TUFN - Earnings call transcript Q3 2021 | Tufin Software Technologies Ltd

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Operator

Greetings. And welcome to the Tufin Third Quarter Fiscal 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. to Investor conference Relations. like host, to now Marcus, Jackie would turn over the your I Thank you.

begin. may You

Jackie Marcus

Thank you, September operator. for And good day, everyone. quarter this fiscal earlier the Tufin of XXXX XXXX ended XX, morning. third released results

you Officer; webcasted and me earnings release, This Ruvi our are on the Relations will Jack today's you copy Tufin's website our Kitov, from press section Chief Tufin's it the Officer. call being not of a obtain Co-Founder at If did Chief Investor of of receive may on investors.tufin.com. call archived Executive is section our and and be Financial Relations Wakileh, Investor website. With

website. call Cofounder, Tufin's to Investor of Relations a and projection, earnings note are Ruvi forward-looking to the to in With today begin, with these These future forward-looking tables in Please statements intent except our our guarantees Securities regarding any those risks statements. this performance. forecast, statements, any Such intent available law. would of the as I from Actual release obligation can company's of CEO noted filings the release those statements remind to future statements Litigation morning's Kitov. press are events statements we and results that located forward-looking today's found to update everyone SEC. performance forward-looking express Act. be to team in press based comparable and may made of that required Private Reform like and non-GAAP considered the may over uncertainties, be that in Ruvi? Tufin turn that, in on I'd the expectation, most anticipation any projected differ including materially Tufin's management information Before the number the webcast future as or like or forward-looking GAAP specifically and not belief, directly disclaims the by involve section Tufin's of defined reconciliation as a number by

Reuven Kitov

everyone. very another thank to for demonstrated adding morning, Thank customers I'm our you, you deals to the us report Good subscription current our quarter. significant during today. also joining Jackie. while serve And several good quarter ability that pleased

revenues year-over-year which was in quarter product by XX% by grew year-over-year third the Our driven X% revenues. largely increase

the bookings also on X We close position surpassed with months to against majority being XX% a finished multiyear third services bottom $XX first bookings from which of in revenue, of in the all approximately We X our with in in target for subscription year. first subscription one deals. guidance our puts the and XXXX targeted XXXX. both us new subscription subscriptions lines, top of hardware third representing being bookings new with the business and at of the new out year quarter XX% end million of the strong of the of were the reaching compared to excluding months business with professional the sold logos, deals XX% our

the completed in pandemic, We to progress sell our our ready invest we their management hires round sales solutions. quarter, emerging key and reflected significant organizations I made in the strategic third our security we across As the of from to network challenges initiatives. up more

over announcements discussion our like to product Before I Jack? of deeper turn of a Jack I'd discuss our now some our morning to recent wins, latest financials. call customer from this for and the

Jack Wakileh

Thank you, Ruvi.

subscription-based our initiatives performance As continued and progress pleased Ruvi goals. our we mentioned, third with we the as towards quarter are made in

network to more in with We sales invest are new in the their strong security. momentum happy with as companies business bookings coming from positive a paired subscription look pipeline

next plan to earnings plan since call. may quarters. on our it basis ARR have And annual this a variability to between provide As an we we metric reminder, on share

represented of to $XX.X strengths third Americas a we Pacific. Let's from and million. X% over to of revenue percentage discuss XX% geographic while our QX was On up our the On million XX% care a Total telcos XX% the represented revenue, quarter came Asia XXXX. services of is X% basis, year-over-year revenue from and quarter, during revenue and energy which customers. of Europe million, and saw basis, Product was with increased from come services financial X% health revenue results. greatest QX sector the $XX.X in XXXX, secondary maintenance customers $XX coming professional

and of $XX.X discuss to was for results will compared I the revenue year. or measures. financial $XX.X Moving or profit XX% third expenses. last to in margins of XX% revenue million non-GAAP quarter QX Gross our based million on of

