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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 001-37496
 
RAPID7, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 35-2423994
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
120 Causeway Street 
Boston,MA02114
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (617247-1717
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareRPDThe Nasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
Large Accelerated Filer
Accelerated Filer
Non-accelerated Filer
Small Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No  
As of July 29, 2022, there were 58,700,340 shares of the registrant’s common stock, $0.01 par value per share, outstanding.



Table of Contents

i

PART I—FINANCIAL INFORMATION
Item 1.Financial Statements.

RAPID7, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data) 
June 30, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$163,469 $164,582 
Short-term investments76,244 58,850 
Accounts receivable, net of allowance for credit losses of $2,266 and $1,978 at June 30, 2022 and December 31, 2021, respectively
124,701 146,094 
Deferred contract acquisition and fulfillment costs, current portion31,367 29,974 
Prepaid expenses and other current assets34,221 33,236 
Total current assets430,002 432,736 
Long-term investments14,330 34,068 
Property and equipment, net50,533 50,225 
Operating lease right-of-use assets84,937 83,751 
Deferred contract acquisition and fulfillment costs, non-current portion60,878 57,191 
Goodwill515,631 515,258 
Intangible assets, net105,785 111,591 
Other assets23,452 11,191 
Total assets$1,285,548 $1,296,011 
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable$6,832 $3,521 
Accrued expenses66,348 82,620 
Operating lease liabilities, current portion11,809 9,630 
Deferred revenue, current portion395,208 372,067 
Other current liabilities3,473 842 
Total current liabilities483,670 468,680 
Convertible senior notes, non-current portion, net813,950 812,063 
Operating lease liabilities, non-current portion89,473 90,865 
Deferred revenue, non-current portion33,098 33,056 
Other long-term liabilities13,512 17,342 
Total liabilities1,433,703 1,422,006 
Stockholders’ equity (deficit):
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized at June 30, 2022 and December 31, 2021; 0 shares issued at June 30, 2022 and December 31, 2021
  
Common stock, $0.01 par value per share; 100,000,000 shares authorized at June 30, 2022 and December 31, 2021; 59,122,773 and 58,181,816 shares issued at June 30, 2022 and December 31, 2021, respectively; 58,635,965 and 57,695,008 shares outstanding at June 30, 2022 and December 31, 2021, respectively
586 577 
Treasury stock, at cost, 486,808 shares at June 30, 2022 and December 31, 2021
(4,764)(4,764)
Additional paid-in-capital681,194 615,032 
Accumulated other comprehensive loss(4,538)(812)
Accumulated deficit(820,633)(736,028)
Total stockholders’ equity (deficit)(148,155)(125,995)
Total liabilities and stockholders’ equity (deficit)$1,285,548 $1,296,011 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
1

RAPID7, INC.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)
 
 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Revenue:
Products$159,122 $119,147 $308,147 $228,432 
Professional services8,333 7,274 16,692 15,440 
Total revenue167,455 126,421 324,839 243,872 
Cost of revenue:
Products45,867 33,169 89,339 62,819 
Professional services8,408 6,139 16,225 12,778 
Total cost of revenue54,275 39,308 105,564 75,597 
Total gross profit113,180 87,113 219,275 168,275 
Operating expenses:
Research and development48,907 35,305 98,719 68,385 
Sales and marketing78,034 56,246 153,180 111,224 
General and administrative20,890 17,488 42,406 33,708 
Total operating expenses147,831 109,039 294,305 213,317 
Loss from operations(34,651)(21,926)(75,030)(45,042)
Other income (expense), net:
Interest income243 122 355 218 
Interest expense(2,758)(3,059)(5,451)(8,453)
Other income (expense), net(2,403)148 (3,006)(919)
Loss before income taxes(39,569)(24,715)(83,132)(54,196)
Provision for income taxes37 9,449 1,473 9,813 
Net loss$(39,606)$(34,164)$(84,605)$(64,009)
Net loss per share, basic and diluted$(0.68)$(0.62)$(1.46)$(1.18)
Weighted-average common shares outstanding, basic and diluted58,239,958 55,392,383 57,983,790 54,169,464 
The accompanying notes are an integral part of these unaudited consolidated financial statements.

