TUFN - Earnings call transcript Q4 2021 | Tufin Software Technologies Ltd

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Operator

00:03 Greetings. Welcome to Tufin’s Fourth Quarter 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] Please note that this conference is being recorded. I'll Relations. conference time, Marcus to this Investor with At turn over the Jackie XX:XX may begin. you Jackie, now

Jackie Marcus

XX:XX Thank XXXX you, released XXXX, results operator, this and good the earlier quarter day, fourth of fiscal morning. ended XX, for December everyone. Tufin

the differ company's is of Harbor Before of XX:XX not may release, today's we Safe statements With projection, from or Investor of XXXX me applicable copy it our call may results to Tufin Such intent from that guarantees specifically SEC. of Actual of are obligation intent Relations future earnings Relations Ruvi our Tufin's projected press may remind webcast of on If CEO relate to available you section to I'd that, any that begin, reconciliation a website be our directly Financial and like the Litigation with to forward-looking uncertainties, Please being and did and Investor team involve Act or Executive XX:XX turn in Co-Founder the receive regarding non-GAAP Kitov. forward-looking future Chief morning's the located These number including future XX:XX you update website. be obtain and this performance to comparable Officer; forecast, of materially our any not any provisions in anticipation, forward-looking risks Jack meaning mostly express in those on at to Officer. to statements are filings statements the as expectation, based and call release everyone future statements Ruvi? forward-looking statements With investors.tufin.com. Reform This except considered on information number Co-Founder events as press other required law. made within Chief law. over belief, the call today's the of events press forward-looking XX:XX archived section and Tufin's disclaims the Kitov. management be Tufin's Ruvi are found would release note Relations the those of can webcasted performance. these earnings GAAP Securities the Tufin's I website. of Wakileh, Private today, will in tables section the and or and noted that Investor statements. or Tufin’s by the like our securities in of a a

Ruvi Kitov

and outlook on for fourth us our that XX:XX XXXX. excited Thank XX:XX with to The be the marks targets to you, reflect for review end exceeded model I'm morning I'm subscription our say X the to completion our transition year we transition joining year quarter today. everyone, and of results, and the last our thank year. Jackie. XXXX of in to excited for Good share here you you

our Additionally, top solid guidance business. line, new the the a we on both year with and momentum surpassed bottom entered and we across

most services. sales We generation subscription-based reflect awareness another As of in security significant revenues approximately were last million a healthy year. fourth XXXX, bookings momentum XX:XX in lead in with new our fourth new order of by deal for saw with new Turning driven made performance. and fourth Full quarter to more year are the navigate pleased breaches years. to revenues quarter full growth policy resources representing I'm increased security of expand improving land significant as the including XX:XX record $XXX.X I to our of our our larger and logos signing number well progress and our as the signed allocating XX% to subscriptions customers. We grew implement logos, corporations product revenues. tomorrow. year-over-year license quarter, threats Our automation with XX% XX% the report record year in continued as the strong of strengthening deals, efforts, in quarter on team, our bolstered we X growth adding existing a

hardware new addition, of services and professional In in excluding bookings were XXXX, XX% subscription. the from logos

this pleased as to representing of $XX I'm the XXXX, greater transition. in While health discuss our year-over-year. detail reached end it the in for Jack believe growth the a in we of reflection At XX% will XX:XX moment, ARR we best million the provides share ARR, of

a we basis. forward, on ARR provide quarterly will Going

bookings feel about Cloud to in Tufin cloud Moving we report licenses. representing I XX:XX from ahead to refers our of bookings to million SecureTrack our move and $X.X XXXX, As We're Tufin SecureCloud objectives XX% with we're SecureChange combined mentioned forward subscription. continued stated perpetual sales pleased the earlier, of to confident growth. Cloud licensing totaled and going cloud. the the year-over-year

business we This our first chapter Jack? completed expansion forward, been now Tufin our plan annual greater Cloud Moving seeing and for subscription-based for detail, like bookings on of to the Tufin Jack while business, growth has financials. accounts. Before turn to XX:XX logos in over an in I existing report deeper also discussion call year important our an of as we basis. both a as new to discuss a I'd

