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Stock-Based Compensation | 6 Months Ended
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Jun. 30, 2025
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Note 11. Stock-Based Compensation (a) General Stock-based compensation expense for restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), stock options and purchase rights issued under our employee stock purchase plan was classified in the accompanying unaudited condensed consolidated statements of operations as follows:
|  |  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  |  |  |  | 2025 |  | 2024 |  | 2025 |  | 2024 |  |
|  |  |  |  | (in thousands)
Stock-based compensation expense: |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of revenue |  |  |  |  | $ | 2,580 |  |  | $ | 3,270 |  |  | $ | 4,844 |  |  | $ | 5,941 |  |  |
Research and development |  |  |  |  | 10,250 |  |  | 8,989 |  |  | 20,636 |  |  | 16,933 |  |  |
Sales and marketing |  |  |  |  | 7,451 |  |  | 7,843 |  |  | 14,692 |  |  | 14,980 |  |  |
General and administrative |  |  |  |  | 7,300 |  |  | 8,964 |  |  | 14,560 |  |  | 16,957 |  |  |
Total stock-based compensation expense |  |  |  |  | $ | 27,581 |  |  | $ | 29,066 |  |  | $ | 54,732 |  |  | $ | 54,811 |  |  |
We recognize compensation cost of all awards on a straight-line basis over the applicable vesting period, which is generally three to four years. Our Compensation Committee adopted and approved the performance goals, targets and payout formulas for our 2025 and 2024 bonus plans, including permitting our executive officers and certain other employees the opportunity to receive payment of their earned bonuses in the form of common stock (in lieu of cash). During each of the three months ended June 30, 2025 and 2024, we recognized stock-based compensation expense related to such bonuses in the amount of $0.4 million and $0.4 million, respectively, and during the six months ended June 30, 2025 and 2024, we recognized stock-based compensation expense in the amount of $0.7 million and $0.5 million, respectively, based on the probable expected performance against the pre-established corporate financial objectives as of June 30, 2025 and 2024. For employees, including executive officers, who elect to receive their bonuses in the form of common stock (in lieu of cash), the payouts are expected to be made in the form of fully vested stock awards in the first quarter of the following year pursuant to our 2015 Equity Incentive Plan, as amended. The number of shares underlying such awards is determined by dividing the dollar value of the actual bonus award payment by the closing price per share of our common stock on the date of grant. (b) Restricted Stock, Restricted Stock Units and Performance-Based Restricted Stock Units RSUs and PSUs activity during the six months ended June 30, 2025 was as follows:
| Shares |  | Weighted- Average Grant Date Fair Value
Unvested balance as of December 31, 2024 | 2,853,235 |  |  | $ | 57.25 |
Granted | 2,409,816 |  |  | $ | 33.50 |
Vested | (897,008) |  |  | $ | 55.64 |
Forfeited | (404,603) |  |  | $ | 54.17 |
Unvested balance as of June 30, 2025 | 3,961,440 |  |  | $ | 43.45 |
As of June 30, 2025, the unrecognized compensation expense related to our unvested RSUs and PSUs was $91.6 million. This unrecognized compensation expense will be recognized over an estimated weighted-average amortization period of 1.15 years. In January 2025, our Compensation Committee awarded 181,067 PSUs that required the achievement of net annualized recurring revenue (“Net ARR”) and Adjusted EBITDA targets for the 2025 fiscal-year to earn any payout. Net ARR is defined as the change in the annual value of all recurring revenue related to contracts in place at year end. In addition, the portion of the PSUs that are earned would be capped at a maximum of 200% of the target level payout and if certain net ARR or Adjusted EBITDA goals were not met, no PSUs will be earned. The PSUs have a performance period of one year and the earned PSUs will vest in three equal installments following each of the first, second and third anniversary of the vesting commencement date, subject to the participant’s continuous service as of each such date. In the three and six months ended June 30, 2025, we recorded $0.6 million and $1.1 million, respectively, of stock-based compensation expense related to these PSUs based on estimated achievement of the performance criteria. (c)Stock Options The following tables summarizes information about stock option activity during the reporting periods:
| Shares |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life (in years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2024 | 582,638 |  |  | $ | 12.38 |  |  |  |  | $ | 16,225 |
Granted | — |  |  |  |  |  |  |
Exercised | (157,317) |  |  | $ | 10.10 |  |  |  |  | $ | 4,541 |
Forfeited/cancelled | (200) |  |  | $ | 10.88 |  |  |  |  | $ | — |
Outstanding as of June 30, 2025 | 425,121 |  |  | $ | 13.23 |  |  | 1.1 |  | $ | 4,215 |
Vested and exercisable as of June 30, 2025 | 425,121 |  |  | $ | 13.23 |  |  | 1.1 |  | $ | 4,215 |
(d)Employee Stock Purchase Plan Under the Rapid7, Inc. 2015 Employee Stock Purchase Plan ("ESPP"), employees may set aside up to 15% of their gross earnings, on an after-tax basis, to purchase our common shares at a discounted price, which is calculated at 85% of the lesser of: (i) the market value of our common stock at the beginning of each offering period and (ii) the market value of our common stock on the applicable purchase date. On March 14, 2025, we issued 186,793 sha res of common stock to employees, with a purchase price of $23.79 per share, for aggregate proceeds of $4.4 million.

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