2

RAPID7, INC.
Consolidated Statements of Comprehensive Loss (Unaudited)
(in thousands)
 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Net loss$(39,606)$(34,164)$(84,605)$(64,009)
Other comprehensive income (loss):
Change in fair value of cash flow hedges(3,027)(72)(3,925)(201)
Adjustments for net losses (gains) realized and included in net loss761 (174)1,077 (378)
Total change in unrealized losses on cash flow hedges(2,266)(246)(2,848)(579)
Change in unrealized losses on investments(220)(3)(878)(12)
Total other comprehensive loss(2,486)(249)(3,726)(591)
Comprehensive loss$(42,092)$(34,413)$(88,331)$(64,600)

The accompanying notes are an integral part of these unaudited consolidated financial statements.


3

RAPID7, INC.
Consolidated Statements of Changes in Stockholders' (Deficit) (Unaudited)
(in thousands)
 Common stockTreasury stockAdditional
paid-in-capital
Accumulated
other
comprehensive
gain (loss)
Accumulated
deficit
Total
stockholders’
(deficit)
 SharesAmountSharesAmount
Balance, March 31, 202258,242 $582 487 $(4,764)$650,710 $(2,052)$(781,027)$(136,551)
Stock-based compensation expense— — — — 31,890 — — 31,890 
Vesting of restricted stock units364 4 — — (4)— —  
Shares withheld for employee taxes(24) — — (1,645)— — (1,645)
Issuance of common stock upon exercise of stock options21  — — 246 — — 246 
Issuance of common stock in connection with conversion of convertible senior notes— — — — (3)— — (3)
Issuance of common stock related to acquisition33 — — — — — —  
Other comprehensive loss— — — — — (2,486)— (2,486)
Net loss— — — — — — (39,606)(39,606)
Balance, June 30, 202258,636 $586 487 $(4,764)$681,194 $(4,538)$(820,633)$(148,155)

 Common stockTreasury stockAdditional
paid-in-capital
Accumulated
other
comprehensive
gain (loss)
Accumulated
deficit
Total
stockholders’
(deficit)
 SharesAmountSharesAmount
Balance, March 31, 202155,091 $551 487 $(4,764)$542,415 $112 $(619,539)$(81,225)
Stock-based compensation expense— — — — 22,487 — — 22,487 
Vesting of restricted stock units500 5 — — (5)— —  
Shares withheld for employee taxes(42)(1)— — (3,346)— — (3,347)
Issuance of common stock upon exercise of stock options109 1 — — 1,102 — — 1,103 
Issuance of common stock in connection with conversion of convertible senior notes23 — — — — — —  
Issuance of common stock related to acquisition67 1 — — (1)— —  
Other comprehensive loss— — — — — (249)— (249)
Net loss— — — — — — (34,164)(34,164)
Balance, June 30, 202155,748 $557 487 $(4,764)$562,652 $(137)$(653,703)$(95,395)
















4

 Common stockTreasury stockAdditional
paid-in-capital
Accumulated
other
comprehensive
gain (loss)
Accumulated
deficit
Total
stockholders’
(deficit)
 SharesAmountSharesAmount
Balance, December 31, 202157,695 $577 487 $(4,764)$615,032 $(812)$(736,028)$(125,995)
Stock-based compensation expense— — — — 64,365 — — 64,365 
Issuance of common stock under employee stock purchase plan81 1 — — 5,709 — — 5,710 
Vesting of restricted stock units766 8 — — (8)— —  
Shares withheld for employee taxes(59)(1)— — (5,105)— — (5,106)
Issuance of common stock upon exercise of stock options120 1 — — 1,204 — — 1,205 
Issuance of common stock in connection with conversion of convertible senior notes— — — — (3)— — (3)
Issuance of common stock related to acquisition33 — — — — — —  
Other comprehensive loss— — — — — (3,726)— (3,726)
Net loss— — — — — — (84,605)(84,605)
Balance, June 30, 202258,636 $586 487 $(4,764)$681,194 $(4,538)$(820,633)$(148,155)

