TENB - Earnings call transcript Q4 2018

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Operator

Greetings, and welcome to Tenable’s Fourth Quarter Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Andrea DiMarco, VP, Investor Relations and Strategy. ahead. go Please

Andrea DiMarco

call and Officer. today's operator, XXXX fourth and results. all joining issued Steve release on for year Chief press Yoran, Thank Officer; a to Executive call thank and this to quarter financial on and the me With conference financial Chief quarter our are discuss us full-year Amit XXXX Tenable's Financial you, Vintz, results. you today Prior Tenable's announcing full we fourth call,

release the IR press tenable.com. the at find can You on website

Before let customer forward-looking security changes actual in expectations and and forward-looking year to full the differ control, the These begin, the services. in regarding and our including of me cause risks are these which of we for we beyond could remind in and materially business, position profitability, competitive our relating our to which of will Tenable’s statements this XXXX, threat landscape new and statements. you growth long-term market, make in Tenable's statements industry course expectations demand anticipated quarter planned innovation by that guidance and and and uncertainties, during those the drivers statements our and the solutions, first from some Tenable's results call, for growth involve products in adoption

You should not events. rely upon forward-looking statements future as a prediction of

of our to as only statements assumptions obligation and Forward-looking forward-looking outlook. views be subsequent disclaim and representative our as of or today statements of beliefs any management's represent should not date. update considered any any We

the could November and affect with website which Form refer are quarterly on results, SEC at the the material our report with sec.gov. filed risks on For available SEC, subsequent we other to SEC most a factors in please and of actual file that XXXX on further that recent important the reports X, our XX-Q those contained discussion

GAAP. a financial and in during will non-GAAP today's substitute discuss limitations we non-GAAP are financial to of equivalents. measures. measures performance measures number superior use prepared the GAAP of are to, to their addition, closest versus addition measures for, accordance financial a not financial These There with In these related of or call, non-GAAP in

Our GAAP Investor and is of And non-GAAP now, measures our available on for reconciliations today these includes to earnings issued we release also to the over let turn Relations Amit. that the website. call me

Amit Yoran

performance thank for call the us a XXXX Thank that today. grew you closed on out year-over-year XX% in share and to $XX grew note. to calculated you, high million. strong million. on year-over-year current The I'm QX as Andrea, joining Tenable to delivered billings pleased we another Revenue $XX XX%

Our fiber strong exposure. and highlights of in rising investments the growing importance momentum

As is component a cyber in board company. category a management efforts. the XXXX these increasingly highlight and we vulnerability and remains why to XXXX. believe talk a as issue. a level Understanding recognized the behind customers With of leading we successful strategic like us, and is security we would Tenable for foundational risk QX that we priority Suite consistently top and remains field, reducing C. strategic Tenable to hear

larger by we the believe proliferation research, anticipated is traditional First, market continue to connected of much management vulnerability devices. market the rapid given than

the business understanding customer and hundreds new broader impact. grow VM logos and base. quarter marching and consistently corresponding adding discovery of the our cyber increasing third, only The vulnerabilities to of Second, exposure, enterprise pioneering in every to pace. disclosure and surface of and we're enterprise, attack reinvigorating volume X-figure continues we're And including

created vulnerabilities. and life the legacy end of posing more more of risk, proliferation amounts of considerable applications are the still surface residual increased of and connected there While devices attack and

CAGR, endpoints success our reaching will forecast, an XXXX to this IoT a base security transformation. February XXXX Gartner's the drivers to IoT worldwide XX XX% billion digital biggest units XXXX. be by for installed of said One continues grow of According at

types, our cloud, As include growth of growing their customers technologies, we're deployments asset modern these a to The of non-traditional developed number validates seeing web the that asset expanding as in and applications, much Tenable.io is coverage our rapid Internet such are Things. such, containers, VM view year. market last IoT, IoT cloud, traditional We than bigger by across our Tenable.sc market and operational devices and extended both research. forecasts

