Rapid7 prepares to toss 18% of workforce to cut costs
Operating expenses almost as high as actual turnover in latest quarterly numbers
Rapid7 is initiating a restructuring process that will involve shedding 18 percent of its workforce after net losses widened over the most recent quarter.
The NASDAQ-listed security info and event management biz reported turnover from sales of $190.4 million for calendar Q2, up 14 percent year-on-year, and a loss of $66.7 million versus a loss of $39.6 million.
Discussing the results on a conference call with financial analysts, CEO Corey Thomas talked up the business, saying it has three clear ways to "support the modern SOC (security operations center)" which resonate with customers.
He said customers continue to upgrade from "legacy log-centric detection to cloud-native detection"; customers no longer "treat risk and threat functions as distinct"; and customers rely more and more on automation.
Within this context, Thomas flipped to describing the decision to "restructure our organization and reorient our cost structure, and how that positions us to better execute against our strategy."
The decision to cut 18 percent of the workforce, estimated at 470 heads, is partly about being "leaner," he said.
"About half of our plan changes are efficiency-related cuts that we expect to flow directly to the bottom line. These include streamlining management layers, reduction of role overlap and optimizing our own and offshore talent mix."
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The company reported operating expenses of $183 million in the quarter, up from $147.8 million a year earlier, with $27 million for the impairment of long-lived assets a contributing factor to the change.
Thomas claimed the other rationale for reducing headcount is to "strategically reallocate investment to key areas that we believe will drive the most long-term value for customers." This seems to involve spinning up relationships with managed service providers.
Due to the redundancies, Rapid7 expects to incur restructuring charges of $24-32 million including "cash expenditures for employee transition, notice period and severance payments" and more, it said in an SEC filing [PDF].
As is typical in these circumstances, the job "eliminations" are subject to local laws and this "may extend this process beyond the fourth quarter of 2023 in certain countries."
Some offices will also be permanently shuttered and this is expected to lead to an impairment charge of $4 million during this financial year.
Across the tech industry, an estimated 939 companies have shed in the region of 225,000 jobs in 2023, according to layoffs.fyi. The pace of redundancies has slowed in recent months, but Rapid7 can now join that list. ®