Jack Wakileh

you, Ruvi. Thank X:XX

to improvement expect license bookings continued mentioned, customers we revenue new from we XX% our contracts of and ARR subscription subscription the XXXX continue SaaS we for his and business; comprised pace revenue is consecutive Ruvi of of was maintenance fourth the I our we QX full our of this support of, one, XXXX within want support a progress primarily our the happy is progress goals. as out the and was and towards next license to value while to conversion new as the been of in remarks, in year fast and As is subscription maintenance the majority be our our and we X two, quarter our our ARR, ARR subscription year quarters. license annualized will million we to quarter. review this out been Before quarter year. and a three, In the contracts maintenance with we into and noted business. pleased quarter perpetual still we are fourth for performance licensing and base to our next XX%. XX:XX subscription metric recurring reached get and have Historically, our with perpetual measure are year-over-year the to full perpetual better the model. ARR from contracts subscription we represents of for for our target I trend and of results, tracking comprised believe and company. license XXXX, perpetual bookings, In another made The together; is $XX growing support how of initiatives in of transition which expected surpass end the X

forward was and to is quarter we the up QX a XXXX. $XX.X $XX.X million ARR going Let which total mentioned, services was on Ruvi revenue of to basis. year-over-year. will sharing product million, million, XX:XX fourth quarterly me revenue professional XX% now be XX% As results. while $XX.X In our maintenance QX X% turn above year-over-year increased revenue to

discuss in million came results XX% XX% was revenue; geographic based the fourth QX million last revenue to on $XX.X compared profit XX% and represented quarter Moving mix of of of our non-GAAP financial of Europe at Looking or Gross for of or The I $XX.X to year. measures. revenue Americas Asia-Pacific. margins XX% our from X:XX will X% expenses. QX. and represented the

of to for compared for expense XX% totaled was XX% $XX.X of or compared $X.X to expenses year. of QX the expense per was operating QX quarter and for basic $X.X or million diluted fourth compared XX% million $XX.X of operating QX of $X.X last of to remain $XX.X revenue million or in million labor QX to QX for XX:XX last was in costs was compared revenue XX:XX $XX million revenue $X.X of $X.X Our quarter in was QX revenue, and year. QX competitive. last G&A year. in The for XX% Operating XX% QX in of a expense rising Sales expense in loss attributable and last of of QX to in increased the compared million, of costs this was million last the for QX $X.XX increase this to million of $X.X our last quarter of in R&D for share revenue, XX% or year. revenue XXXX. marketing $X.X up compared $X million quarter to $X.XX primarily or R&D profit and to year. to year is of million loss compared million net Net loss million net XX% and

Full year maintenance flow $XX.X for to to $XXX.X year was services operating the revenue for million quarter. $XX.X XX% results. was million. increased During XX:XX $X.X used professional was while the revenue ago full-year cash XX% in versus million, and up X% year-over-year. million up $X.X revenue million, XXXX quarter, Moving full to year Total year-over-year product activities

geographic Looking XXXX or and XXXX. mix Gross in revenue $XX.X expenses. of million represented came revenue; for the or Europe X% of XX:XX XX% year our at the XXXX. margins XX% was Moving to and Americas full Asia-Pacific. The to represented XX% from $XX.X profit full for compared non-GAAP on the year XX% of million revenue

revenue operating to net was $XX.X loss million revenue year and for of XX% basic R&D last XXXX. $XXX.X million ago. full compared to totaled $XX.X million compared year was for loss or last $X.XX $X.XX $XX.X share XXXX expenses a or loss up the million for compared XX% the million Our million year full full the year of year million, to million $XX.X expense the $XXX.X was XX:XX of million XXXX. million marketing in in year G&A XX% year year. and XX% $XX.X expense XX% Net for XXXX. net an or compared of XX% for of Sales loss full the $XX.X compared was XX% for was or in Operating a million $XX expense to was of diluted revenue of million revenue revenue per or $XX.X to compared to year for and $XX.X to of the last year. compared loss and revenue operating $XX.X

versus year operating XX:XX For $XX.X flow cash last to Turning for was million balance the for full the million year. used $XX.X sheet. activities

