• Added 335 new enterprise platform customers and 56 net new six-figure customers
  • Revenue of $112.3 million, up 22% year-over-year
  • GAAP loss from operations of $3.5 million; Non-GAAP income from operations of $12.4 million
  • Net cash provided by operating activities of $24.8 million; Free cash flow of $16.7 million

COLUMBIA, Md., Oct. 27, 2020 (GLOBE NEWSWIRE) -- Tenable (Nasdaq: TENB), the Cyber Exposure company, today announced financial results for the quarter ended September 30, 2020.

“We are pleased with our results for the quarter which includes attractive topline growth and expanding operating and free cash flow margins,” said Amit Yoran, Chairman and CEO of Tenable. “Remote work models have accelerated digital transformation and cloud adoption and organizations are increasingly relying on Tenable to secure these dynamic, modern environments. Tenable is helping customers invest in the cloud confidently and securely, empowering them to take a unified, risk-based approach to vulnerability management.”

Third Quarter 2020 Financial Highlights

  • Revenue was $112.3 million, representing a 22% increase year-over-year.
  • Calculated current billings was $133.7 million, representing a 21% increase year-over-year.
  • GAAP loss from operations was $3.5 million, compared to a loss of $18.3 million in the third quarter of 2019.
  • Non-GAAP income from operations was $12.4 million, compared to a loss of $7.7 million in the third quarter of 2019.
  • GAAP net loss was $5.9 million, compared to a loss of $17.6 million in the third quarter of 2019.
  • GAAP net loss per share was $0.06, compared to a loss per share of $0.18 in the third quarter of 2019.
  • Non-GAAP net income was $10.5 million, compared to a loss of $6.7 million in the third quarter of 2019.
  • Non-GAAP diluted earnings per share was $0.09, compared to a loss per share of $0.07 in the third quarter of 2019.
  • Cash and cash equivalents and short-term investments were $269.1 million at September 30, 2020, compared to $212.3 million at December 31, 2019.
  • Net cash provided by operating activities was $24.8 million, compared to $4.7 million of net cash used in operating activities in the third quarter of 2019.
  • Free cash flow was $16.7 million, compared to $(9.6) million in the third quarter of 2019.

Recent Business Highlights

  • Added 335 new enterprise platform customers and 56 net new six-figure customers.
  • Unveiled Frictionless Assessment, a new cloud security capability for Tenable.io® that empowers customers to instantly and continuously evaluate their cloud assets and allows them to quickly detect new vulnerabilities without the need to schedule a scan or deploy an agent.
  • Announced enhancements to Tenable Lumin™, including new capabilities to assess organizations’ remediation maturity, an inventory of endpoint security controls and predictive scoring for more comprehensive insight into an organization’s cyber exposure.
  • Achieved “In Process” designation from the Federal Risk and Authorization Management Program (FedRAMP) for Tenable.io, our cloud-based vulnerability management platform.
  • Announced a new partnership with the Center for Internet Security, Inc. (CIS®) that will bolster cyber hygiene for both public and private sector organizations, making foundational cybersecurity more affordable, accessible and actionable.

Financial Outlook

For the fourth quarter of 2020, we currently expect:

  • Revenue in the range of $113.0 million to $115.0 million.
  • Non-GAAP income from operations in the range of $8.0 million to $9.0 million.
  • Non-GAAP net income in the range of $6.0 million to $7.0 million.
  • Non-GAAP diluted earnings per share in the range of $0.05 to $0.06.
  • 113.0 million diluted weighted average shares outstanding.

For the year ending December 31, 2020, we currently expect:

  • Revenue in the range of $435.1 million to $437.1 million.
  • Non-GAAP income from operations in the range of $18.4 million to $19.4 million.
  • Non-GAAP net income in the range of $12.4 million to $13.4 million.
  • Non-GAAP diluted earnings per share in the range of $0.11 to $0.12.
  • 110.6 million diluted weighted average shares outstanding.

Conference Call Information

Tenable will host a conference call at 4:30 p.m. Eastern Time to discuss its financial results. The conference call can be accessed at 877-407-9716 (U.S.) and 201-493-6779 (international). A live webcast of the event will be available on the Tenable Investor Relations website at https://investors.tenable.com. A replay of the webcast will be available until November 10, 2020.

