Release Date: February 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you clarify the growth expectations for the Detection and Response (DNR) business and how it compares to the Vulnerability Management (VM) segment? A: Corey Thomas, CEO: The DNR business, particularly Managed Detection and Response (MDR), is growing in the mid-teens and represents a significant portion of our ARR. The remainder includes cloud VM and legacy products. We are confident in the growth potential of the DNR segment and are investing in it. The integrated exposure management market is also expected to be a growth driver, although we are cautious about overestimating its immediate impact.
Q: How do you view the margins for the Managed Detection and Response (MDR) business compared to the rest of the company? A: Tim Adams, CFO: Product gross margins are expected to remain stable in the mid-seventies. The managed service aspect of MDR has a lower gross margin due to its labor-intensive nature, but we are working on efficiencies through AI and our innovation center in India. Overall, we anticipate maintaining stable product gross margins.
Q: What is Rapid7's value proposition in the competitive cloud security market, and how sustainable is your success? A: Corey Thomas, CEO: Our focus is on reducing complexity for customers by providing integrated exposure management across various environments, including cloud and on-prem. We aim to offer a comprehensive view of the attack surface, manage risk, and ensure compliance. This approach targets a broader market beyond the initial cloud adopters, making it a sustainable strategy.
Q: How are you addressing the decline in the Vulnerability Management (VM) market, and what is the outlook for this segment? A: Corey Thomas, CEO: The traditional on-prem VM market is not experiencing significant growth, but we see opportunities in managing risk in a fragmented regulatory environment. We are focusing on exposure management, which is gaining traction. While we expect incremental positive impact this year, the more substantial benefits will likely materialize next year.
Q: Can you elaborate on the competitive environment and pricing pressures Rapid7 faces? A: Corey Thomas, CEO: The traditional VM market has been competitive, but our exposure command is gaining momentum with better-than-expected conversion rates. We see a robust upsell opportunity within our install base, particularly in the DNR and exposure management segments. While the market remains competitive, we are well-positioned to capitalize on these opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.