XXXX. As XX, the cash for discussion of had of the loss cash, XXXX, I million, finish equivalents, a between year million up million down from of full XXXX, securities $XX.X be million. beginning to quarter guidance $XX $XX.X million and the expect of we total first and non-GAAP quarter be and fiscal cash December $XX.X $XX of restricted we to will with and For XX:XX year. and marketable total $X.X first revenue between the operating

the and full and $XX.X ahead and million our we million. that the of million operating XXXX year with total fiscal opportunities $XXX non-GAAP I between revenue XX:XX progress between past $XXX expect million pleased $XX.X be and loss over the we Tufin. For year lie for expect to am

are to call expansion working Ruvi? costs prudently also XX:XX to our in while back With that, investing I Ruvi. turn manage over We the business. our of the will

Ruvi Kitov

XX:XX Jack. Thank you,

XX,XXX with was in with visibility, to to in down look deal. today processes, of and was X,XXX quarter and compliance datacenters deal compliance both complex on needs rules bought security their they reducing they for compliance due security world infrastructure dollar the threat a levels multiple spread for included to The efficiency. that to needed and business deal several audit The or Automation, and Checkpoint the challenge automation As security I face shortage over needed audits. a with can turnover which hundreds access. puts changes app. to about been year attack it time their with a their entire At their deal was I’ll They surface the non-compliance have shut XXXX. change protection adding multiple have some align visibility federal revenue in one design firewalls same X They challenges. looking networks. change highlight and for which at magnified balancers While specialists the efforts and breach, firewalls, fourth changes but rules they the SecureChange agility, all access the due signed security course that the and about growing the enforce mentioned of an with the on-premises days. I'd companies lost corporate landscape if cloud with helps cloud professionals the they this the largest thousands AWS X qualified them the which rates ever-changing from all existing security organizations processes usual company result, XXX SecureChange near from that were and security to maintain security of Colonial changes had week They for homegrown and workforce Tufin growing of requests of since mostly XXX of the maintain X expansion it the their different network over difficulty They logos adjusted policies teams on implement, in with pipeline that penalties complexity of SecureTrack were contain for visibility at regulations, for They manage This deployment as sizes policy are of as the IT a security The XXX saw to Alto around to across fourth around and strong made. managing in days to over unforeseen expansion compliance the that the slowing years, of different to million past using of down build down as large is of as models. to fact with risk some hybrid government policy a to Europe. in worldwide. solve their reduce SecureTrack their This a virtual the making access employees cloud Tufin they such of policy presence with as every scarcity over possible. the also hire heightened and like very the define process return hiring before builder security significant of continuing the application over organization federal by and ever routers XX:XX to as security with customer X-figure very expanded They compliance With move market. expand non-compliance through security and landfill to Colonial was over them is monitor pandemic, deals Tufin's purchase the several load Companies business Their create to significant the the automates in Marketplace, and speed were with to Another and SecureTrack, is a network staff, due the the of against labor changes public difficult released sense the recognize app cloud XX,XXX insufficient dollars They X Integrating environment a to could the annual network a The much of to potential mark security change and an the first unified and we've caused conjunction challenge the to pressed as staffing network shopping the enterprise. changes XX:XX XX:XX afford their IT only automation app an and it based is a days We're leading were online offering other future incident. business with X compliance another was takes announcing airline multiple or and like maintain of SecureTrack time, progress are tool security their security we of policy teams app professionals changes teams, with subscription They incidents. option posture cloud transition hack and and online COVID-XX no shortages record process our on-premise for for XX:XX posture. a closer security design the this well-documented months quarter. interesting as automate automate multi-million shutdown industry Security policy over hard are of billion organizations wanted automates data to more even to security over now today. and over not did PCI the of breaches years. security their much is in taking likelihood well policy, a using center not team the was with the accounts. of they've The Palo and improve deal broader and bought posture. policies in critical subscription and had since reduce for and number XX:XX firewalls they SecureTrack cloud critical the firewall the months. working and than of large increases our to firewalls, scaled they for seen in consumer to business. that very and urgency travel new personnel. changes of for This XX:XX a automate recent a awareness as environment and agencies automate environment, made a of the infrastructure In avoid operation. They There are cloud state. consumers. the quarter. several quarter, fines team within handle firewalls struggled They builder away of XXX were European enables in this the on of XXXX, labor of In of about the making subscription. discussed we X/X security for reached we to the switches, the the XX:XX for these security with aggressively that every SecureChange into IT proud XX:XX year to that challenges needed the these security customers need based

