Business model of Rapid7

Customer Segments

Rapid7 provides a range of network security, application security and analytics solutions to commercial and institutional clients. The Company primarily serves customers operating across the following sectors:

• Energy and Utility, including energy producers, transmission companies, water treatment companies, and waste management companies;
• Financial Services, including banks, accountancy firms, insurance companies, credit unions, and brokerages;
• Healthcare, comprising healthcare facilities such as hospitals and clinics, as well as integrated health services providers, health insurance companies, and specialist healthcare providers,
• Education, principally comprising higher education institutions such as a colleges and universities, as well as research institutions;
• Retail, including a range of retail businesses, such as supermarkets, department stores, and members-only retail clubs; and
• Government, including various local, state, and federal government bodies and agencies.

As of 31^st December 2015, Rapid7 had more than 5,100 customers, including 37% of the organisations in the Fortune 1000. Rapid7 names a number of its customers on its website, such as Bridgehampton National Bank, The City of Corpus Christi, Nebraska Public Power District, Prairie North Regional Health Authority, Essentia Health, Carnegie Mellon University, and Bob’s Stores.

Rapid7’s principal market is North America, which accounts for the majority of its annual revenue. The Company also serves an international client base, with operations across Europe, the Middle East, Latin America, Africa, and Asia Pacific.

Value Propositions

Rapid7 provides value to its customers in the following ways:

• Its international and industry reach, with the Company serving a broad range of commercial and institutional clients from various business sectors – including energy, retail, healthcare, and education – across the Americas, Europe, Asia Pacific, the Middle East, and Africa;
• Its automated data collection functionality, with the Company providing efficient data collection services across multiple data sources, from endpoint information, to user behaviors, to cloud activity, utilising proprietary technology;
• Its ability to provide tailored solutions, with the Company providing customer-specific security analytics that cover the cyber security risks specific to each individual client’s IT environment;
• Its specialist personnel and industry experience, with the Company employing expert technical staff across its operation, including specialist security advisors, and maintaining a database of more than 70,000 known vulnerabilities that is continually expanded; and
• Its accessibility and ease of use, with the Company providing accessible and easy to use search functions, with its solutions available online through the cloud.

Channels

Rapid7 operates a website at www.rapid7.com, through which it provides information on its various solutions, services, and industry focus. The Company also operates an online sales channel through its website, making a number of its products available for customers to download on a free trial basis. The Company’s website also includes a customer portal where clients are able to log to an alter their accounts, as well as access products.

The majority of Rapid7’s products are sold through the Company’s direct inside and field sales teams. The Company’s global sales teams – which are organised geographically across the Company’s operating regions, as well as by target organisation size –focus on new customer acquisition and up-selling to existing customers. Rapid7’s inside sales teams typically focus on small and middle-market transactions.

Rapid7 additionally maintains a global channel partner network that complements and supports its own in-house sales operations. This includes companies that provide language support and broader distribution capabilities, particularly in key foreign markets across Europe, the Middle East, Africa, Latina America, and Asia Pacific. The Company’s channel partners- which include independent sales agents and distributors – also assist in closing customer transactions, sourcing new prospects and securing maintenance renewals.

Customer Relationships

Rapid7 provides certain products to customers on a self-service basis, in particular free trials of its various software solutions. These trials can be downloaded and access without interacting with members of the Company’s sales force. Customers are also able to access their products and accounts on a self-service basis, changing account details and utilising Rapid7 functionality independently.

The majority of Rapid7’s sales are made through its dedicated in-house sale force. The Company’s sales personnel consult directly with clients in order to establish the individual requirements and limitations of each customer, working to provide solutions that are tailored to them specifically. The Company continues to work closely with its clients, with a view to establishing a long-term relationship.

Rapid7 provides a range of online customer support resources, including user guides, documentation, and tutorials for its various products. Customers are also able to contact technical support personnel directly in order to receive personalised responses to queries and enquiries. Rapid7 additionally operates a community portal, where customers are able to interact with one another, collaborate on fixing problems, and provide advice.

