TENB - Earnings call transcript Q3 2021

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Operator

Welcome to the Tenable 3Q 2021 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] Please note this conference is being recorded. I will now turn the conference over to your host Erin Karney, Senior Director of Investor Relations. you. Thank

begin. may You

Erin Karney

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

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

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

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

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

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

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

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

Amit Yoran

on our you that thank today. With OT, cloud, AD performance and including solutions joining all platform differentiated our newer results. combined discuss our I'll how in Today, Erin, QX you, strong and and our first touch capabilities. Thank financial on our create us and products, execution for me QX, a to let security

highlighted quarter, are growth growth last we delivered scale this performance third is We in We at quarter. XX% with up growth reported accelerated quarter. the from which CCB incredibly the pleased our by XX% CCB

platform Tenable approach. Our all also also of security AD important AD. Tenable and out. Directory solution are of AD Securing by respect impressive is being quarter, products validating a results are traction areas platform. attack call out third in to and detection said that as for are grappled secure notable of of is environment becoming with beat we In there and implementations. Identities the are to cash identities highly one playing EPS had areas Customers This door trust a of our That during unique in It combines hoped. sizeable our more by driven growth opportunities has strength ongoing Active exactly on free lightweight traction the identities and with known are a saw in that accompanied we quickly few opened across initiatives flow. the critical is a top-line particular audit the with quarter, a how us. the interest a their Tenable targeted have by ransomware. weakness zero is to most to customer

its traction will quarter continue first in opportunity of We outperformed mentioned, since As and see acquisition the for in short-time believe the availability. the AD as pipeline strong Tenable identity Tenable market. in great we

breaches saw outages. focus the and has and also We customers technologies. given Tenable's all a high complex on is business our securing programmatic between increasing recent environments fashion operational capabilities of expanded differentiated their with work creating in Customer convergence global across deep converged IT our become resulting accelerating these priority to increasing OT IT and of visibility, seamlessly OT corresponding dramatically The interdependent solutions are examples deploy their facilities. security understanding IT native and systems opportunities in results. more OT understanding a

AD While a Tenable of IC small IT figure the forestry our OT cross-sell looking their fastest using OT the and areas also expanding as They've helps recent way very of both ecosystems. a base, growing we're with choice portfolio. risk. starting cyber customers, AD and came from further we're and one To Tenable our is our massive secure a investments. serve validate IO these win managing Tenable obvious key been to seven and A company unified as environments, of and

integrates usage cloud partnership and capabilities with needed. strategic era development and environments. matured to as on infrastructure code Infrastructure deployed strategic one augments During allows extend in that and customers, and with our we’re is infrastructures code OT are defined our in these greatly lift AD and operational integrates announced Accurics, in public cloud an quarter, on-prem where securing and and efficiency. clear their and investments time the Splunk we and is with Directory traction private high The a build to with see scale into of at operations in these We technologies our converged Active technology just deployments takeaway well is executing of The Accurics cloud existing has pipelines. in that is shift tremendous and of OT in from a global demand. virtualization ways. acquisition where cloud-native, capabilities, great importance accelerated and Cloud secure dramatic

market only and also identify drift systems security launching laws at can assessment automatically that is remediate and infrastructure comply assessment As code infrastructure runtime, and applications production. is systems into with and checked compliance practices. stood deployed the Once Tenable’s security capabilities and assure policies, is the Laws these them in exposure. Together and advance, up provides and functionality. best applications infrastructure of them Tenable and cloud but called platform in, production. container defined before CSP are Accurics security deliver to before requirements organization’s Accurics into leading assessed frictionless are identified are it cannot

started secure phase. spectrum spans through left most and security to the the development, believe needs the is and environment among entire core to have to in cloud and available security. and cloud also to operational continues segments to and identity into of right the capability holistic security our time analytics, some market market. approaches OT, capabilities space, this deployment We differentiate Our the aggressively VM the new in we the of run from risk cloud bringing products phase pre-production Tenable modern exciting most

We converged platform. ability OT IT, the demonstrating to we’re Doing integrate While their ability capabilities. deliver lead our products most environments. a unified technologies market increasingly our about unique are our onto so these propositions, in understanding excited will of to deliver value compelling these unified

environments. an of only understanding We’re security AD in can which applications provide company, the OT

no consolidate believe will that as Accurics, is to platform complete CSPM be time Tenable.io, this container, see of frictionless that offering we with experience that edge and continue Lumin really the shift Tenable.ep our understanding A containers, surprise company for and example strategic this assessment Pro deep leaps and it. platform. approach to into great a demand a With The figure one a can infrastructure the cloud-native of six automate left visibility customers run about enabling on programs to and to they key focus of common of It comes products into to technology addition do risks of to our prioritization. identify displacement. actions code analytics application multiple to platform, require competitive get security deliver risk, what market. I they strong benchmarking Tenable.ep capabilities. EP unified risk through and allow so leading important. is platform to code and nature cloud for upsell our purchased should other not understand One the matches. pre-deployment holistic Integrating to our no They at the for prioritize the our process what’s underestimated. web Nessus Tenable We for combines

create believe and platform bringing products of We in sustainable intend bolster differentiated we closer strong the we and these periods, use by we greater our products coming and are together. as leverage momentum cases, expanding seeing and unique capabilities to and

holding Day information the sending Steve, I’m to a Finally, the We’ll all December on before you be can XX. Investor in weeks to turn over you be to detailed more virtual of call hope attend. I excited and invite will coming out

Steve Vintz

Thanks, Amit.

