TENB - Earnings call transcript Q3 2020

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Operator

Greetings and welcome to the Tenable Third 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 of 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 third call for Tenable’s we our today a Chief thank third to Tenable’s call the Vintz, results. results. Amit discuss issued

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

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

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

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

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

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

that and release for call over also the to investor available issued GAAP the section Amit. non-GAAP website. turn earnings reconciliations today these Our I'll includes it we relations of our measures, now to on

Amit Yoran

come our And incredibly I to joining today. continue safe. environment. Andrea. you, customers I you and see be thank Thank hope pleased this you remain for and unpredictable in support your together healthy to Tenable team macro to us the families

We continue risk to environment remain many our collaborate to laser The cyber current risk accelerated especially an and digital with increased employees, mission maintain cloud shift to for productivity measure rapidly to forced to customers their them manage remote and organizations transformation. in focused connect environment allowing has on securely help so and of colleagues. to

results, is web the and organizations their occurring traffic accelerating posture, across threat innovation in All globe. all believe, top-line the our at a cloud public and pleased sector. growth includes our the confidently I as strengthen management strategy, operating to criticality our looking environment and to am results and in announced innovations the in highlight help journeys believe, are securely. cloud customers this modernize Tenable to positioned mix for attractive foundational and across cloud. to We or in our expanding innovative Tenable that our their the Additionally, remains We exciting transformation environment results free a digital in risk of Edge the enterprise. based app Today, systems, with security importance are and elevated. underscore customers is just take invest strong cash cloud help and management leadership its flow this security very vulnerability the of cloud margins. on-premise to vulnerability quarter in and of approach we the empower to navigate We continued the I'll whether and the managing position well risk our mission and surge, which QX third

margin grew XX% revenue quarter, and our year-over-year the third Our in to expand. operating continued

including companies. enterprise from We deals vast also plus evidence of on strong model. and quarter. emphasis figure contributing cash IPO majority flow is again results free XXXK of new with cross to our We with large generated and sells this number record an our six are by in Lumin. The partially more These growth ads the healthy our profitability business since of saw momentum deals, larger a aided generated

demand app in in both position of Lumin example in For local can an has for very their growing a a the this best for increased largest helping service resulted as a enjoy enterprise in A vulnerabilities great security, customer is with The the the telecommunications, APAC in enterprise to local This because state data. trust they new Tenable.io as digital cloud government sector. technology, industries presence we're one around security securing one a Tenable our Tenable.io, which to The our security, and we shift and evidence ever, container Coast. with is on saw and they the wanted figure for in platform demand that devices of and the application deployment. more in pleased quarter, they security row, six-figure modules continued is and indicated strong quarter sector government. has cloud strategy. the container applications, which companies world was a This cyber of in services, adoption solution critical security such the public to our an six cloud. takeaways accelerated gaining cloud manage public financial seeing companies to We attribute of new a the telecommunications a the including federal competitive Lumin. traction of in to entities achieve in quality globally. this offering seeing security, of web we're of of They us to region. security and to of grow in reliability largest competitive and win the for example of addition manage after Lumin. cloud infrastructure across This cloud breed This strength increased help securing an workloads, than many we is win West web full our and cloud accelerate their several risk customer identify acceleration second cyber-breach. and cloud healthcare, replaced displacement purchased transformation Tenable made large and chose increase VM Solution continue Tenable.io outdated their Notably of as includes best the customer

platform see subscribe As the our SaaS to attack in continuous our cloud with highlights to customers cloud complete increase the use surface, can you remote starts secure this customer quarter, growing including infrastructure, the from market security the their environments. who understanding continue us a we see and and workforce. to Great and

a With cloud to want cloud-centric It's coverage and why available expect Frictionless performance capability, agent, no of assessment the of the core scanning, important exposure frictionless. can in having evaluate Frictionless cloud environment easily surface in platform risk holistic announcements without continuously schedule years. our has technology a and another we management that's of expand operating vulnerabilities from opportunity asset product no assessment, can very deploy native an in and downloading is scan, have assessment on cloud of security tenable been securing our assessment, to interruption. for of part series is security and visibility cloud fourth that expect their and with user vision. assets customers visibility story. which some of revolutionizing cloud, assets to new instantly in a that, ways customers assets to creates growing Our unveiled is deployment, in our an we'll the detect to changes cloud way frictionless cyber new empowers vulnerability without their cloud for assets to quarter, customers frictionless at cloud-centric an of for our deliver of recently an modern or I entire With complete our a their conference additional impact. attack agent. This part out Tenable highlighted XXXX.We a call quickly no which their customers Edge no be

and new more predictive maturity, During scoring including organization's organization’s Edge, controls a we Tenable of cyber also announced exciting capabilities enhancements to benchmark for to and into security endpoint exposure. and an insight comprehensive inventory Lumin, assess remediation,

