Tenable (TENB) Q2 2025 Earnings Call July 30, 2025 04:30 PM ET Company ParticipantsErin Karney - VP - IRSteve Vintz - CFO, Co-CEO & DirectorMark Thurmond - Co-CEO & DirectorBrian Essex - Executive DirectorSaket Kalia - Managing DirectorJoe Vandrick - Associate Director - Equity ResearchRoger Boyd - Executive DirectorAndres Miranda Lopez - Equity Research AssociateJonathan Ruykhaver - Managing DirectorShaul Eyal - MD - Equity ResearchConference Call ParticipantsRob Owens - MD & Senior Research AnalystAndrew ...

Tenable (TENB) Q2 2025 Earnings Call July 30, 2025 04:30 PM ET Speaker0Greetings, and welcome to the Tenable Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Erin Knee, Vice President, Investor Relations.Thank you. You may begin.Speaker1Thank you, operator, and thank you al ...

EXPOSURE MANAGEMENT REDUCING RISK IN A CLOUD-FIRST WORLD Forward-Looking Statements This presentation includes forward-looking statements. All statements contained in this presentation other than statements of historical facts, including statements regarding our future results of operations and financial position, our business strategy and plans and our objectives for future operations, are forward-looking statements. The words "anticipate," believe," "continue," "estimate," "expect," "intend," "may," "will ...

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]

Financial Performance - Q1 2025 revenue reached $239.1 million[12] - Q1 2025 unlevered free cash flow was $86.8 million[12] - Q1 2025 non-GAAP gross margin was 82%[12] - Q1 2025 recurring revenue was 96%[12] - The company forecasts revenue between $970 million and $980 million for the full year 2025[52] - The company forecasts unlevered free cash flow between $265 million and $275 million for the full year 2025[52] Market Position and Growth - The company is a category leader in Exposure Management[11] - The company has approximately 44,000 customers[12] - The company is ranked 1 in market share in Vulnerability Management[12, 23] - The total addressable market for cyber exposure is estimated at $33 billion with an 18% CAGR[29]

Core Insights - Tenable has been recognized as a Major Player in the inaugural IDC MarketScape: Worldwide Cloud-Native Application Protection Platform (CNAPP) 2025 Vendor Assessment, highlighting its strong position in the market [1][2]. Company Overview - Tenable is identified as an exposure management company that focuses on closing cybersecurity gaps that can undermine business value, reputation, and trust [7]. - The company serves approximately 44,000 customers globally, providing a unified security visibility and action platform that spans various environments, including IT infrastructure and cloud [7]. Product Capabilities - Tenable Cloud Security offers a comprehensive CNAPP solution that integrates seamlessly with Tenable One, enabling organizations to secure their entire cloud stack without needing additional tools [3]. - The platform provides tailored visibility for specific cloud providers such as AWS, GCP, Azure, and Oracle Cloud, simplifying the interpretation of security findings for personnel [4]. - It emphasizes context-rich prioritization and identity-intelligent risk analysis, allowing for the identification of critical vulnerabilities and toxic access combinations that may be overlooked by other solutions [4]. Market Recognition - The IDC MarketScape assessment involved structured discussions, interviews with market leaders, and end-user experiences, validating Tenable's strategies and capabilities in the CNAPP space [2]. - Eric Doerr, the chief product officer of Tenable, stated that this recognition underscores the company's commitment to helping customers manage risk across their cloud environments and overall attack surface [5].

Core Viewpoint - Tenable Holdings, Inc. intends to acquire Apex Security, Inc. to enhance its capabilities in managing cyber risks associated with the expanding AI attack surface [1][5]. Group 1: Acquisition Details - The acquisition aims to strengthen Tenable's ability to help organizations identify and mitigate cyber risks in an AI-driven environment [1]. - Apex Security, founded in 2023, has gained attention from notable investors and is recognized for its innovative approach to securing AI usage [3]. - The financial terms of the acquisition have not been disclosed, and the deal is expected to close later this quarter [5]. Group 2: Industry Context - The rapid expansion of generative AI tools and autonomous systems is increasing the attack surface, introducing new risks such as shadow AI applications and AI-generated code [2]. - Tenable's existing product, Tenable AI Aware, already assists thousands of organizations in detecting and assessing AI usage, and the addition of Apex's capabilities will enhance governance and policy enforcement [2][3]. - The integration of Apex's offerings into Tenable One is anticipated to deliver comprehensive exposure management solutions in the second half of 2025 [5]. Group 3: Strategic Implications - Tenable's strategy focuses on staying ahead of attack surface expansion by not only managing exposures but also eliminating them proactively [3]. - The acquisition aligns with the industry's trend of treating AI risks as part of broader exposure management rather than in isolation [4]. - The collaboration is expected to provide security teams with the necessary visibility and control to manage AI-generated exposure effectively [3][4].

