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Rapid7 Announces Fourth Quarter and Full-Year 2021 Financial Results
المصدر: Nasdaq GlobeNewswire / 09 فبراير 2022 16:05:01 America/New_York
- Annualized recurring revenue (ARR) of $599.0 million, an increase of 38% year-over-year
- Full-year revenue of $535.4 million, up 30% year-over-year; Products revenue of $500.8 million, up 31% year-over-year
- Total customer growth of 18% year-over-year
- Total ARR per customer growth of 17% year-over-year
BOSTON, Feb. 09, 2022 (GLOBE NEWSWIRE) -- Rapid7, Inc. (NASDAQ: RPD), a leading provider of security analytics and automation, today announced financial results for the fourth quarter and full-year 2021.
"We ended 2021 on a high note, delivering strong fourth quarter results across our security transformation and vulnerability management solutions. We grew ARR by 38% during the year while eclipsing 10,000 customers globally, highlighting our team's strong execution and the growing need for customers to manage increasingly complex security environments," said Corey Thomas, Chairman and CEO of Rapid7.
"As we look ahead to 2022, we remain focused on enabling better security outcomes for our customers, while driving durable growth and scaling profitability."
Fourth Quarter 2021 Financial Results and Other Metrics
As of December 31, 2021 2020 % Change (dollars in thousands) Annualized recurring revenue $ 599,020 $ 432,946 38 % Number of customers (1) 10,283 8,718 18 % ARR per customer (1) $ 58.3 $ 49.7 17 % (1) Number of customers and ARR per customer are based on our new customer count methodology provided at our virtual investor day on March 10, 2021. Prior period amounts have been revised to conform with these modified definitions, which are also provided in the Non-GAAP Financial Measures and Other Metrics section below. Three Months Ended December 31, Year Ended December 31, 2021 2020 % Change 2021 2020 % Change (in thousands, except per share data) Products revenue $ 141,262 $ 104,384 35 % $ 500,843 $ 382,922 31 % Professional services revenue 10,376 8,775 18 % 34,561 28,564 21 % Total revenue $ 151,638 $ 113,159 34 % $ 535,404 $ 411,486 30 % North America revenue $ 120,886 $ 93,765 29 % $ 433,111 $ 342,638 26 % Rest of world revenue 30,752 19,394 59 % 102,293 68,848 49 % Total revenue $ 151,638 $ 113,159 34 % $ 535,404 $ 411,486 30 % GAAP gross profit $ 101,758 $ 79,465 $ 366,456 $ 289,969 GAAP gross margin 67 % 70 % 68 % 70 % Non-GAAP gross profit $ 108,181 $ 83,002 $ 388,320 $ 302,967 Non-GAAP gross margin 71 % 73 % 73 % 74 % GAAP loss from operations $ (40,708 ) $ (20,631 ) $ (120,065 ) $ (74,099 ) GAAP operating margin (26.8 )% (18.2 )% (22.4 )% (18.0 )% Non-GAAP (loss) income from operations $ (6,110 ) $ (744 ) $ 7,599 $ 2,032 Non-GAAP operating margin (4.0 )% (0.7 )% 1.4 % 0.5 % GAAP net loss $ (44,625 ) $ (28,918 ) $ (146,334 ) $ (98,849 ) GAAP net loss per share, basic and diluted $ (0.79 ) $ (0.56 ) $ (2.65 ) $ (1.94 ) Non-GAAP net loss $ (8,931 ) $ (3,726 ) $ (2,983 ) $ (5,200 ) Non-GAAP net loss per share, basic and diluted $ (0.16 ) $ (0.07 ) $ (0.05 ) $ (0.10 ) Adjusted EBITDA $ (1,903 ) $ 2,958 $ 23,795 $ 15,525 Free cash flow $ (2,179 ) $ (7,818 ) $ 35,053 $ (15,045 ) For additional details on the reconciliation of non-GAAP measures and certain other business metrics to their nearest comparable GAAP measures, please refer to the accompanying financial data tables included in this press release.
