Digital security company Rapid7, with growing sales and losses, files for IPO

Rapid7 Office 920

Rapid7, a cybersecurity software company based in Boston, is heading to the public stock markets about 15 years after it was founded — the first Boston-area technology company to publicly disclose IPO plans this year.

In paperwork filed Thursday with the Securities and Exchange Commission, Rapid7 revealed increasing revenues but also mounting annual losses, largely tied to its hefty sales and marketing expenses.

The company said it expects to continue losing money “for the foreseeable future” as it spends to expand its market share. Rapid7 is led by chief executive Corey Thomas.

Rapid7’s sales have been increasing at a pretty healthy pace: The company collected about $46 million in revenue in 2012, followed by about $60 million in 2013 and nearly $77 million in 2014.

But Rapid7 has never turned a profit, meaning investors will have to trust that its plan to expand the company will result in noticeable earnings in the future. Rapid7 reported that its net loss grew from more than $12 million in 2012 to more than $32 million in 2014. The company still has about $33 million in cash.

Rapid7’s software helps protect customers from digital attacks by analyzing network traffic and other data to show who is accessing a company’s computer systems. That’s a more modern approach to digital security, Rapid7 said, than the previous generation’s attempts to put up firewalls and other blockades.

Its competitors include large companies such as McAfee and IBM, and smaller providers like Mandiant. Although Rapid7 has attempted to expand its footprint through acquisitions and new products, it notes in the SEC filings that about two-thirds of its sales over the last three years were generated by one product, Nexpose.

Public-market investors have shown some resistance to the idea that enterprise software companies will be able to shed their past of significant losses once they become public. Box, a money-losing seller of business collaboration software, has been the poster child for this trend, seeing its shares fall about 20 percent since it went public in January.

Rapid7’s two biggest private investors are Technology Crossover Ventures and Boston-based Bain Capital Ventures. The two venture capital firms injected $30 million into Rapid7 in late 2014, following a $50 million investment in 2011.

Rapid7 is the first Boston-area technology company to publicly announce its IPO plans so far this year, according to research firm CB Insights. Four tech companies from the region went public in 2014: Care.com, Hubspot, Wayfair, and Imprivata.

A report in Fortune indicates that another local cybersecurity company, Veracode, has also filed IPO paperwork under a provision allowing smaller companies to file their initial plans in secret. No Veracode filings have been made public.