these will fourth We available quarter. the in enhancements be expect also

and app first of business to for hybrid public to strategy. our now many environment expanding our been further into models, each cloud provides than Lumin combination several past trends into expand addition we a to connectors, enhancements, years, container of Tenable of have of scanning, will build drive has build customers maintain security web DevOps will multiple our represents our product cloud position transformation, to and just continue a resonate huge the customers These ever, our going deployments. every digital assessment Increased frictionless presence our IT, extensive this offerings. frictionless our providers. well adoption business not surfaces driving and our we cloud hybrid been with cloud and more future. and the the cloud business native crisis a and assessment, integrated as and believe believe leadership them enhance attack the and visibility vendor, major The but security new We across as opportunity, cloud integrating comprehensive with new into business security In

and to hear customer's capabilities about coming continue a We're these new as months about security the to excited lot we our security quarters. to a focus and expect exciting on ability product cloud more We announcements. cloud in advance other

in public the and we partnership new hygiene FedRAMP in for As seen leveraged remain for on a sector, grow designation, the public the a strong domestically public local private third in sector cyber and success announced bolster also to both will highly and share a the excited shifts pleased value In state quarter, accelerates that Security across We and sector federal organizations. Internet in sector to with business. as increased step Center success we're the our organizations seeing We've an in partnership market. our making size. the to management very in with attainable cyber available based market comprehensive for security now commercial offering the risk our sector. of cloud and vulnerability sector the increasingly foundational public the shift government. cloud cyber This public partnerships only process We're Tenable solutions have abroad, any are important the CIS is about the cloud. more focus in

through analytics Lumin we believe cloud breed continue With attractive believe environments, best we profitability. that OT forward, have robust, trends to strengthen and continue the over our fuel of will securing and the business Going remain that propelling presence, will all strong to we or been advanced and growth outlined, time. strategy, dynamics capabilities, our VM

While managing and through revenue we're millions understand of current recurring our of people natural that to current benefit situation significant our and We from in in we an times. excited facing on financial around as uncertain over future the I prospects, turn the leverage economic of midst and will the call now environment remain are and the difficult that business. world strength Steve. operating businesses about the we the our we're focused

Steve Vintz

Thanks Amit.

enterprise financial growth, earlier, continued that will for the financial the the results first, highlighted free profitability measures quarter our But and and cash I'll exception results today As for momentum Amit deals our we discuss are very all flow. results line discuss quarter momentarily. large attractive we non-GAAP with by pleased third revenue. with note commented of top are with please strong

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

for the represents our $XXX.X Now exceeded year-over-year. quarter the guidance which million, quarter range growth the midpoint Revenue a approximately $X on million. Revenue to was our XX% of results. in by

expected high number new result demand aided not the enterprise large but annual recurring of of terms subscription at also only six-figure is was revenue in better model. which flow of and a Revenue than of our deals, by remained the wins. prepaid number Our percentage XX%, of

XX XXXK $XXX,XXX excess spending net to customers Specifically, brings we added in customer of and six-figure XXX competitive of was the quarter. strong particular for ever total quarter of platform some XX six-figure in takeaways. new best here, customers the new $XXX. the net customers one annually in provide including new quarters number To another with context This category, our strengths enterprise plus of

were some to of exposure in number our the our proposition best Greenfield opportunities, continue displacements, a breed While we of of testament quarter our see to which strategy. we wins largest a and is value cyber deals from healthy believe

This our we the has the to in customers Another Lumin, help and with and the adoption increased the and revenue of Calculate $XXX.X container demand cloud more cloud trend billings add application and security from last VM year-over-year adoption. increasingly TAM This an growing complexity is asset quarter quarter find summarize, hybrid risk and expansion in environment. to manage digital change deployments. to new important highlight case current Tenable.io which for such dynamics trying the quarter. a favorable which markedly of is to XX% use of as million, our that continue as up beyond To security. is customers and secure recognized an security the to in customers plus cloud competitive for traditional modules higher demonstrates current six-figure the cloud, healthy our us resulted market a number and grew transformation the in but revenue web uncertain are the solutions other offerings backs macro, relevance deferred the current on and related of

deferred want third from also be over performance related discuss a quarter. as as a next short-term to our XX-months revenue quarter, grew over obligation. Short-term revenue we XX% which to follow-up last the the As expected RPL, in recognized and we little backlog briefly define

in pay to Across of discussed expected both in in clear quarter timing, rate and better CCB growth renewals strong a it be deals. call, quarter than in As and and RPL short-term the in we came approximately reflected natural strong sales Growth multiyear early was our pre dollar QX. was in last net is due had we metrics, which XXX%. expansion variation between can based there our deal

net allowance gross to continue pace experiencing leverage cash expansion to highlighted As base XX% initial by with with environment. impact is last profitability free from which XX% year, flow. in now up slightly turn asset and also was some margin, current more we I'll where our a last dollar financial but our from and quarter. discussed expansion the model last quarter, demonstrate larger start moderate consistent record of rate in and QX expenses I'll