As momentum contribution strong products our highlighted delighted business. earlier, from our a acquired results growth, and cloud, for accelerating the from sector we quarter, Amit by third with to mentioned due are strength and sizeable top-line public

cash line, substantial the revenue. non-GAAP measures will bottom note the momentarily, discussed the of the financial first these of results quarter. flow the we’ve provide exception commentary please On I today that are we to financial more points all in each with EPS but on and very strong pleased are with

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

up billings the Revenue renewal guided results of Calculated current remains grew represents year-over-year accelerating revenue our the a annual growth in quarter we’ve which the last our Revenue revenue by model. our was in business. percent XX% XX%, billings. recognized recurring for of midpoint which the as defines reported million, and is in quarter subscription the in revenue year-over-year deferred primarily growth by the outperformance new we’re $XXX.X $X.X million, revenue the result prepaid The $XXX.X quarter result as aided QX. in was a is XX% quarter. exceeded the plus to million. growth. onto Visibility of calculated current which both in and strong of our XX% Now, reported growth from current quarter high is range change for in CCB demand XX% and quarter

the last new XXX enterprise from any In which new and a XXX added up quarter business, we in customers, record us for year. we terms in QX is added single platform of

We certainly earlier, also the some worthy year. we last is from number of to in as quarter, which six-figure a this same with growth attribute than of factors, net commentary. new Amit demand added had touched upon the CCB up customers better but in success We the which expected deals of XX XX additional period large and

over represent traction rate sales XX% of and mid-market. as In of product to than the Tenable.io these large total our much as for company. the products continue our Tenable.ep and sales such rate is cloud First, growth growth gain products the now overall new aggregate, the total a of across and higher cloud both percentage

customers to to support their secure and anywhere and move work host to looking As critical prospects initiatives. continue to to the workloads They're environments. increasingly from other Tenable digital transformation cloud

recent cloud infrastructure into prior existing in augments Our October ability cloud and adding by and and environments the capabilities to acquisition strength deployment our of critical to furthers assess production. runtime our Accurics secure

These Second, areas expanded assess contributed notable publicized by products highly is technology just of closing OT starting newly products exposure been in attack several the of offerings to in our new extending have during a quarter. growth pandemic. recently market that the and [indiscernible] attacks. sales collectively This addressable Alsid these April our our points acquired the and last traction surface newly commencing offering have year directory active with as of difference make operational exploited are to are platform in and acquired

and threat Given the from AD build and throughout the heightened environment, these compelling we've opportunity market for pipe a able been sizable OT for to strong products demand year.

pipeline for we quarter QX, the first improved headed of not new year, with quarter. which outperformance the the provides into given apparent of was and well the conversion executed history, contributed limited products the the fourth visibility us in in While half to

better a in sales orders spending this company proposals, our lift sector QX driven sales. and of our by total is executive to which helped business XX% environment, Finally, from public theater benefiting legislative

expenses, in trend unfunded we're and pleased impact ahead, Looking top-line look is from cloud during and to this new the which December. on Day momentum to deliver more turn U.S. want which large quarter Alsid included a potentially margin, gross this OpEx year, providing full including government forward from receiving expense and with that recently our product acquisition. I'll the us, was to with from cloud which incremental XX% on raise very to the architecture. set remain completed momentum the predictive Investor quarter. insight investments do broader steady the of I'll in benefiting related due to with We even analytics, last know cloud. now start products products encouraged of the in margin our in interest to summary, investments gross I up to certification the a our available In scalability agencies. our to growth, relatively federal point funded we with quarter very in myriad of our of debt our our FedRAMP of success has and held opportunities

and been trend. this with have closely pleased this managed very have We

$XX.X including was an fourth the and in strong from incremental efforts secular and due million, investments increased sales focus Looking major sequentially Adding increased core in in of business, ahead, Sales Accurics last related revenue levels and costs, we was as margin XX% reps. for the our expense Sales TAM given last our XX% travel of investing the marketing is Sales marketing area to marketing a quarter gross which compared been quarter, percent tailwinds. expanded despite the acquisition. year, has and million up headcount quarter. number remain and quota-carrying expect at from a capacity the and impact us strength higher primarily quarter. to expense to a sales current $XX.X cloud and this go-to-market for

for in the up in fourth in than quarter. The cost was last change expense better reflects from million to and quarter. an and Alsid for inclusion the current personnel marketing outlook million, revised for $XX.X is full investment to-date of which expected year, our our $XX the quarter. increase quarter we the sales R&D and of plan performance level Given increase upward a

percentage R&D quarter consistent at expense with XX%. of As revenue, was last a

compared to to quarter. of $XX.X best throughout continue a invest innovation priority, year. was million and to our top plan G&A million Given expense last the approach, remains breed we $XX

As a expense compared this percentage XX% was of flat was which revenue, quarter. quarter, to last G&A

quarter to of last was G&A operations margin for X% due third to was headcount-related expense anticipated, million As sequentially $XX.X to QX $XX.X compared the was last million from quarter. compared XX% in higher costs. Operating Income increases quarter.

