TENB - Earnings call transcript Q2 2020

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Operator

Greetings and welcome to the Tenable Second Quarter 2020 Earnings Conference 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. It is now my pleasure to introduce your host, Andrea DiMarco, Vice President, Investor Relations and Strategy. now may you you, begin. Thank

Andrea DiMarco

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

Tenable.com. on the You IR could find press at the release website

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

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

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

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

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

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

Amit Yoran

Andrea for joining you, us you Thank thank all today. and

key and support you on detail, came our financial comments a will our our was Tenable last As mentioned Steve on virtual how customers our I broader it I QX, to quarter XX% environment. grew the macro to strong a trends free these uncertain first flow few was positive I like financial this line non-GAAP our continue that operating quarter a public note improve and income over-year-over in cash I’m this for an results are call, pleased excited results company highlight. together our the profile. to incredibly like would we quarter. to team Revenue organization. year delivered of in with mission. that is Underpinning top environment our strong deliver in make in our quarter discuss performance but or resilient to overall of growth greater would regarding also second few in as very there

risk. building to as their block continue to critical a security vulnerability management enterprises First understanding prioritize cyber

risk. expansion tax of where the our market to VM the Second right us their best-of-breed an And are and looking accelerating deployments finally, strategy the sell for cross continues success. to to surface, power are Leading earns Tenable’s understand enterprises drive better compete opportunities. assess cyber

points. through you these walk me Let each of

cyber prioritize management they try their block risk. enterprises, for to as accelerate foundational digital vulnerability serves initiatives to building customers as understand management. Vulnerability First as a continue

scanning and priority. increased This and engagement quarter, top we security Security and the highlighting assessment saw even as three third-party Chief budget VM CIO frequency level, Officer customer high

distributed assets tax to with workforces, the new and vulnerability critical. surface coming is online, management widens as based increasingly As shift becoming risk cloud

accuracy best-of-breed and vulnerability to we closest to now simply, testing to XX% our management, more continues testing dedication To competitor. shown Lab QX coverage that Forester our professional vulnerability leader has Way. of put products. different to share to we vulnerability vulnerabilities XXXX, to so significant an In doing of differentiation is that greater drive it according common security IDC’s share respect And market results. a analysis in and one number than according significantly our any old VM our were XXXX. Second, are of we market more risk And or next our really and with named cover and -. exposures with management, using

a to takeaways between we in technology security problems wanted were achieve companies. accurate. already our that entity faster vendor two a testing. market platform more according surviving the the in quarter, to XXX consolidate vendor number We for looking a financial than larger more In doing Tenable leads a is to investment work and helping This in XX with strategy. knowledge XXXX, zero XXXX, our turned with deliver discovery rate positive They we standard. enterprise legacy than and to and solution false to testing. the best-of-breed fix merger the example of several significantly than also years. in the extensive accuracy, vulnerabilities competitive emerged new are multi-year sigma deal competitors as choice, more according zero as is security in announced. and vulnerability we industry our for vendor. This of have more lower six have to our the highlight more figure one our customers trench that was research day also own pleased team days large An Notably VM the third-party single and find a into Tenable translate displaced with in six coverage into main configuration

Tenable and workforce. Tenable web We our cross times hear down transformation has to measure Our having challenging especially tracking and relevant understanding We Notably in the when and struggling momentum application mission support again, getting the business. to their sell risk initiatives. cyber to customers with of comes distributed opportunities more strategy risks acceleration is The more matters. transformation these container are our in positives real are in scanner really digital best-of-breed attack increasingly data. of digital and cross risk more IO, QX. accurate cyber applications, using time manage secure to our surface their problems and saw of a amounts to that sell spending security cloud inordinate false along where customers of time with Enterprises seeking data, by elevated is combination increasing help customers fueled

are We business. seeing momentum our continued in also OT

customer active overtime. is told control very change us the capabilities. of of manufacturers a and management, win full a exciting in of This visibility showed IT, customer This control, and largest a to for us the this OT downtime. We they future Tenable One world platform. our state OT automotive converged looking was with OT query for because globally with expand minimize opportunity consideration an