Customers are able to interact directly with Rapid7 and stay up to date with its activities via its social media accounts, including with Facebook and Twitter.

Key Activities

Rapid7 provides security data and analytics solutions to a range of commercial and institutional clients. Its solutions are designed to enable organisations to implement an active approach to cyber security.

The Company's solutions are built around its proprietary Rapid7 Insight Platform, a security data and analytics platform that provides solutions to cyber security, enabling customers to identify and eliminate critical weaknesses and detect attacks in their information technology environments.

Rapid7’s Insight Platform collects information from a range of sources to provide a broad overview across a customer’s systems, spanning network and endpoint data, enterprise cloud data, and user information. The Company also provides security advisory and other ancillary services to its customers. Rapid7 primarily serves the healthcare, government, education, retail, energy, and financial services sectors.

Key Partners

Rapid7 works closely with a range of companies and organisations that provide various services to the Company and assist in its development and distribution of solutions. These partners include:

• Channel Partners, comprising a range of resellers, independent sales agents, and distributors that provide additional sales support to the Company’s in-house sales and marketing force, particularly in certain international markets;
• Integration Partners, comprising a range of technology companies and software development companies that assist the Company in implementing it solutions and integrating third-party functionality;
• Managed Security Service Providers, comprising technology and security solutions providers that have built Rapid7’s unified vulnerability management technology into their own managed security services offerings; and
• Consulting Partners, comprising a range of security solutions, technology, and security consultancy firms that assist the Company in developing and delivering effective and reliable solutions.

Rapid7 includes a number of high-profile technology companies among its integration partners, including Cisco, Amazon Web Services, Google Apps, Microsoft, IBM, and Salesforce. The Company’s consulting partners include Anitian Enterprise Security, Guidance Consulting, and Lighthouse Computer Services.

Key Resources

Rapid7’s key resources are its technologies and intellectual properties, its online proprietary platform, its IT and communications infrastructure, its sales and distribution channels, its partnerships, and its personnel – notably its specialist technical staff.

Rapid7 considers its ability to protect its intellectual properties as a key aspect of its ongoing operations. According to its annual report, as of 31^st December 2015, the Company had five issued patents and 17 patent applications pending in the US relating to its products. Searches of records published by the US Patent and Trademark Office identified several patents filed in the Company’s name, including applications entitled ‘Methods and systems for improved risk scoring of vulnerabilities’, ‘Systems and methods for advanced dynamic analysis scanning’, and ‘Systems and methods for determining an objective security assessment for a network of assets’.

Rapid7 owns and or leases a range of properties, principally comprising its network of offices across the US, as well as offices in Canada the UK, Northern Ireland, Ireland, and Singapore.

Cost Structure

Rapid7 incurs costs in relation to the development of its technologies and solutions, the maintenance and development of its online platform, the maintenance of its IT and communications infrastructure, the operation of its sales and distribution channels, the management of its partnerships, the and the retention of its personnel.

In 2015 Rapid7’s sales and marketing costs were its most significant, amounting to $67.37 million. The Company’s research and development costs totalled $38.75 million, while its general and administrative costs totalled $$21.73 million.

Revenue Streams

Rapid7 generates revenue through the provision of various security and data analytics solutions. The Company’s revenue is arranged into three streams:

• Products, comprising revenue derived from the development and sale of technology solutions;
• Repair and Maintenance, comprising revenue derived from the provision of repair and maintenance services; and
• Professional Services, comprising revenue derived from the provision of consulting and other professional services.

In 2015 Rapid7 generated $110.53 million in annual revenue, up considerably on the $76.88 million recorded by the Company in 2014. The majority of this revenue was a generated through the Company’s sale of products, which totaled $63.41 million. The provision of maintenance and support services accounted for $26.90 million of the Company’s revenue for the year, while the provision of professional services accounted for $20.22 million.