Sales offerings. $XX operating $X.X or was levels the the higher strengthen compensation million million that or or and net expenses our $XX.X $X.X And XXXX. XX% XX% was QX for quarter of basic and in expense to year last for in of year. $X.X $X.X of $X.XX million QX in compared in in QX $XX.X QX initiatives or revenue $XX.X QX revenue a of in and revenue loss XX% current. loss as last diluted, last our of million revenue compared XX% to QX reflect this operating million was $X.XX of $X R&D higher commissions to in is loss last to of of up compared million compared investment an expense strategic third last platform compared in for expenses of return revenue important year. of quarter QX and increase for million and of also G&A bookings. a QX quarter XX% million, for QX last of technology of to $X.X the net the XX% this to expense share, in per QX $X.X Net It future were loss year. million increased year. to attributable operating loss for to pre-COVID $X.X our was of totaled year. and million expenses to further product The our that paid was million or services note for of QX compared of Operating marketing of to enhance is the And compared Our revenue result XX% million year.

to Turning sheet and flows. the cash balance

the for for equivalents, and fourth $XX.X with was year. flow the cash versus $X.X quarter During of operating $X.X and I $XX.X million full with the cash quarter We used million, will the million activities quarter. cash finish finished quarter, million the securities a of guidance the ago marketable total in cash, year discussion down up from beginning of restricted year.

and total results operating $XX.X loss of And million million XXXX $X.X non-GAAP revenue profit. between $XX.X expect million. For the fourth quarter fiscal between million $X.X we and

$XXX and and full operating we be of the fiscal non-GAAP between revenue million and $XX.X expect year For loss we between $XXX expect to total $XX.X XXXX, million million million.

are our our through believe that, are subscriptions Ruvi. back logos Ruvi? over we the execute focused particularly on growing new We keenly positioned plans. With to business, and and well to on I'll turn call

Reuven Kitov

Thank you, Jack.

customers expanding We're before. key with businesses, IT potential to of for considerations network combined complexity for increasing security and with morning, implementing allocations ever our sophistication are is we best today's Tufin several like critical policy as of With government with security for than saw breaches, more milestone Tufin this And and the the budgets solutions the need without product are practices changes recent they're serious against Earlier functionality. automation. more the monitoring policy. from and to threats hearing configuration today network Key if the RXX-X. our the and have customers a more outages, at network to IT well-defined that can both Suite offering, preventing we Facebook, ransomware. represents and our and customers Orchestration new mitigating This done U.S. prospects infrastructure outage without following increasing pieces announced latest simple Tufin implications an important of

We've we've requests We've customers centralize features Cloud and support with Zscaler First, and by Zscaler rules vendors. management. traditional uncertified optimization that's real-time insights highlights providing competing for security to compliance our policy more from policy lot SaaS access Firewall dashboard security seen operational, with The firewall policy and simplify policy dashboard into added provide new also this of added and expired directly violations data a a for collected and Tufin. recommendations. to security

the leadership migrations workflows which SecureChange the large and migration becoming cloning to of needs data common. Tufin policies to users With to data enterprises. Orchestration answering by and Suite new cloud, security from old can technological Finally, center Tufin support removing are center of our obsolete also center workflows one more from policy. networks RXX-X with automate the data we're extending the These critical more leverage RXX-X, the

discussing deal our of spend some third few Let's the activity quarter. from a minutes recent

analytics. critical reduce and They efficiency downtime regulation utilities is first that automate audits. and infrastructure company compliance diversified subject reporting its failed and a network multiple one the wanted of to The protection changes have during operations, NERC to increase are the large

a received we're resulting fines cost on manual in time, will to reduce preparation continuous spend ultimately help As SecureTrack, policy compliance this audit they Tufin With result, substantial going significant and every ensure audit, customer for a policy amount failed and savings. cleanup. annually

logo by strategic IT SecureChange allowing with subscription was also design operations. to and increased manually more they By end-to-end multibillion-dollar Tufin. streamlined security accelerating for implementation IT electrical change new of network significantly their addition, provisioning, This grid. focus productivity a change new In on multiyear their workflows changes they were in to delivery, engineers and which delayed win providing projects, making the infrastructure automation including a

against We could wanted services Asia-Pac a offices With quarter They a that continue found process a changes this presence to across the and the the error. ability customer. customer this track its in solution in policy back organization. roll easily case a many financial needed to the with an they manage of expand configuration consistent Asia, change and our entities large addition dynamically and entire across proper also

