Yahoo Finance Tenable Holdings Inc (TENB) Q1 2024 Earnings Call Transcript Highlights: Robust Growth and ...
Revenue: $216 million, 14% year-over-year growth.
Operating Income: $37 million, significantly above expectations.
Net Income: Non-GAAP net income projected between $28 million to $30 million for Q2.
Earnings Per Share (EPS): $0.25 for the quarter, $0.08 above guided midpoint.
Free Cash Flow: Unlevered free cash flow of $54.7 million during the quarter.
Gross Margin: 81%, consistent with previous quarter and above expectations.
Calculated Current Billings (CCB): Grew 12% year-over-year to $197.8 million.
New Enterprise Sales: Tenable One accounted for 26% of total new enterprise sales.
Deferred Revenue: Total deferred revenue at $722.7 million, with current deferred revenue at $562.6 million.
Release Date: May 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Tenable Holdings Inc (NASDAQ:TENB) reported better-than-expected financial results for Q1 2024, including revenue, operating income, and cash flow.
Tenable One, the company's exposure management platform, grew to represent 26% of total new enterprise sales, highlighting strong market demand.
The company added 410 new enterprise platform customers, demonstrating robust sales to new customers and nearly 30% year-over-year ACV growth from newly acquired customers.
Tenable Holdings Inc (NASDAQ:TENB) has integrated generative AI capabilities into Tenable One, enhancing interactive attack path visualizations and providing specific mitigation advice.
The company's focus on exposure management solutions now represents approximately 50% of total new enterprise sales, indicating a strong market position and customer adoption.
Negative Points
Net new 6-figure customers decreased by 4% in the quarter, attributed to a higher-than-usual number of customers dropping below the $100,000 threshold.
The net dollar expansion rate decreased to 109% this quarter from 111% last quarter, indicating a slight reduction in customer expansion rates.
There are ongoing challenges in the financial services and tech and telecom verticals, impacted by the regional banking crisis last year.
Tenable Holdings Inc (NASDAQ:TENB) is still in negotiations to sublease a portion of its real estate, expected to result in a noncash impairment charge of $6 million to $7 million in Q2.
The company incurred $1.4 million of restructuring costs in Q1 related to onetime severance benefits, although this was lower than the anticipated $2 million to $3 million.
Q & A Highlights
Q: Could you talk about the spending environment in macro? What are you seeing so far this year compared to last year? A: Stephen A. Vintz, CFO of Tenable Holdings, Inc., noted that the overall security spend remains healthy and a top priority. He highlighted the growing adoption of the exposure management category pioneered by Tenable. The company is seeing strength in Tenable One and its core VM business, with robust demand, particularly in cloud security. The spending environment is described as good across the board with a strong start to the year.
Q: What exposure management modules outside of core VM are customers most gravitating towards in Tenable One? A: Stephen A. Vintz, CFO, shared that customers are showing strong interest in cloud security and OT security modules within Tenable One. He cited a significant win with a European manufacturer where Tenable One was used to consolidate many categories of security, enhancing the customer's ability to understand and manage risk across their attack surface.
Q: Can you provide insights on the competitive dynamics around Ermetic, especially given the crowded space? A: An unidentified company representative explained that Tenable's cloud security solution, enhanced by Ermetic's capabilities, offers expansive CNAPP capabilities and industry-leading Cloud Infrastructure and Entitlement Management (CIEM). This differentiation, along with the integration into Tenable One, provides a competitive edge in the market.
Q: How is the new logo acquisition performing, especially given the better ACV growth this quarter? A: An unidentified company representative highlighted that the market is dictating a need for comprehensive solutions beyond single-solution vendors. Tenable's broad product portfolio is resonating well with CISOs tasked with managing an expanding attack surface, driving strong new logo acquisition.
Q: What are the drivers for the expected acceleration in CCB growth in the second half of the year? A: Stephen A. Vintz, CFO, mentioned that the expected acceleration is due to the completion of product integrations, building pipeline opportunities, particularly in cloud security, and strong engagement in the U.S. Federal sector. These factors are anticipated to contribute to higher growth rates in the latter half of the year.
Q: Could you discuss the impact of the Ivanti vulnerability on Federal demand and your pipeline going forward? A: Stephen A. Vintz, CFO, stated that while such incidents can provide some upside, the main drivers for Federal demand in Q1 were defense and critical infrastructure sectors. He emphasized the strong pipeline and engagement with customers at the federal level, projecting another strong year ahead.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