and is everyone our to operator Our well continue policy I goals open their Tufin for line for driven executing like Operator? we to in automation over hard for all to now the our I to team year. achieving call questions. sales at thank see the the for turn solutions. I demand wish XX:XX would work the

Operator

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

Unidentified Participant

this provide wondering some I on XXXX on is the color could more (ph) portion subscription? was if Hi, in for [Drew] you guidance Sterling. XX:XX what of

Jack Wakileh

XX:XX Hi, this is Jack.

So going for we total XXXX is that subscription new follow we the are of metric as business said subscription bookings. license measured out

total XX% license of Sorry said to XXXX. achieve and XX% looking year we was that metric XXXX and that new two said for that this we – bookings are metric -- last out for for we for

Unidentified Participant

XX:XX Okay. Got Thank it. you.

Operator

XX:XX Thank you.

[Operator sorry. is line question next question. from next question of I’m proceed of Our with Barclays. Kalia Saket from The comes Instructions] the Please the -- your line with

Saket Kalia

XX:XX here. seeing you're just just the guys, duration Hey, XXXX? average Maybe in of question great. Can deals? that you, for my you kind one is on thanks duration to sort on speak that of what taking Jack. Hey assumption for And

Jack Wakileh

XX:XX Yeah, sure.

you to deals, subscription think referred I right?

Saket Kalia

absolutely. Yes, XX:XX

deals. subscription Sorry,

Jack Wakileh

XX:XX Yeah.

of the than more we deal. the this the than when So X a years, we say past less X-year deal, in years. vast that, sometimes said are typically case deals it's is we within And X see but multi-year deals, and multi-year majority that

to years. months, So X a of like XX group X have we

be would average X the between those that buckets. So

Saket Kalia

firewall you XX:XX very sorry, healthy Ruvi, follow-up obviously, backdrop. a -- for here. maybe Got it. And one actually spending Ruvi

of been security been And seen that upticks spending? network Does the lag you've all the past? in in Just kind Roughly. and you've what years sort if industry, of management lag wondering I'm refresh what's firewall the of historically? like policy typically so, or sort given for demand that

Ruvi Kitov

XX:XX Hi, Saket.

and what worth think base you also into if said we We're switches, will, years’ that's Firewalls network that, is cloud directly So installed X of of Right? I in the elements. correlated. it's security gear, true [indiscernible] still the not just past over not selling

It's quarters network X not just and growth Alto [indiscernible] Palo can security and suddenly I spending in great it's security healthy overall a track quarter you think So some that -- spending. for have Tufin.

demand it's mentioned that quarter firewall it's that And having vendors levels So as we and back correlated to for not is pre-COVID back on last us, a surpassing it's the strong to call in directly that. that quarterly well.