scale. cloud the Tenable.io Our efficiencies in very margin in related healthy storage continue and and increased for in Also, and demand gross public from the as reflects partially to implementation. resource investment compute, to utilization platform, so delivery infrastructure we benefit continue growing continues increased to by services our our to result professional be cloud we based of improved a of training virtualization offset of

pleased to last to Let's than Sales as very XX% previously expense We're made year that quarter revenue $XX.X XX% sales maturing quarter. a turn million attribute year, organization $XX.X we enjoying compared we've and We're operating million was result which of with mass. expected a and set in million, XX%, which investments was solution marketing the as marketing we're productivity QX to and the significant also from last percent markets in in where expenses. of overhead sell cyber demonstrated tenure third leverage address broader quarter. marketing past a exposure. can critical more and and sales an $XX.X to better the in increasingly sales levels over we XXXX improved of and of Sales this last

the than quarter, notably we to hiring the million million, in any example, environment and macro year be due compared as to $XX.X said, the million is of as spend in upcoming field fourth for and which Further, last estimate $X moderate higher, quarter of rate will the and with marketing expanding For our expectation quarter more to $X well and million most sales for or have we quarter. uncertain $XX.X the areas of approximately time last in current in That savings today $XX.X IPO. was some has a environment. more due again R&D marketing marketing impart this sales quarter investment the the a tenure and early to million year sellers that to capacity year. our third spend, resulted more travel, since sequentially trend

As $XX.X XX% and expense initiatives growth XXXX was R&D in both compared of over a in cloud support and to increase year that to in incremental in the last OT revenue, vulnerability data R&D and the last prior XX% in is as investments year due science well leadership QX quarter. as percent coverage expense The $XX.X G&A to $XX.X XXXX. to maintain quarter and and million accuracy. our was compared QX million, million expense third

last this more a QX $X.X X% to year, operating Non-GAAP company from was quarter profit compared reflects revenue, third notably and compared office and last was of back XX% year non-GAAP QX quarter, Non-GAAP excited our year as improve to million and of our in quarter. X% to many operating the in with $X.X a last million from continue expense public to which we last very the out play our As last income. fully was of to negative model margin automation XX% flat of for $XX.X percent in efficiency G&A and income ability costs functions. down operating expand in see positive We're positive and quarter loss last XX% absorb operations a leverage quarter. million

this earnings $X.XX this of was All upside, EPS to as which per expected. to share $X.XX significant translated our $X.XX than was quarter, non-GAAP better

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

cash free flow positive in flow, cash year. last million in from to compares QX quarter, sequentially. million million up $XX.X of $X.X burn achieved we $X.X to flow a Turning the cash favorably free This of

flow collections in which we saw the quarter. earlier, flow aided consequently free sales the quarter, and commented cash I in As strong

largest payment to we free QX our quarter, to more of of higher modestly pace is ahead, seasonally cash expect be Looking and while normalized a flat as timing. flow collections result

of are second the certain the that under our fourth realization quarter. a I'd wave We quarter developed the fourth our discuss geographies like us, behind pandemic. to guidance With the experience results to quarter the starting for of outlook

back in million be assuming current $XXX.X range Given share go-to-market, make expect $XXX per income results XXXX remain is be some $X.XX head million plan we of the in that non-GAAP to share execute we're $XX.X fully the in $XXX.X million continuing of managing million of exposure range $XXX be actively manage million. $XXX.X to guidance. invest long-term that with we range net pleased of be the be in currently customers reflected diluted we're diluted such outstanding. the the $X positioned confidence to Non-GAAP to Non-GAAP $X expect million environment to income the for $X the to a fourth to of operating Amit to summary, average that over significant on compelling a growth well in the throughout And be a additional of our and million, In non-GAAP in fully to net for cyber million range the uncertainty earnings in value now, which And as in levels, shares opportunity. related million and platform comments. currently million range million, growth assuming the operating current increasing year we business of income to million, quarter fluidity a full the developed turn to per to $X I'll closing to deliver income will in us to diluted hiring we range provides a as gives to macro shares challenging $X.XX, weighted We've to in for to the $X.XX while be average diluted start areas $X.XX, earnings non-GAAP to range of $XXX the of the to environment, including the foundational and call investments the million. long-term. $XX.X XXXX, and $XX.X comprehensive the With to which and revenue of revenue non-GAAP outstanding. the closely profitability backdrop, to a in $XX.X a continue the weighted to million, range be quarter

Amit Yoran

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

VM our in surface. in Tenable, For cloud driven OT and aided core attack our deployment. across our natural has a It's strength and success expansion the

positions as Tech Conference, virtually questions. the Virtual portfolio in long-term to We'd product customers success call the Reinvent Wells We the strengthening for our Invest cloud you hybrid open Stifel, conferences months. and Gartner UBS and environments. Our see Barclays, shift the now up coming to the and to for at hope of like AWS us maintain Fargo many at