and few geographies to of last The has value past and so is of the migrating of and to to provides architecture with another that years. across lie the ahead efficiency large of over Alto with an IPAM policy Infoblox for up existing the new SecureTrack, us the staffed I'll many with we of complications, zone marketplace that the can Policy of logo in further their our they new with which with them. Tufin able management million been They've included relationship company retaining difficulties this business. purchase and Palo mention operations. This app region. integrate dramatically to our ability and recruiting short was couldn't Check multiple the Security While the Tufin been opportunities management $X to The offices confirmation from network improve SecureChange create deal teams able strengthened the were expansion their flexibility spent demand subscription strong offer over energy today security have Point keep that talent

with the compliance next the SecureTrack, government, regulation X prove compliance at all the to for and easily authorities. increased network full as the to team. security They to step units X security the secure only into with the a pressure federal tight expanded Following actively ensure hack, can X proof on business now pipeline Tufin Colonial they SecureTrack of looking needed from which and business use posture With automation for are change with regulations their units. they

to heard business subscription our you making we're As today, model. significant in shifting progress a

wish operator seeing members We for critical to threats. to hard line our from of turn in team our for and would their launching I we geographies variety to work positive now for significant help while the the like continue to customers. value keep I Operator? are over that organizations capabilities call open questions. momentum the deliver industries safe to also a as outside thank

Operator

Thank question. Please the first from JPMorgan. comes proceed of [Operator be Our Sterling line with we’ll your conducting question-and-answer Instructions] session. you. time, this question At with a Auty

Unidentified Analyst

customers? This the customers' [Indiscernible] you the the me business Sterling. is versus subscription for versus in on of renewal both new understand from what's transition help Can mix the

Jack Wakileh

question. for This Hi. is the Jack. Thanks

and off this for versus new from So said, from our also terms subscription the how for said new XX% year. new we of customers, that business coming existing said we're coming subscription. we it logos. from new proactive of like kicked is new that subscriptions This vast is from coming to move we customers our We've business, is renewals much in And our majority of customers.

to new X the for subscription around of that's were So renewal XX% the this the going majority done be looking subscription past new to from year. and be that XX% of going then this that are year. it is total XX% to part deals going quarters, to subscription on is we to XX% The be the obviously

Unidentified Analyst

the and Okay. Check your mentioned you And that talent. are small then improvement like But How Alto seen going the hiring maybe on? from the you And Point an a plans previous to one. how quarter? seeing retain on Palo unable Like about going front? have you is

Reuven Kitov

acquisition or you acquisition question? about the of of the Are clarify talent? asking you Can customers

Unidentified Analyst

of Acquisition talents?

Reuven Kitov

and now we're us both the sector on investing Israel, also for is is The So high-tech sales especially booming, competitive. front very development. heavily, on in economy right

So to hiring. good in are investing difficult we it's find engineers, but

no changes there's perspective. to So from our plans that

Unidentified Analyst

guys. lot, a Thanks

Reuven Kitov

you. Thank

Operator

Thank you.

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

Saket Kalia

taking Jack, you? my questions How thanks for Hey are Ruvi, here.

Reuven Kitov

Good.

Saket Kalia

just to you. start with maybe Ruvi,

have some firewall been historically we Some about of like policy were context seen experience, types behave has of strength firewall firewall? guess coming. typically tools seeing demand through do your the between it and demand you've vendors I love And lag refresh management sort talking policy been demand? on in would now? those does backdrops, meaning performance whole. the strong in spending just how more is feels come the something management what firewall it question on generally, is I Or that in

Reuven Kitov

Saket. Thanks, Sure.

are the So not correlated. X directly

support of general, in just First firewalls, all, technologies, ACI. Azure, we NSX, including segmentation Cisco not VMware, but AWS,

firewalls. say, X into broad a it's installed think broader base of last purchases. of than I'd But So we say firewall let's years we're if the cycles, -- refresh selling of just

be a just So major if datacenter is, a it going infrastructure. ticket moving dramatically. that moving major the through influence to there's the they're between happens and for example, a new of purchases, somebody vendors fact That does base if item. a somebody is What buying installed increase they're or is does into refresh not new lot that

So million, say, they on can budgets if use. have that spending they're let's they $XX refresh,

infrastructure So we some to than we to get opportunity new that necessarily, support. more have it's not need an of budget less lot okay, a of

that past, the after. it's a us. or upticks in budget major it's not refresh significant opens, for There's right we some before but So haven't right or seen driver downticks whether