Summary of Tenable's Earnings Call Company Overview - **Company**: Tenable, a cyber exposure company focused on understanding and reducing risk through vulnerability management and exposure management platforms [2][3] Key Financial Highlights - **Revenue**: $239 million, representing an 11% growth, exceeding expectations [3] - **Operating Margin**: Strong at 20% [4] - **Free Cash Flow**: Over $80 million of unlevered free cash flow [4] - **New Customers**: Added over 300 new enterprise platform customers [4] - **Record Deals**: Achieved a record number of seven-figure deals [4] Guidance and Market Outlook - **Cautious Guidance**: Revised guidance downwards by approximately $17 million, reflecting potential longer sales cycles, particularly in the U.S. public sector [8][9] - **Public Sector Dynamics**: 15% of sales come from the U.S. public sector, which is experiencing personnel disruptions affecting sales cycles [7][9] - **Strong Demand**: Despite cautious guidance, the top of the funnel remains strong with good momentum in demand generation [6][10] Strategic Initiatives - **Platform Consolidation**: Tenable One is driving 30% to 40% of new business, focusing on consolidating various security solutions into one platform [17][21] - **FedRAMP Certification**: Achieved certification for Tenable One, enhancing credibility and opportunities in the federal government space [13][19] - **AI Integration**: Emphasizing AI as a key component for enhancing risk insights and operational efficiency [24][47] Competitive Landscape - **Market Position**: Tenable is well-positioned in the exposure management market, differentiating itself from competitors who are not as focused on this area [54][55] - **Cloud Security Growth**: Cloud security is one of the fastest-growing areas, with a 100% growth last year [66] - **Challenges from Competitors**: Noted pressure from larger platform vendors offering VM features, but Tenable maintains a strong competitive edge due to its established customer base and product offerings [51][56] Future Growth Opportunities - **Focus on Innovation**: Investing over 20% in R&D to drive product innovation and market expansion [29][78] - **Public Sector as a Tailwind**: Long-term growth expected from public sector contracts, leveraging past successes in the Department of Defense [80] - **Acquisition Strategy**: Recent acquisition of Vulcan aimed at accelerating market presence and product offerings [29][78] Conclusion - **Optimistic Outlook**: Despite short-term challenges, Tenable remains confident in its growth trajectory, driven by strong demand, innovative product offerings, and strategic positioning in the market [80]

Core Insights - Tenable has introduced significant enhancements to its flagship platform, Tenable One, including Tenable One Connectors and customizable risk dashboards, aimed at providing a comprehensive exposure management solution [1][6] - The platform addresses the challenges posed by the fragmented security landscape, where organizations typically manage an average of 83 disconnected tools, leading to operational inefficiencies and blind spots [2][6] - Tenable One integrates data from both native and third-party security tools, offering a unified view of organizational risk and enabling faster, smarter security decisions [3][4] Product Features - The new ecosystem of out-of-the-box Connectors allows seamless integration with various third-party tools, enhancing endpoint detection, cloud security, and vulnerability management [3] - The Tenable Exposure Data Fabric serves as the platform's scalable, cloud-native architecture, which normalizes and connects data across the security ecosystem [4] - Customizable risk dashboards are designed to streamline reporting processes, providing security teams with tailored insights that align with specific business roles and priorities [5] Market Context - The cybersecurity market is characterized by a saturation of point solutions that operate in isolation, which can hinder security efforts and leave organizations vulnerable [6] - Tenable's acquisition of Vulcan Cyber is highlighted as a strategic move to enhance its capabilities in the exposure management market, reinforcing its commitment to providing comprehensive security solutions [6][8]

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