Recent Business Highlights
- In January 2022, Rapid7 announced its inclusion in the Bloomberg Gender-Equality Index, which aims to track the performance of public companies committed to transparency in gender-data reporting.
- In January 2022, Tim Adams joined Rapid7 as Chief Financial Officer, reporting to Rapid7's Chairman and Chief Executive Officer, Corey Thomas.
- Rapid7 ended 2021 with over 10,000 global customers that rely on Rapid7's technology, services, and research to improve security outcomes and securely advance their organizations.
- In November 2021, Rapid7 fully redeemed the remaining $45.4 million in aggregate principal amount of its outstanding convertible senior notes due 2023.
First Quarter and Full-Year 2022 Guidance
Rapid7 anticipates annualized recurring revenue, revenue, non-GAAP (loss) income from operations, non-GAAP net (loss) income per share and free cash flow to be in the following ranges:
First Quarter 2022 Full-Year 2022 (in millions, except per share data) Annualized recurring revenue $740 to $750 Year-over-year growth 24% to 25% Revenue $153 to $155 $682 to $690 Year-over-year growth 30% to 32% 27% to 29% Non-GAAP (loss) income from operations $(7) to $(5) $17 to $24 Non-GAAP net (loss) income per share $(0.18) to $(0.15) $0.05 to $0.16 Weighted average shares outstanding 58.3 60.9 Free cash flow $40 to $45 The guidance provided above is forward-looking in nature. Actual results may differ materially. See the cautionary note regarding “Forward-Looking Statements” below. Guidance for the first quarter and full-year 2022 does not include any potential impact of foreign exchange gains or losses. The weighted average shares outstanding for the first quarter 2022 represent basic shares outstanding given our projected non-GAAP net loss and diluted shares outstanding for the full-year 2022 given our projected range of non-GAAP net income. The guidance provided above is based on a number of assumptions, estimates and expectations as of the date of this press release and, while presented with numerical specificity, this guidance is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond Rapid7's control and are based upon specific assumptions with respect to future business decisions or economic conditions, some of which may change. Rapid7 undertakes no obligation to update guidance after this date.
Non-GAAP guidance excludes estimates for stock-based compensation expense, amortization of acquired intangible assets, amortization of debt issuance costs, and certain other items. Rapid7 has provided a reconciliation of each non-GAAP guidance measure to the most comparable GAAP measures in the financial statement tables included in this press release. The reconciliation does not reflect any items that are unknown at this time, such as litigation-related expenses, which we are not able to predict without unreasonable effort due to their inherent uncertainty.
Conference Call and Webcast Information
Rapid7 will host a conference call today, February 9, 2022, to discuss its results at 4:30 p.m. Eastern Time. The call will be accessible by telephone at 877-357-4230 (domestic) or 629-228-0721 (international). The call will also be available live via webcast on the Company’s website at http://investors.rapid7.com. A telephone replay of the conference call will be available at 855-859-2056 or 404-537-3406 (access code 7585978) until February 16, 2022. A webcast replay will be available at http://investors.rapid7.com.
About Rapid7
Rapid7 (Nasdaq: RPD) is advancing security with visibility, analytics, and automation delivered through our Insight cloud. Our solutions simplify the complex, allowing security teams to work more effectively with IT and development to reduce vulnerabilities, monitor for malicious behavior, investigate and shut down attacks, and automate routine tasks. Over 10,000 customers rely on Rapid7 technology, services, and research to improve security outcomes and securely advance their organizations. For more information, visit our website, check out our blog, or follow us on Twitter.
Non-GAAP Financial Measures and Other Metrics
To supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States, or GAAP, we provide investors with certain non-GAAP financial measures and other metrics, which we believe are helpful to our investors. We use these non-GAAP financial measures and other metrics for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We also use certain non-GAAP financial measures as performance measures under our executive bonus plan. We believe that these non-GAAP financial measures and other metrics provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making.