closed we our in facility As early a reminder, credit July.

in comparison third income was of was of net midpoint $X.XX range. skew reduced by our periods. prior So expense, approximately the was than the million quarter does in in $X.X the which interest EPS guided quarter which the $X.XX, better

turn which in facility. let’s $XXX balance and sheet. to finished We Now, with our from the proceeds quarter the of included $XXX cash million short investments, credit net term million

lot reminder, As million was a deferred visibility million the fourth revenue us to Current cash a of used a acquire Accurics. into September we $XXX quarter. at $XXX of given headed XX October in

the useful unlevered term I’d business. payments like a to metric in Now, of assessment cash discuss of is interest in With to health the the commencing cash to we aid relating loan October, believe flow. underlying cash B the flow free

the a free flow. months activities $XX.X of unlevered in quarter, provided levels the XX, cash cash free generated in net while operating we press high nine the for of we attractive business. feel renewal generated to to such million flow, recurring As And the cash. unlevered we $XX.X September reconciliation invest cash can ended cash high third release, provided margins by and flow gross In free have to rates. million of that generate with revenue, continuing We of confident unlevered continue high we

year quarter results to and XXXX. fourth with our for behind discuss Now, quarter us, I’d the of like outlook the the full

diluted fourth range business $XXX to the $X million. of to for strong be operations that share average $X diluted, be the we And the give in million from million. of Non-GAAP the in for $XXX million. weighted $XXX.X $XXX.X With million full for income million to per to $X.XX million range $XXX assuming range million, million. $XX.X of $XXX in the weighted in current the operations $XX.X be expect of to revenue $XXX.X million. million. income to of outstanding. for in $X from increased a $X.XX net assuming Non-GAAP to a million, be to earnings range assuming to $X.X outstanding. $XXX $XX to to average million be net shares environment. assuming currently range income of income in non-GAAP Non-GAAP income to $X fully Non-GAAP the billings million million. in to the be taxes per calculate year, in of a confidence we million the quarter, currently Non-GAAP the continues $X.XX, in shares $XX provision be of to Revenue expect to to to be And provision range said to range performance income of share fully us $X.X to earnings the diluted Our of range year-to-date million taxes the in of $X.XX range be million diluted

in matter we of two today increased I to also guidance reflects with providing the are revenue. like operations meaningful as of and our year, for non-GAAP from QX, CCB the outperformance has associated guide well raise from OpEx the both despite for a acquisitions. income year notable would that a the highlight incremental the as been beginning clarity, our As

back closing equating credit call results we facility. turn guidance and we remain the pleased of I’ll the the introducing growth EPS about to capabilities, to some Amit over long-term. excited positioned increasing well includes And momentum are us that the we deliver the our are comments. confidence profitability and compelling to ours The year Lastly, per expense the now the seeing. summary, with for with give quarter, for to differentiated $X share associated are In full market of million we $X.XX interest new

Amit Yoran

Steve. Thanks,

zero including critical customers applications, security complex, mission helping trust, web critical challenges, critical cloud and solve infrastructure. operational most technologies, the identities, We’re

We’re represents. see that virtual Day weeks. our hope Stifel capabilities up Investor of especially so bring We to like approach call and our conferences, for and differentiation about excited coming We as to at as together many the virtually the well compelling platform these questions. the to based in doing Wells the Fargo you now open

Operator

you. line your Morgan question proceed Fodderwala Stanley. from question. of comes Our Hamza [Operator the with Please Instructions] Thank first with

Hamza Fodderwala

I cases Thanks guys. newer color for really seeing my evening. some on that's and Good something question. the of use dig traction with to good Hi, into. you're And the taking want

Amit, you. first for question So,

you product. adopted I'm figure was as with And think was one ACV you could You they the product us uplift was well. win What the beforehand? seven curious that the mentioned OT And I OT? give the the a had figure seven win. mentioned customer that you when a of sense what using AD

Amit Yoran

requirement. It's to we existing and capabilities ultimately great we're Yes. process good AD We for account OT about that about an as bid came went VM them then in to with throughout was you. with excited they to relationship, dealing move and what holistic customer, really Thanks. the OT VM It decide forward our product And learn security components. giving as and the well great team. an to a how hear and AD visibility OT originally visibility. got with EP out They from provided more suite them and works the

Delta forward. that call would was super a added with indicator going between they a we'd see VM were I and to types and ACV hundred but of So thousand And of it dollars moves exciting where the several win textbook, it components. the a like an

Hamza Fodderwala

of like could And product versus in over mentioned you Okay. version. us sales that if general a for curious on-prem you, just SC you uplift then up the is just IO the ACV helpful. the see I'm Tenable with That's what follow cloud QX. XX% remind you was super Steve

Steve Vintz

Hi, Hamza, great question.

if points actually it's driving price products is of Tenable generally cost. IO relatively It with selling We're prepositioned a has as as the such commenced products fastest carrying SA. exciting other a what's IO, as XX% terms and ASPs, of called that comes sales. it's slightly cloud. subscription, over inflection to about of for in seeing us. It's higher helped strength average, WAS Container In it Tenable IO Tenable But in same a On demand. is new one earlier, and our Security Lumin. growing It's out I the

– couldn't cloud or as well why And so, demand heightened we we're embrace think, the the of related we're some move to that pool seeing demand as pleased seeing combine our transformation for reasons be home I underlying products. digital work more with from

Hamza Fodderwala

Got it. Thank you.