Saket Kalia

commentary, just my That just it actually in because what you missed your Jack, it. remind by for mix I stronger you And a us sense. your see for but typically And wonder you. quarter. little makes Got subscription Okay. -- just up guidance maybe I for if follow perpetual? demand apologies particularly are goals could volatile, maybe QX mix for for that's see next be when we that can

Jack Wakileh

sure. Yeah,

So that as move maybe the remember we that also to lot that early you of to the we beginning the announced point. the the I'll -- we've subscription. We of said announced you announced before take transition back year transition internally, it at that. when not And a proactive we right, come with mileage

we're average our even subscription we that. you our we a higher first This little XX% X better QX, new And bit quarters. that the more as we estimated on transition did to subscription third was -- than in reported In we wing business. much new coming business with with saw versus around QX So the the from from XX% initial logos, expectation XXXX. was more in case This for going obviously. new business of to business saw

think pipeline this if are at trend from majority, at new QX, pipeline, the subscriptions looking For coming that our of we you looking of like, to going business continue. the

end we or now XX% little higher a with full equal bit may for the year. So up

Saket Kalia

And if just make Okay. for it's more sneak actually can one in. you, just asked. I sure Jack, Maybe to

just seen. I what here think than for little bit a QX wider revenue we've is typically guide the

million that is? we I why I kind for to But spread QX wider $X think a I you on it's love guess in of guidance hear why is? can comment here that think range mean just revenue the -- I'd

Jack Wakileh

multiyear said business. I our a we in before deals I subscription have of mean, like lot

is think the a that mentioned lot I I question it first multiyear. this of with As on prescription,

is large is the have of we in in looking still pipeline guidance a deals it to model we of subscription subscription guidance we being at the even believe within we safer again, sway if have some providing the terms in and we were deals still careful we safer. deals that though of slip. so in wide a exists the And point. since model this and those perpetual lot while our This guidance, at forbid god felt where far variability in deals, the would be guidance of the So list the in wanted the

Saket Kalia

Very guys. helpful. Thanks

Reuven Kitov

Thanks, Saket.

Operator

Thank you.

question Company. Cowen next your with Our from Eyal proceed of Shaul question. & line with the comes Please

Shaul Eyal

Jack. that more they if Thank reluctant? you. Are would appear why Good other that customers of some afternoon, to slightly Ruvi would reluctant, are shift are the model. are subscription It customers and mostly receptive that from you the case? seeing be And a resistance

Reuven Kitov

Shaul. Hi, question. the Thank for you

we're existing So mass. yet the on converting customer base not

not we're proactively. doing So that

incentivized future. sales obviously. that Although very is sell the force we're The keeping for subscription, to option

seeing are well. into the with as of subscription we subscription So surprised been perpetual more as renewal the account a positively customers sales several new by We've team actually was transition existing able and expansion. more part where to accounts business

proactively movement but point, at not transition resistance existing But not seeing this at trying strong we're we'll accounts we're decide all yet. to it. the perpetual So there. as everybody if of we to point, move do And then we're them actually this seeing re-examine positive

Shaul Eyal

I that late But so point seen addressed. supply Ruvi, a might to as of if little the have was late? in the was And Understood. call, advance constraints you chain any apologies

Reuven Kitov

really. Not

customers an We It's option. decide to have that appliances our purchase. some

Some people deploy appliances. in can

ordering had we've we've more shipment a a longer to lot but So we're able taken earlier. times, that. lot manage into We're appliances that account. And

Shaul Eyal

Thank it. so Understood. Appreciate it. much. Got you

Reuven Kitov

Shaul. Thanks,

Operator

Thank you.

question. Borg Our from your with comes next of Please question Stifel. proceed the Adam with line

Adam Borg

question. so Ruvi. guys. two My a for for the parter much Thanks taking maybe Hey, first one

And coming. the to I then Zscaler let's the us, map that's for remind Firewall know older Is part was that upgrade I pricing in road time. integration any TAS. some B, of Cloud say, A. customers there XX-X see just nice from it's verge when part So guess uplift?

in on about installed base. latest Thanks. I you But your a remarks. version? kind for that you this to upgrades think, demand know the alluded to of is the that in Just curious prepared driver

