Tenable Announces Third Quarter 2023 Financial Results


  • Added 386 new enterprise platform customers and 58 net new six-figure customers.
  • Revenue of $201.5 million, up 15% year-over-year.
  • Calculated current billings of $224.7 million, up 8% year-over-year.
  • Net cash provided by operating activities of $42.4 million; Unlevered free cash flow of $48.2 million.

COLUMBIA, Md., Nov. 01, 2023 (GLOBE NEWSWIRE) -- Tenable Holdings, Inc. ("Tenable") (Nasdaq: TENB), the Exposure Management company, today announced financial results for the quarter ended September 30, 2023.

"We are pleased with our execution in the quarter, which included better-than-expected earnings and unlevered free cash flow," said Amit Yoran, Chairman and CEO of Tenable. "We also saw significant outperformance in the public sector, which had minimal benefit to CCB in the quarter. Specifically, we experienced increasing strength in the U.S. federal market evidenced by several strategic seven-figure deals that are reflected in our current remaining performance obligations (RPO) growth of 15%.

"We continue to see momentum with Tenable One, and the integration of Ermetic's cloud-native application protection platform will further augment our existing products, enhancing our ability to identify cyber risks and secure cloud and hybrid environments for our customers."

Third Quarter 2023 Financial Highlights

  • Revenue was $201.5 million, a 15% increase year-over-year.
  • Calculated current billings was $224.7 million, an 8% increase year-over-year.
  • GAAP loss from operations was $7.9 million, compared to a loss of $13.0 million in the third quarter of 2022.
  • Non-GAAP income from operations was $36.6 million, compared to $23.1 million in the third quarter of 2022.
  • GAAP net loss was $15.6 million, compared to a loss of $18.7 million in the third quarter of 2022.
  • GAAP net loss per share was $0.13, compared to a loss per share of $0.17 in the third quarter of 2022.
  • Non-GAAP net income was $27.7 million, compared to $17.2 million in the third quarter of 2022.
  • Non-GAAP diluted earnings per share was $0.23, compared to $0.15 in the third quarter of 2022.
  • Cash and cash equivalents and short-term investments were $693.0 million at September 30, 2023, compared to $567.4 million at December 31, 2022.
  • Net cash provided by operating activities was $42.4 million, compared to $35.9 million in the third quarter of 2022.
  • Unlevered free cash flow was $48.2 million, compared to $34.8 million in the third quarter of 2022.

Recent Business Highlights

  • Added 386 new enterprise platform customers and 58 net new six-figure customers.
  • Acquired Ermetic Ltd. on October 2, 2023, an integrated cloud-native application protection platform (CNAPP) company with industry leading cloud infrastructure entitlement management (CIEM), to deliver market-leading contextual risk visibility, prioritization and remediation across infrastructure and identities.
  • Launched new generative AI capabilities and services across Tenable One to deliver faster, more intuitive insights.
  • Added new features to Tenable OT Security, including increased visibility of Building Management Systems (BMS) — covering devices such as security cameras, HVAC systems, badge scanners and entrance security systems, lighting control, programming systems and other assets.
  • Upgraded Tenable Nessus Expert to include web application and API scanning to provide simple and comprehensive vulnerability scanning to quickly and accurately identify web vulnerabilities.
  • Recognized as a "Leader" in both the GigaOm Radar for Operational Technology (OT) Security and “The Forrester Wave™: Vulnerability Risk Management," and named Best Security Company and Best Risk/Policy Management Solution of the Year (for Tenable One) in the 2023 SC Awards.

Financial Outlook

For the fourth quarter of 2023, we currently expect:

  • Revenue in the range of $204.0 million to $208.0 million.
  • Non-GAAP income from operations in the range of $23.0 million to $24.0 million.
  • Non-GAAP net income in the range of $16.0 million to $17.0 million, assuming interest expense of $8.3 million, interest income of $4.9 million and a provision for income taxes of $3.0 million.
  • Non-GAAP diluted earnings per share in the range of $0.13 to $0.14.
  • 123.5 million diluted weighted average shares outstanding.