Operator

you. Thank

proceed Our comes next Auty of question. line Sterling Please from question with the with your Morgan. JP

Sterling Auty

guys. Hi, thanks. Yes,

So for organic you've sense of the the kind when was from you along quarter? of put of strength from look may that of much done, you much that the right versus how revenue the coming recent can into you've acquisitions Tenable how may products relative quarter, what a to in give not us especially you at upside the came that that or have guidance had

Amit Yoran

Yes, we're both. also seeing it's and product. business a of seeing core strengthen We're combination our in from new upside

last And over the quarters, from up quarter, growth the couple if from trend that's growth is look so, in past XX% growth quarter, this which XX% line XX% QX. of you CCB up at

the I which notable time That's deal fact we're really last what's quarter to newer a Active works, April. that in product. first TAM are Directory the is some going first the that is the for this pandemic. year even we're full of and And which late opportunities that is that to – the operational in think for during closed market market selling technology, expansionary going OT products first us for the

increasing not for in outlook us quarter, year, execution like products feel QX our work were having this conversations been the newer but opportunities has over of confidence, only rates also some of with the we full hard course for building the customers. first in the of year, pipeline less at we've these So certain conversion And while year. the half the in given the at and given

as of for newer to a difference starting short, growth in several So, points this make mentioned have earlier products contributed us. are I quarter and

Sterling Auty

you of characterize the so get resources hiring ramping growth in sales would you like layered up in of kind you gaps kind the And feel in of kind been how that And year? any of would into looking maybe has you XXXX? pace the then follow you're do as consistent, earlier the of one be don't

Amit Yoran

Yes.

As focus that of we area that's for – are I an us. –

to terms sequential sales the P&L and in continue quarterly higher in we can that of So spend. in marketing, see out make you investments play

in think fair I to the half our third say efforts. year, and than so relative this it's half more investments the we – to quarter, outreach highest recruiting hiring we're second we in first part, improve in the and in in saw planned and And other made because year other it carrying quota quarter – was any with our increase reps largest expansion. to of

contributing. full we've the so we're reps well. that Keep year half in the year continue about this that is And that reps in mind not but to second XX time of rep. hopefully our for but also new of in that growth, way core as They're products. the the hiring selling in a will our more certainly ramp The of first sales hired XXXX. year, will products, So average the for rest are newer pave only only productivity not half good for ramp the months

Sterling Auty

makes sense. Thank That you.

Operator

you. Thank

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

Rob Owens

thanks question. for and taking afternoon Good Great. my

one Just today. from me

this probably linearity better quantification and see forward? sector moving a there. are folks some federal levels you for in elevated last strength where setting about federal mentioned the How up this spending quarters. and lot up December the these or you for think And setting spending pipelines for You thanks We've elevated from do public do Thanks. heard levels and time? March will

Amit Yoran

in a deals I or market. have in in space think started do quarter. QX, the figure with fourth in seven and – have pleased six continued federal large perform a the of the I We performance deals for the a we we think very QX strong And strong year federal out federal third the opportunity, in to number quarter. federal ability have very pipeline in with space our space and the to

awareness Biden any windfall, directly the previous candidly result We in attention haven't executive seen years. and if government orders of increased paying to broadly you an cyber a than the security have It's of more a where any lot will, tremendous branch new as federal including cyber heightened just more the programs. of just started executive

Steve Vintz

sector, And just been public strong proposals. well add, given executive orders, year legislative to one profile thing of demand breaches this as the high data other the drumbeat has as environment content in

in there the are is market and our and And We IO success the of to OT for leader product will compelling believe this over FedRAMP believe in grow our long-term approved instrumental sector ability opportunity market public a achieve product and our in be us. hardened course time.

Rob Owens

as And guess FedRAMP, I that result becomes the could just Steve, bigger mentioned a since articulate follow much you of as opportunity there, up maybe the you how that?

Steve Vintz

so their we the public us help cloud customers the in environments of choice, We customers environments. secure opens on-premise can secure cloud, it Well, to where moved now help we offer up to new a avenues growth, including has can workloads environment. more

is this so, another And of vector growth.

a newer us, it IO, opportunities for newer are Tenable as these OT, continue. will result, all So, we And think products.

the sector. public it Our in foothold strengthen is that to hope our continue will

Operator

you. Thank

next question. Fargo. Please Our with Nowinski Wells proceed comes from with your Andrew question

Andrew Nowinski

want stood was in new that Tenable Hi, just attack was element they apparent about that think you of and of compromised obviously I Microsoft scale AD of half. your customers. great Thank said you great. And the – first out like to impacting the not quarter. off a products start the detected Active conversion know congrats yesterday how I announced I XXX a on their with they large one attack Directory.

do not, conversion now in that you're if QX So attacks? Or to rates sort what's of I seeing driving would these better guess that conversion? some is think recent attribute you better you – of what

Amit Yoran

given been would been Directory security scale the active security, kind little keys for difficult audit for the has – and have And Active very it's in difficult been At monitoring it kingdom. the Active segment Yes, the really deploy directory I detecting attacks critical the underserved same plays, any call mechanisms dirty to Directory IT that the the of It's fashion. inadequate. an and the incredibly time, in market has secure against secret to the years. of role is to

a modern majority you so, I say, see should attacks attack, super going And vast Directory. or almost every after of Active modern

