names. The US$3.1b market-cap company announced a latest loss of US$149m on 31 December 2023 for its most recent financial year result. The most pressing concern for investors is Rapid7's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to the 23 industry analysts covering Rapid7, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$18m in 2024. So, the company is predicted to breakeven approximately 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 124% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Rapid7's growth isn't the focus of this broad overview, though, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we would like to bring into light with Rapid7 is it currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. Oftentimes, losses exist only on paper but other times, it can be a red flag.
Next Steps:
This article is not intended to be a comprehensive analysis on Rapid7, so if you are interested in understanding the company at a deeper level, take a look at Rapid7's company page on Simply Wall St. We've also put together a list of pertinent factors you should further examine:
- Valuation: What is Rapid7 worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Rapid7 is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Rapid7's board and the CEO's background.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.