Operator

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

Unidentified Analyst

is taking This the customers. trends? guys. on deal from new Hi, if of customers? And give how you has question. wondering, more that previous size for was little Thanks. Sterling. guys changed could on bit I the What new Matt average for a Thanks for the color was kind

Steve Vintz

an macro, XXXK deals. we're very category pandemic just which the but we continue commented earlier, And foremost, the but plus larger ability out the deals, with on also a strength that added customers takeaway. is and traction competitive enterprise in even Well, closing also attract XXXK call velocity to not new the during so, with We increasingly during add we only new have larger over transacting not difficult we pandemic. to platform it particular but in a new XXX opportunities, of customers Amit we quarter. first and logos pleased uncertain saw

And ability adoption as container cloud exposure. think good So of logos. in all well, the pleased very, more of traction a even of increasing with underscores secure as sales, VM, importance such new mix cloud the this applications with based apps, think Lumin. we our specifically overall, higher a web And I growing we're IO this attributed security, our really of part the is of very to and cyber

closing. the with we're that So, of new business very overall pleased way

Unidentified Analyst

helpful. saw some the one in been And seeing? quarter. then What's of success been those very really driving the about this federal you space talked that you that trends that's you've follow-up, Great,

Steve Vintz

is This Steve.

Amit Yoran

Fed… the On

Steve Vintz

ahead go Amit. Sorry,

Amit Yoran

us. think No, strategic an I incredibly for just the sector federal is market

think we've we're And demand momentum very state to in footprint and and relationships terrific the local and in directly got for seeing I strong into of and some building relationships some notable across federal market and government. wins a performance that sizeable leadership there. translate

the think seasonally I see mentioned the our -- -- in us We uptick there's continue QX, And no the being in one I there's of market. of and call with of process them QXs earlier. in process We're quarter saw sort about seasonally kind different and FedRAMP strong on the federal cloud excited from I strong in web this we for additional to that in based invest that additional was space. opportunities previous FedRAMP. years. in And believe in opportunity

Unidentified Analyst

much, guys. Great, thanks so

Operator

question next comes with Hamza Fodderwala with from line Morgan Our the of proceed question. Stanley. Please your

Hamza Fodderwala

Hey first for question you. guys, for my taking my you is Amit, question. thank

have, for environment? Chief I current wondering more are into we must clearly have their about some as becoming Tenable management priority, vulnerability a you nice And you VM as perhaps VM as far of priorities customers now your remain bit, customers in more of who on focus it's talked a could a seeing was work in vulnerability are you the to and this that prioritization especially Officers? environment. you because strategic talk little in to time. as obviously, you like becoming XXXX spending a more in particular seems if And growing distributed a management it So, for on what quite Security right, seeing as in saw expand

Amit Yoran

I there's in Yeah, great think the happening market. really security maturation a

driver, as at requirement years a they needs, looked regulatory in compliance some may have some have folks compliance think, I that past VM for driver. some

blocks I think market your asset to what and from that are level understanding building base, appreciate that base, management a understanding the and the your security. compute your fundamental to via understanding understand of exposure, vulnerability to starting and just perspective, you, fact risk are people for means is starting

three in last years, -- seen the remain so one, high over CISO And every we've three about strong, two instances, in the seen last CIO spend single surveys. and in years to even position but rating vulnerability three survey, vulnerability security or number rise or the extremely two management we've in many just

technology. to in surface, trend. both number a base and the a in looking outside I as infrastructure, achieving strong We're Greenfield of So, expansion accounts parts think the innings. We and attack as analyzing opportunities create well perspective an from still early opportunity. or enterprise of larger market, customer from And platforms. traditional value, on that's in of Greenfield great the opportunity a as the I they're we're new that looking the our existing VM, analytic are the and even believe ones the web additional great new at cloud operational out VM think candidly, customer look And very Greenfield modern currently more transactions, chosen broadly still based the we're our at the at applications, lands the we which

still early in believe the innings we market. that strongly we're So, this of

Hamza Fodderwala

you. Thank it. Got

Operator

with of next question. Owens question Our from Please comes Sandler. Piper with proceed Rob your the line

Rob Owens

think it to taking security how how And as of for have motion we transformation on this you mentioned other has begs and cloud questions. deployed? digital any and the channel the work cloud question, go-to-market Amit, versus changing does remote I require you adopted or integrated been DevOps my traditionally adoption, with technologies are emphasis adjustments these purchased type thank relative Great, container and security.

