Core Viewpoint - Tenable (TENB) has received an upgrade to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, indicating a positive outlook for the company's stock price [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the importance of changing earnings estimates in influencing near-term stock price movements, making it a valuable tool for investors [2][4]. - The correlation between earnings estimate revisions and stock price movements is strong, largely due to institutional investors who adjust their valuations based on these estimates [4]. Business Improvement Indicators - Rising earnings estimates and the Zacks rating upgrade suggest an improvement in Tenable's underlying business, which could lead to increased stock prices as investors respond positively [5][10]. - For the fiscal year ending December 2025, Tenable is expected to earn $1.49 per share, with a significant increase of 100% in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a proven track record of Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [7]. - Tenable's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10].

Core Insights - The conference call is focused on discussing Tenable's second quarter 2025 financial results [2][3] - Co-Chief Executive Officers Steve Vintz and Mark Thurmond are present to provide insights and updates [3] Financial Results - A press release detailing the financial results for the quarter was issued prior to the call, available on the company's investor relations website [3] Forward-Looking Statements - The company will make forward-looking statements regarding guidance and expectations for the third quarter and full year 2025, as well as business growth and changes in the threat landscape [4]

Group 1 - Tenable reported $247.3 million in revenue for the quarter ended June 2025, an 11.8% year-over-year increase, with EPS of $0.34 compared to $0.31 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $241.89 million by 2.23%, and the EPS surpassed the consensus estimate of $0.30 by 13.33% [1] - The calculated current billings were $238.59 million, slightly above the average estimate of $237.55 million by analysts [4] Group 2 - Subscription revenue was reported at $228.03 million, exceeding the average estimate of $223.27 million, representing a 12.6% year-over-year change [4] - Revenue from professional services and other was $7.85 million, surpassing the average estimate of $7.13 million, with a year-over-year increase of 17.4% [4] - Revenue from perpetual license and maintenance was $11.41 million, matching the average estimate, but reflecting a 5% year-over-year decline [4] Group 3 - Tenable's shares returned -2% over the past month, while the Zacks S&P 500 composite increased by 3.4% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Insights - Tenable reported quarterly earnings of $0.34 per share, exceeding the Zacks Consensus Estimate of $0.30 per share, and showing an increase from $0.31 per share a year ago, resulting in an earnings surprise of +13.33% [1] - The company achieved revenues of $247.3 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.23% and increasing from $221.24 million year-over-year [2] - Tenable has consistently surpassed consensus EPS estimates over the last four quarters, indicating strong performance [2] Earnings Outlook - The future performance of Tenable's stock will largely depend on management's commentary during the earnings call and the sustainability of the stock's immediate price movement based on recent earnings and future expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.40 on revenues of $244.15 million, and for the current fiscal year, it is $1.49 on revenues of $975.07 million [7] Industry Context - The Internet - Software industry, to which Tenable belongs, is currently ranked in the top 30% of over 250 Zacks industries, suggesting a favorable environment for performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - In Q2 2025, the company achieved a revenue of $247.3 million, reflecting a 12% year-over-year growth and exceeding the midpoint of the guided range by $5.3 million [28][29] - The operating margin for the quarter was 19%, which is approximately 100 basis points better than the midpoint of the guided range [31] - The net dollar expansion rate was 107% for the quarter, indicating strong customer retention and upsell [27][66] Business Line Data and Key Metrics Changes - The exposure management platform, Tenable One, accounted for 40% of total new sales in the quarter, highlighting its growing adoption [7][27] - The company added 367 new enterprise platform customers and 76 net new six-figure customers during the quarter [27][66] - Current RPO (Remaining Performance Obligations) grew 12% year-over-year, reflecting increasing momentum with Tenable One [27] Market Data and Key Metrics Changes - The public sector showed better-than-expected performance, particularly in the SLED (State, Local, Education) business, driven by strong platform sales [9][10] - The company noted a positive outlook for the U.S. Federal market, with improved visibility into the renewal base despite a cautious spending environment [10][41] Company Strategy and Development Direction - The company is focusing on expanding its AI capabilities and integrating them into the Tenable One platform, particularly following the acquisition of Apex Security [26][75] - The strategic emphasis is on preemptive security, which involves reducing risk before breaches occur, rather than just responding after an attack [10][17] - The company aims to unify visibility, insights, and actions across various asset types, enhancing its competitive edge in the exposure management space [58][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to drive momentum and growth, particularly with the Tenable One platform [41][66] - The outlook for Q3 and the full year 2025 has been raised, reflecting improved visibility and performance in the federal market [34][35] - The company anticipates continued strong demand for its exposure management solutions as organizations modernize their security strategies [25][26] Other Important Information - The company reported a gross margin of 82% for the quarter, which is flat compared to the previous quarter [29] - The company has a strong cash position with $387 million in cash and short-term investments, providing flexibility for future investments and share repurchases [32][33] Q&A Session Summary Question: Comparison of current quarter with previous expectations - Management noted improved visibility in the federal business and a strong pipeline, leading to an upward revision of guidance [41][42] Question: Expectations for Tenable One penetration - The company highlighted that exposure solutions represent over 20% of total sales, with significant growth potential in the platform [45][46] Question: Competitive landscape in exposure management - Management emphasized Tenable One's hybrid capabilities and unified platform as key differentiators against traditional VM players [56][60] Question: Larger deal sizes and their sources - The company indicated that larger deals are coming from both new logos and existing customers, with a strong focus on the Tenable One platform [66][67] Question: Strategy for securing generative AI in enterprises - The acquisition of Apex is expected to enhance the company's AI capabilities, providing customers with better governance and security for AI resources [72][75] Question: Adoption metrics for AI solutions - Over 6,000 customers are using AI aware to detect shadow AI applications, with the capabilities from Apex being integrated into the Tenable One platform [83][84] Question: Performance of specific products and verticals - The company reported strong performance in exposure management and noted that the VM market met expectations without significant outperformance [88][91] Question: Opportunities in OT and hybrid environments - Management highlighted growth in sectors like data centers and manufacturing, where customers are seeking unified exposure management solutions [97][98]