You saw it.

in attacks. of see majority You a it ransomware

know disclosure get think proving it persistence, are activities. to out. in that target within lead specifically. sort adversaries in, a things it of to Once you of security enterprise, want whole reach I to want and you recent expand AD practitioners all saw headlines establish of And the swap You you and those the Microsoft's the

So quarter the we that with in is quarter I part exciting actually quarter the see very the we excited parts our and pleased market, Tenable.ad. is and it going integrated continue very the And, results, notably about the had, most into and quarter, being AD third to that, and build beyond we’ve and that it’s that the was fourth product, can other portfolio. in full it with had with pipe the be, we – first the first think tremendous first also of with the that product AD traction

whole of JBS could to differentiation in lead cloud compromised, with have Colonial prevented a the opportunities or workloads, better is insight slew like and type protection the OT might the leverage. of food and processing of Pipeline of the type AD’s So insight that for that

Andrew Nowinski

do enterprise your great and wondering, customers of deals, number question that’s That you function wanted the I’m products then follow-up Or on this the to or on year? think you. just you’re customers capturing were initial more And than now bundling some of is now where driving those you’re of these just I just more that maybe or with you’re together? at great. new spend deals bigger it sell point perhaps talked larger what having a if is the last that That’s record about. large of Tenable.ep – you not, you to color. Thank purchase

Steve Vintz

I jump in, I’ll think to feel – chime. it’s Steve, free

more playing profile a risk That’s and the all One out understanding then than ever it’s high things, think understanding orders complex. I it’s strategic factors. of is combination more itself breaches, those the surface your cyber is a is been. attack of the lot executive

but also also your environment, it, need you VM all recognize program, a and for AD had the your you analytics. the expanding probably protecting If OT you’re environment,

the these EP, is with more understanding some to platform traction approach tremendous we that based newer seeing a exposure – risk. including mentioned, with and products we’re So, of which

Amit Yoran

we’re And mindset. pairing mid-market, we strength is those with the the the is about beginning there of security one which first transformation, making seeing would right? at also Mid-market of a thing continued something the in too, talked I in that add year, digital kind investments customers

And strength and in deal more usually we’re the mid-market, mid-market with in comes strength so volume the flow. deal seeing more along

lots of the have we’re best that public able So quarter, larger enterprise platform add with new fact our in ever new deals in products to strength customers this quarter along that sector. and were

– high larger as to as create as ability of pleased the see deals, So, together volume deals transact a we’re outperformance in well good to continue to our quarter.

Andrew Nowinski

Sounds great, up work. keep the guys, good

Amit Yoran

you. Thank

Operator

Thank you.

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

Brian Essex

adoption the new with customers. within revenue is And and Accurics of land? Great, CCB AD customers. rolling clear what is is your OT, thank experience and installed you base, out, as see you’re that, the and you back customer landing rate larger opposed your enterprise base And the maybe how nice I install the platform acceleration and and robust particularly on good pretty what is afternoon. But the growth that I of expand growth new it’s much guess, the taking and mean, you’re as now to to for question

Amit Yoran

some newer these quarter have have gone a or have just we’re year which I not the full centrally. since through, points, gone one been guess, early of even Well, largely two still with through products, released, this in is, cycles just

or excited ability expectations our our expectations. exceed we’re So, even about super hit to our

be continue dollar I’d to the rates tend anything if be within net say trending expansion appear And a to range. lead other be north, – no Our to direction. in

to our become to customers. just that approach And our our me ability prove it’s expand with leads matter customers. to so in relationships continue out and existing sell to more strategic of of based platform newer some us our deployments continue a with starting a Customers these that to products to believe their

early we’re the the And indicators so, but again, are in positive. innings, extremely

Brian Essex

increase IO some those it. of EP focus? do are attach SC continue percentage sales, just how IO the customers those to to in that the point we And customers traction about stay just there more you then those how customers Got have on I with you that expand you, with as guess behave and anticipating to, maybe newer think cloud have is mean, both I that should follow-up, given and features, maybe platforms, platform any potential, you they’ll and at SC, think your more functionality,

Amit Yoran

product scores. – high and good very MBS a is renewal high and rates, SC high with and Well,

been So product. it’s beloved a for the and long a it’s that’s market product time, a in

offerings We for cloud use SC product. our customers who cloud path are our currently have increasingly choosing a to and our want use glide compelling who

see or sell given product choice customers in the one thing So we want thing come a other. to for way often could bad for that is secure on-prem doing as looking the reason needs. the one to well. IO providing looking both one we right And to products not their we is sales versus buy see to cloud-based their products a can customers, the of team. make is environments, some remuneration And product create behavioral to customers that why have the we’re The to tendency that That’s that EP. that the

can regard. that So we’re one attack in cover that the the of few companies surface

us. well doing And way so as SC sense to move as for a for from there’s makes incentives them customers in that But IO. to that we’re

Brian Essex

very All It’s right. Makes sense. Thank helpful. you much.

Operator

you. Thank

Barclays. comes Our next from with your Kalia question with Please proceed Saket question.