Amit Yoran

that what base is to we're things base that how and how manage, asset helping I their in remediate our large changing all this efficiently base laser as on risk looks can the trying even means environments, What requirements opportunity the would in two security people environments container we've and DevOps and the right. unpack the all be years. customer you just level. and what people. or asset as focused security and complex Tenable, in understand the quite lower like, last way And three and seen isn't community is or that develop rapidly Yeah, they're say to What exposed changes for about they evolves and

when going of what help we're We're we our do is to their it container our cloud assess to cloud of story. every enterprise. to integral to an those security, introducing customers going to So part it's try container security, not their and exposures deployments, think environment DevOps comes not and aspect containers

think that level the users, And do their do we trust and it drag DevOps very introducing efficiently. it a for enterprises so into existing already we can can understanding VM of we security requirements We do that of the whole process. think friction without can lot their or And us risk. we with

if the it of without and type it can do works go-to-market frictionless will that our approach we base way. impacting nicely customer we that's do think a And fit our motions. for So DevOps, in with

radical So product hindering that be in could or to bring who would we're change to today we bringing how in market. it not a

Rob Owens

the bigger, getting And then XXX% rates asset expansion to renewal and mentioned land Steve, you of environment. in then the due current size

and you've moving As the cloud is run this forward? to metric in potential portfolio, continues a ramp there point inflection

Steve Vintz

we the frictionless we of rate expand to bit, but to manage its dollar-based and business asset continues may think earlier in the initial and we cloud to assessment, previously cloud deployed move although better don't came healthy. renewals coverage more which lands, expected. We expansion current than temper one in a Yes, quarter strong the any the moderate expansion customers metric, And pace believe were But and in net of as workloads larger we a environment, so. did the be to see it with about assets. want more noted talked with single

mix large This number quarter, new can with added logos we’re upsell number we and of quarter. from quarter of the deals, and the to vary new pleased between because a

healthy of number bodes well we're new because this for logos, adding expansion think long-term. a we However,

Rob Owens

thank you. Great,

Operator

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

Gur Talpaz

Okay, so, questions. this great. and current do on breed taking of directly you is for why? Thanks that best greater my if is Amit, takeaways. competitive is question the this, think emphasis the My second placing VM is environment

Amit Yoran

growing as result strategy. Well, of it's I of definitely think that breed best a we're our

into value integration ability customers way. them rich or our breed has confidence I results investments emphasized think that very more emphasizes our of to from product. native a breed drive tremendous they're allows same always and the at have a of strategic the best think I seeing the have best Tenable pretty meaningful made, enterprise our time, that from in in significantly historically infrastructure ecosystem already And to through

I So of consistently tough the that these markets, reflect lab testing quality. proving in to and like provider proof of think that feel economic various the And the values e-valves we're and the quality I products. there's in in the And think space. in we're

Gur Talpaz

seasonality. period more quarter, typical helpful. one noteworthy or see quarter, maybe you would And Did it you. late some Steve, noted as That's of classify this you for or linear here? anything Last you QX more

Steve Vintz

I'll talk degree it Not and CCB. about which saw to in QX, the specifically in we

term current impacting the into every off mentioned of we was indicator really dots, saw future earlier, consideration. and a which prepaid As can in a advanced, good something deferred And variability meaning but of we runs timing, multi not we URLs, possibility But be deals even period, leading CCB. which predicated pay surfaced deal multiyear to knew of moreover, in with a pandemic, deals, macro. it prepaid their to timing revenue customers QX. calls, CCB QX, see In less into and or a is could prior fewer it during revenue here elect be a subscriptions have QX, factors XXX connect portion more the uncertain an may current each because did certainly the revenue and overall automatically deals not headed just multitude of on it's multiyear we pandemic, prepaid deferred on portion clarify including discussed a thereby the positively deal something in long

CCB it's is So a monitor too to This persistent early continue tell. something we’ll certainly during and trend, the to that pandemic. said, the

even So with may was the over performance again, good CCB XX%. short That leading not growth said, term a CCB are delighted over growth the aside, in be CCB quarter, we indicator. And RPL XX%.

think I So, the metric to any measure, a had continue we clear closely. good quarter, it's while we CCB we're a track very pleased. and By result for as

Gur Talpaz

Thank you. great. That's

Operator

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

Jonathan Ho

the differentiators impact Hi, a of to better, these, the and guess good talked you that with bit potentially I mean, what how start some understand little could adoption out that Lumin afternoon, perhaps enhancements pace of can and about, I just of wanted Lumin?

