Cloud Stocks: Data Breach Drives Cloud Security Stocks To Record Highs

Cyber security players have been in the news recently following the SolarWinds security breach at several federal agencies. Analysts believe that the hack “will see a seismic increase in spending” in the coming year and could lead to a $200 billion growth opportunity in cloud security over the next five years. Endpoint security providers and vulnerability management companies like Rapid7 (Nasdaq: RPD) and Tenable (Nasdaq: TENB) are bound to benefit from this growth.

Rapid7’s Financials

Rapid7’s revenues for the third quarter grew 26% to $105.1 million, ahead of the market’s expectations by 3.41%. Non-GAAP net income was $25 million or $0.00 per share compared with the Street’s forecast of a loss of $0.04 per share.

By segment, revenue from products grew 29% to $98.6 million and maintenance, support, and professional services grew 29% to $98.6 million.

By region, revenues from North America grew 25% to $87.6 million and the Rest of the world grew 32% to $17.5 million.

Total ARR grew 29% to $398.7 million, primarily driven by strong customer growth. Its customer count increased by 17% to over 8,600 customers globally. Its customer economics remain strong with average ARR per customer increasing 19% to $42,700.

For the fourth quarter, Rapid7 forecast revenues of $107.9-$109.5 million with a loss of $0.09-$00.7 per share. The Street was looking for revenues of $107.18 million and a loss of $0.04 per share. Rapid7 expects to end the current year with revenues of $406.2-$407.8 million and earnings of $0.12 to $0.10 per share. The market had forecast revenues of $402.18 million with a loss of $0.11 per share.

Rapid7’s New Products and Partnerships

During the quarter, Rapid7 announced the availability of several new products. It released Enhanced Endpoint Telemetry (EET) within InsightIDR. The solution allows customers to bring endpoint activity into InsightIDR, unifying it within network, user, and cloud data, providing holistic visibility of the environment. The solution will enable security teams to better monitor the attack surface and drive accelerated investigations and response from one interface. EET extends core threat hunting capabilities of InsightIDR.

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