environment diagnostics Tenable needed company and web cloud proprietary our purchased this rapidly analytics growing foundation and Building to better analytics making. and vulnerabilities offers, accuracy science. With research security. more. entire Tenable assets, decision healthcare the and matters a for Tenable advanced attack expanding benchmarking and and on also need is in application prioritization also unparalleled When leading on including their added data scanner surface SD, VM assess enterprise even based they IO, privatization container

cloud and technology the also to Cloud In a attack foundation Tenable surface, helping platform increase our Everything core in extension our separate improve portfolio. our that applications we seeing the few a via of upon ultimately has recent their cloud with added all the an our added of assess security is are addition native our to the a advanced cloud in example market OT. for maintain customers do Tenable container also different. in then for of we is entire This bolt major vendors part environments integrate more In many cloud and executive are the see public fashion our and tool. purchasing hybrid exciting builds solutions, and deployments years. integrated of we past sell on workloads web the an We they a which with cloud. not team, of customers a multiple Securing assets analytics no they customer across cross become of lumen. we across natural customers, the in security And the core product wins vendors. native of security pod attribute environments opportunity IO, leadership connectors, as moving

connectors, capabilities about months Expect identify cloud integrated provide customers cloud the use into - vulnerability novel our of these customers and our to cloud secure the misconfiguration to in more to deployed these comprehensive the scanner, native a of deployments. compliance. visibility customers coming assess Our container the need of web to combination and DevOps, to assets operating extensive security hear security app also environments cloud connectors ways quarters, our lot

advance security cloud and and level meeting customers about of timorous achieve assessment. integration, We excited are visibility this while scale, to our our type specific ability of in their terms cloud expectations to platform our help of

assets grow product rapidly our we to from addition to of data lake continues number our collecting data cloud a In offerings, increasing assessed.

customers. produce leverages that insights being team to to Our our data science are this benefit data used

this going examples of of testament will prioritization, insights forward. site leveraging include refinements new Some we and scoring, our be that

assess attack this into unifies our customers one hybrid data cloud cyber place, the all surface platform risk. help across environments pure Our of

will OT strategy, growth dynamics Going to our analytics will believe enhancements, and to strong VM cloud we remains forward, continue capabilities believe strengthen have that The we profitability. best-of-breed been business propelling and our and fuel that security attractive overtime. continue advanced

Our in the a challenges for through well maintain which long-term compelling. are we of remains strength. our and manage future. provide the focus This believe and macro leverage on natural confidence financial and a path significant opportunity, positioned the business We operational recurring environment our that gives we me near-term to the revenue see

will over the call turn Steve. Now, I

Steve Vintz

Amit. Thanks,

we extend excited the our customers and our leadership commented and measure in Amit their opportunity cyber As results earlier, quarter remain by the pleased are helping to about this for with very exposure. market second manage

then Let’s the to guidance. quarter to second talk about turn our results

exception that the financial please revenue today financial of discuss non-GAAP are will measures. that with all we First, note results

call, non-GAAP in found GAAP of the at earnings and today to mentioned website. this reconciliations Andrea earlier on our our be may release posted start issued As

to renewal which new throughout the business the Revenue Revenue demand XX% better and by quarter. both represents in growth. approximately quarter million. was our million the for was $X range our Revenue year-over-year expected exceeded Now, XXX flow results. and than healthy guided in quarter of the on QX overall aided by midpoint

model. recurring is to a Our percentage to XX%, annual continues subscription of which revenue high at prepaid testament our remain

was percentage platform adoption mix platform. model, enterprise is is number web container of and of summarize, continue to security higher challenging a trend uncertain demand, customers importance and current of back the of of securing net plus total and Tenable revenue total despite which environment new sizable brings secure. saw annually new in just application strength six-figure logos It the platform XXX it and contributing higher best number This IO healthy We customers adoption current an million. of new our new in customers XXX. over six-figure the terms our macro add we us the security accelerating growing in included cloud resulted of backdrop environment, In winning we seeing last new which net cloud To speak in This six-figure higher year-over-year worth revenue the takeaways. for excess we to quarter, that - is added change the and it our $XXX,XXX the to added in choosing this an customers that number Xx to noting demand define best-of-breed recognized than has of of is XXX cloud in of of quarter, spending to applications, strategy. VM that ever. customers the customers new also are one increased and customers Calculated we some quarter macro competitive overall deferred XX and enterprise from cloud XX%