About Tenable

Tenable® is the Cyber Exposure company. Over 30,000 organizations around the globe rely on Tenable to understand and reduce cyber risk. As the creator of Nessus®, Tenable extended its expertise in vulnerabilities to deliver the world’s first platform to see and secure any digital asset on any computing platform. Tenable customers include more than 50 percent of the Fortune 500, more than 30 percent of the Global 2000, and large government agencies. Learn more at tenable.com.

Contact Information

Investor Relations
Andrea DiMarco
investors@tenable.com

Media Relations
Cayla Baker
tenablepr@tenable.com

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release other than statements of historical fact, including statements regarding our future results of operations and financial position, business strategy and plans and objectives for future operations, are forward-looking statements and represent our views as of the date of this press release. The words “anticipate,” believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of assumptions and risks and uncertainties, many of which involve factors or circumstances that are beyond our control that could affect our financial results. These risks and uncertainties are detailed in the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2019, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 and other filings that we make from time to time with the SEC, which are available on the SEC's website at sec.gov. Such risks and uncertainties may be amplified by the COVID-19 pandemic and its potential impact on our business and the global economy. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated or implied in any forward-looking statements. Except as required by law, we are under no obligation to update these forward-looking statements subsequent to the date of this press release, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.

Non-GAAP Financial Measures and Other Key Metrics

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important metrics used by management for financial and operational decision-making. We present these non-GAAP financial measures to assist investors in seeing our financial performance using a management view and because we believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.

Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the financial tables accompanying this press release.

Calculated Current Billings: We define calculated current billings, a non-GAAP financial measure, as total revenue recognized in a period plus the change in current deferred revenue in the corresponding period. We believe that calculated current billings is a key metric to measure our periodic performance. Given that most of our customers pay in advance (including multi-year contracts), but we generally recognize the related revenue ratably over time, we use calculated current billings to measure and monitor our ability to provide our business with the working capital generated by upfront payments from our customers. We believe that calculated current billings, which excludes deferred revenue for periods beyond twelve months in a customer’s contractual term, more closely correlates with annual contract value and that the variability in total billings, depending on the timing of large multi-year contracts and the preference for annual billing versus multi-year upfront billing, may distort growth in one period over another.

Free Cash Flow: We define free cash flow, a non-GAAP financial measure, as net cash provided by (used in) operating activities less purchases of property and equipment. We believe free cash flow is an important liquidity measure of the cash (if any) that is available, after purchases of property and equipment, for investment in our business and to make acquisitions. We believe that free cash flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash.

Non-GAAP Income (Loss) from Operations and Non-GAAP Operating Margin: We define these non-GAAP financial measures as their respective GAAP measures, excluding the effect of stock-based compensation, acquisition-related expenses and amortization of acquired intangible assets. Acquisition-related expenses include transaction expenses and costs related to the transfer of acquired intellectual property.

Non-GAAP Net Income (Loss) and Non-GAAP Earnings (Loss) Per Share: We define non-GAAP net income (loss) as GAAP net loss, excluding the effect of stock-based compensation, acquisition-related expenses and amortization of acquired intangible assets, including the applicable tax impact. We use non-GAAP net income (loss) to calculate non-GAAP earnings (loss) per share.

Non-GAAP Gross Profit and Non-GAAP Gross Margin: We define non-GAAP gross profit as GAAP gross profit, excluding the effect of stock-based compensation and amortization of acquired intangible assets. Non-GAAP gross margin is defined as non-GAAP gross profit as a percentage of revenue.

Non-GAAP Sales and Marketing Expense, Non-GAAP Research and Development Expense and Non-GAAP General and Administrative Expense: We define these non-GAAP measures as their respective GAAP measures, excluding stock-based compensation and acquisition-related expenses.


 TENABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

 Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share data)2020 2019 2020 2019
Revenue$112,282  $91,852  $322,139  $257,537 
Cost of revenue(1)19,394  15,245  57,237  42,389 
Gross profit92,888  76,607  264,902  215,148 
Operating expenses:       
Sales and marketing(1)53,045  56,699  168,343  165,403 
Research and development(1)25,128  20,763  77,269  64,396 
General and administrative(1)18,180  17,472  54,992  48,595 
Total operating expenses96,353  94,934  300,604  278,394 
Loss from operations(3,465) (18,327) (35,702) (63,246)
Interest (expense) income, net(12) 1,527  1,177  4,677 
Other expense, net(561) (240) (1,819) (576)
Loss before income taxes(4,038) (17,040) (36,344) (59,145)
Provision for income taxes1,820  600  4,451  1,563 
Net loss$(5,858) $(17,640) $(40,795) $(60,708)
        
Net loss per share, basic and diluted$(0.06) $(0.18) $(0.41) $(0.64)
Weighted-average shares used to compute net loss per share, basic and diluted101,736  96,709  100,272  95,433 

_______________
(1) Includes stock-based compensation as follows:

 Three Months Ended September 30, Nine Months Ended September 30,
 2020 2019 2020 2019
Cost of revenue$826  $694  $2,403  $2,088 
Sales and marketing4,806  3,521  14,677  11,102 
Research and development3,953  2,124  10,794  6,595 
General and administrative5,715  4,160  16,127  11,406 
Total stock-based compensation$15,300  $10,499  $44,001  $31,191 



TENABLE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS

 September 30, 2020 December 31, 2019
(in thousands, except per share data)(unaudited)  
Assets    
Current assets:   
Cash and cash equivalents$141,387  $74,363 
Short-term investments127,720  137,904 
Accounts receivable (net of allowance for doubtful accounts of $314 and $764 at September 30, 2020 and December 31, 2019, respectively)87,502  94,827 
Deferred commissions30,131  28,499 
Prepaid expenses and other current assets34,236  27,369 
Total current assets420,976  362,962 
Property and equipment, net39,960  26,847 
Deferred commissions (net of current portion)41,753  43,766 
Operating lease right-of-use assets41,430  42,847 
Acquired intangible assets, net13,771  15,508 
Goodwill54,138  54,138 
Other assets11,807  12,544 
Total assets$623,835  $558,612 
    
Liabilities and Stockholders’ Equity   
Current liabilities:   
Accounts payable and accrued expenses$6,248  $10,168 
Accrued compensation28,244  36,634 
Deferred revenue296,360  274,348 
Operating lease liabilities6,312  5,209 
Other current liabilities1,126  1,284 
Total current liabilities338,290  327,643 
Deferred revenue (net of current portion)93,842  88,779 
Operating lease liabilities (net of current portion)55,645  40,663 
Other liabilities4,931  2,622 
Total liabilities492,708  459,707 
    
Stockholders’ equity:   
Common stock (par value: $0.01; 500,000 shares authorized; 102,755 and 98,587 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively)1,028  986 
Additional paid-in capital735,961  662,990 
Accumulated other comprehensive income54  50 
Accumulated deficit(605,916) (565,121)
Total stockholders’ equity131,127  98,905 
Total liabilities and stockholders’ equity$623,835  $558,612 



TENABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

 Nine Months Ended September 30,
(in thousands)2020 2019
Cash flows from operating activities:   
Net loss$(40,795) $(60,708)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:  
Depreciation and amortization7,980  4,604 
Stock-based compensation44,001  31,191 
Other1,009  (787)
Changes in operating assets and liabilities:   
Accounts receivable7,774  (13,309)
Prepaid expenses and other current assets(6,690) 820 
Deferred commissions381  (5,089)
Other assets17,691  (2,386)
Accounts payable and accrued expenses(3,873) 3,892 
Accrued compensation(8,390) (5,350)
Deferred revenue27,075  39,472 
Other current and noncurrent liabilities135  (22)
Net cash provided by (used in) operating activities46,298  (7,672)
    
Cash flows from investing activities:   
Purchases of property and equipment(19,073) (10,262)
Purchases of short-term investments(157,557) (179,703)
Sales and maturities of short-term investments168,175  174,485 
Net cash used in investing activities(8,455) (15,480)
    
Cash flows from financing activities:   
Proceeds from loan agreement2,000   
Principal payments under finance lease obligations(11) (12)
Credit facility issuance costs(333)  
Proceeds from stock issued in connection with the employee stock purchase plan13,040  15,129 
Proceeds from the exercise of stock options15,782  15,448 
Net cash provided by financing activities30,478  30,565 
Effect of exchange rate changes on cash and cash equivalents and restricted cash(1,359) (1,226)
Net increase in cash and cash equivalents and restricted cash66,962  6,187 
Cash and cash equivalents and restricted cash at beginning of period74,665  165,378 
Cash and cash equivalents and restricted cash at end of period$141,627  $171,565 



