Corey Thomas: Yes. So good questions. I’m not going to try to do the IDC, Gartner thing given the overall market growth rates because I probably like misremember stuff — but what I would just say is that think about my comment largely, Alex, is that our assumption and our plan is to see growth rate acceleration over the midterm, you can think about that 2- to 3-year window. So we do actually plan to see like growth acceleration. And we plan for that to actually be ahead of where the analysts in the market is. And I think we can look at what they have as their growth rates is probably the best arbitrator. It’s certainly something that access that, but we see the capacity. And our strategy for that, just to be very specific, is that this year, our investment is rotated to products and product differentiation and distribution and market expansion.
So like we’re very focused about like what are the high-growth areas, detection response, taking cloud security mainstream, getting more leverage for us and our partners through our AI and SOC investments and then extending our partnership ecosystem, especially in the managed service space. We think that those investments will allow us to both be differentiated to address more customer demand that we actually see in the overall market and actually have a more cost-efficient go-to-market motion and distribution motion. That’s where we’re actually putting our dollars and our investments. We think that over the next 3 years, we can be a very, very strong both free cash flow grower but also a total top line ARR grower with the actual setup and with that investment.
I won’t comment more on the guide because I think I talked about like the different structure we have in the guide we entered at the end of last year. So I think I’ve talked about that extensively. But that is just not sort of like the totality of how we actually see the midterm and the long term or even fully this year. Your other question about customer accounts, you’re absolutely 100% right. We — and what I would just say is that you can say it’s smaller customers who want to just say is that both in customers, I think you know that, Alex, it actually makes a shift from transactional sales and yes, some smaller customers to a higher mix of strategic sales, where Rapid7 is a dominant security provider with all the opportunity for expansion and growth on that.
So you’re seeing a real shift in mix as reflected by our ARR per customer in there. So it is an intentional, as you say, shedding I would say, lower more transactional sort of like customers, it’s transactional to focus, not really the dollar size to actually being more strategic. And I think we’re executing great on that sort of like strategic agreement. So to that point, that’s a stat we’re not focused. Your question on like what’s the growth rate. I think a while ago, we provided like the platform growth rate I don’t have that metric on hand and ready to go.
Tim Adams: That number is growing faster than the overall customer base.
Corey Thomas: It is. I just don’t have it…
Tim Adams: We didn’t break it out. It’s a few points higher than what we disclosed.
Corey Thomas: Exactly.
Operator: Your next question comes from the line of Michael Turits from KeyBanc Capital Markets.
Michael Turits: I mean, just along similar vein of the questions that have been asked, but I guess I’ll just ask 2. Corey, I guess what are the areas of the business where you can kind of best control your own destiny when it comes to that ARR acceleration? That’s number 1. And then two, just curious performance in the quarter, just curious if there was anything called out, whether it’s demand trends or just execution from the team, whether it’s Americas versus international, if there’s anything to call out.
Corey Thomas: That’s a good question. I might tag team that with Tim. Look, I actually thought Q4 was fairly solid from my perspective. There’s nothing that stands out, Tim. I don’t know whether you think about anything that stands out.
Tim Adams: EMEA performed very strong in Q4 in terms of new bookings.
Corey Thomas: Yes, which is an improvement over the prior year. So that was healthy. But I would just say that Q4 was overall very healthy in general. I think on the stuff that we can control, I would just say we’re taking very, very disciplined mid-term investments. Look, we can control our distribution ecosystem. As I’ve said before, we are investing in the partner. As we bring on new distribution, things we’re being quite successful at it. I just don’t factor-in and that’s why just like you could figure out how you want to talk about those. We don’t factor in things that are in motion or in play, even if they’re sort of like optimistic and doing well and hit. It’s a baseline assumption. That’s just not the way we’re ever going approach it.
We talked to you about things that are actually already done and completed. But we have a lot of control. Look, we’re in the right markets. We’re in sort of like the growthier parts of security, detection response is our anchor tenet. We have incredible conversion rates. We’re set up well. We don’t have to change our market position. So what I’ll say is we have capacity to actually do well in the market. But what we’re communicating, I think, overall, I’ll reiterate is that the market, I’ll flip it around and just say the setup that we gave you is actually one of control. What we’ve actually said is that like we can actually grow well and drive free cash flow independent of what happens to the market. And we think that’s a great setup in a market that’s a little bit noisy.
And I would just say if the markets stay safe, if the market is stable, then we actually have plenty of capacity for the topline growth.
Operator: Your next question comes from the line of Joshua Tilton from Wolfe Research.
Unidentified Analyst: This is Patrick [ph] on for Josh. Corey, you’ve mentioned that the environment was noisy a few times now. Just wondering if you could unpack that a little bit further. And then also, one of your competitors mentioned that the mid-market was strong in the fourth quarter. Curious if you saw any of that outsized strength in the mid-market space or maybe increased competition?
Corey Thomas: Yes, I’ll do the second one first. Mid-market was I’ll just say stable and consistent for us, and it was healthy. I think we made adjustments earlier. So I think different people processing their observations about the mid-market. We processed ours at the start of last year. And I would say it was at or exceeded our expectations, and we think it’s a healthy driver and contributor. And then remind me your first question again? I’m not good with the questions.
Unidentified Analyst: So you mentioned that the environment was noisy.
Corey Thomas: Yes, yes. So here’s what I mean by noisy. When we talk to CISOs and security teams, we see plenty of demand, like there is plenty of demand. What’s been noisy is if you look over the course of last year, there was different points in times where people were having trouble getting those projects funded versus not. And so we don’t see a problem in actually security demand. The question is, can those security teams get those projects funded? If they’re getting those projects funded, we feel great and things are great, but I’m not going to take an [indiscernible] that basically all the security projects that we actually see are actually going to get funded. That’s what’s been noisy. Over the course of last year, you had different periods of time where security teams were told they had to slow down some of their investments.
I would say that my hope is that what we’re seeing from the regulatory environment and what we’re seeing more broadly is going to encourage people to actually fund the projects that their security teams and their CISOs are asking for. But it’s also not something that it will be wise to actually have a presumption, that’s going to be the default case.
Operator: Your next question comes from the line of Rob Galvin from Stifel.
Rob Galvin: Corey, last quarter, you spoke of a growing number of longer-term contracts with weighted average deal duration up 20% year-over-year. And I’m wondering if you’ve seen the same trend persist into Q4 and what your expectations are for 2024 on this front?
Tim Adams: Yes. But still, it was strong again in Q4. So we’re really pleased with really seeing those contracts being extended out beyond 1-year contracts. We’re seeing a lot of 3-year contracts, both on the new and the renewal side.
Corey Thomas: Yes. I would just say that goes to what we talked about us becoming and being a strategic provider, I think I’m most proud of the team is that like if you look over the last 3 years, we have become a very strong strategic provider of security. And you see that both reflect in our consolidation offerings as well as our ASPs and ARR as well as the length and the duration of the contracts that customers want to do with us. So yes, I think that’s fair.
Operator: And that’s all the time we have for questions. I will now turn the call back over to Corey Thomas for closing remarks.
Corey Thomas: Well, thank you all for joining us on the call today, and I wish you all a good evening. Thanks.
Operator: This concludes today’s conference call. Thank you for your participation, and you may now disconnect.