with as our good performance quarterly said timing, reasons it we prepaid leading is the level obligations, a I when XX% of the quarter, more deals. of factors we future in be such call, of mentioned. pleased during year. It as commentary on good billings renewals, as little As CCB the last the of discuss is I I remaining a multiyear revenue important growth, number to CCB not over to this calculate disclosed filings and overall on pandemic provide in outlook influenced although for note indicator by all is translated real current indication sales I her early are that for short-term just may a our not of and A this grew will year-over-year. our

strong in margin, As quarter, on based which in profitability larger it by last with income. with quarter previously down where more consistent but and But healthy a expected, positive non-GAAP to it later. tempers demonstrate in QX XX% rate the and we dollar was that will turn I more percent. of quarter. XX%, asset will and environment, noted, net XXX% highlighted our XX% renewals came financial is be operating a than although profitability major leverage turn moderate current pace our last and over in first were from at model continue expansion of continues was to our let’s provide expenses initial better gross I in color year, expansion all milestone, to land now to first the

Our Recently, healthy gross efficiencies result to our very infrastructure. also benefited margin from other in and cloud have a training, services. utilization Tenable professional and virtualization we offset our reflect cloud and based improved demand resource scaling for I/O continues by partially platform, increased public increased of as implementation be

percent and year. year, operating XX.X and quarter. to Sales to primarily and XX%, last kickoff, other quarter as million and worldwide expenses. due industry marketing marketing Sales last Sales XX.X last million quarter. RSA in was was revenue XX% last to which year turn million of as compared the first down marketing in events and XX% this Let’s second sales QX such the sequentially, was place XX.X and in decreased to of took our that quarter a

most estimate to of notably COVID saving, we and the travel, million to areas marketing approximately addition, be In there this related were which two three in quarter.

to new the business digital leverage of are expected in Some to endure are as the the today, of they tribute we reflect productivity. acceleration said, lot That these savings and reality we improve of transformation. today experiencing a

but the Specifically, the mirror. increased, rear the maturity fully management, has sales is only organization leadership terms terms in sales ramped, also of that of are hiring last not percentage reps of the view in now year, of and new the of in

have have is sales second million Which can markets see XX.X where calls. XX.X optimized in XX.X overhead discussed and R&D million the on prior on also We compared to was in mass. quarter year, spend million last we critical something we quarter. the of last

R&D both revenue, G&A year. wide of XX% our first compared million second in to XX the percent held in R&D was XX% in developers quarter and conference the quarter to last expense decreased the million compared due sequentially, primarily As XX.X to XXXX was QX XX.X in quarter. company this of XXXX. million QX, year, last

year operations this XX% revenue income loss last of from to of As X.X XX.X QX X.X was loss quarter X% XX% last in second million for was compared Non-GAAP and down XX% margin XXXX. X% quarter. of in G&A negative compared the and operating was a million quarter, XX% quarter. percent and to of from a Non-GAAP last positive million negative last quarter QX last year

from for $X.XX a was have earnings We which quarter EPS are a pleased guidance profitable with of efficiencies significant the made while summarize upside from to over better as to better XXXX management. our expect XX to $X.XX $X.XX this operations $X.XX, non-GAAP expected $X.XX approximately per XXXX, to operational To our and in annual progress to company very translated be non-GAAP we from as All million years moderating public XX first income than in expected. the milestone, operating was on our loss full-year operating be also as excited expense revenue to in now basis which million non-GAAP major non-GAAP share to today. a significant very XXXX in and reflected this than was achieve the is improved in was

in sheet. turn quarter the cash let’s and with finished the to investments. balance cash short-term XXX Now equivalents We and million

into million new of and million credit facility will provide we going connection we that We also a in $XX today upsize the was forward. liquidity facility, with credit additional Xx. potential to announced maturity done This $XX at entered our