Saket Kalia

taking about if I do for and wondering customers just Thanks out about bundling little how do for from year was questions you I you you a guys. EP like bit What could we’ve you think EP next here. hear little bit. Tenable Hey my Maybe maybe a zoom two? longer mentioned earlier. Great. over bundles Okay. or term first mean, Amit, for

Amit Yoran

tremendous EP. with seen traction we’ve Yes,

based from only what going it. of go-to-market these and sales candidly a team gravitated to offerings. perspective, those how proposition you for its not to market we can asset. extremely greater on how to their customer customers. value price leverage, it about customers desire, unique various the pulled with of EP create the drive lot where, embrace customers sales and our our work pleased and show toward value But per We gravitate through We’re together to It’s were things to never ability despite a willingness EP the and one are to of how ASPs and feedback, team the extremely products propositions candidly know significantly higher together excited some but how

we’ve add methods been and it extremely about bundle in Again, to with So to types do into of a short asset period earlier out about EP to what and able in new analytic excited also only continue year, excited came time. ability new EP. and this our

a look can portfolio licensing. to of faith of assets other not occur great natural EP the add to it’s technology in some the into So, leap and the those at leverage where

So the their much correlations with greater seeing, the smoothly value the types. more customers asset expand and in asset derive various can based between data

Saket Kalia

are here for or you inorganic just organic how within couple Got way year few the guide? ask makes quarter, follow-up contribute my of QX think ton and CCB I points full for a about you sense. in did just a maybe specifically for it. maybe CCB, how assuming that much question growth for from to in Steve, CCB of this the talked Maybe That much you,

Steve Vintz

us, for full of first product. kind So specifically that And seasonally contributes the tends given to we points QX we and if environment, OT where quarters and but several the to business products collectively, the look first that heightened are product making several and think selling we’re good at specifically higher having I the growth. think know fair be into year cycles one contribute of to say specifically that performance you for with selling acquired the first and tailwinds say, the of our that all which the point strong of collectively of and us, These CCB, are contributed we what OT really for it’s for specifically sales growth. of is AD was about put with But AD growth look we roughly newly it’s sales year least seeing talked I we what QX growth. in longer last the points threat also to collectively we year in backdrop going fourth for those These compare at prices, market full in it is good quarter said now the setup what you in associated that’s lines at products AD, inorganic a how a for and about give QX I’ll opportunities. think quarter, year OT half comes of to talked fair

strength do little I the third the we’re a quarter. given than full in on that pace year think to a better the specifically in

Saket Kalia

Thanks helpful. Very guys.

Operator

comes question Cikos Thank Needham proceed you. [Operator Please Instructions] the next Our line Mike with with of your from question. & Company.

Mike Cikos

building certain primarily on and if in team, this are I that, any broader are win wanted And now guess to you IO are under maybe the tent sell hoarding seeing rates, addition which seeing that nose get EP cross and AD portfolio think the your then EP AD on selling you is then changes ask here that in and – fair you through based offering. you’re you’re to this Thanks are actually pulling to it for or where and OT primary IO situations lead, OT, start or that? can the

Amit Yoran

increasingly yet of EP the holistic VM application the so analytics VM in with directory cyber capability. newer EP, now understanding active historically the cloud OT security, more showing the and lumen, are EP included licensing I EP has The includes schemes. guess, To-date risk. core some approach a not led capabilities to container, company and with web

some a to the products motion our base, fastest generate think products bringing easier us for of newer customers newer customer much much right. these more these selling the think easiest I to to existing opportunity to adopt there’s of do make is tremendous broadly. it So I traction and have, We some

over customers, large capability. customers where and the which that’s a or some on expand expect seen enterprise which We solution have natural tremendous and on also and some numerous have these integrated, them have near-term augmented of as VM opportunities there’s value. or they’re platforms do newer some we’ve need add swap core time. for place already significant or XX,XXX occasions, to customers will in VM those our upsell and motion, plus multi-year to product us AD newer not land for they’re natural looking period. of cloud can And at a tremendous We’ve But OT lines, ability slightly conversations over outs they become obligated products contractually VM

Mike Cikos

some channel those earlier with better investments appreciate and you would understand the And helpful. the the you MSSPs. is anything guys to guys But your on of one wanted accelerated XH spoke Can when call, if investments to you. talk you and Very think all to benefiting make more I touch about your I sales just go-to-market, – year. in expect go-to-market strength about investments specifically us of ask in that on mid-market the that be maybe help the more versus you XH beneficial. this question capacity that I could Thank guess,

Amit Yoran

an exciting important a preceded market. the in remained because part product changes and was MSSP long-term for market by us new which in MSSP of opportunity Well, an year essence, that’s to route this products

And provide You an but more MSSP partners Primarily products much markets, XX% new long-term of and this We MSSP we’re certain in that total here in generate success as difference But markets the with the our the market. channel XX course for rely or having in on made a able really seeing add a in model, sales. controls. and we’ve we’re that from access heavily last along have states, number the fact think changes have of as of could us. to we’re customers. as added a pull channel over in – new rights good months, to result, features partners foreign partners

one going think investments we’re continue that going time. to to not to We I that’s to make another us, take that’s in. question. new a route market know for that’s But

to here. Our partner to critical. model invest is is going important our And ability be

us and we MSSP doubling when So in but in making for of that have channels. provider. the in generating best-of-breed quota market the on marketing, talk that increases we one it’s about more that sales And the important specifically investments having quota-carrying success as and the is we’re the channel the reasons just in business time one worked talking But to the something be down over spend channel why capacity investments more in able often and is reps, about and years. them. we’re well of we’re

Mike Cikos

Thanks again, guys.