Financial Data and Key Metrics Changes - In Q2 2025, the company achieved a revenue of $247.3 million, reflecting a 12% year-over-year growth and exceeding the midpoint of the guided range by $5.3 million [26][27] - The operating margin for the quarter was 19%, approximately 100 basis points better than the midpoint of the guided range [29] - Calculated current billings grew 8% year-over-year to $238.6 million, indicating strong momentum with the Tenable One platform [25] - The net dollar expansion rate was 107% for the quarter, demonstrating robust customer retention and upsell [25][70] Business Line Data and Key Metrics Changes - The exposure management platform, Tenable One, accounted for 40% of total new sales in the quarter, highlighting its growing adoption [5][25] - The company added 367 new enterprise platform customers and 76 net new six-figure customers during the quarter, indicating strong demand for its solutions [25][70] - The percentage of recurring revenue remained high at 96%, showcasing the stability of the revenue model [27] Market Data and Key Metrics Changes - The public sector showed better-than-expected performance, particularly in the SLED business, driven by strong platform sales [7][8] - The company noted an improvement in visibility within the U.S. Federal market, particularly regarding renewals, despite a cautious spending environment [8][42] Company Strategy and Development Direction - The company is focused on expanding its AI capabilities and integrating them into the Tenable One platform, particularly following the acquisition of Apex Security [6][24] - The strategic emphasis is on preemptive security, which involves reducing risk before breaches occur, rather than just responding to incidents [8][14] - The company aims to unify visibility, insights, and actions across hybrid environments, positioning itself as a leader in exposure management [16][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to drive momentum, particularly in the federal market, with a strong pipeline and opportunities for growth [42][44] - The outlook for Q3 and the full year 2025 has been raised, reflecting improved visibility and performance in the public sector [34] - The company anticipates continued growth in long-term RPO, with a 40% year-over-year increase, indicating strong customer commitment [25][70] Other Important Information - The company has a strong cash position with $387 million in cash and short-term investments, providing flexibility for future investments and share repurchases [30] - The company announced a $250 million increase to its share repurchase program, demonstrating a commitment to returning capital to shareholders [31] Q&A Session Summary Question: Comparison of current quarter performance with previous expectations - Management noted improved visibility in the federal business and a strong pipeline, leading to an upward revision of guidance [42][44] Question: Expectations for Tenable One penetration and growth - Management highlighted that Tenable One represents over 40% of new sales and is expected to drive further growth with modest movement in penetration [46][50] Question: Competitive landscape in exposure management - Management emphasized the differentiation of Tenable One through its hybrid capabilities and unified platform approach, leading to high win rates against competitors [58][60] Question: Impact of larger deal sizes on new logos versus renewals - Management indicated that while gross dollar renewal rates remain strong, new business from new logos is driving growth, particularly with the Tenable One platform [67][70] Question: Strategy for securing generative AI in enterprises - The company is leveraging AI to enhance customer security programs and has integrated Apex capabilities to address AI-related risks [76][78] Question: Performance trends in July - Management noted that July has been trending ahead of historical seasonality, indicating positive momentum as the third quarter progresses [115]