half like cash second We achieved guidance that the the we favorably million sprout behind of the under second compares of to second The results will our uneven in year. This quarter. quarter be Net the flow, assumption quarter developed free and positive three two for cash year. year. the a the discuss we the Turning QX cash approximately million was in X.X and in new of remainder burn we for to flow of of half in million headquarters the estimate the for flow the free I economy million for X.X last of of the outlook our us, our year. reopening CapEx

fluidity of and in in here million be to but million backdrop, diluted uncertainty third in current in year investments million operating XXXX, to range in of to million, zero a $X.XX be $X.XX growth to to fully share, manage make continue on on disciplined million the million the to of which XXX to of million earnings in assuming the of and Non to million outstanding. we million. product expect and of will share three million. is areas million, GAAP range range income we in range assuming range be the outlook a environment, XXX diluted the XXX seen in average plan range revenue currently our the the income XXX Based that revenue XXX to non-GAAP currently non-GAAP two shares Non-GAAP outstanding. With the QX per to the share operating of and non-GAAP income innovation expect guide. net to net be levels as go-to-market the million business shares income million four quarter four weighted XXX in additional in our fully to Given the per of also way, diluted, in as the we the such diluted, zero reflected non-GAAP in to three per seven related the range weighted $X.XX, of of range earnings rest average to for

the model have we annual EPS QX strong subscription revenue visibility results guidance. prepaid our Given and we annual reinstate and today believe to our

to environment and us given good continues be the an consequently visible not compelling of our summary, the billing profitability believe for and in quarter, to gives confidence the increasing pleased future which deliver growth we positioned indicator earlier. less are well I current [indiscernible] results In we long-term. a Tenable for with over the leading growth However, business. mentioned reasons remains

We current exposure foundational we comprehensive comments. have customers. to a and are continuing for platform macro Amit that back the developed invest in the now challenging environment managing actively value significant I some call cyber the And turn through opportunity. will long-term to execute closing while provides to And

Amit Yoran

Regardless management vulnerability we will in priority. believe continue to grow Thanks of Steve. macro environment, the

Tenable has surface For our of expansion across cloud and deployment. our into core natural strength aided in the and VM OT our success driven attack in

see lien hope at many the long-term portfolio city Our now DA up success. to like positions call for for September. open you second questions. would of We to and in the virtually conferences product Davidson us We

Operator

Please question from your Auty Instructions] comes [Operator question. of you. Thank proceed Morgan. line with JP with the first Our Sterling

Unidentified Analyst

is question. guys Hi, for for Sterling. on [Matt[ taking (Ph) Thanks this the

one follow-up. question I one had So and

COVID the seeing impact side? business The is direct are negative on positive what the first given and you question environment from

Amit Yoran

briefly. I comment Thanks guess I question comment. the Yes, for I will will

around and I/O. trying it. acceleration most is We SAS customers positive think activity some the frequently I/O, on the world All reviewing expenses, see digital cloud other acceleration company see environments wins web assess application processes. and given environment. spending, to like of might transformation. negative security I assess that practices procurement, solution there our just cloud Tenable operating macro to expect, And to our every the changing you as We of of reviewing then Tenable help them container using both in scanning, an acceleration the the are certainly of part solution, created environment, aspects as

create bit for think more And over purchase so of and others. I scrutiny little just every a us does a natural headwind just

Unidentified Analyst

helpful. improvements last if wondering update your very a programs And given you that these and Thanks. was have the on that I year. then may any an give channel you have put Great place is you just follow-up. can into that seen strategy us in

Steve Vintz

Steve. is this Hi,

We end network we we sell our company resellers sell are the so transact the to in only just the we transact tier two through new to in we space of made with - commitment turn distributors, work with - through who the we has partners directly the channel, VM although our close sell closely business. to vast and customer,

having a strategy important market channel like I think in particularly is even this. cohesive a

XXX a countries, sellers have We new to have as channel help over and in XX,XXX the spanning it is partners business. we serves customers, And countries. because cost important effective over XX bring way

total talked from about even it our business higher than have our channel, of the XX% sales on much prior of there and as over from think calls. or ago, the ago, XX% inbound think as is years come was can XX long-term, that. today little a channel. Years X% much We is we I this