 Common stockTreasury stockAdditional
paid-in-capital
Accumulated
other
comprehensive
gain (loss)
Accumulated
deficit
Total
stockholders’
equity (deficit)
 SharesAmountSharesAmount
Balance, December 31, 202052,225 $522 487 $(4,764)$692,603 $454 $(617,279)$71,536 
Stock-based compensation expense— — — — 44,771 — — 44,771 
Issuance of common stock under employee stock purchase plan148 1 — — 4,466 — — 4,467 
Vesting of restricted stock units874 9 — — (9)— —  
Shares withheld for employee taxes(80)(1)— — (6,670)— — (6,671)
Issuance of common stock upon exercise of stock options279 3 — — 2,518 — — 2,521 
Purchase of capped calls related to convertible senior notes— — — — (76,020)— — (76,020)
Issuance of common stock in connection with repurchase and conversion of convertible senior notes2,200 22 — — (2,720)— — (2,698)
Issuance of common stock in connection with inducement of convertible senior notes35 — — — 2,740 — — 2,740 
Issuance of common stock related to acquisition67 1 — — (1)— —  
Cumulative-effect adjustment for the adoption of ASU 2020-06— — — — (99,026)— 27,585 (71,441)
Other comprehensive loss— — — — — (591)— (591)
Net loss— — — — — — (64,009)(64,009)
Balance, June 30, 202155,748 $557 487 $(4,764)$562,652 $(137)$(653,703)$(95,395)


The accompanying notes are an integral part of these unaudited consolidated financial statements.
5

RAPID7, INC.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
 Six Months Ended June 30,
 20222021
Cash flows from operating activities:
Net loss$(84,605)$(64,009)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization20,392 13,768 
Amortization of debt issuance costs1,990 1,791 
Stock-based compensation expense61,333 44,676 
Deferred income taxes 3,924 
Induced conversion expense 2,740 
Other2,281 1,446 
Changes in operating assets and liabilities:
Accounts receivable18,147 12,816 
Deferred contract acquisition and fulfillment costs(5,080)(5,453)
Prepaid expenses and other assets(10,527)394 
Accounts payable3,557 (1,329)
Accrued expenses(12,493)(7,592)
Deferred revenue23,183 22,220 
Other liabilities(326)4,389 
Net cash provided by operating activities17,852 29,781 
Cash flows from investing activities:
Business acquisition, net of cash acquired (52,420)
Purchases of property and equipment(7,224)(2,671)
Capitalization of internal-use software costs(8,058)(4,205)
Purchases of investments(58,997)(59,308)
Sales/maturities of investments60,329 87,938 
Other investments(500)(1,500)
Net cash used in investing activities(14,450)(32,166)
Cash flows from financing activities:
Proceeds from issuance of convertible senior notes, net of issuance costs paid of $14,560 for the six months ended June 30, 2021
 585,440 
Purchase of capped calls related to convertible senior notes (76,020)
Payments of debt issuance costs(71) 
Payments for repurchase and conversion of convertible senior notes(12)(184,649)
Payments related to business acquisitions(300)(2,431)
Taxes paid related to net share settlement of equity awards(5,106)(6,671)
Proceeds from employee stock purchase plan5,710 4,467 
Proceeds from stock option exercises1,205 2,530 
Net cash provided by financing activities1,426 322,666 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(3,671)(293)
Net increase in cash, cash equivalents and restricted cash1,157 319,988 
Cash, cash equivalents and restricted cash, beginning of period165,017 173,617 
Cash, cash equivalents and restricted cash, end of period$166,174 $493,605 
Supplemental cash flow information:
Cash paid for interest on convertible senior notes$3,337 $4,025 
Cash paid for income taxes, net of refunds$564 $632 
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents$163,469 $493,568 
Restricted cash included in prepaid expenses and other assets2,705 $37 
Total cash, cash equivalents and restricted cash$166,174 $493,605 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
6