Saket Kalia

guys. XX:XX Got it. Very helpful. Thanks

Ruvi Kitov

Thanks. XX:XX

Operator

of Instructions] line question you. Thank XX:XX the King proceed Collier. your with Our with next question. from comes Please [Operator Andrew

Andrew King

off, expect guys. revenue Hey question. out of product for the has into XX:XX I that just Thanks first been like where you FY’XX. was Congratulations This total it is and revenues. first QX XX% in on break good dive you the since looks to quarter. over why time the XXXX product that taking my just wanted just Can revenue. -- that

Jack Wakileh

for XX% this XX:XX Andrew, product Yeah, Yeah. sure. is Jack. reported We QX.

full XX% year be. still growth. to product it's the driving we For we're But the that's definitely, want where at not

it if product can looking we So revenue. guide for we growth. continuing accelerated our that reflect and at growth And of you're this revenue. the you is bookings bookings see So XXXX think the than for fact did bookings growth Right? forward, higher example, is for driving growing even going as the

we move the before split forward, back IPO. we as As we go to were to XX% expect

Andrew King

on XX:XX Got business then it. itself. And hardware the just

security chain detail haven’t, out seen issues. any not? other some You of in if dealing you are people or supply of seeing just a Can space why that you've the with lot you those

Ruvi Kitov

XX:XX Sure.

a ahead Nothing notable customers that. of so results about take that supply appliances. been chain the ordering really far, chain. buy chain supply I'll our have challenges terms in third to impacted choose deploy around of and financial appliances, managing call Tufin to we've of So it. and do supply out We But

Andrew King

for Thank contribution XX:XX I'm Could guys [indiscernible] just us? you. And Got have it. then miss this. you might international

Ruvi Kitov

about Jack, was geography contribution think, question wise. the I international XX:XX

Jack Wakileh

we're XX% over ASPs. may But year it's reported years. been year. US, the on We a the working changing because that stable. about for has about the the said we to We full We for balanced from prepared been year, XX% with quarters, it’s high stable split, that's see Yeah. fluctuations had script. it's this Between XX:XX geographical Europe for the and

Andrew King

a Thanks. Congrats it. guys. quarter Got XX:XX on great

Ruvi Kitov

Thank XX:XX you.

Operator

XX:XX Hugh questions. from line proceed Cowen. Our next is question Please of with Cunningham the with your

Hugh Cunningham

quarter. congratulations Two Hey, questions. the strong XX:XX guys, on

expect terms of expect Let to did in secondly, me -- the terms, impacting labor of with what squeeze happen in the First, that you? COVID-XX, is deal? And customers, for a general do down of just in tightness for you? wind you your that terms mentioned you of the also then do sort Who in see insurance you you on you competing who deal. third that Thanks. -- against

Ruvi Kitov

XX:XX Okay.

So hopefully questions. I'll X remember those

The first one labor. think on I was

So obviously, it's operating is a great we're that work. Tufin to in. very competitive environment a place

We while you and in can attract reflected continue talent. and to remind me competitive guidance the the stay or compensation We retain did find could ways and second market What’s that's the we with year. -- the the for best the question? just expenses adjust

Hugh Cunningham

you're of there about, did competition on seeing? who what but large against you're sort often? mention you you see more deals XX:XX mentioned, Is the actually going It you X other was you anyone that up the seeing deal, even insurance can

Ruvi Kitov

Right. XX:XX

probably Tufin a So, competitor, direct in and close are just competitor. and terms and value [indiscernible] and lot much. normally a but are enough the would we for I baking they of competitors is deals off a as sometimes would be would we secondary the X competitive see direct often are on is whether most expansion, not two the say, landscape, Tufin they Skybox there reviewing Skybox making of there. [indiscernible] obviously to decision well. against it A see large changed that competitors competitive the lesser that be But extent Of hasn't

Hugh Cunningham

the your out? XX sort my them last to XX:XX a ease that, the and the and was why you there on Did is COVID impact on A is quick superiority follow-on And products? reason by of question down of you? it wind way,