So, especially have customers, the and relationships that strategy. selling And can you channel is critical don’t for mass. our an into important go-to-market enterprise to take otherwise you part markets have they of

to So, important, sure intimacy greater build and are for with channel re-numerated and the do is they work continuing they and are good the incentivized making we us. for it that

Unidentified Analyst

very helpful. Thank that Great. Thanks you. guys, is

Operator

from question line Keith question. next comes your Weiss with proceed of Morgan Stanley. with Our Please

Keith Weiss

much durable and accelerating full-year we The think of as is to profitability. some one congratulations getting thinking benefits about And XXXX of expectations sort it and taking milestone is XXXX conferences the for of place, the nobody should Steve talking about? are like one, for on much and this is Steve, back the And about into question good of temper like to how really is guys. going a be as question going Excellent, that question one how and thank is productivity come been you heading gains Maybe we of we how for aren’t have and you profitability. that to beyond, traveling Amit. should this the of much versus job is

Steve Vintz

I it think at revenue of all the over of we lot the a if look talked that. benefits strong is XX% particular, But a over efficiency. is net Well which latter, and We business, recurring operational very and model. in our have subscription having about you XX% gross margins, dollars

So, lot margin us confidence in of company. profile a it gives the of the

And sales at handle the is are just XX% marketing. four those have If fully and percentage time, of in XX% on spending it. today year, had of that sales. were over not. are you more that marketing sales of and last have a versus - a something there we reporting are greater look one And particular, that has And also our lot revenues this of for about we maturity, big reps a drivers we maturity we growth, ramped greater reps in echo and

we sales to able in markets been also have where We critical mass. overhead stretch, have

will estimate two in in also out R&D. sales a were I and related is call million. there of just which be not to quick So, in marketing, some we business, but lot savings, to three We to COVID leverage tell

transact the uneven will environment in the the not and what expect current normal sure face-to-face reopen deals we what contact Some came can we marketing. you, of is is the and same remain traveling of with next a over in quarters, customers. And through of larger and with we economy. not will But certainly we couple way that that be know expect I’m the I slow without honest

some leverage in several is quarters. this just yield have out today is business It in talked would playing also that given that about the something there ourselves. for efficiencies of dynamics seeing So, the a are for now business, leverage and lot here. is at But the are play natural you that greater we

Keith Weiss

of a to a as you flowing picking for talked conversation, it channel are recent see the priority and of that be you a cloud well seeing point priority in you particular? That for been up sort lot the like and of helpful, do think VM the and causing the environment kind that in And you are great the through. could of Got is the that near-term then in we up that while. in moving for super And around to may it. to terms is to about of higher surveys environs ramp Amit, public VM

Amit Yoran

in I the very active? first productivity. hit, on that people pandemic when the very and shifted were of environment our we proficiency our we keep a do was think How work-from-home together How when the have priority keep top they focused employees sustain employees to office. level to the working quickly able they

the or adoption, provided VM in these answer from As I data is their organizations it ask that, so, in to comes questions Solution. committees, And make that CIO that they those about the technology, cloud of how and computers audit risk people their in priorities many foundational shift, work-from-home profile? of natural questions VM acceleration gravitate risk the solution, think is place is whether when the the next that changes the in understanding how change CEOs, these do risk for changes

just a So, I natural think it becoming very question.

Okay, the providers. I work native And continue customers then all cases, in cloud into major now we this just to the well, use years enhance do the developed I have visibility and of and gain insight thousands cases, that in with how connectors and have many over environment, it? cloud

Keith Weiss

is so That guys. the Thank time helpful. you super much Excellent. for

Amit Yoran

Thanks Keith.