RAPID7, INC.
Notes to Consolidated Financial Statements (Unaudited)
Note 1. Description of Business, Basis of Presentation and Consolidation and Significant Accounting Policies
Description of Business
Rapid7, Inc. and subsidiaries (“we,” “us” or “our”) are advancing security with visibility, analytics, and automation delivered through our Insight Platform. Our solutions simplify the complex, allowing security teams to work more effectively with IT and development to reduce vulnerabilities, monitor for malicious behavior, investigate and shut down attacks, and automate routine tasks.
Basis of Presentation and Consolidation
The accompanying unaudited consolidated financial statements have been prepared by us in accordance with accounting principles generally accepted in the United States of America (“GAAP”), as well as pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), regarding interim financial reporting. Accordingly, certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 24, 2022.
The consolidated financial statements include our results of operations and those of our wholly-owned subsidiaries and reflect all adjustments (consisting solely of normal, recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented. All intercompany transactions and balances have been eliminated in consolidation. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The management estimates include, but are not limited to the determination of the estimated economic life of perpetual licenses for revenue recognition, the determination of standalone selling prices in revenue transactions with multiple performance obligations, the estimated period of benefit for deferred contract acquisition and fulfillment costs, the useful lives and recoverability of long-lived assets, the valuation for credit losses, the valuation of stock-based compensation, the fair value of assets acquired and liabilities assumed in business combinations, the incremental borrowing rate for operating leases and the valuation for deferred tax assets. We base our estimates on historical experience and on various other assumptions that we believe are reasonable. Actual results could differ from those estimates.
The COVID-19 pandemic has resulted in a sustained global slowdown of economic activity that has decreased demand for a broad variety of goods and services, including from our customers. While we have not experienced significant disruptions from the COVID-19 pandemic during the three and six months ended June 30, 2022, we are unable to accurately predict the extent to which the ongoing COVID-19 pandemic may impact our business, results of operations and financial condition going forward. Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment. As of the date of issuance of these financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates, assumptions and judgments or revise the carrying value of our assets or liabilities. These estimates may change as new events occur and additional information is obtained and will be recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to our financial statements.
Significant Accounting Policies
Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no changes to the significant accounting policies during the three and six-month periods ended June 30, 2022.
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Recent Accounting Pronouncements
Accounting Pronouncements Recently Adopted
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which clarified the accounting for acquired revenue contracts with customers in a business combination. ASU 2021-08 requires acquirers to measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606. As a result, it is generally expected that an acquirer will recognize and measure contract assets and liabilities in a manner consistent with how they were recognized by the acquiree in its preacquisition financial statements. This standard is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted. We early adopted this standard on January 1, 2022. This guidance will be applied prospectively to all business combinations that occur on or after January 1, 2022.
Accounting Pronouncements Not Yet Effective
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions to GAAP guidance on contract modifications to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate ("LIBOR") to alternative reference rates. We may elect to apply the amendments prospectively through December 31, 2022. The impact to our consolidated financial statements from the adoption of this standard is expected to be immaterial.
Note 2. Revenue from Contracts with Customers
We generate revenue primarily from: (1) subscriptions from the sale of cloud-based subscriptions, managed services, term software licenses, content subscriptions and maintenance and support associated with our software licenses, (2) perpetual software licenses, and (3) professional services from the sale of our deployment and training services related to our solutions, incident response services, penetration testing and security advisory services.
The following table summarizes revenue from contracts with customers for the three and six months ended June 30, 2022 and 2021:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
(in thousands)
Subscriptions$157,771 $117,014 $305,238 $224,181 
Perpetual software licenses1,106 2,036 2,467 4,150 
Professional services8,333 7,274 16,692 15,440 
Other245 97 442 101 
Total revenue$167,455 $126,421 $324,839 $243,872 
Subscriptions
Subscriptions consists of revenue from our cloud-based subscription, managed services offerings, term software licenses, content subscriptions and maintenance and support associated with our software licenses.
