• Revenue: $235.7 million, representing 11% year-over-year growth.
• Operating Margin: 25%, exceeding expectations.
• Unlevered Free Cash Flow: $86 million for the quarter.
• Gross Margin: 82% for the quarter.
• Sales and Marketing Expense: $80.1 million, 34% of revenue.
• R&D Expense: $32.5 million, 14% of revenue.
• G&A Expense: $20.5 million, 9% of revenue.
• EPS: $0.41, $0.07 better than the midpoint of guidance.
• Cash and Short-term Investments: $577 million.
• Deferred Revenue: $833 million total, $650 million current.
• Net Dollar Expansion Rate: 108% for the quarter.
• New Enterprise Platform Customers: 485 added in the quarter.
• Net New Six-Figure Customers: 135 added in the quarter.

• Warning! GuruFocus has detected 4 Warning Signs with TENB.

Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Tenable Holdings Inc (NASDAQ:TENB) exceeded expectations on all guided metrics for the fourth quarter of 2024, with calculated current billings (CCB) growth of 11%, surpassing the midpoint of guidance by $7.5 million.
• The company achieved an operating margin of 25%, significantly better than expected, and generated $86 million in unlevered free cash flow.
• Tenable One reached a record 40% of new business sales, highlighting strong demand for the unified exposure platform.
• Cloud security sales more than doubled, with significant wins across both public and private sectors, driven by Tenable's ease of use and integrated platform approach.
• The pending acquisition of Vulcan Cyber is expected to enhance data aggregation capabilities and accelerate automated remediation capabilities, positioning Tenable to advance AI-driven exposure management.

Negative Points

• Tenable Holdings Inc (NASDAQ:TENB) expressed caution regarding US federal business due to the transition of a new administration, which could impact the timing of transactions.
• The company is incrementally more cautious about its outlook for US federal contributions, expecting lower contributions in the first half of 2025.
• Despite strong results, the company is facing a competitive landscape in the vulnerability management (VM) space, with mid-single-digit growth expectations for VM going forward.
• The acquisition of Vulcan Cyber is expected to add $11 million to $13 million in operating expenses and reduce unlevered free cash flow by $20 million, including transaction costs.
• The company is undergoing a search for a new CEO following the passing of Amit Yoran, which could introduce uncertainty in leadership continuity.

Q & A Highlights

Q: How does Tenable feel about its competitive position in the Vulnerability Management (VM) space, and is there an opportunity to extend its lead in 2025? A: Stephen Vintz, co-CEO & CFO, stated that Tenable feels positive about its momentum in VM, having exceeded expectations with significant growth and competitive displacements. Mark Thurmond, co-CEO & COO, added that Tenable had high win rates against competitors in Q4, driven by the differentiation of Tenable One and the current threat environment.

Q: Can you elaborate on the cautious outlook for the federal sector and its impact on guidance? A: Mark Thurmond explained that while there are no changes in budgets or project cancellations, there is some uncertainty due to the transition of a new administration, leading to timing issues for federal transactions. Stephen Vintz noted that about 15% of sales come from the public sector, and the company is taking a cautious approach due to the current political environment.

Q: What is driving the growth in cloud security sales, and is it coming from existing or new customers? A: Mark Thurmond highlighted that Tenable One has seen significant uptake from new customers, with cloud security being a major part of the consolidation message. The company is seeing strong demand for a unified platform that addresses hybrid environments, leading to doubled cloud security sales.

Q: How did Tenable's international operations perform compared to the US, and what are the competitive dynamics? A: Stephen Vintz reported strong demand internationally, particularly in Europe and the Middle East, with significant deals in Latin America. The competitive landscape remains consistent, with Tenable seeing traction in both standalone cloud security sales and integrated solutions for hybrid environments.

Q: Can you provide more details on the Vulcan Cyber acquisition and its strategic importance? A: Stephen Vintz explained that Vulcan Cyber enhances Tenable's data integration capabilities and automated remediation, enriching Tenable's data and accelerating its AI strategy. The acquisition is expected to provide broader and more intelligent remediation capabilities and complements Tenable's existing offerings.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.