While our non-GAAP financial measures are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, you should review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures included below, and not rely on any single financial measure to evaluate our business.
Non-GAAP Financial Measures
We disclose the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP net income (loss) per share, adjusted EBITDA and free cash flow. We also disclose non-GAAP gross margin and non-GAAP operating margin derived from these financial measures.
We define non-GAAP gross profit, non-GAAP income (loss) from operations, non-GAAP net income (loss) and non-GAAP net income (loss) per share as the respective GAAP balances excluding the effect of stock-based compensation expense, amortization of acquired intangible assets, amortization of debt discount and issuance costs and certain other items such as acquisition-related expenses, litigation-related expenses and induced conversion expense. Non-GAAP net income (loss) per basic and diluted share is calculated as non-GAAP net income (loss) divided by the weighted average shares used to compute net income (loss) per share, with the number of weighted average shares decreased, when applicable, to reflect the anti-dilutive impact of the capped call transactions entered into in connection with our convertible senior notes.
We believe these non-GAAP financial measures are useful to investors in assessing our operating performance due to the following factors:
Stock-based compensation expense. We exclude stock-based compensation expense because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact our non-cash expense. We believe that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between our operating results from period to period.
Amortization of acquired intangible assets. We believe that excluding the impact of amortization of acquired intangible assets allows for more meaningful comparisons between operating results from period to period as the intangible assets are valued at the time of acquisition and are amortized over several years after the acquisition.
Amortization of debt discount and issuance costs. The expense for the amortization of debt discount and debt issuance costs related to our convertible senior notes and revolving credit facility is a non-cash item, and we believe the exclusion of this interest expense provides a more useful comparison of our operational performance in different periods.
Induced conversion expense. In conjunction with the first quarter of 2021 partial repurchase of our 1.25% convertible senior notes due 2023, we incurred an induced conversion expense of $2.7 million. We exclude induced conversion expense because this amount is not indicative of the performance of, or trends in, our business and neither is comparable to the prior period nor predictive of future results.
Litigation-related expenses. We exclude certain litigation-related expenses consisting of professional fees and related costs incurred by us related to significant litigation outside the ordinary course of business. We believe it is useful to exclude such expenses because we do not consider such amounts to be part of our ongoing operations.
Acquisition-related expenses. We exclude acquisition-related expenses as costs that are unrelated to the current operations and neither are comparable to the prior period nor predictive of future results. Our acquisition-related expenses for the year ended December 31, 2021 includes $9.0 million of tax expense related to the sale of acquired intellectual property through an intercompany transaction related to the Alcide acquisition.
Anti-dilutive impact of capped call transaction. Our capped calls transactions are intended to offset potential dilution from the conversion features in our convertible senior notes. Although we cannot reflect the anti-dilutive impact of the capped call transactions under GAAP, we do reflect the anti-dilutive impact of the capped call transactions in non-GAAP net income (loss) per diluted share, when applicable, to provide investors with useful information in evaluating our financial performance on a per share basis.
Adjusted EBITDA (non-GAAP). Adjusted EBITDA is a non-GAAP measure that we define as net loss before (1) interest income, (2) interest expense, (3) other income (expense), net, (4) provision for income taxes, (5) depreciation expense, (6) amortization of intangible assets, (7) stock-based compensation expense, and (8) certain other items. We believe that the use of adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods.
Free Cash Flow. Free cash flow is a non-GAAP measure that we define as net cash provided by operating activities less purchases of property and equipment and capitalization of internal-use software costs.
Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact upon our reported financial results. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in our business and an important part of the compensation provided to our employees.
Other Metrics
Annualized Recurring Revenue (ARR). ARR is defined as the annual value of all recurring revenue related contracts in place at the end of the period. ARR should be viewed independently of revenue and deferred revenue as ARR is an operating metric and is not intended to be combined with or replace these items. ARR is not a forecast of future revenue and can be impacted by contract start and end dates and renewal rates, and does not include revenue reported as perpetual license or professional services revenue in our consolidated statement of operations.