For the year ending December 31, 2023, we currently expect:

  • Calculated current billings in the range of $862.0 million to $870.0 million.
  • Revenue in the range of $789.4 million to $793.4 million.
  • Non-GAAP income from operations in the range of $107.9 million to $108.9 million.
  • Non-GAAP net income in the range of $83.0 million to $84.0 million, assuming interest expense of $31.5 million, interest income of $24.2 million and a provision for income taxes of $9.1 million.
  • Non-GAAP diluted earnings per share in the range of $0.68 to $0.69.
  • 121.0 million diluted weighted average shares outstanding.
  • Unlevered free cash flow in the range of $168.0 million to $173.0 million.

Conference Call Information

Tenable will host a conference call on November 1, 2023 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. An archived replay of the live broadcast will be available on the Investor Relations page of the website following the call.

About Tenable

Tenable® is the Exposure Management company. Approximately 43,000 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 approximately 60 percent of the Fortune 500, approximately 40 percent of the Global 2000, and large government agencies. Learn more at tenable.com.

Contact Information

Investor Relations
investors@tenable.com

Media Relations
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, 2022 and in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 as well as other filings that we make from time to time with the SEC, which are available on the SEC's website at sec.gov. 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

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 the 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 include these non-GAAP financial measures to present our financial performance using a management view and because we believe that these measures provide an additional comparison of 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 and Unlevered Free Cash Flow: We define free cash flow, a non-GAAP financial measure, as net cash provided by operating activities less purchases of property and equipment and capitalized software development costs. We believe free cash flow is an important liquidity measure of the cash (if any) that is available, after purchases of property and equipment and capitalized software development costs, for investment in our business and to make acquisitions. We believe that free cash flow is useful as a liquidity measure because it measures our ability to generate or use cash. We define unlevered free cash flow as free cash flow plus cash paid for interest and other financing costs. We believe unlevered free cash flow is useful as a liquidity measure as it measures the cash that is available to invest in our business and meet our current debt obligations and future financing needs. However, given our debt obligations, non-cancelable commitments and other contractual obligations, unlevered free cash flow does not represent residual cash flow available for discretionary expenses.

Non-GAAP Income 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, costs related to the intra-entity asset transfers resulting from the internal restructuring of legal entities and amortization of acquired intangible assets. Acquisition-related expenses include transaction and integration expenses, as well as costs related to the intercompany transfer of acquired intellectual property.

Non-GAAP Net Income and Non-GAAP Earnings Per Share: We define non-GAAP net income as GAAP net loss, excluding the effect of stock-based compensation, acquisition-related expenses and amortization of acquired intangible assets, including the applicable tax impacts. In addition, we exclude the tax impact and related costs of intra-entity asset transfers resulting from the internal restructuring of legal entities as well as deferred income tax benefits recognized in connection with acquisitions. We use non-GAAP net income to calculate non-GAAP earnings 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, acquisition-related expenses and costs related to intra-entity asset transfers resulting from the internal restructuring of legal entities.


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

 Three Months Ended
September 30,
 Nine Months Ended
September 30,
(in thousands, except per share data) 2023   2022   2023   2022 
Revenue$201,529  $174,851  $585,404  $498,560 
Cost of revenue(1) 45,754   38,582   134,774   109,549 
Gross profit 155,775   136,269   450,630   389,011 
Operating expenses:       
Sales and marketing(1) 94,759   88,123   289,750   258,119 
Research and development(1) 37,052   36,131   113,080   106,649 
General and administrative(1) 31,877   24,973   85,614   77,969 
Total operating expenses 163,688   149,227   488,444   442,737 
Loss from operations (7,913)  (12,958)  (37,814)  (53,726)
Interest income 7,662   1,803   19,323   2,746 
Interest expense (8,119)  (5,082)  (23,208)  (12,246)
Other expense, net (6,502)  (2,073)  (7,993)  (4,880)
Loss before income taxes (14,872)  (18,310)  (49,692)  (68,106)
Provision for income taxes 693   420   6,944   2,629 
Net loss$(15,565) $(18,730) $(56,636) $(70,735)
        
Net loss per share, basic and diluted$(0.13) $(0.17) $(0.49) $(0.64)
Weighted-average shares used to compute net loss per share, basic and diluted 115,954   111,937   114,967   110,843 

_______________

(1) Includes stock-based compensation as follows:


 Three Months Ended
September 30,
 Nine Months Ended
September 30,
  2023  2022  2023  2022
Cost of revenue$3,011 $2,341 $8,542 $5,968
Sales and marketing 15,805  13,589  46,622  36,420
Research and development 9,242  8,754  27,871  23,294
General and administrative 8,777  7,959  25,777  24,272
Total stock-based compensation$36,835 $32,643 $108,812 $89,954



TENABLE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS

 September 30,
2023
 December 31,
2022
(in thousands, except per share data)(unaudited)  
Assets    
Current assets:   
Cash and cash equivalents$445,316  $300,866 
Short-term investments 247,658   266,569 
Accounts receivable (net of allowance for doubtful accounts of $225 and $1,400 at September 30, 2023 and December 31, 2022, respectively) 179,432   187,341 
Deferred commissions 46,132   44,270 
Prepaid expenses and other current assets 52,529   58,121 
Total current assets 971,067   857,167 
Property and equipment, net 44,076   46,726 
Deferred commissions (net of current portion) 65,412   67,238 
Operating lease right-of-use assets 35,989   38,495 
Acquired intangible assets, net 66,169   75,376 
Goodwill 316,520   316,520 
Other assets 25,213   38,008 
Total assets$1,524,446  $1,439,530 
    
Liabilities and Stockholders’ Equity   
Current liabilities:   
Accounts payable and accrued expenses$26,880  $18,722 
Accrued compensation 44,850   52,620 
Deferred revenue 518,372   502,115 
Operating lease liabilities 5,655   5,821 
Other current liabilities 4,986   4,882 
Total current liabilities 600,743   584,160 
Deferred revenue (net of current portion) 163,086   162,487 
Term loan, net of issuance costs (net of current portion) 359,941   361,970 
Operating lease liabilities (net of current portion) 49,382   52,611 
Other liabilities 7,621   7,436 
Total liabilities 1,180,773   1,168,664 
    
Stockholders’ equity:   
Common stock (par value: $0.01; 500,000 shares authorized; 116,470 and 113,056 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively) 1,165   1,131 
Additional paid-in capital 1,146,435   1,017,837 
Accumulated other comprehensive loss (540)  (1,351)
Accumulated deficit (803,387)  (746,751)
Total stockholders’ equity 343,673   270,866 
Total liabilities and stockholders’ equity$1,524,446  $1,439,530 



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

 Nine Months Ended September 30,
(in thousands) 2023   2022 
Cash flows from operating activities:   
Net loss$(56,636) $(70,735)
Adjustments to reconcile net loss to net cash provided by operating activities:  
Depreciation and amortization 18,900   15,911 
Stock-based compensation 108,812   89,954 
Other 1,838   2,102 
Changes in operating assets and liabilities:   
Accounts receivable 9,084   (10,727)
Prepaid expenses and other assets 17,524   20,355 
Accounts payable, accrued expenses and accrued compensation 447   (8,829)
Deferred revenue 16,856   61,731 
Other current and noncurrent liabilities (5,475)  (529)
Net cash provided by operating activities 111,350   99,233 
    
Cash flows from investing activities:   
Purchases of property and equipment (1,299)  (5,132)
Capitalized software development costs (4,707)  (8,778)
Purchases of short-term investments (217,239)  (190,440)
Sales and maturities of short-term investments 242,864   163,340 
Business combinations, net of cash acquired    (66,993)
Net cash provided by (used in) investing activities 19,619   (108,003)
    
Cash flows from financing activities:   
Payments on term loan (2,813)  (2,813)
Proceeds from loan agreement 424   572 
Proceeds from stock issued in connection with the employee stock purchase plan 16,224   14,791 
Proceeds from the exercise of stock options 2,421   10,655 
Other financing activities (213)  (10)
Net cash provided by financing activities 16,043   23,195 
Effect of exchange rate changes on cash and cash equivalents and restricted cash (2,562)  (4,276)
Net increase in cash and cash equivalents and restricted cash 144,450   10,149 
Cash and cash equivalents and restricted cash at beginning of period 300,866   278,271 
Cash and cash equivalents and restricted cash at end of period$445,316  $288,420 



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) 2023  2022  2023  2022
Subscription revenue$183,268 $156,764 $531,133 $446,257
Perpetual license and maintenance revenue 12,200  12,658  36,535  38,214
Professional services and other revenue 6,061  5,429  17,736  14,089
Revenue(1)$201,529 $174,851 $585,404 $498,560

_______________

(1) Recurring revenue, which includes revenue from subscription arrangements for software (both recognized ratably over the subscription term and upon delivery) and cloud-based solutions and maintenance associated with perpetual licenses, represented 95% of revenue in the three and nine months ended September 30, 2023 and 2022.