We generate cloud-based subscription revenue primarily from sales of subscriptions to access our cloud platform, together with related support services to our customers. These arrangements do not provide the customer with the right to take possession of our software operating on our cloud platform at any time. Instead, customers are granted continuous access to our cloud platform over the contractual period. Revenue is recognized over time on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our cloud-based subscription contracts generally have annual or multi-year contractual terms which are billed in advance of the annual subscription period and are non-cancellable.
Managed services offerings consist of fees generated when we operate our software and provide our capabilities on behalf of our customers. Revenue is recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our managed services offerings generally have annual or multi-year contractual terms which are billed in advance of the annual subscription period and are non-cancellable.
For our term software licenses where the utility to the customer is dependent on the continued delivery of content subscriptions, we recognize the license revenue over the contractual term of the content subscription. For our term software licenses which are not dependent on the continued delivery of content subscriptions, the license is considered
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distinct from the maintenance and support, and we therefore recognize revenue attributable to the license at the time of delivery.
Content subscriptions and our maintenance and support services are sold with our perpetual and term software licenses. Revenue related to our content subscriptions associated with our software licenses is recognized ratably over the contractual period. Maintenance and support services are distinct from the perpetual and term software license and revenue attributable to maintenance and support services is recognized ratably over the contractual period.
Perpetual Software Licenses
For our perpetual software licenses where the utility to the customer is dependent on the continued delivery of content subscriptions, the content subscription renewal options result in a material right with respect to the perpetual software license. As a result, the revenue attributable to the perpetual software license is recognized ratably over the customer’s estimated economic life of five years, which represents a longer period of time in comparison to the initial contractual period of maintenance and support. The estimated economic life of five years represents the period which the customer is expected to benefit from the material right. We estimated this period of benefit by taking into consideration several factors, including the terms and conditions of our customer contracts and renewals and the expected useful life of our technology.
For our perpetual software licenses which are not dependent on the continued delivery of content subscriptions, the license is considered distinct from the maintenance and support, and we therefore recognize revenue attributable to the license at the time of delivery.
Professional Services
All of our professional services are considered distinct performance obligations when sold stand alone or with other products. These contracts generally have terms of one year or less. For the majority of these contracts, revenue is recognized over time based upon the proportion of work performed to date.
Contracts with Multiple Performance Obligations
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. The majority of our contracts with customers contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price (“SSP”) basis. We determine SSP of our products and services based on our overall pricing objectives using all information reasonably available to us, taking into consideration market conditions and other factors, including the geographic locations of our customers, negotiated discounts from price lists and selling method (i.e., partner or direct). When available, we use directly observable stand-alone transactions to determine SSP. When not regularly sold on a stand-alone basis, we estimate SSP for our products and services utilizing historical sales data, including discounts from list price. The historical data is aggregated and analyzed by geographic location and selling method to establish a median or average price. Once SSP is established it is applied consistently to all transactions including that product or service utilizing a portfolio approach.
Contract Balances
Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are recognized as revenue over the contractual period consistent with the above methodology. For the three months ended June 30, 2022 and 2021, we recognized revenue of $143.7 million and $108.2 million, respectively, and for the six months ended June 30, 2022 and 2021, we recognized $250.4 million and $181.3 million, respectively, that was included in the corresponding contract liability balance at the beginning of the periods presented. Deferred revenue that will be realized during the succeeding 12-month period is recorded as current, and the remaining deferred revenue is recorded as non-current.
We receive payments from customers based upon contractual billing schedules. Accounts receivable are recorded when the right to consideration becomes unconditional. Unbilled receivables include amounts related to our contractual right to consideration for both completed and partially completed performance obligations that have not been invoiced. If the right to consideration is based on satisfaction of another performance obligation in the contract other than the passage of time, we record a contract asset. As of June 30, 2022 and December 31, 2021, unbilled receivables of $1.0 million and $1.2 million, respectively, are included in prepaid expenses and other current assets in our consolidated balance sheet. As of June 30, 2022 and December 31, 2021, we had no contract assets recorded on our consolidated balance sheet.
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Transaction price allocated to the remaining performance obligations