The of first half. strong devices, to assets over Xx XXXX Cloud deployments embedded systems, sale asset in half. cloud second of grew of adoption and XXXX coverage first second the IoT point versus compared of solutions. robust devices is our of of cyber in other the coverage the over surveillance the teleconference momentum XX% and grew driving Our half exposure half and

a This to new from meaningful On with first transformation added VM the make the Difficulty] many which into In like environments. win Tenable.io, into. foundation customer the continue VM They Originally, for strength to that few they bundle quarter. they're exposure more technology assess stages both joint we've greater A of lacked to types, visibility They currently understanding. wins the to power why start more When we container devices. broader QX. VM fiber front, overhaul and industrial and are they and CISO talk OT With all I’d on align This input recognize trying of available highlights also cyber to I needed X-figure Tenable.sc transformative and [Technical would a scanning, in digital depth web of company only application visibility and customer OT us purchasing in with of that PCI, plan a customers, include the to typical of in a venture. complex a a in their places efficiently and our progress. X-figure with example the creates solution want connected in capabilities a more it OT and looking a digital we opportunity QX, increasing Tenable exposure the assets. exposure. analytics. to insurer shift a do to asset Tenable.sc traditional exciting want sold global do solid in the seeing the We're purchased better within suite. convergence security control to strategy highlight now from IT/OT is holistically solution They European system strategy. journey various organizations. all to is VM large noteworthy and their cyber across their new to evidence major This example breadth oil environment gas cyber Tenable.io market across This solution. the get deliver more that, with modern That's and maturing IT operational to

processes. effort. customer purchase, together quickly SC need company. had new purchased wide to multi-platform They IO offering healthcare win a cyber and enterprise scanning manage reduce their and for new of and is growth external ultimately SC This manual chose company Another due and an also for scalable IO wide hybrid to the vulnerabilities. the unsustainable exposure national our VM both Tenable by vision. very They solution realized They a risk a enterprise our and

for Nessus container looking Tenable.io’s a recognized year SC X-figure purchased was platform and container external our win This container in security only strategic the modest addition customer an company hybrid This to largely a that scanning separate included was is exposure like last the was company. healthcare While a upsell Greenfield the value this coverage. VM quarter. plus more reliable strategic also efforts. global because all another national and incumbent architecture, cloud A Nessus for as scalable scalable our for one purchased e-commerce cyber a competitive strategy unified on-premise it cloud Nessus in to solution and of was win chose in Tenable.io and We’d looking share They company upsell offering, project Tenable our and scanning. and also considering X-figure for for couple brand. displacement, used also wins And was solution.

leadership to expanded Department in sector continue the that during was the solution public and leadership we called an clear fourth maintaining We sector, quarter. Defense also of strengthened awarded assured a position lead X-figure provide public the assessment contract the position with our priority a to Tenable in ACAS. compliance is expand

build example cyber continues across it account. and needs the Information expanded customer as in scalable DISA For to the to of highly lastly, ACAS and point This To DOD over X cyber on summer VM. great And on us counter a everything is their earlier threats to customers. cost quarter properties continuing Tenable platform matter enterprise-wide leadership million to help increase we exposure had and assets million customers growth assets covering effective exposure cyber in to for efforts retailer made to expansion rising solution a Defense on X community DISA, relied assets fast DOD we be with enterprises our early of the the great XXXX of XXX,XXX in opportunity VM and and to that assets, past have from in scale forward and facto the from assess Systems lead in the investment the real detect in XXX most then modern to and fourth expanding our issues known this This provide to and de to and research X both enterprise look retailer. traditional to market our our in Agency time. large devices. the decision to Fortune defense focus XXXX accurate accelerate sale another the help assets transformation We years, the a our

down enterprise made to science using and likely vulnerability learning actors, and another of be machine data organizations being threat yet weeks innovative Tenable customers. exploited a core X%. enables leveraged critical vulnerability ourselves vision. that on of the (CVSS) over vulnerability search. strategic These platforms make increasing with most third-party even Predictive measurement. vulnerabilities extending with suggests vulnerabilities system capability Prioritization for Predictive capability threat of and focuses probability and will by and advance with public developed capabilities This by cyber on data to position are daily Prioritization radius algorithms combines fourth lack XXX of and privatization consequently, information organizations enterprises technology XXXX our rigorous vulnerability for current identify that on science analyzing and XXX unable to is with SC them an Tenable In these announced of intelligence average remediate struggling with Prioritization reliable over Tenable algorithms portion months available vulnerabilities both the a few the common as just industry an the to example exploits This report standard exposure data enterprise new resources scoring Tenable anticipate smaller are the vulnerabilities decisions. leadership our collected of approximately be next is differentiating threat Our together The actors. our those the IO. to which analyze X% found an vulnerability our by to quarter, Predictive focus