Reuven Kitov

Adam. Thanks,

So a special XX-X not is standard a release. release. It's

charging not more it. customers we're So for

a Now today, for for the visibility now, we're and announced specifically players. popular. becoming scale on and It's SD-WAN considering it's asking There's and going -- support demand these firewall of next. down with for of now demand integration if more at customers different SaaS for a lot diverse. pretty of first road. to lot Zscaler, more There's cloud and what's We're adding right of vendors look And the and Zscaler SD-WAN others are of more there's Zscaler. the automation we're those. But on you a SaaS we add lot

Zscaler interesting and competing Point in are because directly starting more with with firewall, is So Fortinet. some and Pal use Check their cases, them. more And Alto, wet they're customers to

Adam Borg

Very quick region, the a although hear business. in just the It's the still wit of to it nice helpful. as is small And maybe APAC part a up. follow

in to are opportunity going the so there Just how forward opportunities expand signaled and some APAC thinking the you presence you're much. curious other since about Thanks opportunity there.

Reuven Kitov

Sure.

APAC the of lot point. for at XX%. in below stages. sure. We early there small It's this that a business there So just believe the countries us There's growth opportunity is is the opening or that is for demand fairly we're

Asia-Pac. So we significant opportunity there are continuing we there, is to invest and believe in

Adam Borg

Thanks again. Great.

Reuven Kitov

Thank you.

Operator

comes question with Jonathan Thank Our William the you. [Operator line Please next of your Ho question. proceed with Blair. Instructions] from

Jonathan Ho

Hi. Good morning.

prioritization. pipeline? in we given qualitatively How customer the comments to around about or wanted spending quantitatively Just think improvement your understand

Reuven Kitov

Hi, Jonathan.

the of been results pipeline So of improving, QX. seeing has some that in and you're

healthy and a also for QX pipeline for XXXX. have We

rates. So to the continue. hoping the for that we're conversion we're pipeline about feeling good and pretty And

Jonathan Ho

you've just XXXX, completed. maybe hires? towards And key most in start of given about business, do of just then the look think recently Thank we And we it. how made difference? the new you. What's as the these Got trajectory the that hires terms to

Reuven Kitov

Sure.

this changes on been several months. so So board of essentially, new, And of area last in at the to has year. U.S. X area few hired the Brancato came they've our year, in the the VPs the Ray beginning earlier are all made VPs

We also of have new operations. a VP sales

that key some impact. were say It's hires make most those made. to ones are the which tough So

And it's they're all an all making impact. think additive. I

team. So that I'm improved the in execution seeing sales within

in that point of results. And I'm looking that for the this seeing You're continue from some forward. to

Jonathan Ho

you. Thank Great.

Reuven Kitov

Thanks, Jonathan.

Operator

Thank you.

Our next question. Please line of King proceed question the your Collier from with Securities. comes Andrew with

Andrew King

my Hey. about how post-pandemic companies changing? question. I action. taking changing nice idea, customer get those you cycle quarter. how it an Thanks versus And Really start we're Can wanted for sales how more to was are as to pre-COVID? talk just see conversations seeing you return to the just

Reuven Kitov

Sure.

we're So seeing demand coming back.

work is at a urgent was now need think on automation. took like pandemic of I interest backseat done And lot from a turning what items a lot pre-COVID but more think COVID, interest. home. I And in we're during a There's are security for it levels. to that corner lot seeing the the that. now people always we're do we policy with projects, The around, demand of of

the sort demand the and is So is visible team in our of is executing back better, which results.

Andrew King

Great. Thank you.

Reuven Kitov

Thanks.

Operator

Thank floor concludes you. back that session. turn our Kitov Ladies Mr. to final I'll the gentlemen, and for question-and-answer comments. any

Reuven Kitov

you, Thank operator.

the quarter heard today, with business transition far in our we're you progress that we pleased subscription. so XXXX made to in As the our and in very

strategic XXXX, to We against today. you our customers. next plans joining look goals progress our forward our industry-leading for for sharing Thank I early us continue year. our solutions are initiatives to more to bring of all and executing and in

Operator

you. This Thank concludes today's conference.

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

Tufin Software Technologies (TUFN) 9 Nov 212021 Q3 Earnings call transcript