Investment thesis
IT trends come and go, but cybersecurity is poised to stay as every company is turning into a software company. A name that will benefit from this mass migration is Rapid7. But is it a wise investment?
Founded in 2000, it has been growing at a steady pace and developed cybersecurity solutions across the entire IT environment. Today, it is a leader in vulnerability risk management (‘VRM’), rubbing shoulders with Qualys (QLYS) and Tenable (TENB), and also in security information and event management (‘SIEM’), competing with FireEye (FEYE) and Splunk (SPLK).
While the market is hyper-competitive, the pie grows rapidly. To capture further growth, Rapid7 has recently acquired DivvyCloud (May 2020). This move promises to solidify its position within Cloud Application Security and helps to multiply its total addressable market to $34B from $9B. From the macro perspective, major opportunities abound.
Despite the top position accolades and apparent tailwinds, we wonder if Rapid7 will sustain its 30%+ growth, or achieve economies of scale quickly enough to stay at the top. Having been around for 20 years, it is still a relatively small company with $350M in…