Operator

Thank you.

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

Jonathan Ho

Hi, good afternoon.

contribute Accurics to to Just us of sense wanted start your you can strategy? cloud maybe out how a give maybe left with the this acquisition. inside acquisition Can and the shift of

Amit Yoran

we Accurics Yes, strategy. expand factors in how the significantly our I think cloud

So, Tenable has for been years. a leaning in of cloud number on

all major conducting the agents connectors a cloud-native without have We’ve We deploying deployed We’ve or delivered cloud public the container allows cloud frictionless, to security in providers. capability. to scans. infrastructure assets which us assess

after is focused kind time in an code to is as deployment operations. run noted. I you’ve left what shift One while additional infrastructure assessing Accurics capabilities bear. characterize that on in brings capability of approach real, some more state cloud-native is two as So much

security policy in So violations at now time and mode. pre-production and at at code checking looking of issues a looking

which being produced making and problems infrastructure production their can where provide the you the So is environment. the you lot check issues code ever code in, DevOps it, exist. at remediation request and of you rather look to and which is back in, team, look and their someone can feedback into identify provide alleviates a from really at accepting checks code you And just than way

of lot and So of improvements that. a savings, and doing cost in lot a enhancements security

table other functionality. more to is CSPM The a the traditional the brings Accurics capability

we an pre-production issues, drift configuration container, their believe as in and through code entire based of through a mode frictionless it’s our runtime across protecting these all cloud quite compelling assessment integrated assessment to approach from the really integrate customers a and way assets preventing platform approach in cloud workloads. of providing to cloud approach we our code cloud, issues capabilities infrastructures, So,

Jonathan Ho

or a the that seems are sort Got it that guess, of guys be a really business here? it. points period of that comes it owned here. is or you this of about accelerating driving time. you’ve space, you inflection the may for stronger up activity in Got to or product And business Thank picking you. levels Can any I seen have it. talk pipeline the when some And OT things like maybe

Amit Yoran

Yes, it’s a question. good

a being that healthcare is went And challenges increased between protect And been time nature compelling. really environments that Pipeline, There’s of got for Colonial also software just issues other activity over our think in of market with is blocking highlighting think orders the to like in and being through to and that pandemic the I only tackling critical growth visibility the there’s able site business not OT they’ve mode. those being stages IT activity that year past operate customers them. number that capability, to or infrastructures the deployments eval high and to executive to We matter critical and I appreciation between OT some do of JBS, a things approach, market combining remote predominantly OT saw be of able on slower – quite chain, proof profile deliver did acceleration able into And UK. early of to happening. it see we a hands distribution. issues deliver of supply that mission and

deployments, seeing these first transactions moving sites from global scale larger into now things adopting early we’re occurring, which our a of moving about broader seeing talking deployments, some phase. are some handful deployments, first operational So to of larger dozen shows more significantly we’re and that, those also customers a

Jonathan Ho

Great. you. Thank

Operator

you. Thank

your question with Gray Please Powell next question. proceed with comes Our BTIG. from

Gray Powell

taking my Thanks the Great. end. questions. on for A couple

of a differently. but one it kind first on, ask already little bit you’ve hit The I might

environment obvious Just at what the there in relative in XXXX XXXX. headwinds at to get trying would And a years? demand to some categorize I’m then were is, obviously, prior you high how level,

So, of of insights of year spending sort forward. seeing I or then and question the my a up part you’re in going guess catch demand not on of whether this is any sort just sustainability

Amit Yoran

reasons, – think still a we’re No, but down returning of characterize I more mode a it it up I operation. as I of and spend, catch to think number for would slowed was normal I what last year don’t characterize was wouldn’t a

room If you look at demand we it the growth improve environment still continue of and from to us lots like and and and and pre-pandemic where new the draw markets tap like perspective rates there’s and for feel we’re were backs still, feel behind execute we of to a of to starting we’re into. on that market now our a capabilities bunch core and new still

Gray Powell

how just into helpful. really look QX for as the of I we should business, particularly think then Accurics run things for year? the try and any to, about think the material And implied That’s Okay. through does as we guidance that sort contribution of from quarter, that and rate next just include billings

Steve Vintz

Yes. Gray. Hi,

So, in as earlier going is the with about the we of talked top-line. de-minimus be to Accurics terms Accurics.

quarter, $X a of meaningful on to going the So fourth to it’s not in expected the assume not have impact we’ll OpEx. million about top-line

depending a $XXX to $XXX which guidance seeing are a as and confidence a business look our at growth where full spending as new increase strong represents and in to QX lot products, strength for $XX the as year we’re favorable by to a the TAM the cloud in about a seasonality overall million on in things CCB $XX AD for for about outlook million given our million, OT, the sector. This and we’re the implies you that is you for raise from well expansionary specifically today, part growth with QX, we’ve look, very beat QX. public QX contributions full of range year. million of as talked pleased in such driven XX% as full year in environment If in XX% And gives our XX% at guide us year the growth the well for in

delivering in give So but our think year. things quarter, only for it’s, I together, the rest a us that all of confidence are in outlook these confluence more upside of not the this

Gray Powell

Understood. results. the That’s on Thanks. all good Congratulations good to hear.