Operator

coms I we're having trouble the line. mean, with

Amit Yoran

mute a product. greatly. introduces all to of through great a vision take of When people showing place. value go with I controls other very and tremendous at I assess Oh, of and we has think would looking customer in progress analyzing help innovative risk that showing there's capability base. levels enterprises large myself sort of translated can that sorry. you how still across off risk the beyond very some early exposure, Well, guess we're Lumin benchmarking, long vulnerabilities, where even sorts in asset And innings, start I real the criticality, the

inventorying started And I it's to controls, the exposed controls, we've We've insights risk added assessing things am am that. those maturity, adding hey, confident not capabilities is how in and just also how and important, which answer those how question a we also to think at because security compensating really assessment like am so I, It's of Lumin. I?

be of product just So, large to visibility, or, And a my assess forward. there's swaths where in the where peers, do brings have risk, way? of compensating we're done able cursory very it super real I or excited I adding assessment like a to what innovative controls like maturity that runway it when Lumin in of think understanding a environment, to steps long compared is don't doing to type assess risk, if all table, of that where the am I way? in going those in have depth understanding don't capabilities forward I of type to I'm strategic we real not Or and of other I how have

Jonathan Ho

the And how expansion? capacity just environment? just can puts takes some COVID thinking Thank investments given the us And for give uncertainty, one you're Steve, you. given and a sales you balancing sense you maybe the your Fantastic. about they're of then about how are in thinking

Steve Vintz

us to quarters important now. that's Sure, and something we've talked some for about

which lean I growth as EPS that of XX% think I think for of to leverage about seeing to assessment invest, with flow, but our that we’re beat well outsize frictionless course, to attractive with quarter, the sales We actively a profitability there the cloud. number cash enhancements the announced quarters quarter balancing with we it's in and we we over the is in a top four started where of probably lot exciting pandemic, with ability we narrative the to go balance, in growth. that and as it And all or the is that, new on latter. flow talked three marketing wider year, for XX% specifically Lumin, important this $XX in during in regard and invest and the We takeaway almost maintain also think our deeper into then we're cash marketing, this ago. sales innovation, an sure want range. line make in revenues here are in low $X.XX and marketing sales spending even was this Last million will to leverage, quarter, of say I line, go-to-market and of

ever. the rearview because One we management the more of is why now to lot reasons reps the leverage sales year of with which and Also here added depth of we're the of believe mirror. team, management, than a been have is organization maturity more seeing a the in

also of really important. sales wider mass, which and deeper where We've markets terms and able bench sales been to have overhead is So optimize we a in critical leadership.

lean to associated that less goes and quarter some of in on overhead with So, the those carriers sales.

to honest in to here result, estimate of marketing. savings a So did savings, field we are acknowledge a here. touch less than do partners these demonstrating deploy related drive deals. pandemic deals COVID in not with We're of customers lot this them way All But little the intimacy, and $X ability larger that endure XXXk both you, We which requires be of XXXk some able travel, of quarter. also we've leverage marketing be a alike. of even but been that requires or acknowledge with virtually will only just post and still not able a still here, a to sales a probably virtually virtually there as to some million as lot lot we're the plus and transact

market speaks we're proud It here and resiliency and we've of the the a value the also So the to strength team this. of come how together. like and VM really of

profitability. So that's we'll growth balance to continue and

We the guide. EPS of in that our We about reflected are as going the reasons. in fourth to continue talked to invest just one quarter,

in As our we our closing on we start we'll updating provide And quarter on update to and results XXXX call. forward a on February. in and get an on an XXXX February look early you the note good

Operator

Instructions]. [Operator

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

Daniel Ives

Yeah, thanks.

to whether with little Lumin getting is for team a housing side, conversation mean, the you Tenable? it's sense are and So my talking customers question Dave on the the from the Lumin I changing partners,

Steve Vintz

am management different of VM agents deploying or the programs, about all how and future vulnerabilities, reasonable questions. and the answer these foundational the systems they're think vulnerability Am risk their is I? all the not we care direction my organization. understanding data I When am of their programs, VM standard of VM maturing me exercising systems are enterprises or of to or as all points to I? entrusted these Absolutely. it How that's secure about with a it's trying data at an just scanning How

much have? really does you rating And conversations How and to there What enterprise the answers. it and from about the a in Lumin decision you from to relative What with it peers? confident to makers. perspective? is the And is at so, How able your strategic more risk is are users it differentiation exposed? with those mean are about our to drive enterprise accuracy allowing having do efficiency How of so leaders conversations answers? you move products, us

and we that. different more pleased be conversations couldn't radically it's So, about driving

Daniel Ives

of as Great. you are And it are government of larger many table four for which look put three, just on just deals agencies the of or organizations, next the out the shifts government cloud remote in just environment, call never is terms given even these many together, two quarters, in of of the sensing called some you on state that in [Indiscernible]. terms federal pipeline or going these with getting

Amit Yoran

more a based practices, to and in designation in cyber requirements. be the to But same their new of our these certainly is security to large and transformation management risk way are with that enterprises. the we're some based, seeing lot having those leading federal definitely we're FedRAMP to are that government seeing continuing opportunities and sector Yeah, cloud for web align and broadly that and and with digital influencer more go extent the mature process through private excited

we going And customer the federal continue bases think strength great to expand and evolve, in those compute opportunity and have us. our greater yeah of as and to think relationships lead space. a we base that's position we So, in to more for

Daniel Ives

Thanks.

