Rapid7, Inc. (RPD Quick QuoteRPD - Free Report) , a recognized leader in extended risk and threat detection, recently announced its acquisition of Noetic Cyber, a pioneering firm in cyber asset attack surface management (CAASM). This strategic buyout is poised to enhance Rapid7’s cybersecurity solutions, offering customers a more comprehensive view of their digital environments.

The acquisition of Noetic Cyber is set to close during Rapid7’s third quarter of 2024 and is not expected to materially impact the company’s 2024 Annualized Recurring Revenues. Following the completion of the transaction, Rapid7 plans to make Noetic Cyber’s capabilities available to its customers by the summer.

Rationale Behind the Acquisition

The acquisition of Noetic Cyber brings a significant advantage to Rapid7’s portfolio. Noetic Cyber’s CAASM solution is designed to provide visibility into both internal and external assets, whether on-premises or in the cloud. This capability aligns seamlessly with Rapid7’s goal of delivering high-context, inside-out views and adversary-aware, outside-in perspectives. The integration of Noetic’s technology is expected to help customers better anticipate threats and manage risks by providing a detailed understanding of their attack surface.

The acquisition will enable Rapid7’s clients to benefit from advanced threat-aware context and focused prioritization. This means security teams can recognize critical risk signals and exposures more effectively, improving the overall signal-to-noise ratio. Additionally, the combined solutions will offer highly correlated asset and resource views, enhancing the efficiency and productivity of security operations through improved asset inventory and continual content updates.

The acquisition will also address the critical market need for improved visibility and management of cyber assets. Citing Gartner’s Innovation Insight: Attack Surface Management report, Rapid7 revealed that only 17% of organizations can clearly identify and inventory a majority of their assets. The integration of Noetic Cyber into Rapid7’s platform ensures that more security teams can confidently oversee their security data, prioritize exposures and identify security gaps effectively.

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Enhancing Portfolio Aids Rapid7’s Growth

Rapid7 is launching fresh solutions as well as enhancing the capabilities of existing ones. Most recently, it revealed that Rapid7 AI Engine is now equipped with generative artificial intelligence (AI) capabilities.

Additionally, Rapid7 has broadened its InsightOps portfolio by incorporating advanced antivirus, forensics and incident response features. In its SecOps offerings, RPD is witnessing growth in cloud-based risk agreements, with an increasing count of customers making long-term commitments.

Rapid7 is also continuously focusing on expanding its portfolio through partnerships and acquisitions. In June 2024, it collaborated with Comcast Business to support the Comcast Business Managed Detection and Response solution, which leverages Rapid7’s security analytics platform. Last year, it acquired Minerva Labs, Ltd., a prominent provider of anti-evasion and ransomware prevention technology, to enhance its offerings.

Additionally, Rapid7 has technology partners that include industry leaders like IBM, Microsoft Corporation (MSFT Quick QuoteMSFT - Free Report) , Splunk, Atlassian Corporation (TEAM Quick QuoteTEAM - Free Report) , CyberArk and Amazon.com, Inc.’s (AMZN Quick QuoteAMZN - Free Report) Amazon Web Services. Collaborations with these industry giants enable Rapid7 to integrate its cybersecurity solutions seamlessly into widely used platforms, enhancing the value proposition for customers.

Integration with Microsoft’s security and productivity tools allows Rapid7 to offer comprehensive threat detection and response solutions within familiar environments, improving user adoption and effectiveness. By partnering with Atlassian, Rapid7 leverages tools like Jira to streamline security incident management and collaboration, enhancing efficiency for security teams. Collaboration with Amazon Web Services enables Rapid7 to deliver scalable, cloud-native security solutions, appealing to a broad customer base transitioning to or operating in the cloud.

Rapid7’s strong customer traction and product offerings are driving its top and bottom-line results. In the last reported financial results for the first quarter of 2024, the company’s total revenues increased 12% year over year, while adjusted EPS jumped 244%. The Zacks Consensus Estimate for 2024 revenues and earnings suggests a year-over-year increase of 7.2% and 41.5%, respectively.

Conclusion

We consider that the acquisition underscores Rapid7’s commitment to providing comprehensive, proactive cybersecurity solutions, positioning the company to better serve its clients in an increasingly complex threat landscape. The sustained focus on strengthening its product portfolio will help Rapid7 gain new customers, thereby boosting revenues over the long run.

However, Rapid7’s near-term prospects might be hurt by softening IT spending. Enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues. Some of the cybersecurity players have already pointed out that organizations are delaying or taking more time in finalizing deals or even rightsizing deals in the current uncertain macroeconomic environment.

This makes us slightly cautious about this Zacks Rank #3 (Hold) company’s prospects in the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the last month, Rapid7’s share price has risen 21.3%, significantly outperforming the Zacks Internet – Software industry’s growth of 5.6%.