Tenable(US:TENB)2025-08-08 20:25PART I – FINANCIAL INFORMATION Financial Statements This section presents Tenable Holdings, Inc.'s unaudited consolidated financial statements for Q2 2025, showing increased revenue but a wider net loss Consolidated Balance Sheets The balance sheets reflect a decrease in total assets driven by lower cash, offset by increases in goodwill and acquired intangible assets Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $175,025 | $328,647 | | Goodwill | $697,769 | $541,292 | | Acquired intangible assets, net | $128,860 | $94,461 | | Total assets | $1,656,572 | $1,742,119 | | Liabilities & Equity | | | | Deferred revenue (Current) | $624,548 | $650,372 | | Term loan, net | $355,439 | $356,705 | | Total liabilities | $1,305,873 | $1,342,165 | | Total stockholders' equity | $350,699 | $399,954 | - Total assets decreased from $1.74 billion at year-end 2024 to $1.66 billion at June 30, 2025, primarily due to a significant decrease in cash and cash equivalents. Goodwill and acquired intangible assets increased, reflecting recent business acquisitions11 Consolidated Statements of Operations The statements of operations show increased revenue for the quarter and six-month periods, but a widening net loss due to higher operating expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $247,295 | $221,241 | $486,432 | $437,202 | | Gross Profit | $192,861 | $172,443 | $379,538 | $339,472 | | Loss from operations | $(7,448) | $(8,818) | $(25,159) | $(17,748) | | Net loss | $(14,706) | $(14,572) | $(37,641) | $(28,958) | | Net loss per share | $(0.12) | $(0.12) | $(0.31) | $(0.25) | - Revenue increased by 11.8% YoY for the second quarter and 11.3% for the first six months of 2025. However, the net loss for the six-month period widened from $(29.0) million in 2024 to $(37.6) million in 2025, driven by higher operating expenses, particularly in Research and Development and General and Administrative13 Consolidated Statements of Cash Flows Cash from operations significantly increased, but overall cash decreased due to substantial outflows for acquisitions and treasury stock purchases Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $129,870 | $81,750 | | Net cash used in investing activities | $(168,766) | $(44,485) | | Net cash used in financing activities | $(116,304) | $(37,853) | | Net decrease in cash | $(153,622) | $(3,665) | - Cash from operations increased significantly in the first half of 2025 compared to 2024. However, cash used in investing activities rose sharply due to $196.2 million spent on business combinations. Financing activities also saw increased cash usage, primarily from $125.0 million in treasury stock purchases21 Notes to Consolidated Financial Statements This section provides detailed notes explaining the accounting policies and specific line items within the consolidated financial statements Note 2: Revenue This note details revenue composition, highlighting significant reliance on channel partners and strong growth in remaining performance obligations Revenue by Type (in thousands) | Revenue Type | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Subscription revenue | $228,031 | $448,474 | | Perpetual license and maintenance | $11,411 | $22,963 | | Professional services and other | $7,853 | $14,995 | | Total Revenue | $247,295 | $486,432 | - The company has a significant concentration of revenue from its channel network, which accounted for 94% of revenue in the first six months of 2025. One distributor represented 32% of revenue during this period33 - Total remaining performance obligations (RPO) grew to $889.1 million as of June 30, 2025, up from $747.5 million a year prior, indicating a strong backlog of future revenue35 Note 6: Acquisitions, Goodwill and Intangible Assets This note details recent acquisitions, including Vulcan Cyber and Apex Security, and their impact on goodwill and intangible assets - In the first half of 2025, Tenable completed two acquisitions: Vulcan Cyber Ltd. for $148.5 million in cash and Apex Security, Inc. for $47.8 million4647 - As a result of the acquisitions, goodwill increased by $156.5 million during the first six months of 2025, reaching a total of $697.8 million51 Note 10: Stock-Based Compensation This note details stock-based compensation expenses across departments, including a significant one-time expense for the former CEO's equity awards Stock-Based Compensation Expense (in thousands) | Department | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Cost of revenue | $6,775 | $6,270 | | Sales and marketing | $34,448 | $31,576 | | Research and development | $28,267 | $22,960 | | General and administrative | $32,939 | $20,311 | | Total | $102,429 | $81,117 | - Stock-based compensation for the first six months of 2025 included $14.6 million of expense related to the accelerated vesting of equity awards for the company's late CEO66 Note 13: Segment and Geographic Information This note confirms the company operates as a single segment and provides revenue breakdown by region, highlighting US revenue concentration - The company operates as a single operating segment79 Revenue by Region for Six Months Ended June 30 (in thousands) | Region | 2025 | 2024 | | :--- | :--- | :--- | | The Americas | $299,944 | $271,237 | | Europe, Middle East and Africa | $131,031 | $116,358 | | Asia Pacific | $55,457 | $49,607 | | Total | $486,432 | $437,202 | - Customers in the United States accounted for 53% of total revenue in the first six months of 202580 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, highlighting an 11% revenue increase, GAAP operating loss, non-GAAP operating income, rising expenses, and strong liquidity Key Operating and Financial Metrics | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Calculated Current Billings (in thousands) | $238,585 | $221,145 | $453,945 | $418,902 | | Free Cash Flow (in thousands) | $37,416 | $28,663 | $117,646 | $75,792 | | Dollar-Based Net Expansion Rate | 107% | 109% | N/A | N/A | - Revenue for Q2 2025 increased by $26.1 million (12%) year-over-year, with $24.1 million of the increase coming from existing customers133 - Research and Development expenses rose 31% in Q2 2025 compared to Q2 2024, primarily due to a $12.0 million increase in personnel costs137 - General and Administrative expenses for the first six months of 2025 included $15.5 million in termination benefits related to the passing of the company's Chairman and CEO127149 - The company's stock repurchase program has purchased a total of 6.3 million shares for $239.9 million since its inception. The Board increased the authorization by an additional $250 million in July 2025159 Quantitative and Qualitative Disclosures About Market Risk Primary market risks include interest rate, foreign currency, and inflation, with interest rate risk potentially increasing 2025 expense by $1.2 million - The company is exposed to interest rate risk through its $375.0 million Term Loan, which has a variable interest rate based on SOFR. A one percentage point increase in the rate would increase 2025 interest expense by $1.2 million172 - Foreign currency exchange risk is mainly from operating expenses incurred in currencies like the Euro, British Pound, and Israeli New Shekel, as most sales contracts are denominated in U.S. dollars173 - While inflation has not had a material effect so far, the company acknowledges that rising costs for employees and third-party cloud infrastructure could become a significant pressure174 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Based on an evaluation, the Co-Chief Executive Officers concluded that the company's disclosure controls and procedures were effective as of June 30, 2025176 - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls178 PART II – OTHER INFORMATION Legal Proceedings The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial condition - Tenable is not presently a party to any legal proceedings that would be expected to have a material adverse effect on the company181 Risk Factors This section highlights new and updated material risks, including generative AI integration, channel partner reliance, government sales uncertainties, and macroeconomic instability - The use of generative AI in products like ExposureAI introduces risks of inaccurate output, data privacy concerns, and navigating an emerging and uncertain legal and regulatory landscape, such as the EU's Artificial Intelligence Act183184186 - The company has a high concentration of revenue from its channel partners, with 94% of revenue in H1 2025 derived from this network. A single distributor, Ingram Micro, accounted for 32% of revenue, posing a significant dependency risk189 - Sales to government entities are subject to risks from budgetary cycles, funding authorizations, and potential spending reductions, such as those proposed by the Department of Government Efficiency (DOGE), which could elongate sales cycles in the second half of 2025191 - Unstable market conditions, including inflation, high interest rates, and trade tensions, may cause customers to defer or reduce spending, which could adversely impact business197198199 Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered equity sales and details Q2 2025 stock repurchases, with the Board increasing authorization by $250 million in July 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | 40 (thousands) | $33.17 | | May 2025 | 1,203 (thousands) | $32.43 | | June 2025 | 800 (thousands) | $32.48 | | Total | 2,043 (thousands) | $32.47 | - In July 2025, the Board of Directors increased the stock repurchase authorization by $250 million206 Other Information The company amended Co-CEO employment agreements in August 2025, enhancing severance benefits from 12 to 18 months of base salary upon certain terminations - Employment agreements for Co-CEOs Stephen Vintz and Mark Thurmond were amended following their permanent appointment in April 2025207 - Severance benefits for termination without cause or resignation for good reason were enhanced, increasing continued base salary payments from 12 months to 18 months210 Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including amended executive employment agreements and SOX certifications - The report includes a list of filed exhibits, such as the Amended and Restated Certificate of Incorporation, amendments to executive employment agreements, and certifications by the Principal Executive Officer214