Financial Performance - Q2 2025 revenue reached $247.3 million[11], with a 12% revenue growth[11] - Q2 2025 unlevered free cash flow was $44.3 million[11] - Q2 2025 non-GAAP gross margin was 82%[11] - Q2 2025 recurring revenue was 96%[11] - The forecast for FY 2025 revenue is $981.0 million to $987.0 million[54] - The forecast for FY 2025 unlevered free cash flow is $265.0 million to $275.0 million[54] Market Position and Opportunity - The company has approximately 44,000 customers[11] - The company is the 1 market share leader in Vulnerability Management[11] - Exposure Management is estimated to be a $50 billion market opportunity[27] - The Exposure Management market is expected to have a 20% CAGR from 2025-2027[28] Product and Strategy - The company aggregates 1.5 billion assets[25], normalizes 100+ 3rd party integrations[25], and classifies 150 billion exposures[25]

Financial Performance - Revenue for Q2 2025 was $247.3 million, representing a 12% year-over-year increase[5] - Calculated current billings reached $238.6 million, an 8% year-over-year increase[5] - Non-GAAP income from operations was $47.7 million, compared to $42.8 million in Q2 2024[6] - Unlevered free cash flow was $44.3 million, up from $36.5 million in Q2 2024[6] - Revenue for Q2 2025 reached $247.3 million, a 11.8% increase from $221.2 million in Q2 2024[24] - Gross profit for the first half of 2025 was $379.5 million, up 11.8% from $339.5 million in the same period of 2024[24] - Total revenue for the six months ended June 30, 2025, was $486.432 million, compared to $437.202 million for the same period in 2024, reflecting an increase of 11.3%[30] - Non-GAAP net income for the six months ended June 30, 2025, was $85.687 million, compared to $68.602 million in 2024, an increase of 24.9%[33] Cash Flow and Expenses - Cash and cash equivalents decreased to $175.0 million as of June 30, 2025, down from $328.6 million at the end of 2024[27] - Operating expenses increased to $200.3 million in Q2 2025, compared to $181.3 million in Q2 2024, reflecting a 10.5% rise[24] - Net cash provided by operating activities for the first half of 2025 was $129.9 million, significantly higher than $81.8 million in the first half of 2024[29] - Free cash flow for Q2 2025 was $37.416 million, compared to $28.663 million in Q2 2024, marking a 30.5% increase[30] - Business combinations in the first half of 2025 resulted in cash outflows of $196.2 million, compared to $29.2 million in the same period of 2024[29] Customer Growth and Product Development - Tenable added 367 new enterprise platform customers and 76 net new six-figure customers[6] - The acquisition of Apex Security was completed, enhancing the exposure management platform[6] - Tenable launched new connectors and advanced risk dashboards to improve organizational risk visibility[6] Future Projections - For Q3 2025, revenue is expected to be in the range of $246.0 million to $248.0 million[10] - Non-GAAP diluted earnings per share for Q3 2025 are projected to be between $0.36 and $0.37[10] - Forecasted non-GAAP income from operations for Q3 2025 is expected to range from a loss of $3.1 million to a loss of $1.1 million[37] - Forecasted non-GAAP net income for the three months ending September 30, 2025, is projected to be between $44.0 million and $46.0 million[38] - Forecasted free cash flow for the year ending December 31, 2025, is estimated to be between $238.0 million and $248.0 million[38] - The forecasted GAAP net loss for the year ending December 31, 2025, is expected to be between $(55.4) million and $(45.4) million[38] Stock and Compensation - The company repurchased 2.0 million shares for $65.0 million during the quarter[6] - Stock-based compensation for the first half of 2025 was $102.4 million, an increase of 26.2% from $81.1 million in the same period of 2024[29] - The company anticipates total stock-based compensation for the year ending December 31, 2025, to be between $197.5 million[37] - Forecasted stock-based compensation for the year ending December 31, 2025, is estimated at $197.5 million[38] Balance Sheet - Total assets decreased to $1.66 billion as of June 30, 2025, compared to $1.74 billion at the end of 2024[27] - The company reported a decrease in deferred revenue to $624.5 million as of June 30, 2025, down from $650.4 million at the end of 2024[27] - Remaining performance obligations increased by 19% year-over-year, totaling $889.143 million as of June 30, 2025, up from $747.541 million in 2024[30]

