Tenable(TENB) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q4 was $260.5 million, representing a year-over-year growth of 10.5% and a full-year growth of 11.0% [20][21] - Non-GAAP gross margin for Q4 was 82.7%, an increase from 81.7% in Q4 2024, while the full-year gross margin was 82.1%, compared to 81.4% in the prior year [23][24] - Non-GAAP earnings per share for Q4 was $0.48, up 17.1% from $0.41 in Q4 2024, and for the full year, it was $1.59, an increase of 23.3% from $1.29 in 2024 [25] Business Line Data and Key Metrics Changes - Tenable One accounted for 46% of new business in Q4, marking a significant milestone for the platform [7][22] - The company added 502 new customers in Q4, the highest in two years, indicating strong demand for Tenable One [7][20] - The net dollar expansion rate was 106%, exceeding expectations [23][70] Market Data and Key Metrics Changes - Tenable was recognized as a leader in the 2025 Gartner Magic Quadrant for Exposure Assessment Platforms and as a Customers' Choice in the 2025 Gartner Peer Insights [14][15] - The company is experiencing strong demand driven by the rapid adoption of AI, closing its first seven-figure deal related to AI exposure in Q4 [16] Company Strategy and Development Direction - The company is focusing on a platform-first approach, emphasizing unified visibility, insight, and action to manage risk across complex attack surfaces [9][10] - Investments are being made in AI security and advanced remediation capabilities, with a belief that remediation will be a major part of the next chapter in exposure management [10][11] - The company aims to leverage its extensive exposure data to create competitive advantages and drive scalability [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum of Tenable One and the growing opportunities in AI exposure, setting a foundation for returning to accelerating growth in 2026 [34][33] - The company expects revenue for Q1 2026 to be in the range of $257 million to $260 million, representing a year-over-year increase of 8.1% at the midpoint [28] - For the full year 2026, revenue is expected to be between $1.065 billion and $1.075 billion, marking a year-over-year increase of 7.1% at the midpoint [29] Other Important Information - The company repurchased 2.3 million shares for $62.5 million in Q4, with a total of 10.6 million shares repurchased for $362.4 million since November 2023 [26] - A restructuring effort was initiated, incurring $3.1 million in expenses in Q4, with an expectation of approximately $5 million more in the first half of 2026 [31] Q&A Session Summary Question: Regarding the large customer cohort and net additions of $100,000 ACV customers - Management noted that while new business was strong with 500 new customers added, the value of these new customers was higher than in the past, and expansion within large customers was also strong [35] Question: On the success with AI exposure and customer activity - Management indicated that AI is a prevalent topic in every customer conversation, with significant interest in securing AI workloads and addressing governance issues [37] Question: About the adoption of additional modules within Tenable One - Management highlighted that customers are increasingly adopting the platform for holistic risk assessment, with a focus on visibility, insights, and action [43] Question: On the dynamics of billings duration and guidance - Management explained that while there are headwinds from billings duration, they are confident in revenue growth and operational income for 2026, despite the changes in billing patterns [46][47] Question: Regarding the strength in professional services - Management attributed the increase in professional services to the deployment of the platform at scale, which requires more support for exposure management initiatives [62] Question: On the pricing environment and ASPs - Management confirmed that there was no pricing pressure and that selling Tenable One allows for higher pricing due to the consolidation of multiple tools into a single platform [90]