Shares in Rapid7 Inc. fell nearly 5% in after-hours trading today after the cybersecurity solutions provider offered weaker-than-expected guidance for 2024.

For its fourth quarter ended Dec. 31, Rapid7 reported adjusted earnings per diluted share of 72 cents, up from 35 cents in the same quarter of last year, on revenue of $205.3 million, up 11% year-over-year. Both figures were beats, as analysts were expecting earnings per share of 48 cents on revenue of $201.26 million.

Rapid7’s strong headline figures were driven by product revenue, which saw a 13% year-over-year increase, to $194.8 million, while Rapid7 saw its professional services revenue decline 10%, to $10.5 million. Annual recurring revenue was up 13%, to $805.7 million, driven by 5% customer growth to 11,526 and annual recurring revenue per customer hitting $69,900, up 7% year-over-year.

Net cash provided by operating activities in the quarter was $63.47 million, up from $40.2 million a year prior and free cash cash flow came in at $60.3 million.

Highlights in the quarter included Rapid7 announcing the introduction of two artificial intelligence-powered threat detection capabilities in November. Aimed at enhancing the ability of security teams to identify and address unknown threats more efficiently and with less background noise, the solutions include Cloud Anomaly Detection and Kerberoasting Detection.

For its full fiscal year 2023, Rapid7 reported adjusted earnings per diluted share of $1.52, up from 36 cents in 2022, on revenue of $777.7 million, up 14% year-over-year.

“Rapid7 delivered solid results to end the year, exceeding our guided ranges on ARR, revenue, non-GAAP operating income, and free cash flow,” Corey Thomas, chairman and chief executive officer of Rapid7, said in the company’s earnings release. “Mainstream enterprise customers continue to choose Rapid7 for the strength of our consolidated security operations platform, our integrated expertise and our compelling value proposition.”

For its first quarter, Rapid7 expects adjusted earnings per share of 52 cents to 55 cents on revenue of $203 million to $205 million. For the full year, the company expects earnings per share of $2.10 to $2.21 on revenue of $848 million to $856 million.

Of the four outlook figures, both the revenue outlook figures were the problem. For the full year, analysts expected a higher figure of $870.8 million, and for the first quarter at the midpoint, analysts were looking for $204.7 million. The two weaker-than-expected figures were enough to spook investors in late trading.

Image: Rapid7