Number of Customers. We define a customer as any entity that has an active Rapid7 recurring revenue contract as of the specified measurement date, excluding InsightOps and Logentries only customers with a contract value less than $2,400 per year.
ARR per Customer. We define ARR per customer as ARR divided by the number of customers at the end of the period.
Cautionary Language Concerning Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, the statements regarding our financial guidance for the first quarter and full-year 2022, the assumptions underlying such guidance and the timing of global economic recovery, market opportunities, future growth and operating leverage, and the anticipated impact of COVID-19 on our guidance, business, financial condition, and results of operations. Our use of the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. The events described in our forward-looking statements are subject to a number of risks and uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Risks that could cause or contribute to such differences include, but are not limited to, risks arising from the ongoing COVID-19 pandemic, fluctuations in our quarterly results, failure to meet our publicly announced guidance or other expectations about our business, our rapid growth and ability to sustain our revenue growth rate, the ability of our products and professional services to correctly detect vulnerabilities, our customers renewal of their subscriptions with us, competition in the markets in which we operate, market growth, our ability to innovate and manage our growth, our sales cycles, our ability to integrate acquired companies, our ability to operate in compliance with applicable laws as well as other risks and uncertainties set forth in the “Risk Factors” section of our most recent Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (the “SEC”) on November 4, 2021 and in the subsequent reports that we file with the Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those expressed in any forward-looking statements we may make. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.
Investor contact:
Sunil Shah
Vice President, Investor Relations
investors@rapid7.com
(617) 865-4277Press contact:
Caitlin O'Connor
Senior Public Relations Manager
press@rapid7.com
(857) 990-4240RAPID7, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands)December 31, 2021 December 31, 2020 Assets Current assets: Cash and cash equivalents $ 164,582 $ 173,617 Short-term investments 58,850 138,839 Accounts receivable, net 146,094 111,599 Deferred contract acquisition and fulfillment costs, current portion 29,974 21,536 Prepaid expenses and other current assets 33,236 27,844 Total current assets 432,736 473,435 Long-term investments 34,068 10,124 Property and equipment, net 50,225 53,114 Operating lease right-of-use assets 83,751 67,178 Deferred contract acquisition and fulfillment costs, non-current portion 57,191 43,103 Goodwill 515,258 213,601 Intangible assets, net 111,591 44,296 Other assets 11,191 8,271 Total assets $ 1,296,011 $ 913,122 Liabilities and Stockholders’ Equity (Deficit) Current liabilities: Accounts payable $ 3,521 $ 3,860 Accrued expenses 82,620 61,677 Operating lease liabilities, current portion 9,630 9,612 Deferred revenue, current portion 372,067 278,585 Other current liabilities 842 — Total current liabilities 468,680 353,734 Convertible senior notes, net 812,063 378,586 Operating lease liabilities, non-current portion 90,865 75,737 Deferred revenue, non-current portion 33,056 31,365 Other long-term liabilities 17,342 2,164 Total liabilities 1,422,006 841,586 Stockholders’ equity (deficit): Common stock 577 522 Treasury stock (4,764 ) (4,764 ) Additional paid-in-capital 615,032 692,603 Accumulated other comprehensive (loss) income (812 ) 454 Accumulated deficit (736,028 ) (617,279 ) Total stockholders’ equity (deficit) (125,995 ) 71,536 Total liabilities and stockholders’ equity (deficit) $ 1,296,011 $ 913,122 RAPID7, INC.