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Rapid7 on the Potential 2013 IPO Roster

Posted on Tuesday, Jul 10th 2012

According to Gartner, the worldwide security software market grew 7.5% in 2011 to $17.7 billion. The increase was driven by increased adoption by small and medium businesses (SMBs). Last year, Symantec, McAfee, and Trend Micro remained the biggest players in the market and together accounted for 34% of the market share. But smaller players continued to move forward. They reported a combined market share of 56.4% and grew 9.3% over the year.

Rapid7’s Financials
Rapid7 is one such player that is making its presence felt. The Boston-based company was founded in 2000 by Alan Matthews, Tas Giakouminakis, Chad Loder, and John Devine.

Rapid7 is best known for its award-winning vulnerability management solution, Nexpose, and its penetration testing product, Metasploit. Its products help organizations obtain accurate, actionable, and contextual intelligence to evaluate their network threats and risk posture. Metasploit Express is security software for penetration testing that uses a graphical user interface and automates tasks such as scripting, evidence collection, and reporting. NeXpose Express is a vulnerability assessment, policy compliance, and remediation solution for SMBs that is able to scan up to 128 IPs at a time. While most of its products are available through annual licenses, its also offers a free downloadable version of both NeXpose and Metasploit for SMBs.

Overall, its customer list of more than 2,000 enterprises spans 65 countries and includes names such as Blackstone Group, Trader Joe’s, and the state of Massachusetts, to name a few. Its free products have been downloaded more than one million times per year and have been enhanced by more than 125,000 security community users and contributors. The company was named among one of the fastest-growing security companies worldwide by Inc. Magazine.

Rapid7 ended 2011 with revenues growing 72% over the year to $30.3 million. Analysts expect Rapid7 to end the current year with $47 million in revenues. The company expects to double revenues this year. To date, it has received $59 million in funding from investors, including Bain Capital Ventures and Technology Crossover Ventures. The company is now evaluating an IPO even though it has not confirmed the timeline.

Expanding into Australia and the Middle East
Rapid7 plans to use the IPO funds for acquisition of other companies and international expansion. But even without IPO funds, it has been focused on international expansion. Recently it began operations in Sydney, Australia, to cater to customers and partners in Australia, New Zealand, and the surrounding regions. It also partnered with Spire Solutions, a specialist IT security distributor that delivers information security solutions across the Middle East. Through the partnership, Rapid7 will be able to distribute their products in the Middle Eastern market.

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