TENABLE HOLDINGS, INC.
REVENUE COMPONENTS AND RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(unaudited)

RevenueThree Months Ended September 30, Nine Months Ended September 30,
(in thousands)2020 2019 2020 2019
Subscription revenue$96,792  $75,503  $275,192  $209,610 
Perpetual license and maintenance revenue12,448  13,797  38,046  40,877 
Professional services and other revenue3,042  2,552  8,901  7,050 
Revenue(1)$112,282  $91,852  $322,139  $257,537 

_______________
(1) Recurring revenue, which includes revenue from subscription arrangements for software and cloud-based solutions and maintenance associated with perpetual licenses, represented 94% and 92% in the three months ended September 30, 2020 and 2019, respectively, and represented 93% and 91% of revenue in the nine months ended September 30, 2020 and 2019, respectively.

Calculated Current BillingsThree Months Ended September 30, Nine Months Ended September 30,
(in thousands)2020 2019 2020 2019
Revenue$112,282  $91,852  $322,139  $257,537 
Add: Deferred revenue (current), end of period296,360  245,985  296,360  245,985 
Less: Deferred revenue (current), beginning of period(274,953) (227,227) (274,348) (213,644)
Calculated current billings$133,689  $110,610  $344,151  $289,878 


Free Cash FlowThree Months Ended September 30, Nine Months Ended September 30,
(in thousands)2020 2019 2020 2019
Net cash provided by (used in) operating activities$24,807  $(4,675) $46,298  $(7,672)
Purchases of property and equipment(8,069) (4,927) (19,073) (10,262)
Free cash flow(1)$16,738  $(9,602) $27,225  $(17,934)

________________
(1) Free cash flow included reductions related to employee stock purchase plan activity of $2.3 million and $3.7 million in the three months ended September 30, 2020 and 2019, respectively, and $2.7 million, and $4.7 million in the nine months ended September 30, 2020 and 2019, respectively. The three and nine months ended September 30, 2020 included $5.6 million and $14.2 million, respectively, in proceeds from lease incentives as well as $6.8 million and $16.6 million, respectively, in capital expenditures for our new headquarters. The three and nine months ended September 30, 2019 included $2.4 million in capital expenditures for our new headquarters. The nine months ended September 30, 2020 also included $0.7 million of acquisition-related payments for Indegy.

Non-GAAP Income (Loss) from Operations and Non-GAAP Operating MarginThree Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands)2020 2019 2020 2019
Loss from operations$(3,465)  $(18,327)  $(35,702)  $(63,246) 
Stock-based compensation15,300   10,499   44,001   31,191  
Acquisition-related expenses      339     
Amortization of acquired intangible assets579   125   1,736   427  
Non-GAAP income (loss) from operations$12,414   $(7,703)  $10,374   $(31,628) 
Operating margin(3)% (20)% (11)% (25)%
Non-GAAP operating margin11 % (8)% 3 % (12)%


Non-GAAP Net Income (Loss) and Non-GAAP Earnings (Loss) Per ShareThree Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share data)2020 2019 2020 2019
Net loss$(5,858) $(17,640) $(40,795) $(60,708)
Stock-based compensation15,300  10,499  44,001  31,191 
Tax impact of stock-based compensation(1)497  273  1,132  (255)
Acquisition-related expenses    339   
Amortization of acquired intangible assets(2)579  125  1,736  427 
Non-GAAP net income (loss)$10,518  $(6,743) $6,413  $(29,345)
        
Net loss per share, diluted$(0.06) $(0.18) $(0.41) $(0.64)
Stock-based compensation0.15  0.11  0.44  0.33 
Tax impact of stock-based compensation(1)    0.01   
Acquisition-related expenses       
Amortization of acquired intangible assets(2)0.01    0.02   
Adjustment to diluted earnings per share(3)(0.01)      
Non-GAAP earnings (loss) per share, diluted$0.09  $(0.07) $0.06  $(0.31)
        
Weighted-average shares used to compute GAAP net loss per share, diluted101,736  96,709  100,272  95,433 
        
Weighted-average shares used to compute non-GAAP earnings (loss) per share, diluted(4)111,224  96,709  109,046  95,433 

________________
(1) The tax impact of stock-based compensation is based on the tax treatment for the applicable tax jurisdictions.
(2) The tax impact of amortization of acquired intangible assets is not material.
(3) Adjustment to reconcile GAAP net loss per share, which excludes potentially dilutive shares, to non-GAAP earnings per share, which includes potentially dilutive shares.
(4) In periods in which there is a non-GAAP net loss, basic and diluted weighted average shares outstanding are the same, as potentially dilutive shares would be antidilutive.