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)Three Months Ended December 31, Year Ended December 31, 2021 2020 2021 2020 Revenue: Products $ 141,262 $ 104,384 $ 500,843 $ 382,922 Professional services 10,376 8,775 34,561 28,564 Total revenue 151,638 113,159 535,404 411,486 Cost of revenue: Products 41,457 27,295 140,773 96,864 Professional services 8,423 6,399 28,175 24,653 Total cost of revenue 49,880 33,694 168,948 121,517 Total gross profit 101,758 79,465 366,456 289,969 Operating expenses: Research and development 48,514 29,737 160,779 108,568 Sales and marketing 73,189 54,429 247,453 195,981 General and administrative 20,763 15,930 78,289 59,519 Total operating expenses 142,466 100,096 486,521 364,068 Loss from operations (40,708 ) (20,631 ) (120,065 ) (74,099 ) Other income (expense), net: Interest income 63 111 365 1,454 Interest expense (2,877 ) (7,429 ) (14,292 ) (24,137 ) Other income (expense), net (703 ) 12 (1,921 ) (81 ) Loss before income taxes (44,225 ) (27,937 ) (135,913 ) (96,863 ) Provision for income taxes 400 981 10,421 1,986 Net loss $ (44,625 ) $ (28,918 ) $ (146,334 ) $ (98,849 ) Net loss per share, basic and diluted $ (0.79 ) $ (0.56 ) $ (2.65 ) $ (1.94 ) Weighted-average common shares outstanding, basic and diluted 56,752,295 52,017,473 55,270,998 51,036,824 RAPID7, INC.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)Three Months Ended December 31, Year Ended December 31, 2021 2020 2021 2020 Cash flows from operating activities: Net loss $ (44,625 ) $ (28,918 ) $ (146,334 ) $ (98,849 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 9,988 6,284 33,501 22,631 Amortization of debt discount and issuance costs 1,096 5,305 3,982 17,518 Stock-based compensation expense 28,707 16,967 102,579 63,888 Deferred income taxes (3,458 ) 737 466 737 Induced conversion expense — — 2,740 — Other 265 447 1,920 2,428 Changes in operating assets and liabilities: Accounts receivable (48,997 ) (37,608 ) (25,475 ) (24,380 ) Deferred contract acquisition and fulfillment costs (12,754 ) (8,101 ) (22,526 ) (13,379 ) Prepaid expenses and other assets (6,446 ) (10,308 ) (3,355 ) (8,956 ) Accounts payable (4,156 ) (4,316 ) (2,077 ) (2,394 ) Accrued expenses 23,759 11,719 19,205 8,640 Deferred revenue 61,173 47,884 85,562 37,428 Other liabilities 136 490 3,729 (425 ) Net cash provided by operating activities 4,688 582 53,917 4,887 Cash flows from investing activities: Business acquisitions, net of cash acquired — — (358,420 ) (125,826 ) Purchases of property and equipment (4,175 ) (6,677 ) (9,010 ) (13,802 ) Capitalization of internal-use software costs (2,692 ) (1,723 ) (9,854 ) (6,130 ) Purchases of investments (33,784 ) (68,343 ) (93,092 ) (177,053 ) Sales/maturities of investments 23,160 10,925 147,998 166,524 Other investments — — (3,000 ) — Net cash used in investing activities (17,491 ) (65,818 ) (325,378 ) (156,287 ) Cash flows from financing activities: Proceeds from issuance of convertible senior notes, net of issuance costs paid — — 585,024 222,799 Purchase of capped calls related to convertible senior notes — — (76,020 ) (27,255 ) Payments of debt issuance costs (300 ) (29 ) (300 ) (440 ) Payments for redemption, repurchase and conversion of convertible senior notes (45,351 ) — (230,000 ) — Payments related to business acquisitions — — (12,118 ) (150 ) Taxes paid related to net share settlement of equity awards (4,672 ) (2,937 ) (16,044 ) (8,921 ) Proceeds from employee stock purchase plan — — 9,276 7,082 Proceeds from stock option exercises 1,036 1,591 4,315 7,810 Net cash (used in) provided by financing activities (49,287 ) (1,375 ) 264,133 200,925 Effect of exchange rate changes on cash, cash equivalents and restricted cash (423 ) 519 (1,272 ) 679 Net (decrease) increase in cash, cash equivalents and restricted cash (62,513 ) (66,092 ) (8,600 ) 50,204 Cash, cash equivalents and restricted cash, beginning of period 227,530 239,709 173,617 123,413 Cash, cash equivalents and restricted cash, end of period $ 165,017 $ 173,617 $ 165,017 $ 173,617 RAPID7, INC.