Steve Vintz

you. Thank

Operator

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

Daniel Ives

thanks. Yes,

given executive you’re I is of solution in Are and that terms well the the ratchet It from order? you given hit as the up starting you true? stand in nature you’re just on deals, feels executive threat set getting a can of more, almost actual more lot like order. order where environment, mean, that’s as the with pecking seeing that So a changing? that, federal you these the

Amit Yoran

and well government a enterprises understood We feel security operations like solution and a that set that’s It’s general. requirement for solution understanding we’ve continued nor got civilian, with the expansion, a a especially, of of vulnerabilities have by exposures. risk room cyber is core a which of in of federal large lots complete and don’t their customers, perspective federal existing across number and understanding coverage from

of I We another active is have for become newer sector, a and opportunities capabilities as public as well can think like also us. example. our number have products been which private sector, which things directory, technologies Operational tremendous plaguing

the think we’re programs, of will spend, So, but this we’re in how seeing, come in play still early awareness in starting the early, together out. the still to federal I endings terms of increased

Daniel Ives

the humble like answer. I Yes.

invested on terms Thanks. like be you’ve point within public beltway? just and like have there but about you sector, should talk in of can to obviously the the sales, just a investment So partners ton,

Amit Yoran

Okay.

budget So think well there’s local, only one, position that there. to us, given in of market and think but things demand, we’re say combination an also our local. I along state opportunities this to our invest really theaters, and environment. our domestically recent important across state with in this the cycles, all continuing And sales leadership term and as reflects compelling in and abroad, the is And conversion, for terms with I we public success we’re seeing some projects, federal, number some closing it’s year strong that’s it, the efforts, shorter investment, and know success as in in sector, opportunities of in seeing current opportunities we’re the and longer whether couple go-to-market it’s for, federal,

potential a that We’re us. ahead of growth catalyst be of And is us. of this number by catalyst, to we opportunities are we going what encouraged in potentially see think front sizable for

we’re this us important story and So, best the think opportunity we of leader for be a creates sector complaint market space. in forward. long-term part the this we are will us public for – an going And

Daniel Ives

Awesome job. Thanks.

Operator

Thank you.

Please comes proceed with FBN from question with Securities. question. next Our Shebly your Seyrafi

Shebly Seyrafi

Yes. you much. very Thank

you can into you much OT to how think deal that be? uplift? said So EP, higher AD if AD add OT EP but average and that about would EP, be bundled I before if your size XX% you your and what uplift and Because is now,

Amit Yoran

to I’m AD, that, some would be the out would I’d two OT, you’re throw assets. a at there’s love One dimensions, It’s about simply you appreciate there. you’re as of sure way include is great number I assets as covering an would that be question. increased that data Steve it but not include more think play.

higher deliver those interact products, and on of is that multiple a into products where of that on our And which expansion the a inclusion ASP, we analytics like can one ASP with dimension, It’s would can can customers. selling more EP, EP based a products for scheme. just, of in approach along you we’re natural the top per that occur there’s a licensing a lumin another, there’s value asset because platform so the basis the deliver also when light not simply things

So they’re premium getting a we willing can to pay analytics to pricing superior and for products those interact deliver.

higher that, I AD, price have opposed through asset, So, products the could on part purchasing standalone customers significant ASPs. as OT as that the inclusion and expand per assume of they’re paying coverage think a bundle EP to asset impact if fair them asset of a it’s to and their significantly

Shebly Seyrafi

QX growth five I your four follow-on, decelerate, from my about annual QX, CCB points growth actually growth a in by decelerate to it group your And or don’t guidance, implicitly would little like is And CCB slightly CCB Okay. are to know I rate. a easier, that bit is reason say conservative? there five why looks four being points, the would comparisons you

Amit Yoran

we newer think beat delivered in traction with guidance revenue momentum a cloud our products. with obviously And QX We is in both about, talked on public getting strength CCB appropriate. sector. sizable and great were We

out look saw we in encouraged with the we’re we quarter, QX. fourth what As into

mind, our of number for We’re regard of the full these front a have Keep us in we outlook in year. raising products. to ton opportunity with of

We late sales March about, about in closed is, launched an in about platform, a acquisition more is, for talked exposure we the is talked We end AD, OT and product we we this So, us. contributing cycles product, already these the which are opportunities of the top-line. to which here, April. notably our talked hardening and how longer

and activities and we the are us. products. believe, in public continue to absolutely us So, serve of the confidence withstanding the opportunities delighted they’ll no in front more are pipeline we’re these growth of for us, conversions not QX, gives We’ve sector, but success had with in QX against catalyst

guidance we say. So with the we’re what appropriate. And encouraged we believe is

raise, fourth So optimism reflects fourth And over good an the the we’ll and on giving to look all update quarter. our in you quarter forward for quarter. February beat

Shebly Seyrafi

you. Thank Okay.

Operator

Thank and you. have Ladies this session, the question-and-answer and we today’s gentlemen, reached concludes conference. end of the

time. line for your participation. at this you we thank your disconnect may And You

Tenable (TENB) 27 Oct 212021 Q3 Earnings call transcript