Please be advised that this additional detail may be onetime in nature, and we may or may not update these metrics in the future. With that, I'd like to turn the call over to our CEO, Corey Thomas. Corey?

Corey Thomas: Good afternoon and thank you to everyone joining us on today's call. Rapid7 had a strong close to 2023, ended the year with $806 million in ARR, growing 13% over the prior year while delivering revenue, operating income and free cash flow above our guided ranges. Sustained customer demand for our platform offerings anchored by our detection and response and cloud security solutions and improvements in execution supported a strong topline finish to the year. At the same time, our focus on operating efficiency and streamlining our cost structure drove $84 million of free cash flow in the year, exceeding our target and reflecting nearly 500 basis points of free cash flow margin expansion over the prior year. As we look back at the last year, there are a few highlights that stand out.

First, we continue to drive product innovation across our Insight platform. We further elevated our market-leading capabilities and our compelling customer value proposition with advancements in areas like AI-driven cloud anomaly detection. We exited the year with a scaled security operations platform that expands over their fragmented attack surface, covering strategic workloads across detection response, cloud native security or CNAPP and vulnerability management. Secondly, our sales force successfully reoriented towards our platform consolidation solutions to meet customers' most pressing needs, while navigating larger and longer deal cycles with conversion rates that improved as the year went on. Our package offerings gained steady traction throughout 2023 and now constitute roughly $100 million in ARR driven by a healthy contribution from both landing new customers and upgrading existing customers.

We have reflected the deal size and conversion dynamics of our growing package mix into our forward expectations for seasonality given the onboard success of our consolidation value proposition. And lastly, we rightsized our cost structure to build a foundation for efficient growth. This was a critical initial step that positions us to be able to drive efficient growth in our business over time. A great example of our progress in 2023 is illustrated by a new customer win in the fourth quarter. A publicly traded media company with a mature and security program was extensively evaluating new solutions and looking to consolidate multiple vendors across their security operations center or SOC. The large and complex nature of the company's digital footprint and their lean team, combined with Rapid7's ability to work better together with their endpoint provider made us stand out against legacy SIEM competitors.

This customer chose Rapid7 for 3 main reasons: the breadth of our cloud native platform, our ability to consolidate critical capabilities across multiple SecOps categories, including SIEM or XDR and VM. And lastly, our ease of adoption and integrations with other security vendors. We displaced a competitor with our Managed Direct Complete consolidated offering, securing a multiyear deal worth over $0.5 million in ARR. We believe the progress we made in 2023 sets us up well to win market share, accelerate growth and be a leading security platform consolidator in the next few years. Looking forward, we see 2024 as a critical year to accelerate our platform differentiation by driving focused investments to lead in mainstream cloud security adoption, drive security productivity with AI, extend our service and partner ecosystem to deliver sustainable and efficient growth going forward.

We are delivering this strategic execution against a backdrop of stable, yet noisy demand environment. Amidst this backdrop, we are leaning into our areas of strategic focus in building our security operations platform for acceleration. We're investing and innovating in areas where we see substantial demand over a multiyear horizon and where there is a clear opportunity to elevate our customer value proposition and the services ecosystem that supports it. We're making deliberate investments to build the strongest managed SOC ecosystem and deliver a leading data platform that contextualizes risk across a fragmented complex environment. Here are the 4 key areas where we are focused on and investing in as we build our leadership position in the extended SOC.

The first is on integrating and contextualizing more data across the digital attack surface particularly as security teams are managing data across traditional and cloud environment. Ease of consolidation of data on our Insight platform allows customers to apply the best operational context to their security programs. The breadth and quality of our platform features are strong, and our internal SOC has years of expertise and data to better understand the attacker. In 2024, we're focused on elevating the customer experience, with a better, more integrated Rapid7 technology platform to support fragmented IT environments. The second area of investment will be around driving cloud security adoption and mainstream enterprises. As security programs mature, lean teams with significant resource constraints increasingly need to secure their cloud environments.

We believe the majority of cloud security buyers in the coming years will look different from the typical buyer we've historically seen. We are focused on delivering CNAPP solutions that are simple to use, affordable and integrate it into our broader security operations platform. And our packaging and distribution is being fine-tuned for our mainstream enterprise customers. We are also extending our capabilities, building on the solid traction in cloud security posture management to be a leader in cloud detection and response. The third area of focus is the use of AI for improving security operations. Our AI-powered SOC continues to drive our leadership in managed detection response, one of the areas of highest growth in customer demand within security operations.

We are focused on using machine learning and large language models or LLMs, to improve our SecOps coverage and detection in multiple areas, including anomalous activity monitoring, analyst workflows and quality assurance. In addition, we are working on leveraging LLMs to drive efficiency and accelerate response times. We are building and refining these capabilities inside our SOC and manage delivery ecosystem to help get product innovations to market faster, and we'll continue to expand on these AI capabilities with a focus on productivity and efficiency all while safeguarding our customers' data. Lastly, we will be investing in our services and partner ecosystem with an emphasis on growing key channel relationships, accelerating our MSSP partnerships and increasingly engaging with customers in marketplaces like AWS.

As we look out at the rest of the year, Rapid7 has a compelling opportunity to build better, more connected customer experiences across our platform. We believe that the foundational work we're doing will position us to drive market share gains and higher durable growth over the medium to long term. At the same time, we're focused on optimizing for efficient growth and remain laser-focused on scaling free cash flow. Consistent with our previous commentary, we expect to generate at least $160 million in free cash flow in 2024. Looking towards our overall financial outlook for the year. As we process a healthy finish to 2023, balanced with our expectation for a continuation of the recent stable demand backdrop, we remain focused on providing a high confidence range for our 2024 financial outlook, which Tim will detail in his remarks.