The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied as of June 30, 2022. The estimated revenues do not include unexercised contract renewals.
Next Twelve MonthsThereafter
 (in thousands)
Subscriptions$432,603 $147,895 
Perpetual software licenses1,548 273 
Professional services18,197 2,928 
Total$452,348 $151,096 
Note 3. Business Combinations
IntSights
On July 16, 2021, we acquired IntSights Cyber Intelligence Ltd. (“IntSights”), a provider of contextualized external threat intelligence and proactive threat remediation, for a purchase price with an aggregate fair value of $322.3 million. The purchase consideration consisted of $319.2 million in cash paid at closing, $3.4 million in deferred cash payments and a $0.3 million receivable for purchase price adjustments. The deferred cash payments will be held by us to satisfy indemnification obligations payable within eighteen months of the acquisition date.
The assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. The excess of the purchase price over the assets acquired and liabilities assumed was recorded as goodwill. The fair value of net assets acquired, goodwill and intangible assets were $61.1 million, $260.9 million and $65.2 million, respectively. These preliminary amounts are subject to subsequent adjustment as we obtain additional information to finalize certain components of working capital and deferred income taxes. The goodwill was allocated to our one reporting unit. The acquired goodwill and intangible assets were not deductible for tax purposes.
Our revenue attributable to the IntSights business for the three and six months ended June 30, 2022 was $8.1 million and $15.0 million, respectively, and our net loss attributable to the IntSights business for the three and six months ended June 30, 2022 was $10.4 million and $21.3 million, respectively.
Pro Forma Financial Information
The unaudited pro forma financial information in the table below summarizes the combined results of our operations and IntSights, on a pro forma basis, as though we had acquired IntSights on January 1, 2020. The unaudited pro forma financial information for all periods presented also includes the effects of business combination accounting resulting from the acquisition, including an adjustment to revenue for the deferred revenue fair value adjustment, amortization expense from acquired intangibles assets, reversal of acquisition-related expenses and the stock-compensation expense recorded to retain certain employees.
Three Months Ended June 30, 2021Six Months Ended June 30, 2021
(in thousands)
Revenue$132,963 $256,393 
Net loss$(47,222)$(84,232)
Velocidex Enterprises Pty Ltd
On April 12, 2021, we acquired Velocidex Enterprises Pty Ltd (“Velocidex”), a leading open-source technology and community used for endpoint monitoring, digital forensics, and incident response. The purchase price consisted of $2.7 million paid in cash and $0.3 million in deferred cash payments. The purchase price was allocated to developed technology intangible asset which has an estimated useful life of 6 years.
Alcide.IO Ltd.
On January 28, 2021, we acquired Alcide.IO Ltd. (“Alcide”), a leading provider of Kubernetes security, for a purchase consideration of $50.5 million, which was funded in cash.
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The assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. The excess of the purchase price over the assets acquired and liabilities assumed was recorded as goodwill. The fair value of net assets acquired, goodwill and intangible assets were $(0.7) million, $40.8 million and $10.4 million, respectively. The goodwill was allocated to our one reporting unit. The acquired goodwill and intangible asset were not deductible for tax purposes.
Note 4. Investments
Our investments, which are all classified as available-for-sale, consisted of the following:
 As of June 30, 2022
 Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
 (in thousands)
Description:
U.S. government agencies$65,670 $ $(608)$65,062 
Corporate bonds16,932  (310)16,622 
Commercial paper8,164   8,164 
Agency bonds750  (24)726 
Total$91,516 $ $(942)$90,574 
 As of December 31, 2021
 Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
 (in thousands)
Description:
Commercial paper$37,778 $ $ $37,778 
Corporate bonds32,059  (32)32,027 
U.S government agencies22,396  (31)22,365 
Agency bonds749  (1)748 
Total$92,982 $ $(64)$92,918 
As of June 30, 2022, our available-for-sale investments had maturities ranging from 1 to 17 months. As of December 31, 2021, our available-for-sale investments had maturities ranging from 2 to 23 months.
For all of our investments for which the amortized cost basis was greater than the fair value at June 30, 2022 and December 31, 2021, we have concluded that there is no plan to sell the security nor is it more likely than not that we would be required to sell the security before its anticipated maturity. In making the determination as to whether the unrealized loss is other-than-temporary, we considered the length of time and extent the investment has been in an unrealized loss position, the financial condition and near-term prospects of the issuers, the issuers’ credit rating and the time to maturity.
Note 5. Fair Value Measurements
We measure certain financial assets and liabilities at fair value. Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:
Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability.
We consider an active market to be one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, and we consider an inactive market to be one in which there are
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infrequent or few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers.
The following table presents our financial assets and liabilities measured and recorded at fair value on a recurring basis using the above input categories:
 As of June 30, 2022
 Level 1Level 2Level 3Total
 (in thousands)
Description:
Assets:
Money market funds$62,007 $ $ $62,007 
U.S. Government agencies65,062   65,062 
Corporate bonds