Operator

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

Gur Talpaz

willingness about my you complex Can you quarter. talk Amit, questions. environment? for about Thanks in some displacements Great. projects talked taking the more this embark Okay. that broadly on current large more customer

Amit Yoran

about risk company Yes. as saying, we I question. In sense? surface understanding other the larger any and at know and you Thanks understanding make customers looked prioritize to and a of continues and their it? priority. be It is projects attack their and some an spend, part scrutinizing And is this cyber and absolute want say critical? great Does just our risk at Gur. arms their around a to expenses this getting spend Do certainly, looking have new and okay, operating the case, their

in survey, seeing CISOs of about are consistently the it hear You survey directors, in earlier and CEO’s year results others. for and and NACD surveys this you

that. the a understand have that some and to we understand certainly it environments than is more and seen help to risks. desire understand look part, workstations environment, deals and concern, think their it that them. by cloud the a applications a is extent want and to it have whether matters like before it for more adversely risk across their and and of and in have people different ops to most They I we others, just It So, affected granular But dev factors could has and computer environments forms servers different them help web way.

loaded us, our I sort has well as capabilities, differentiation just right. core for VM that well of as in like think that

Those We is are negative of incredibly lower risks. it to have coverage rate points XX% for whose plus understand more CDEs meaningful. data positive, false people and false job

Gur Talpaz

one for you That is Steve. helpful. Maybe

more that hoping growth current to process and mentioned with that RPO You there. was maybe better a some I color gauge growth, could elaborate the give bit you on maybe quarter. a

Steve Vintz

Sure. it in talk CCB. to I will relation about

very in effort and environment, of the often most indicator and are and foremost, to CCB our underlying value, first close deals of contract close performance discuss sales CCB quarter our quarter as in and of performance a we ability we as So in that business. to proxy is our this the with pleased an annual proxy and the particular

I is everything be factors, during it multi-year of revenue on However, as a prepaid as the call good on not which a it many indicator CCB mentioned our last variability can have market. by influenced growth, may challenging because leading call such deal more I a as timing, call future pandemic else, deals in

all So while commitments notably value RPO fairly in to most in growth annual contract deals due and by captures quarter And are CCB timing. invoice yet CCB RPO is that invoiced most short-term quarters the influenced aligned. of growth of additional customer plus tightly deal short-term, the

this more importantly, a several short-term of We ACV with RPO closer the to This quarter points clear just the and business. approximation wanted call separation underlying is there and growth out. growth for higher a

one, whether if better quarter now, or close a we are approximation not calling another in right are and think market business. whether in or is to indicator uncertain performance underlying best I growth an is going the just we terms out think but there of the see just that we not that will RPO I this is indicator or as a of forward, of have

Gur Talpaz

Steve. Thanks helpful. Very

Steve Vintz

Thank you.

Operator

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

Jonathan Ho

important potentially I out with change guess I you afternoon. that and higher good be wanted why Hi, on about deal to wanted prioritization. OT understand start the better understand we signed implications was so maybe in the it I deal. signals to or that what your why maybe and of thought this thinking environment just either maturity relative you should to a

Amit Yoran

journey I good transact embarked with we case OT with Yes, use strongly felt teams have to and on are us buyer opportunity and able in messaging current leverage years-ago. about OT users. sales resonated with our front recall, buyers saw, we our the as in our you an our between very think We opportunity of

that reporting, year, that have acquisition So, gives we last analytics that a nature. things facets confidence late into of going of an make technology platform our for integrated into prioritization, us many in lot of unified

prioritization OT just nice the converged it with of of of risks continued and traction the we in customers is types want are to see and it where operating so sort across seeing but where is not environments those different they environments. understanding reporting And these just

our middle notable auto that pull saw enough and manufacturer, the on are value trigger sizable it it purchase, a think prioritized in facing. environment pretty in a really plays challenges was thought current global the to they we to of and strengths we the the was So that all

Jonathan Ho

sort your clip and we retention on it do Thank effect like, understand just you. the little Got it, is of helpful. for you then and to time? Can be us impact you RPO. relative should you talked a between about a expect it retention, this to net short-term there seeing an help was that net think may or quarter, is start this differences And clearly, and you here, the normalize TCP to just maybe bit are

Steve Vintz

is Steve. Jonathan Hey this

that to pace the and were earlier, call moderate more larger better expansion. that renewals given the so in asset wanted quarter in As we came I initial but current out. mentioned environment, are lands with expected, and strong seeing We we than a of

tempered And dollar rate expansion so net our it continues to track a bit, still but above XXX%.