Looking advance Lumin. ahead, we comparison cyber continue exposure and to of our product, scoring, the peer benchmarking, development

receive was used cases platforms. our feedback something of During of valuable prioritization VM that as those contemplated we core as originally part was that vulnerability a discussions, based viewed which of beta be Lumin component should and customer

time cyber criticality assets data. Lumin Given their based this critical opportunity build functionality. very with to and the into customers accelerated help the enterprise layer by build Prioritization overall deeper expand Lumin exposure will Predictive about against the XXXX. of also both of for strengthen all to had vulnerability context greatly information a sure our of the Predictive Lumin enthusiastic We IO providing will the insight and score. cyber to and feedback, asset measure to platform in exposure development excited customers upon make over data the their benchmark SC peers. remain on enriches and value Criticality Prioritization we business access

cloud-based software, the solutions some one era. solutions most built for cyber and risk global tech's into off move scale, Officer. as product most cyber for Ben-David to lead a leaders I digital the phase in and Tenable product is measuring and organization, will large He iconic having new engineering enterprise to addition on-premise new organization I to Ofer of respected in Chief managing of the next companies. Before innovation, of innovative Ofer exposure note a our want joining Product product

and continue we comprehensive pace view Security remain also high that priority an alerts focused and partners the fourth their we status. a AWS In with As strategic designed provide integration the is to to of innovation the on Hub security quarter, of push users strengthening we in with our market, through integrations. reach compliance announced

cyber now was environment. Tenable.io assets customers build of risk AWS that announced the reduce also This automated cloud We across discovery in manage, including for allows VM seamlessly purchase to to and and available the cloud marketplace. measure, assessment infrastructure

over call come the I'll end. Vintz summarize the our Now, to Financial then let me to turn and Chief Officer in Steve back

Steve Vintz

to fourth strong quarter a Tenable. marks year successful for finish The Amit. a very Thanks,

otherwise, results outlook release we our deeper year that as will on the results dive quarterly this year for on to of as issued results. begin highlight financial financial earlier into the me XXXX Unless for discuss reminding may business and you Let as the the revenue I'll be all financial well by today our Andrea except Non-GAAP results full start mentioned stated earnings press are non-GAAP website. reconciliations found call, at and today GAAP ahead.

Now for million, which on is the to recurring, of our representing XX% over the revenue worth same in growth quarter noting was is the last that QX XX.X quarter benefit the subscription for year. model. our results quarter, fourth of XX% with the It revenue

XXXX, began fourth proxy business we contract to value want revenue, calculated correlates defined exclude deferred and subscription exposure maintenance billings. quarter years revenue of We such renewal. our accordance are licenses a the importance we is in recognized addressing. cyber change to the over XXXX. This amounts current XX% with the walk good VM revenue as recognizing Since believe service the $XX.X in the calculated include in you generally we rising backdrop, topic in not revenue of professional our contracts of to from momentum available as as year current broader over grew a it revenue annual recurring but we're the and of revenue reminder, through that a licenses, how license manage billings total Calculated that's business. that ratably in perpetual I in in recall, perpetual plus as the may as for year billings testament growth you of from on XXX. million is we a future scale current As perpetual the period and With X current and are opportunity ASC and underlying

momentum, important with of customers an XXX fourth customer driver deals. mix us. for discuss larger In the new Let's which growth platform added is quarter, we increasing an enterprise towards

seeing of of new X excess This brings had of history. expanding takeaway demand spend continued now and the and value in customers quarter. adding as XXX. the year XX% XX% are basis. margin strong and annually customers spending terms at total we this of Enterprise X-figure an in in number domestically $XXX,XXX quarter deals, that Gross in net is are customers. QX was of and In the who The represents expenses net the existing abroad with the turn in of is last we the These XX the in number both year. are momentum experiencing here new which same This to customers customers in from on I'll new large to and relationships X-figure up customers profitability. largest company's LTM our excess figures of

with the on less infrastructure in investments scaling better reminder, an in than short having gross connection are we're delivery expected term. cloud of Tenable.io platform. our These investments and impact of a public making margin As our

we term, However, to to of gross functionality and range high over have add points the new presence low expect long time. continue XXs margins globally settle in to and XX%

the fourth half last total from $XX.X compared and turning the to we focused we are Now million $XX.X for XX% marketing the long in mid operating in was year. QX growth. range term, the short of represents Sales expenses, in our improving down business investing XX% million quarter first to operating over for in in leverage the but quarter, term, the on are expense revenue of the This year.

