Shares in Rapid7 Inc. fell slightly in late trading today despite the cybersecurity solutions provider reporting an earnings and revenue beat in its most recent quarter.

For its first quarter that ended March 31, Rapid7 reported a profit before costs such as stock compensation of $10 million, or 16 cents per share, compared with an adjusted loss of $9.2 million or 16 cents per share in the same quarter of 2022. Revenue rose 16% from a year ago, to $183.17 million. Analysts had expected earnings per share of nine cents on revenue of $181.18 million.

Rapid7 saw growth across the board, with its product revenue up 17% year-over-year, to $173.78 million, and professional services revenue up 12%, to $9.4 million. Annualized recurring revenue rose 16%, to $727.86 million, while ARR per customer grew 9%, to $66,000. The number of Rapid7 customers grew 6% year-over-year, to 11,034.

Highlights in the quarter included Rapid7 acquiring ransomware detection specialists Minerva Labs Ltd. for $38 million in March. Founded in 2014, Minerva Labs offered an endpoint security solution that protects enterprises from ransomware attacks that would otherwise bypass antivirus and other baseline cybersecurity products.

Rapid7 acquired Minerva Labs to extend its managed detection and response service across cloud resources, traditional infrastructure and existing endpoint protection infrastructure, allowing customers to consolidate their security investments further.

In February, Rapid7 also announced a partnership with the University of South Florida to create a cyberthreat intelligence laboratory. The partnership is designed to catalyze new collaborative research efforts in cyberthreat detection.

“As we continue to focus on delivering better security outcomes to our customers, we are doing so with an intentional focus on ramping our efficiency, which is evident in our strong first-quarter profitability and a modest increase to our full-year non-GAAP operating income target,” Corey Thomas, chairman and chief executive officer of Rapid7, said in the company’s earnings release. “Looking forward, we remain on track to achieve our full-year growth objectives as we manage the business for long-term profitable growth.”

For the second quarter of 2023, Rapid7 said it expects adjusted earnings of nine to 12 cents a share on revenue of $187 million to $189 million. Analysts had expected an adjusted profit of 18 cents a share on revenue of $188.65. For the full year 2023, the company expects an adjusted profit of 83 to 89 cents a share on revenue of $773 million to $779 million, versus the analyst consensus of 84 cents and $774.62 million.

Even though Rapid7 surprised on earnings and revenue in the quarter, the second-quarter outlook at the midpoint were both misses, whereas the full-year outlook was higher than expected. Investors did perhaps focus on the second-quarter outlook, as Rapid7 shares fell over 2% in late trading after a more than 7% drop in the regular session.

Image: Rapid7