Ruvi Kitov

XX:XX All right.

topology We're piece there. let's accurate in mean take strong we've automation, got got So leader I advantages. Sure. of any competitive we the out the clear the vendor first. competitive most

We that have need you at high solution automate the capability accurately. best really a end, the

is that's than been unless to more accurate we've automation able the software the trust can’t and You achieve. human automation what

competitors. all it's we XX:XX major So a that pandemic. have of terms against COVID-XX differentiator our of In

still is get sense people We're there but to hoping in more say, of office going move forward. week back depends really shifted a it to the back it everybody to X-day customers. model, that per selling is basis more pandemic think terms I meetings in to or geography. on is depends the customers offices, in virtual in And the not virtually, lot impact we've to with have hope there yet face We how physical the office, the let's events. more on with a hybrid face is to and

in in to more just the of upside So we I sell this up, we're customers environment, environment. open now able office. to -- more get new we see how things where know the for employees think If face will be this to work new operate, within us that be with face we'll and

Hugh Cunningham

guys XX:XX Awesome. congratulations again. and Thanks

Ruvi Kitov

you. Thank XX:XX

Operator

XX:XX with Thank Adam Borg Instructions] the [Operator questions. line Stifel. comes from your question of Please next you. with The proceed

Unidentified Participant

should first, quarterly growth in question. see taking is be it's growth Hi. thinking you the in thank the [indiscernible] Adam XX:XX on we how ARR And about ARR disclosures, I for just XXXX. This Borg. for the nice guess to

Jack Wakileh

Adam. XX:XX Hi,

reported last we year. of of ARR $XX of the the as close So million

time, early, we're to So guiding reported too it's on It's are fast for call be And early mentioned ARR us for the decrease. -- major obviously component while can over it it's to ARR the you maybe to support support, some going comprising forward. it, expect basis. as on not ARR. guide think Right? maintenance that we think going we growing a this well. at growing But quarterly too to you color, should share point way ARR, subscription as slower. the Ruvi the But component to actually

within still So the these not trends guidance are ARR, but there. to going actual be were

Unidentified Participant

for And curious support I'm XX:XX follow-up. one Cloud about then Great, and maybe very helpful. Zscaler early interest just just Firewall.

the you when of if remind automation timeline you expect support Zscaler Thank us for could well. to So as you.

Ruvi Kitov

XX:XX Sure.

what So more a for I we a added visibility down Cloud for not customers. Zscaler We It's support the integration in add to we for the with last date to for And the fact think announced release [indiscernible] lot that. popular Firewall. referring we're quarter, automation support Zscaler now, becoming you're have is road. announced going that with still

announce when we date the will. ready to So we're release

Just in is Palo general, we're yet clear the with firewall emerging there There XX:XX exception Zscaler. and no directly now looking winner WAN quite of and several and fragmented. at market other competes Checkpoint. is a Sassy that Zscaler with players the vendors, Fortinet Alto, are has SD

we're going terms we're of as we're vendors So the Sassy considering next to well add in to and announce that. And ready are WAN. when what SD

Unidentified Participant

XX:XX very much. Great, thank you

Ruvi Kitov

Thanks. XX:XX

Operator

At XX:XX Thank we've I'll the remarks. the this Ruvi time, end for closing over session. question-and-answer reached the Kitov to you. back call hand of

Ruvi Kitov

Thank on us my and above rise for right. next our services and I remarks, today. really execute updating challenges we today. stand the joining on much want up continue thank against we're achieving today All look very and I very you progress in XX:XX all everybody our targets, product on believe Like competition. our to forward you tomorrow's to call. to our joining Thank I earnings I objectives. strategic mentioned much. you our for

Operator

XX:XX does conclude This Thank you. today's conference.

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

Tufin Software Technologies (TUFN) 10 Feb 222021 Q4 Earnings call transcript