higher industry as over marketing investment in incremental to QX number first QX the to leverage million as As time. the was sales first in year of in million $XX R&D sales in a and due the of large events half revenue a year other is the year. last half of capacity compared which expense produces $XX.X typically percentage and a of in as spend reminder, well

was science, Innovation the data expense last OT, coverage million last around remains top quarter to year. compared in percentage products, across million assets a versus $XX.X for containers. R&D and our priority especially analytics, XX% IoT, all QX revenue, new $X.X of paradigm and for cloud, XX% of As year. including but G&A of us a was

XX% XX% of As associated cost revenue, QX increase new being a The reflects percentage public largely G&A a versus in was XXXX. with company.

negative negative fourth for $X.XX per quarter Our non-GAAP of last quarter was of to was XX% last operating to loss loss per a margin which the compares $X.XX, better to was was XX% guidance from year. operations the Pro-forma compared million. in the $X.XX share in our Non-GAAP $XX.X loss net of fourth than loss share. This quarter million $X.X a non-GAAP year.

Focusing the quarter of not term progress recorded as January headquarters. equivalents to Xst noting, related in adopted new new finished but The change QX, the we and lease XXXX. early on how building cash de-recognize also with we we investments. the in XXX.X record and balance short and fourth sheet, with expense, and cash worth us It's our million the assets required obligation financing construction does previously guidance new rent guidance

leases, of for a guidance payments the up requires present is asset and sheet combined of that also a corresponding balance use right the a liability remaining lease existing of For value the incentives. lease gross with the

million XXXX. XX.X assets use As operating X.X at such, lease we of million and XX, December of have liabilities of right

the In fourth million our to X.X was cash burn cash the for terms compared free of flows, quarter, burn flow million for of X.X a XXXX. quarter

we million ESPP contributed fourth which free X quarter. the in flow August, in reminder, a program our to cash our As started

annual free expected to our X the are flow as and X impacted on by cash from stock efficiency expected is first be the however, received ESPP financing previously million an flow basis, a Overall, be of flow. pleased negatively impact cash significant they are QX activity. XXXX million contributions to to business. On The issuance will is the to re-class X the a we free have on and March of not with in cash

an XX% continue highlights we to related will for the XXXX. over Calculated XXX.X a million, of year-over-year. XX% to approximately we was XXXX, financial new fiscal build Non-GAAP in from the operations flow increase of positive of million increase year, CapEx expect the compared full billings XX.X XX or turning XXXX. margin finally, in flow XX% X.X impact cash inclusive was we XXXX. of second the half million, the was free cash XX% burn or current an revenue X.X represents of incur year. in cash million revenue of XX% of exit As which million revenue, although time to XXXX. of of non-recurring Quickly free to upon XXX.X XX.X free to ESPP touching which last burn Gross primarily a loss XX% And year, of the by reminder of million was flow compared for target X% was out revenue million, our contributions, headquarters,

to Now, guidance. turn let's

of forma in and share in non-GAAP and of to loss the range be average of the of For million. to XX shares common of the XX.X million assuming outstanding to XX loss million XX the weighted range net range to XX.X non-GAAP loss a pro revenue range XX.X $X.XX, of in to per first XXXX, operations to net $X.XX XX million from quarter million in expect currently we non-GAAP be million million,

expect forma XXXX, from and in to million to year XXX current range of we million of Pro billings net million common to loss loss outstanding of assuming XX the operations to $X.XX, range loss million. million, to XX XXX net full non-GAAP revenue the million, million million non-GAAP average shares range the expected $X.XX non-GAAP in currently share XXX XX of be the XX XX.X For XXX of weighted calculated in per million. of is to

surrounding comments. lower believe And now, procurements, for have in As US Amit due overall. the back the which closing outlook call we federal impact little it relates year federal will contemplates I'll some to on the to guidance, our QX contribution uncertainties turn from to government

Amit Yoran

market believe and vulnerability more We're exposure. more In risk. partnering management approach Thanks, cyber with in be stronger now our customers up of in our excited customers cyber questions. even for combination to technology, continue open and to to to strategic like their positions we Tenable approach strategic any our Steve. in predictive the a We VM aid pioneering call the summary, about the now interested We opportunity differentiated the successfully this to with and prioritization journey. understanding