GAAP to Non-GAAP Reconciliation (Unaudited)
(in thousands, except share and per share data)Three Months Ended December 31, Year Ended December 31, 2021 2020 2021 2020 Total gross profit (GAAP) $ 101,758 $ 79,465 $ 366,456 $ 289,969 Add: Stock-based compensation expense1 1,521 1,104 6,491 4,298 Add: Amortization of acquired intangible assets2 4,902 2,433 15,373 8,700 Total gross profit (non-GAAP) $ 108,181 $ 83,002 $ 388,320 $ 302,967 Gross margin (non-GAAP) 71.3 % 73.3 % 72.5 % 73.6 % Gross profit (GAAP) - Products $ 99,805 $ 77,089 $ 360,070 $ 286,058 Add: Stock-based compensation expense 1,066 727 4,357 2,740 Add: Amortization of acquired intangible assets 4,902 2,433 15,373 8,700 Total gross profit (non-GAAP) - Products $ 105,773 $ 80,249 $ 379,800 $ 297,498 Gross margin (non-GAAP) - Products 74.9 % 76.9 % 75.8 % 77.7 % Gross profit (GAAP) - Professional services $ 1,953 $ 2,376 $ 6,386 $ 3,911 Add: Stock-based compensation expense 455 377 2,134 1,558 Total gross profit (non-GAAP) - Professional services $ 2,408 $ 2,753 $ 8,520 $ 5,469 Gross margin (non-GAAP) - Professional services 23.2 % 31.4 % 24.7 % 19.1 % GAAP Loss from operations $ (40,708 ) $ (20,631 ) $ (120,065 ) $ (74,099 ) Add: Stock-based compensation expense1 28,707 16,967 102,579 63,888 Add: Amortization of acquired intangible assets2 5,781 2,582 17,305 9,138 Add: Acquisition-related expenses3 — 205 7,211 1,343 Add: Litigation-related expenses4 110 133 569 1,762 Non-GAAP (loss) income from operations $ (6,110 ) $ (744 ) $ 7,599 $ 2,032 GAAP Net loss $ (44,625 ) $ (28,918 ) $ (146,334 ) $ (98,849 ) Add: Stock-based compensation expense1 28,707 16,967 102,579 63,888 Add: Amortization of acquired intangible assets2 5,781 2,582 17,305 9,138 Add: Acquisition-related expenses3 — 205 16,176 1,343 Add: Litigation-related expenses4 110 133 569 1,762 Add: Induced conversion expense — — 2,740 — Add: Amortization of debt discount and issuance costs 1,096 5,305 3,982 17,518 Non-GAAP Net loss $ (8,931 ) $ (3,726 ) $ (2,983 ) $ (5,200 ) Reconciliation of net loss per share, basic and diluted: GAAP net loss per share, basic and diluted $ (0.79 ) $ (0.56 ) $ (2.65 ) $ (1.94 ) Non-GAAP adjustment to net loss per share $ 0.63 $ 0.49 $ 2.60 $ 1.84 Non-GAAP net loss per share, basic and diluted $ (0.16 ) $ (0.07 ) $ (0.05 ) $ (0.10 ) Weighted average shares used in per share calculation, basic and diluted 56,752,295 52,017,473 55,270,998 51,036,824 1 Includes stock-based compensation expense as follows: Cost of revenue $ 1,521 $ 1,104 $ 6,491 $ 4,298 Research and development 14,838 6,571 46,622 24,423 Sales and marketing 5,696 4,297 23,828 16,826 General and administrative 6,652 4,995 25,638 18,341 2 Includes amortization of acquired intangible assets as follows: Cost of revenue $ 4,902 $ 2,433 $ 15,373 $ 8,700 Sales and marketing 684 104 1,477 247 General and administrative 195 45 455 191 3 Includes acquisition-related expenses as follows: Research and development $ — $ — $ 40 $ — Sales and marketing — — 275 — General and administrative — 205 6,896 1,343 Provision for income taxes — — 8,965 — 4 Includes litigation-related expenses as follows: General and administrative $ 110 $ 133 $ 569 $ 1,762 Reconciliation of GAAP Net Loss to Adjusted EBITDA (Unaudited)