quarter, your the act. of number This with we are pleased local

and new natural can logos sometimes some between variability be deals. also And opportunities quarter-to-quarter pipeline with there

was anything this with land. quarter-to-quarter. there variability pace in over drive of some logos that and of be don’t are from six those out. best win. six to Notwithstanding of were is customers, figure we a new very number for this the certainly over will competitive six metric calling one to company especially natural QX, quarter to worth which current number any we figure quarter, harder quarter us the deals figures the to So, added certainly adding notable, deals can new optimize larger And and and enterprise takeaways XXX strong our And really of the for we pleased logos strong new well see acceleration environment seasonally in our is where an

And so that do to we today. wanted

Jonathan Ho

Great. you. Thank

Operator

comes question your question. Wedbush. with Please the of proceed next line from with Ives Daniel Our

Daniel Ives

going thoughts are you fiscal terms thoughts workers into Can give what your you some of What terms XQ. many year especially in in seeing remote? federal government are going of

Amit Yoran

business. we Yes, very bullish to about continue I federal think feel our

program pressed the that or as federal use said we part of its marketplace, department position as be have to in a think earlier, strong VM you find agency core would have single an a hard I exceptionally we doesn’t finger of customers the we a technologies. working that federal our close applications risk of very around developing, some of we federal understanding with on also operational and requirements pulse market cyber analytic the are on maintain many and Tenable of

a So, I maintain over proven feel technology is in to think environment like close and has the to understand there strong ties standpoint that market Tenable itself remains and differentiation years desire this a from that a risk

Daniel Ives

talk I your the that many doing to is great, just does like, And are customers obviously intersect? transformation can how especially just but kind mean, to that about Great. that movement right changed moving conversations just just cloud comes you with now, of customers? And

Amit Yoran

to it point, is work-from-home. complex, which you great that Yes, think more shift a I get sure operating as is Dan. have environments And a

to You have environments. platforms, clouds applications. adoption cloud to dev accelerating see things moving more people of continued their We web deployment, container and ops environments

have understand prioritize IT these trends and to how activities. as truly a where to extent limited, time, in are environment to this so, And it calculate right. certainly continue And difficult accelerated recent large cycles risk becomes more in and

Your embrace really IT security The staff go them to to back new is completely technologies. inundated trying can fewer these team apps. far with

make need prioritizing reducing that for they do impact greatest the that make enterprise. the materially their have and sure to are so that to they requests they the requests risks And

lumen, like products analytics, of can larger for play understanding much be role and enhanced So, prioritization, much customers. more risk a impactful

Daniel Ives

Thanks. Great.

Operator

Our next Berenberg. with question your comes line question. from of Please Tilton the with proceed Joshua

Joshua Tilton

suggest the Hey, to touch guys. players question. would I smaller report for prepared taking in on remarks. continuing my Thanks you called the out data give share. are to that up IDC wanted that The the

you you Is the business to Greenfield these see towards do do see it competitive meaningful of or shifted replacements continue more guys So, how a opportunity? days. these mix

Amit Yoran

Greenfield meaningful enterprise sometimes consistently quarter-out, customer sometimes are from look the higher, continue no larger has and we Greenfield VM a we transactions capability. to of think I little or at bit them or in-house coming lower. account. quarter-in, opportunity, little quarter-in, XX% more quarter-out a technology our But see mean a I bit less

it at potential market our at we existing look we tremendous have and hey, within the customer say, base. growth So,

We you asset have sell our into the ability types existing base. customer to

a addition of the XXX there of logos that, is new enterprise there evidence figure Greenfield ample and And net landing our the transactions. in consistently six market. plenty of to are We onto that plus is platforms, in lot increasing number ultimately there

So, and our more competitors. of were of think I we a lot about quarter of larger number out we Steve pretty a our the feel some called in the it bullish saw coming established takeaways from

to continue as trend that will continue. So, we think differentiate we ourselves,

Joshua Tilton

going That just I continue talk. was prioritize I/O if should we helpful. forward about margin How if gross follow-up, least? customers then could to think at And to

Amit Yoran

gross a healthy all, is sold to with lot here, I gross what for cloud of We it cost expecting long-term, a margins goods think that, moderate will to really But but we the settle company. we have onset said expect we and and Well, have able public of of said range, high our drive in regard XX% of efficiency at the are operational we they XX% the long-term. low margins to kind maybe source first say and costs. been been is margin range. we I have more pride of quicker to

to our And so, remain margins that will continue gross we believe healthy.