Non-GAAP Gross Profit and Non-GAAP Gross MarginThree Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands)2020 2019 2020 2019
Gross profit$92,888  $76,607  $264,902  $215,148 
Stock-based compensation826  694  2,403  2,088 
Amortization of acquired intangible assets579  125  1,736  427 
Non-GAAP gross profit$94,293  $77,426  $269,041  $217,663 
Gross margin83% 83% 82% 84%
Non-GAAP gross margin84% 84% 84% 85%


Non-GAAP Sales and Marketing ExpenseThree Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands)2020 2019 2020 2019
Sales and marketing expense$53,045  $56,699  $168,343  $165,403 
Less: Stock-based compensation4,806  3,521  14,677  11,102 
Non-GAAP sales and marketing expense$48,239  $53,178  $153,666  $154,301 
Non-GAAP sales and marketing expense as % of revenue43% 58% 48% 60%


Non-GAAP Research and Development ExpenseThree Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands)2020 2019 2020 2019
Research and development expense$25,128  $20,763  $77,269  $64,396 
Less: Stock-based compensation3,953  2,124  10,794  6,595 
Non-GAAP research and development expense$21,175  $18,639  $66,475  $57,801 
Non-GAAP research and development expense as % of revenue19% 20% 21% 22%


Non-GAAP General and Administrative ExpenseThree Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands)2020 2019 2020 2019
General and administrative expense$18,180  $17,472  $54,992  $48,595 
Less: Stock-based compensation5,715  4,160  16,127  11,406 
Less: Acquisition-related expenses    339   
Non-GAAP general and administrative expense$12,465  $13,312  $38,526  $37,189 
Non-GAAP general and administrative expense as % of revenue11% 14% 12% 14%


Forecasted Non-GAAP Income from OperationsThree Months Ending December 31, 2020 Year Ending December 31, 2020
(in millions)Low High Low High
Forecasted loss from operations$(8.0) $(7.0) $(43.3) $(42.3)
Forecasted stock-based compensation15.4  15.4  59.4  59.4 
Forecasted amortization of acquired intangible assets0.6  0.6  2.3  2.3 
Forecasted non-GAAP income from operations$8.0  $9.0  $18.4  $19.4 


Forecasted Non-GAAP Net Income and Non-GAAP Earnings Per ShareThree Months Ending December 31, 2020 Year Ending December 31, 2020
(in millions, except per share data)Low High Low High
Forecasted net loss$(10.7) $(9.7) $(51.1) $(50.1)
Forecasted stock-based compensation15.4  15.4  59.4  59.4 
Tax impact of stock-based compensation0.7  0.7  1.8  1.8 
Forecasted amortization of acquired intangible assets0.6  0.6  2.3  2.3 
Forecasted non-GAAP net income$6.0  $7.0  $12.4  $13.4 
        
Forecasted net loss per share, diluted$(0.10) $(0.09) $(0.51) $(0.50)
Forecasted stock-based compensation0.14  0.14  0.59  0.59 
Tax impact of stock-based compensation0.01  0.01  0.02  0.02 
Forecasted amortization of acquired intangible assets0.01  0.01  0.02  0.02 
Adjustment to diluted earnings per share(1)(0.01) (0.01) (0.01) (0.01)
Forecasted non-GAAP earnings per share, diluted$0.05  $0.06  $0.11  $0.12 
        
Forecasted weighted-average shares used to compute net loss per share, diluted103.3  103.3  101.0  101.0 
Forecasted weighted-average shares used to compute non-GAAP earnings per share, diluted113.0  113.0  110.6  110.6 

________________
(1) Adjustment to reconcile GAAP net loss per share, which excludes potentially dilutive shares, to non-GAAP earnings per share, which includes potentially dilutive shares.