(in thousands)Three Months Ended December 31, Year Ended December 31, 2021 2020 2021 2020 Net loss $ (44,625 ) $ (28,918 ) $ (146,334 ) $ (98,849 ) Interest income (63 ) (111 ) (365 ) (1,454 ) Interest expense 2,877 7,429 14,292 24,137 Other (income) expense, net 703 (12 ) 1,921 81 Provision for income taxes 400 981 10,421 1,986 Depreciation expense 3,140 2,915 12,342 11,036 Amortization of intangible assets 6,848 3,369 21,159 11,595 Stock-based compensation expense 28,707 16,967 102,579 63,888 Acquisition-related expenses — 205 7,211 1,343 Litigation-related expenses 110 133 569 1,762 Adjusted EBITDA $ (1,903 ) $ 2,958 $ 23,795 $ 15,525 RAPID7, INC.
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (Unaudited)
(in thousands)Three Months Ended December 31, Year Ended December 31, 2021 2020 2021 2020 Net cash provided by operating activities $ 4,688 $ 582 $ 53,917 $ 4,887 Less: Purchases of property and equipment (4,175 ) (6,677 ) (9,010 ) (13,802 ) Less: Capitalized internal-use software costs (2,692 ) (1,723 ) (9,854 ) (6,130 ) Free cash flow $ (2,179 ) $ (7,818 ) $ 35,053 $ (15,045 ) First Quarter and Full-Year 2022 Guidance
GAAP to Non-GAAP Reconciliation
(in millions, except per share data)First Quarter 2022 Full-Year 2022 Reconciliation of GAAP to non-GAAP (loss) income from operations: Anticipated GAAP loss from operations $ (46 ) to $ (44 ) $ (143 ) to $ (136 ) Add: Anticipated stock-based compensation expense 33 to 33 138 to 138 Add: Anticipated amortization of acquired intangible assets 6 to 6 22 to 22 Anticipated non-GAAP (loss) income from operations $ (7 ) to $ (5 ) $ 17 to $ 24 Reconciliation of GAAP to non-GAAP net (loss) income: Anticipated GAAP net loss $ (51 ) to $ (49 ) $ (161 ) to $ (154 ) Add: Anticipated stock-based compensation expense 33 to 33 138 to 138 Add: Anticipated amortization of acquired intangible assets 6 to 6 22 to 22 Add: Anticipated amortization of debt issuance costs 1 to 1 4 to 4 Anticipated non-GAAP net (loss) income $ (11 ) to $ (9 ) $ 3 to $ 10 Anticipated GAAP net loss per share, basic and diluted $ (0.87 ) $ (0.84 ) $ (2.73 ) $ (2.61 ) Anticipated non-GAAP net (loss) income per share, diluted $ (0.18 ) $ (0.15 ) $ 0.05 $ 0.16 Weighted average shares used in GAAP per share calculation, basic and diluted 58.3 59.0 Weighted average shares used in non-GAAP per share calculation: Basic 58.3 59.0 Diluted 58.3 60.9 The reconciliation does not reflect any items that are unknown at this time, such as acquisition-related and litigation-related expenses, which we are not able to predict without unreasonable effort due to their inherent uncertainty. As a result, the estimates shown for Anticipated GAAP loss from operations, Anticipated GAAP net loss, and Anticipated GAAP net loss per share are expected to change.
Full-Year 2022 Reconciliation of net cash provided by operating activities to free cash flow: Net cash provided by operating activities $ 78 to $ 83 Less: Purchases of property and equipment (25 ) to (25 ) Less: Capitalized internal-use software costs (13 ) to (13 ) Free cash flow $ 40 to $ 45 