Core Insights - Tenable Holdings, Inc. reported a revenue of $247.3 million for Q2 2025, reflecting a 12% year-over-year growth, driven by the adoption of its exposure management platform [5][6] - The company achieved a non-GAAP operating margin of 19% and a GAAP operating margin of (3%) for the same period [5][6] - Tenable's leadership in exposure management is highlighted by significant customer expansions and strong competitive wins [2] Financial Highlights - Revenue increased to $247.3 million, up 12% year-over-year [5][6] - Calculated current billings reached $238.6 million, an 8% increase year-over-year [5][6] - Net cash provided by operating activities was $42.5 million, compared to $31.4 million in Q2 2024 [5][6] - Unlevered free cash flow was $44.3 million, up from $36.5 million in the same quarter last year [5][6] Business Developments - The company repurchased 2.0 million shares for $65.0 million and announced a $250 million expansion of its stock repurchase program [5][6] - Tenable completed the acquisition of Apex Security, enhancing its exposure management platform [5][6] - The launch of Tenable One connectors and advanced risk dashboards aims to provide a comprehensive view of organizational risk [5][6] Market Position - Tenable was named a "Major Player" in IDC's inaugural MarketScape report for Cloud-Native Application Protection Platforms (CNAPP) [5][6] - The company published the 2025 Cloud Security Risk Report, offering insights into current security challenges faced by organizations [5][6] - Tenable received two AI-powered security awards from the 2025 Globee Awards and 2025 Cybersecurity Excellence Awards [5][6]

Core Insights - Tenable One has achieved over 300 validated integrations, positioning it as the most interconnected exposure management platform in the market, enhancing visibility and risk reduction for security teams [1][2][3] Group 1: Platform Features and Benefits - The platform addresses the fragmentation in cybersecurity tools, which averages 83 per enterprise, by providing a unified view of the attack surface, thus reducing blind spots for security teams [2][3] - Tenable One integrates data from various security tools, including EDR, CNAPP, and PAM, to deliver a contextualized risk view, enabling teams to visualize attack paths and focus on critical exposures [3][4] - The platform automates remediation workflows and enhances collaboration across teams, significantly decreasing the time required to investigate and resolve security exposures [4] Group 2: Customer Impact and Ecosystem - Two-thirds of Tenable One customers utilize its integrations, with reported benefits including up to 10x greater visibility and a 75% reduction in time spent on data aggregation, allowing teams to concentrate on proactive risk management [5] - Tenable is launching a universal integrations connector to facilitate the development of custom integrations, reinforcing its commitment to an open ecosystem and enabling organizations to tailor the platform to their needs [6] Group 3: Partnerships and Industry Collaboration - Partnerships with companies like Splunk and ServiceNow enhance the platform's capabilities, allowing for faster threat detection and response through deep integration of exposure data [7][8] - The collaboration with CyberArk focuses on securing privileged access, combining vulnerability insights with intelligent controls to mitigate risks effectively [8]