Operator

comes Morgan question Franchi from of [Operator Instructions] Stanley. Our Melissa line first the with

Melissa Franchi

if that you in Amit, talk good enterprise customer this within wondering a terms your upgrades. Nessus adds space you had have the just about can you quarter. runway very I'm of

that now then last going or XX,XXX the rate think change so you the maybe base customers IO Nessus’ I most quarter? was conversion any in over a into recent X,XXX enterprise reasonable have in and customers, seen you and terms metric had have we the what's a conversion SC of in

Steve Vintz

Hi, Melissa. This is Steve. I’ll take a shot here.

on also sense quarters, a have, we out a, and the that enterprise product we’re market, the that backdrop, cost we a the of are of highlight Nessus come reflective, most here much of the on of sale that customers have to of growth a the total the we as enterprise enterprise a building base. can and mentioned a b, is total it's larger the Nessus paid point a past those in way a made set, capability momentum platform customers sales as we’ve effective as whole but With average our that the customer So, from third ramp as seed is we have to market over market, of momentum and the unique total Nessus distribution. to we couple the as a before. exceeds growth XXXXX somewhat go in Pro of produce to think in plus emphasis enterprise

as expanding based relationship customer, gaining logo customer, the with lift the our we we asset overall, once model. history it's the enterprise have of you and we're pricing Nessus a So does new a from land that pull know then paid upsell a Nessus course whether or through from

Amit Yoran

Yeah.

to add well. new thing is, only line recent product efforts to add product to capabilities there the would organization the the as innovative think in Nessus and I I

innovative and addition you visibility you a near a is think to majority to a very and but which or rescan, our as you collected new times, and conduct capabilities as very complex, good live the discovered, which lot series go not out a new can and be compelling have as very we even telemetry have them scan. very understanding where of First don't through. new is will of vulnerabilities vast results vulnerabilities of are Nessus, already we Nessus before increase be will which to you environments of have whether future, And well which pull believe a the launching in we do

customer ties enterprise the some the Nessus with can those get they platform capabilities and products product. professional in So, between using base uplifted conjunction

really that opportunity or compelling we think in So strategic not been tapped a monetized a yet there's is into way.

Melissa Franchi

federal disruption you and following if the elaborate And then on seeing if bit backlog could little the from to helpful. extent quantify for maybe which saw open and a QX just in I'm were if you're assuming up the your disruption you're QX QX to closure with in specifically wondering then starting just some if already? you federal any could up comments Steve, Steve, you

Steve Vintz

for guidance, QX, in Fed more quarter. think foremost company of it the X.X was the than well, results calculated outperformance the little Sure, current versus the billings, first and million. in We're pleased fourth was I area for with it an

fourth So, on had for the no impact the us. Fed quarter uncertainties surrounding

business the of XX% as less Fed with offsetting of do third whole from sales the earlier, our renewal the QX than lower the end. in QX. to sizable quarter contribution amounts total mentioned coming in with as today, the and close fed’s I that in due new represents fiscal new year, throughout business outlook though and you know For and year percentage Fed QX We a contemplates

federal flow. whole, will believe later due to outlook believe as revenue calculated in guidance therefore year it's we're just more our our strong and a year us. the QX long the impact does and profitability pretty reflects QX, for uncertainties impact quarterly modestly compelling current significant for billings So it whole confident and surrounding term, we and US while that Fed side, of a opportunity about excited in In as not a business

Operator

question line Auty next Our with Sterling of JPMorgan. from comes the

Sterling Auty

wondering follow-up as made within of that expansion on, and broader much just as the I bigger you and are deals more expansion, to within in you well of from specifically devices company the plus prepared about probably comment you ARR you just Wanted the initial size deal the as how their XXXk deals some to think seeing within enterprise feature seeing remarks adding adding and functionality coming the are the relationship? mentioned, more versus customers, accounts, coverage

Amit Yoran

Sterling, a great it question. is

enterprise, as bytes I of I the much more existing larger way tactical that's mature, I with go the to think know clearly reflective us, enterprise comment? our answer more initial also journey where continued in is the that wardrobe and organizations larger, lands their motions, for both. think of and motions. very VM become seeing We're moving in our to in positioning, and being we're market largely a you seeing oriented meaningful we messaging, our accounts don’t very any greenfield moving scale our and in down understanding as from in well cyber have stepping as in in we’re if strategic expansion additional enterprise up