We are focused on making deliberate platform and services investments to reaccelerate and drive durable, long-term growth. We are optimizing around our technology and distribution channels, which we believe will position us for the best multiyear growth outlook. With that, thank you for joining us on the call today. I will now turn the call over to our CFO, Tim Adams, to share additional detail on our financial results and outlook.

Tim Adams: Thank you, Corey. Good afternoon, everyone, and thank you for joining us on the call today. Before I turn to the results, a quick reminder that except for revenue, all financial results we will discuss today are non-GAAP financial measures unless otherwise stated. Additionally, reconciliations between our GAAP and non-GAAP results can be found in our earnings press release. Rapid7 ended the year with $806 million in ARR, growing 13% over the prior year. Growth was led by healthy customer demand for our integrated security operations platform and supported by expansion and innovation in our detection and response and cloud security capabilities. We saw strong traction as our consolidated offerings ramp throughout the year with improving sales conversion rates as the combined value and efficacy of our solutions increasingly resonate with mainstream enterprise customers.

ASPs increased as we benefited from larger deals tied to our package offerings. And we saw roughly balanced contributions from new and existing customers throughout the year, with particular strength in cross-selling to our existing base. These dynamics speak to the effectiveness of our technology and our strong value proposition as customers consolidate across our Insight platform. Our customer base grew 5% year-over-year to end 2023 with over 11,500 customers globally. ARR per customer grew 7% over the prior year to approximately $70,000 at year-end. Full year revenue of $778 million grew 14% over the prior year and exceeded the high end of our guidance range. Product revenue also grew 14% over the prior year to a full year total of $740 million.

Our commitment to profitable growth, including the changes we made to our cost structure in August, drove meaningful expansion in operating income and free cash flow, and we exceeded our guided ranges on both metrics for the year. We delivered $102 million of operating income which represents full year margin expansion of over 800 basis points. And we generated $84 million of free cash flow, which reflects an 11% free cash flow margin for the year. Now turning to our fourth quarter results. Total Q4 revenue of $205 million was up 11% over the prior year and above the high end of our guidance. Product revenue grew 13% year-over-year to $195 million, while professional services declined 10% to $10 million as we actively deemphasize certain lower-value services.

Our international revenue grew 21% over the prior year and represented 23% of total revenue for the fourth quarter, while North America revenue grew 9% and represented 77% of total revenue. Product gross margin was 76% in the quarter and total gross margin for the quarter was 74%, both in line with the prior year. Operating expenses in the fourth quarter reflect changes to the cost structure starting in the third quarter of 2023. Sales and marketing expense declined 5% year-over-year and represented 32% of revenue, down from 38% in the prior year. R&D expense was slightly lower than the prior year and represented 16% of revenue, down from 18% while G&A represented 6% of revenue, down from 8% in the prior year. All in all, fourth quarter operating income of $41 million was better than our guidance and represented a 20% operating margin exiting the year.

Our adjusted EBITDA was $48 million in the quarter and net income per share was $0.72. Moving to our balance sheet and cash flow. We ended the year with cash, cash equivalents and investments of $439 million compared to $373 million at the end of Q3 2023. We delivered better-than-expected fourth quarter cash flow from operations on higher operating profitability, which helped drive over $60 million of free cash flow in the quarter. This brings us to our guidance for this year. As we enter 2024, we assume a relatively stable macroeconomic backdrop and customer spending environment, consistent with the back half of 2023. This assumption informs our high-confidence growth outlook for ARR this year. For the full year 2024, we expect ending total ARR of $885 million to $895 million, which represents growth of 10% to 11%.

As Corey shared earlier, this range reflects our strategy to focus this year on deliberate investments for more efficient, durable, medium- to long-term growth. In terms of seasonality, as deal sizes get larger and reflect a scaling contribution from the success of our platform and packaged deals, our new ARR linearity assumptions for the full year reflects slightly stronger seasonality with a naturally lower contribution in the first quarter. Turning to the income statement; we expect total revenue for the full year to be in the range of $848 million to $856 million, representing growth of 9% to 10%. As we continue to focus on these strategic areas of our business, we expect product revenues to grow slightly faster than this range, offset in part by professional services revenue which we expect to decline to approximately $30 million for the full year.

On profitability measures, we anticipate strong growth in operating income which we expect to be in the range of $150 million to $158 million for the full year, implying operating margin expansion of roughly 500 basis points. We expect net income per share to be in the range of $2.10 to $2.21 based on an estimated 75.1 million diluted weighted average shares outstanding. For full year 2024, we expect to generate at least $160 million in free cash flow. This implies roughly 800 basis points of free cash flow margin expansion. In terms of free cash flow seasonality, we expect a modest contribution in the first quarter, driven by a number of cash expenses that are concentrated early in the year, including the FY '23 bonus payments and timing of tax payments.

We would then anticipate a notable ramp in free cash flow in the second quarter. Moving to quarterly guidance; for the first quarter of 2024, we expect total revenue in the range of $203 million to $205 million, representing year-over-year growth of 11% to 12%. We expect non-GAAP operating income for the first quarter in the range of $37 million to $39 million and non-GAAP net income per share of $0.52 to $0.55, which is based on 74.4 million diluted weighted average shares outstanding. We made important progress in 2023 across product innovation, go-to-market improvements and rightsizing our cost structure. This year, we have a compelling opportunity to build on that foundation to position ourselves for reacceleration and share gains in the next few years.

Thank you for taking the time to join us on the call today. And now we will open the call for questions. Operator?

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