Tenable(US:TENB)2023-11-02 02:14Financial Data and Key Metrics Changes - Calculated current billings (CCB) grew 8% year-over-year to $224.7 million, while revenue was $201.5 million, representing 15% year-over-year growth [19][22] - The dollar-based net expansion rate was 111%, consistent with the previous quarter [22] - The company finished the quarter with $693 million in cash and short-term investments, and generated approximately $48 million of unlevered free cash flow during the quarter [23][24] Business Line Data and Key Metrics Changes - Tenable One represented 20% of new sales in the quarter and grew over 100% year-over-year [31] - The company added a record number of seven-figure customers, indicating strong performance in large enterprise and public sector [16][21] - There was softness in the mid-market, particularly with new logos, which is expected to persist into the next year [6][31] Market Data and Key Metrics Changes - Significant outperformance was noted in the public sector, especially in U.S. Federal, benefiting from a robust spending environment [29] - The mix of business shifted towards perpetual licenses and professional services, which minimally contributed to CCB [15][29] - The company is seeing increased emphasis on active directory security and cloud security within its specialty products [8] Company Strategy and Development Direction - The company continues to innovate within Tenable One, leveraging generative AI for faster insights and efficiency [7] - The integration of Ermetic is expected to enhance cloud security offerings and provide a competitive edge in the CNAPP market [27][40] - The company aims to balance growth with profitability, expecting unlevered free cash flow to grow approximately 25% next year [35] Management's Comments on Operating Environment and Future Outlook - Management noted a cautious outlook from buyers in the market, impacting conversion rates [20] - The company anticipates mid-teen CCB growth for 2024, reflecting contributions from Ermetic and current selling conditions [34][78] - Management expressed confidence in the strength of their product offerings and the ability to capture market share despite macroeconomic challenges [70][93] Other Important Information - The company is raising its outlook for income from operations for the full year by $10 million, reflecting strong underlying performance [24] - The gross margin for the quarter was 80%, slightly down from 81% in the previous quarter [32] - The company expects to see a budget flush in Q4, which typically represents over 30% of total sales [105] Q&A Session Summary Question: What competitive dynamics does Tenable face in the cloud security market? - Management indicated that they are seeing competition from major CNAPP vendors but believe their integrated offerings provide a competitive advantage [40][49] Question: How is the integration of Ermetic progressing? - Management acknowledged some modest delays in integration activities but emphasized that strategic progress continues [52] Question: What is the outlook for the mid-market segment? - Management noted that the mid-market is experiencing softness, particularly in new logos, but remains optimistic about overall performance [71][81] Question: How does Tenable One's pricing compare to standalone VM? - Management stated that selling prices for Tenable One are approximately 70% higher than standalone VM due to its comprehensive asset coverage [120] Question: What is the company's approach to cash utilization? - Management highlighted the fragmented nature of the security market and indicated that cash is being used for strategic acquisitions and investments in cloud security [75]