Operator

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

Joshua Tilton

I Hi, my about just questions. the on profitability, maybe to up guys, perspective. for comments thanks different wanted follow from taking a

this believe margin X% look of guidance, XX% we the an from FY'XX. incremental in at for operating up if non-GAAP XXXX. And implies So it I is

should there to So revert metric back as sales 'XX meaningfully that expect I you even incremental this mentioned, COVID if XX% And savings. more understand you're savings grow we reps, you in and COVID and sales in out again? maybe still starts around invest marketing But are margin. that the you to

Steve Vintz

model. believe you're ’XX about is will we'll Well, more this leverage seeing of is that, as But natural today I the really in reflection the a I talk say mentioned I what February. earlier that

We have revenue. XX% recurring

We have over high XX% gross renewal margins, have we rates.

seeing XX% will very a margins have know confidence have be the and have we the years, confidence of invest flow the strike in And add to announcements. There investment cash And over to the able And business of in the successfully this confidence our course we for of right opportunities in in become obviously, business. term fourth And long-term. we've lots both plus quarter of have And investments in to over that, our to some growth, -- to flow the sales. future, ruler recent XXXXin in more to adding the of been past profitable some try product and are side today for past. so the a -- confidence early we some long with for about of trade points very is on of of talked lot free to lot company points the in margin the capacity margins We few the ability for and goal we operating our margins, of you're the innovation company. phasing in here. the balance. the been There's continuing the profitable the cash market.

off, So that this going off in to careful to yeah, our to balance to with expectation we're the this walk is try walk try try to very way, growth. margins continue in a

resurging, In terms of of uncertainty, macro, close a new demonstrated some lot the cases there there's parts the business. there's resilience COVID of shutting to economy we've but down,

success major surprise new that's is logos. for we're us in think the closing one having I the

largest itself. to to to model potentially then February watch our fully the we're a So continue what we'll have to we're excited very forXXXX. in just in do call, the going quarter, way this balanced this, of But, talk means about and heading quarter. our our And ability fourth reflection is this which we're about into

Joshua Tilton

the the just you the more in that follow or would deals that possibly the highlighted $XXX,XXX Could in remarks some increase of assets broadly, up, then purchases? was buying then a That coverage you And helpful. saw a from deal more maybe function product just size And Lumin? those under customers just that comment say deals you prepared more was Lumin. on saw, you guys that included that you

Steve Vintz

Steve. Lumin deal the little bit talk about a Hi, this I'll is sizes.

is Lumin anywhere XX% in uptick The seeing yeah, So plus. impact we're ASPs. a from to on XX% can notable where range attached, ASPs

we're success So having the certainly, is ASP attached. raising where there Lumin

then of drive can I new successful many the companies we obviously, here, category. the XXXk And a questions plus And think Now fact focus the I that beXX% given the to unusual, it's to more. years here not think with your attach the SaaS plus That's modules. pertaining or even our the over product with think course is more. rates add-on and attach rates

out. As of it's a cross both, combination

we cross have we to to over last selling of delighted opportunity, are more. continue it's the We long-term a it's and ability quarter, quarter, compelling success secure out And the think up this cloud, more Lumin but security, not web go have our just tell security. We products. actually we sell rates when it we Tenable.io container add-on close higher with with -- more sell application know

it's I the function expansion. plus a selling the asset both more but in So, cross category, think also of XXXk

assets larger technology, able ASPs complexity heterogeneous have an spend are we and result, more types it's coming transformation, create having be ability to more digital discover and And that. And undergo compute. assets a all on an as to more of assess companies online, deals. and devices impact As with money on

Joshua Tilton

how And investors more in, into and and about I current sneak you. are should one if just guys Thank think the takes you chance QX growth puts could to going maybe calculated comment what on there? the any

Amit Yoran

a full during We don't basis. on give year quarterly this guidance, suspended as on our CCB. you CCB And we know QX call our year,

For renewals. and reasons underlying by timing good deals multi-year a the indicator is different the of leading lot prepaid and factors, field not be early for influenced quarter discussed I CCB a performance. of about talked may and We

overall quarter range the the Despite the uncertainty Given our potential variability, a and COVID we of outcomes resurgence potential as is health good macro largest factors feel these sales. of business. the for cases, of wider seasonal, what surrounding for into and we CCB about momentum in there for though, head the is

outcomes potential quarter the So, of good we about And that, feel the answer there's short the a the of ahead. have the here delighted and quarter. with for are wider prints is business, the range

Joshua Tilton

the quarter Thank you guys. so much. Congrats on

Operator

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

Brian Essex

little maybe I Amit, to the with Great, thank management you legacy question. a just so get and of of maybe Or the tease bit to question trends trying you they have a projects quick a the best if those by regard then we for strong anything in evaluation, were to suspects more point these technology is to for perhaps the understanding technology they're got you're you're you. that driven solutions? there on the Maybe Maybe there partnerships there follow-up. of usual breed driven, are the a mentioned, quick competitive trends have patch they out are we could on any detail? deals, competitive there sin Maybe more win the technical where to displacements you, taking And were you where effectively? little seeing, stage of or the able kind may can merits activity quarter? And displacement for kind of thank and

