Rapid7 Q3 2026: Cost Cuts Power a Fifth Straight EPS Beat

Rapid7 reported adjusted non-GAAP earnings of $0.60 per share for the third quarter of 2026, beating the consensus estimate of $0.48. The beat extended the cybersecurity company's streak of exceeding EPS estimates to five consecutive quarters, a run that now stretches back to Q3 2025.

The profit outperformance came without growth behind it. Revenue of $212.4 million came in above the $209.3 million estimate, but it still fell 2.5% from the same quarter a year ago. Annual recurring revenue slipped to $819.7 million, down 2.2% year over year, underscoring that the top-line headwinds remain real.

Aggressive cost discipline is doing the work. Sales and marketing expense dropped to $65.6 million from $79.3 million a year earlier, and R&D fell to $39.6 million, lifting non-GAAP operating income to $46.2 million. CEO Wael Mohamed described the quarter as early progress in a "multi-quarter journey," adding that "one quarter of stability is just a start."

The forward picture offers little comfort on revenue. Fourth-quarter guidance calls for sales of $208 million to $210 million, another year-over-year decline, with Q4 ARR expected to come in at approximately $812 million. Non-GAAP EPS guidance of $0.53 to $0.55 for the quarter suggests the margin story has further room to run even as the top line contracts.

On the product side, Rapid7 is building toward what it calls an Autonomous SOC, combining AI agents with its security-expert services. Hundreds of customers are already using capabilities powered by the Kenzo Security acquisition, and the company launched Rapid7 Intelligence in October to unify threat intelligence and vulnerability research. Full-year 2026 free cash flow is targeted at approximately $130 million, a figure management says remains on track.