Steve Vintz

model. a have we land No, and expand

we're the attractive And a net added momentum XX,XXX X-figure even in customers So, enterprise, and a QX and expand. new demonstrating also we X-figure number number of clearly of is total is lands combination, we total have XXX. record higher in customers it more though customers, reflecting

adding even of So, opportune we quarter. a though customer substantial we're right have own hundreds in new within front customers us our base of a

Sterling Auty

How you we of think drive be that add in marketing about capacity momentum to the aspect that where is the how kind up, the mentioned would now you added you’re the one you as ramping of stand coming to you of as marketing follow awareness? that And going to outlined, really maybe how then investment much the public and go of and markets. some should you resources do characterize incrementals versus the to headcount driven

Steve Vintz

Well, a both. combination of it's

about on investment in conviction gives short terms has to In strategy to invest average, a for pretty XX confidence, our we've been investment continue us new dollar of, it’s the company, payback, XX sales. and clear months

So sales to longer, into that so sales adding of over forces sales have our time than of a in phase year, of higher we’re XX% capacity. force months that. say some did I here now or pleased mature will have percentage XX we're last we XXXX, a ramp, reps headed more been this have we but we see

the to strong The other continue lever, unit to given capacity, economics. sales paybacks going add and so we're the

know channel. level the You us is for

We’re VM has commitment the We only important. space in channel. that think company XXX% the that's to the

We are today years in our to and from ago, a continues meaningful that seeing and X% channel of and very to sales percentage. increases increase channel inbound -- continued are the business,

So, thing in a the of terms and leverage to and market, capacity distribution go is important. see of point market, levers we can is adding lot feet street sales the is ability there terms really we third in pulling to channel, which the create is are is awareness up the the assets on of one two, on in with building think

Operator

Ho Jonathan William next from line with of question Blair. Our comes the

Jonathan Ho

into XXXX maybe us with Can an terms that and I of just wanted revenue update maybe expectations the timing and give built little of bit start terms to release in your guidance? are the you in maybe for Lumin. billings of a what are

Amit Yoran

Lumin bit a Yeah. little I’ll start the timing. with

something of core management the actually compelling a number customers, the they the this our of throughout really We feedback. of the use critical like took every using program case, our part scoring to how of capability. use new was significant very the capability felt it’s Case our many data later a beta compelling the feedback team differentiation, prioritization, customers told hundreds we VM felt us know, we've prioritize, like a, in with embarked in you discovered was and use vulnerabilities of that capability and processed was prioritization platform. great inclusion XXXX, matters a was that -- Lumin they'd that's As on you're data, our hey, models as of vulnerability but capability lot that a a built predictive CVSS Intel the case. you of core but And do of concept for vulnerabilities, really was or got what has VM just the day It's credit, core and using exploitability in see and customers because science most, what it

So then drawn or and a to to a add those are of can accelerated delivered those that we product capabilities capabilities combinations extend to in we've prioritization VM products that said being the the VM capabilities beta benchmarking the you the that case we've feedback of predictive so the of and business both of core line, outside Lumin We've analytics Tenable.sc moved platforms. that the form we've enterprise assess separately around use been we of and on assets, Tenable.io and the those those motions of really types criticality honing developing peer use and in are cases, confident XXXX. as anticipate which on charge and around for comparison, will, in previously core Lumin context we're based that to business assets all specifically understand outside if we and in

Steve Vintz

in terms contribution from our today, of any Lumin. guidance reflect And it of not then does the sales meaningful

Jonathan Ho

us changes what terms your signal Officer could Ofer just of potential a sense Thank you, give this a strategy? brings and as product what little in you. from of follow the up, Chief of also standpoint a bit Can Product maybe

Amit Yoran

that software a of experience we I SaaS based approach the think capability live hundreds chosen it's larger frequently customers, these both stage base and for have is on-prem most cloud as hybrid very the reflects customer it's cloud based both a isn't base, how development customers in accurately change think something that hundreds of a environment, for based to scale. increase a committed table, capability, of Ofer and or the strategic step which the IT what strategy, we of organization found really larger scale there on-prem a in – strong and brings to the an and really architectures at delivering capabilities sort onto their so enterprise product and

his the about add strength excited of really team. the we're So to

Operator

comes Stifel. question line of Talpaz next the Our Gur from with

Gur Talpaz

ask and the upstream I the the to nontraditional and was, about in service you first about in a seeing these success also IoT containers you you're success the cloud able are you because peers? about better continued two Amit, and new these to guess enterprise, meaning, pushing wanted enterprise are lot servicing interrelated, I what talked like talked environments vectors functionally to

Amit Yoran

Yeah.

answer is I think the both.