will presence long-term. our settle greater we have XX% think forward going and now seeing just work there implementations, ability anywhere efficiencies we to with that into that today, do costs professional We range the public will some so virtually delivery of cloud with XX%, here that training in services, too, our and that are in we in we also and margins good given points from this concert to other environment which low do be are efficiency of professional high able remotely, services,

Joshua Tilton

for Thanks helpful. it guys. Thanks that is

Amit Yoran

you. Thank

Operator

question. Our your of Essex Please with with proceed next question Goldman line Instructions] [Operator Brian comes Sachs. the from

Brian Essex

for I question. thinking through has sales touch taking have the upside and Hi, confidence build with good around as Tenable could more know and quarter where quarter, then and you example? the mean, I/O, was web execution what this you uncertainty we was bit about lot container a full-year attach level afternoon. are wondering rates quarter? pipeline from guidance understand of little on last with I about your what opportunities you If changed as that process I thank comfortable And last the outlook in might that where, next it went lie, you that and and pipeline better if Where of for guess uncertainty the conversion. maybe I for there quarter. a is, you around could primarily was security well whether

Steve Vintz

IT. pulled for IT and that just believe full-year, Hey will Brian, GDP considered, I the is I between quarter, uncertainty good call into and higher in corollaries growth news Steve. we guidance provided other categories the this is on we but clear spanned here ground jump QX, think last the security knowledge an this is given - within a the for our outlet

security part remained a think of I customer an particular important program. VM in has

we need an increasing So seeing are vulnerability for management.

QX lot uncertainty. there into Going of is a

expect. what You to didn’t know

and for So in provided guidance quarter the revenue that EPS. was we in

have fee subscription annual model. We paid an

of lot a So visibility. of our lot from a revenue they us different and sources gave comes

there revenue pleased more terms confidence I ago. guidance as the business think we third able are we XX-days are also the providing for to the fourth quarter are not And full-year. is fair with very it and that to now provide but EPS, results of in and result, in say we the only this is And than our for here. a quarter

and there than I there uneven did be, expect just, we reopening of are that So note today it will think in we quick success last and economy we and business we despite more our have quarter. a But uncertainty. to we will to continue our QX, also know in confidence slow will be the that, be

that them that maturity, progress And are why, today. a we only to coverage, so and that terms we it will rate are of say our And continue with pleased opportunities also levels, make have activity of pipeline providing in we progress. I at very healthy but is not consideration. on all though, and and takes continue that guidance pipeline to pipeline good into those

pandemic you So execute there deals we continue normal times, then share know win to are our will the challenging and ability delighted more in we here. opportunities and be those we our to more know, expect do that, and with the against ability to but

Brian Essex

looks expectations together, rates going on could web kind implicit that that in being what forward? is you touch quarters maybe I/O kind so now rates, relative out and of that called super Tenable prior sold containers, tax your tax And are is of to you helpful. security like something the Great, is maybe

Steve Vintz

applications, the we container web something is work cross And for talked think including well environment a we anywhere catalyst, about so cloud Lumin the So, and security. as our app I we sells been in Tenable I/O - that earlier. based and from out as think more I quarter about certainly catalyst talked other call security,

lot to regard, a here, the they is tax take expectation think will rates be with and again as continue So, we way grow is over that talked years. are in have new more regard SaaS certainly a successful XX% of could to our and resources, terms you product, time seeing provides the that lot pull like our will thinking we in of quickly this this, we for And over customers. impactful often most of have resources in prioritize focus on where stretched a of the is is believe market especially a a ability risk, it there is think for limited customers plus, directionally important. we value, compelling uncertainty, of really course are and Lumin that to what And

and modules, continue our the progress and overtime. grow with build and to add it pleased overall, will Lumin, with specifically on on So,

Brian Essex

much. very you Thank great. Okay,

Operator

questions all queue. participation. conclude the further for for no you call are Thank This your There today. in does our

may and time have wonderful this lines at your day. You disconnect a

Tenable (TENB) 28 Jul 202020 Q2 Earnings call transcript