Rapid7, Inc. (“Rapid7”) (Nasdaq: RPD) today announced that it
intends to offer, subject to market conditions and other factors,
$250 million aggregate principal amount of convertible senior notes
due 2029 (the “notes”) in a private placement to persons reasonably
believed to be qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933, as amended (the “Securities
Act”). Rapid7 also intends to grant the initial purchasers of the
notes an option to purchase up to an additional $37.5 million
aggregate principal amount of notes.
The notes will be general unsecured obligations of Rapid7 and
will accrue interest payable semiannually in arrears. The notes
will be convertible into cash, shares of Rapid7’s common stock or a
combination of cash and shares of Rapid7’s common stock, at
Rapid7’s election. The interest rate, initial conversion rate and
other terms of the notes will be determined at the time of pricing
of the offering.
Rapid7 expects to use a portion of the net proceeds from the
offering of the notes to repurchase a portion of its outstanding
2.25% Convertible Senior Notes due 2025 (the “2025 notes”) in one
or more separate and privately negotiated transactions expected to
be entered into concurrently with the pricing of the offering and
to pay the cost of the capped call transactions described below.
The terms of any repurchases of the 2025 notes are anticipated to
be individually negotiated and will depend on several factors,
including the market price of Rapid7’s common stock and the trading
price of the 2025 notes at the time of such repurchases.
Rapid7 expects to use the remainder of the net proceeds for
general corporate purposes, which may include continued investment
in its sales and marketing efforts, product development, general
and administrative matters, and working capital. Rapid7 may also
use a portion of the proceeds from this offering for acquisitions
or strategic investments in complementary businesses or
technologies, although it does not currently have any plans for any
such acquisitions or investments.
In connection with any repurchase of the 2025 notes, Rapid7
expects that holders of the outstanding 2025 notes that have hedged
their equity price risk with respect to the 2025 notes (the “hedged
holders”) will, concurrently with the pricing of the notes, unwind
their hedge positions by buying Rapid7’s common stock and/or
entering into or unwinding various derivative transactions with
respect to Rapid7’s common stock. The amount of Rapid7’s common
stock to be purchased by the hedged holders may be substantial in
relation to the historic average daily trading volume of its common
stock. This activity by the hedged holders may increase the
effective conversion price of the notes.
In connection with the pricing of the notes, Rapid7 expects to
enter into capped call transactions with one or more of the initial
purchasers or affiliates thereof and/or other financial
institutions (the “option counterparties”). The capped call
transactions will cover, subject to customary adjustments, the
number of shares of Rapid7’s common stock that initially underlie
the notes. The capped call transactions are expected to offset the
potential dilution to Rapid7’s common stock as a result of any
conversion of notes, with such offset subject to a cap. If the
initial purchasers exercise their option to purchase additional
notes, Rapid7 expects to enter into additional capped call
transactions with the option counterparties.
In connection with establishing their initial hedges of the
capped call transactions, Rapid7 has been advised that the option
counterparties and/or their respective affiliates expect to enter
into various derivative transactions with respect to Rapid7’s
common stock concurrently with or shortly after the pricing of the
notes and/or purchase shares of Rapid7’s common stock concurrently
with or shortly after the pricing of the notes. This activity could
increase (or reduce the size of any decrease in) the market price
of Rapid7’s common stock or the notes at that time.
In addition, the option counterparties and/or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to Rapid7’s common stock
and/or purchasing or selling Rapid7’s common stock or other
securities of Rapid7 in secondary market transactions following the
pricing of the notes and prior to the maturity of the notes (and
are likely to do so on each exercise date of the capped call
transactions, which are expected to occur during the 20 trading day
period beginning on the 21st scheduled trading day prior to the
maturity date of the notes, or following any termination of any
portion of the capped call transactions in connection with any
repurchase, redemption or early conversion of the notes). This
activity could also cause or avoid an increase or a decrease in the
market price of Rapid7’s common stock or the notes, which could
affect a noteholder’s ability to convert its notes and, to the
extent the activity occurs during any observation period related to
a conversion of notes, it could affect the amount and value of the
consideration that a noteholder will receive upon conversion of
such notes.
Neither the notes, nor any shares of Rapid7’s common stock
issuable upon conversion of the notes, have been registered under
the Securities Act or any state securities laws, and unless so
registered, may not be offered or sold in the United States absent
registration or an applicable exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act
and other applicable securities laws.
This press release is neither an offer to sell nor a
solicitation of an offer to buy any securities, nor shall it
constitute an offer, solicitation or sale of the securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to the registration or qualification under the
securities laws of any such jurisdiction.
About Rapid7
Rapid7 (Nasdaq: RPD) is on a mission to create a safer digital
world by making cybersecurity simpler and more accessible. We
empower security professionals to manage a modern attack surface
through our best-in-class technology, leading-edge research, and
broad, strategic expertise. Rapid7’s comprehensive security
solutions help more than 11,000 global customers unite cloud risk
management and threat detection to reduce attack surfaces and
eliminate threats with speed and precision.
Forward-Looking Statements
This press release includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements include, but are not limited
to, the statements regarding the proposed terms of the notes, the
completion, timing and size of the proposed offering, the
repurchase of the 2025 notes and capped call transactions, the
potential dilution to Rapid7’s common stock and the anticipated use
of net proceeds from the offering, including our growth strategies,
business plans and focus. Our use of the words “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “may,” “will” and
similar expressions are intended to identify forward-looking
statements. The events described in our forward-looking statements
are subject to a number of risks and uncertainties, assumptions and
other factors that could cause actual results and the timing of
certain events to differ materially from future results expressed
or implied by the forward-looking statements. Risks that could
cause or contribute to such differences include, but are not
limited to, growing macroeconomic uncertainty, unstable market and
economic conditions, fluctuations in our quarterly results,
effectiveness of our restructuring plan, failure to meet our
publicly announced guidance or other expectations about our
business, our ability to sustain our revenue growth rate, the
ability of our products and professional services to correctly
detect vulnerabilities, renewal of our customer's subscriptions,
competition in the markets in which we operate, market growth, our
ability to innovate and manage our growth, our sales cycles, our
ability to integrate acquired companies, and our ability to operate
in compliance with applicable laws as well as other risks and
uncertainties that could affect our business and results described
in our filings with the Securities and Exchange Commission (the
“SEC”), including our most recent Quarterly Report on Form 10-Q
filed with the SEC on August 9, 2023, particularly in the section
entitled "Item 1.A Risk Factors," and in the subsequent reports
that we file with the SEC. Moreover, we operate in a very
competitive and rapidly changing environment. New risks emerge from
time to time. It is not possible for our management to predict all
risks, nor can we assess the impact of all factors on our business
or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those expressed in
any forward-looking statements we may make. Except as required by
law, we undertake no obligation to update any forward-looking
statements to reflect events or circumstances after the date of
such statements. You should, therefore, not rely on these
forward-looking statements as representing our views as of any date
subsequent to the date of this press release.
Investor contact:
Elizabeth Chwalk
Director, Investor Relationsinvestors@rapid7.com(617)
865-4277
Press contact:Kelly CrummeyCorporate
Communicationspress@rapid7.com(617) 921-8089
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