Amit Yoran

Yeah, been something it's in definitely a trend and quarters. that's picking-up recent

that have And that last continued to of and, breed decisions our I third strongly as quarter. or best believe being in of competitive whatever certainly think we extent the Senior, it's usual using they're driven It's primary is predominantly enterprise, the quarter use other a it they out VM We and call they're the in the the the and I called accelerate the competitive our very products, seeing program the in they're market. program of strategy. well competitors are very solutions mature They're suspects or procurement the looking legacy officer as understanding ourselves entirely, in or Vice Director sort by the in of testing capabilities, level President, and enterprise the almost X. sporadic displacements of what that Rapid sort to for product, and would program. evaluating say

we're measure capability we're VM a and and with hand and really Greenfield seeing, from also that displacements north enterprise, we the we're evolves Meaning competitive of as that, folks not allowing competitive try adoption accounts, our Greenfield, us up. those the just about. products, as or us larger be And it using X Rapid doing excited we healthy coming out no very through ability of to in of using transparent convert speak XX% transactions us, seeing of sort Greenfield with of they they're so, quarter continued into quarter have And us well, about to to level it in and accounts. this, well organic glove call

very So exciting. that's also

Brian Essex

networks? think insight And collaboration then enterprises like back helpful. super is of spent of to transformation after trend, those of to potential strategically the an you maybe or the spent manage trying expanded spin I understand for circle tools, offer on this could this now eyeing reactionary as are or like their derivative platforms on to for maybe that and to, CIOs Got thinking been process any already they've another Just kind access terms on have VM, we've a they're that way that about -- I in like spend can CISOs trying second there kind this they their digital maybe have if is as it, pursue?

Amit Yoran

definitely a enabler. it's strategic Yeah,

we're major I capability, shift cloud of acceleration infrastructure app, connectors modules. of think as increased We heavier in Tenable.io, think QX scanning what as well. in security acceleration business, and native based in of adoption the use our adoption for capabilities of a from the our based container the seeing cloud the providers, out the and called web all QX in platform cloud Lumin consistent in we is I it continued an the from quarter, and current SaaS

second been to little of increased call a over that that part assets be attribute as just seeing remote couple of the digital of have a deployed it short I definitely we're or would result order last hesitant or the that bit a uptick to may So we quarters. and stop transformation. assets

our growth into from we're year still going think original I plans look the a If you behind our at perspective. where business, were

at And tailwind for or so, of the look us some say, COVID any expecting or market sort tailwind. current there's meaningful environment we're don't and I hey,

Brian Essex

Got it. very That's much. you super Thank helpful.

Operator

question. the next proceed Our question of Nowinski line Davidson. Please from your D.A. with with Andrew comes

Andrew Nowinski

All Thank you, squeezing right. for in. thanks me

ones. So quick two just

I on-prem think your higher revenue the in mentioned? the cloud mix XX versus within but cloud saw to large large you solutions want mix clarification, could deals I of throw of you a you you actual provide deals, those First, said

Steve Vintz

We product. Tenable.io growth enabler disclose We is certainly for has But deals. to an a catalyst clearly, of us, don't this -- details Steve. and by large been don't hi, is

Andrew Nowinski

to and by pipeline And was management now last what from relative very is work I you then if the wondering growth a priority good. to But higher year. said you're your Okay, it vulnerability was seeing I evidenced trend. attributable know, that in home

if So provide your you pipeline Thanks. more relates to just a as year-over-year any color basis? wondering, on could

Amit Yoran

during And to And say even we closely the what terms We about track just And it's exceeded talked close of we've the sure pipe, weren't pipe. fair that only that into monitor Pipeline think is activity transparency. to we we've the something not we've also pandemic, something Number generate level we of of headed the our previously expectations. were get also continue in I and rates pipeline. maturity a going provide is to pipe the very monitor the ways. but to the our pandemic, been surrounding coverage, to ability we one, but pleased. two what

leads a growing -- of drive ability is but our and ability top to our think through closing qualify pipelines in it from logos the it we funnel, the behind pipe. new something of of We're I and pleased secure also we're Obviously, We're the of closely, it and tailwind ability real our the this our close the very not of we're attach momentum reflection having time and seeing new a on of ability our one demonstrate from success. pleased that move here the So reflects is success both importance But to in but pull lot products. business opportunities quarter-to-quarter rates. is with lot to with at was VM, here a can cross-sell a rates month-to-month. and has cloud continue that only the the direct where to to spending

Andrew Nowinski

Got you. it. Thank

Operator

teleconference. queue. final today's all participating. Thank in conclude does our That question for was This you

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

Tenable (TENB) 27 Oct 202020 Q3 Earnings call transcript