I think as guidance that there core market of the and adjusted think is a attractiveness the the -- and out I the VM some of to markets. analysts

they in and there said, in strategy VM to I core differentiation do that increased new are enterprise that and this continued still that of significant and our these assess have types, opportunity that platform infrastructures investment want so for that categories, the to our Tenable because a even seeing we're CECL that for believer cyber about they're to firm differentiator. provider IoT yet critical in in exposure VM capability, prepared they're those attractive see asking those the not areas, we are things And modern informed they it's is providers gives customers. modern among signifying all I meaningful be OT the visibility asset the market. for That our confidence adopting or the a for growth think a a not responsibility and asset them types the I'm think is capabilities So while yet customers coming know and broader adoption these questions environment, those those might having environment

Gur Talpaz

OT OT of I interesting, service both coming play your you to that span kind new or coverage, mean, and startups ability that nature is out can a does some IT, what and versus of you that OT, IT of these are call makes I convergence in extension [ph] sort the of sort the that want talking of CSO differentiator said an on sense. across was environments and and And breadth only the question, environments importance thought pure maybe increasing of to can? like was, a something in about spectrum the know I OT your That do that the the of

Amit Yoran

Yeah.

that's I great a question. think it's critical and

the I almost of pure think completely OT By have assets environments. purpose environments two are one even definition, all In invaded critical aspect, different standalone traditional of convergence in OT are OT. never IT it's there computer, general aspects. today

as ability a is the operations on us points fashion true IT both strictly risk and of OT that gives So, of in-depth the assess is the in without of opposed elegant of environment. part focused IT OT a of that of to understanding that understanding kind those our componentry a -- to much an better point product

us it's recent come is journey. their understanding previous issues and a that assess exposure where leg technology, for in you have brand, so departments we the we hey, at their IP in of saying, that of the CSO we've this trusted is covered, last we're as unlike think dimension confidence and advantage these keeping that go the those say, OT strength up think that customer CSO in OT, over cyber second so that That when is base saw you operators strategic CSO, the awareness we have hey, you different, the OT and OT beginning level I very for great, the this understand years really year, with caused position trust, are has the up I of how you CSOs is operators have world IT about get the the a discovery your turn it The of operational a can the so guys operators some the this CSO relationship this and play got and and of that sandbox, know of do questions in us. here influence environments environments, to from the helping we increasing seeing an is help to bay,

Operator

Deutsche Bank. Our next question comes from the line of Gray Powell with

Gray Powell

on my side. Just a couple

can pace not you programs? I formalized more signing which developing in point formalized vulnerability customers customers about see program you. last you place new the you mentioned a with start, did talk management that some to about at quarter, before of XX% at think So have

correct of Greenfield the market a for that that think you and is opportunity? proxy is a good So is portion the

Amit Yoran

largest measure That's consistently we one our coming especially that deals largest accounts. or from pretty

at to no particular mean systems might wide systems we percent a specific plus, who quarter so program, to deals where dozen maybe Greenfield not really are think it and of requirements, centers Greenfield, enterprise us, given our a so but not data or that units, displacing and VM it's we We every VM largest it's quarters, some our quarters, XX couple Greenfield means any new and I to vary program a base us that from us as architectures and have looking of VM, roughly characterize be third come or as understanding so absolutely from business characterize XX%, what sales but it of coming third order in and enterprise period, there's by of PCI or accounts largely the to doesn't types customers enterprise the we from us about XX% some they comes market customer magnitude, displacing to and compliance or an those does opportunity. new quarter, quarter what it’s come

Gray Powell

is closest competitors? adding impact of of and then how then a to the just so IO an C pricing comments, is those your there prioritization on just prioritization versus at predictive that differentiation to up follow And predictive and big products

Amit Yoran

There pretty is capability and adoption Lumin the differentiation the sell capability. no or cycles, originally and from customer the broader we center when think and stage so security and a capability, for was up of we've will this anticipate compelling part heard io help base. compelling currently broad the uplift contemplated we also more to and in price adoption think it product set that it's We it beta Tenable a is

Operator

Dan Ives question the of next Securities. Our line comes from with Instructions] [Operator Wedbush

Dan Ives

opportunities you're a when from cycle trying more and convert is the of the a the and, in sales them to but even typical question to my take customer maybe perspective. taking progression through VM that lifecycle So us suite, challenges

Amit Yoran

Yeah.

security the in in through think awareness can happening activities, of be opportunity can it brought marketing brought I through in can industry. driven, be activities broader the be externally

set ask when how vulnerable we foundational a to system typically breach asking are are CEO, types risk that record questions, start VM as the maturation are which sales, the as answering Directors, you how of of for are they could Board and So those external program curse, committee activities, secure audit of the we, CIO, questions, program exposed marketing they're we, chair, or well, market is questions activities, internal those by and driven spur well there of so of other VM ultimately drivers. whether based an

CSO with those comes understanding robotics automation, new around -- and enterprise all inventory wants it's for whether transformations. in, security company associated So, of technologies, and of need to manufacturing and initiatives types risk digital new embracing transformation, or new the in, those wants embrace an CSO launched, OT, spur gets of frequently comes cloud, management, questions to new program can warehouse

drivers So both and exist. think those internal external I

Dan Ives

in on a just on lot it, of the DoD, government, how so because not getting we're obviously of breakout, we exact government, versus DoD but the and about exposure none obviously, civilian but So investors terms should affected, the I to should questions from government homeland the how military? think the the on military think terms side, of business security civilian and about in

Steve Vintz

it We Fed. XX% the the as of all -- really from would look, approximately come characterize sales And of our same. XX%

letter civilian that in result, source giving as offset probably tone, more pride from QX DoD that flow agencies we impact X But, but side and of commented in QX. the it's more a less a of I the things. Fed a think to QX, specifically and and of in company. we timing really an first and guess, view billings a on what largely was said, be of some That just it, modest footprint within that more on chose as We we’ll we would it, from and so perspective, of less very sizable serve the the federal just we uncertainty have quarter Fed. the surrounding cautious We for a take most

Operator

question next the with Berenberg. of comes Tilton Our Josh line from

Josh Tilton

automate Rockwell type of and where some will to maybe bring the on on the do or the smart just regards are you driving deals In to side the build level a commentary out a or factory security some what's seeing Siemens then factory in IoT IT/OT connected opportunity, OT a situations side? or Tenable high a for

Amit Yoran

Yeah.

there an coming with really It’s either the think OT and our engagement just motions. one increased requirements strategy, cyber and from the uncover kind in role existing OT us or the tends is being to the being by not and responsibility side that talking through and the new currently capabilities a to the market CSO. vision requirements CSO responsibilities environments, for different of are our I CSO providers opportunity, by through exposure picked going them our having and or two addressed up

focus OT you suggest, as Siemens. with from We more partnership year discussion. second, The strategic a about a comes announced ago, a global

so focused understand applications, that making the access identify of to can us of as complex as we extremely their that the environments, on phase helping the really deployed there, vulnerabilities. was partnership well the systems assets our are refine you products sure OT in expand imagine first protocol, The might and we the both environments, types datasets getting these capabilities of and

second The the where that's primarily to engagement driven Siemens themselves. lot they that a operators of a market involves stronger go with by phase motion combine, have partnership of

Josh Tilton

the of behind a maybe new would to to then force say on just how on sales is your ramped scale go strategy, more strategy? And you XX, specifically market the X

Amit Yoran

has bring them CSO a experience engagement. rely the the otherwise OT and the in It house experts. much opposed helps to the capability motion to the table focused of house have I'd more VM, identify actively side market -- CSO, on engaged primary differentiation that's our sales OT the go the that core We're where with team assist we're sales to the IT the by sales no means around. aligned to opportunities. team category exposure, experts our to the and understanding complexity, terms OT the are We Siemens of OT motions. of a those core to entire then limited like are greater we cyber as in This of our market depth We building that that bring primary number say of of focus selling partners and side

Operator

the session. reached end question-and-answer Ladies and of conference. we gentlemen, have the This concludes today's

lines time. may you your at participation. for this You Thank your disconnect

Tenable (TENB) 5 Feb 192018 Q4 Earnings call transcript