Calculated Current BillingsThree Months Ended
September 30,
 Nine Months Ended
September 30,
(in thousands) 2023   2022   2023   2022 
Revenue$201,529  $174,851  $585,404  $498,560 
Deferred revenue (current), end of period 518,372   447,863   518,372   447,863 
Deferred revenue (current), beginning of period(1) (495,199)  (415,378)  (502,115)  (408,443)
Calculated current billings$224,702  $207,336  $601,661  $537,980 

_______________

(1) Deferred revenue (current), beginning of period for the nine months ended September 30, 2022 includes $0.9 million related to acquired deferred revenue.

Remaining Performance ObligationsSeptember 30,
(in thousands) 2023  2022
Remaining performance obligations, short-term$528,367 $458,910
Remaining performance obligations, long-term 168,817  153,939
Remaining performance obligations$697,184 $612,849


Free Cash Flow and Unlevered Free Cash FlowThree Months Ended
September 30,
 Nine Months Ended
September 30,
(in thousands) 2023   2022   2023   2022 
Net cash provided by operating activities$42,411  $35,853  $111,350  $99,233 
Purchases of property and equipment (201)  (1,896)  (1,299)  (5,132)
Capitalized software development costs(1) (1,894)  (2,451)  (4,707)  (8,778)
Free cash flow(2) 40,316   31,506   105,344   85,323 
Cash paid for interest and other financing costs 7,843   3,253   26,786   10,619 
Unlevered free cash flow(2)$48,159  $34,759  $132,130  $95,942 

________________

(1) Capitalized software development costs were previously included in purchases of property and equipment.

(2) Free cash flow and unlevered free cash flow for the periods presented were impacted by:

 Three Months Ended
September 30,
 Nine Months Ended
September 30,
(in thousands) 2023   2022   2023   2022 
Employee stock purchase plan activity$(2,236) $(4,845) $(2,507) $(4,538)
Acquisition-related expenses (571)  (398)  (830)  (2,395)
Costs related to intra-entity asset transfers          (838)
Tax payment on intra-entity asset transfers          (2,697)


Free cash flow and unlevered free cash flow for the nine months ended September 30, 2022 were benefited by approximately $8 million from prepayments of software subscription costs, insurance and rent in prior quarters.


Non-GAAP Income from Operations and Non-GAAP Operating MarginThree Months Ended
September 30,
 Nine Months Ended
September 30,
(dollars in thousands) 2023    2022    2023    2022  
Loss from operations$(7,913)  $(12,958)  $(37,814)  $(53,726) 
Stock-based compensation 36,835    32,643    108,812    89,954  
Acquisition-related expenses 4,598    322    4,728    2,376  
Costs related to intra-entity asset transfers             838  
Amortization of acquired intangible assets 3,055    3,080    9,208    8,292  
Non-GAAP income from operations$36,575   $23,087   $84,934   $47,734  
Operating margin (4)%  (7)%  (6)%  (11)%
Non-GAAP operating margin 18 %  13 %  15 %  10 %


Non-GAAP Net Income and Non-GAAP Earnings Per ShareThree Months Ended
September 30,
 Nine Months Ended
September 30,
(in thousands, except per share data) 2023   2022   2023   2022 
Net loss$(15,565) $(18,730) $(56,636) $(70,735)
Stock-based compensation 36,835   32,643   108,812   89,954 
Tax impact of stock-based compensation(1) (1,207)  318   1,046   1,572 
Acquisition-related expenses(2) 4,598   322   4,728   2,376 
Costs related to intra-entity asset transfers(3)          838 
Amortization of acquired intangible assets(4) 3,055   3,080   9,208   8,292 
Tax impact of acquisitions(5) (48)  (958)  (161)  (4,307)
Tax impact of intra-entity asset transfers(6)    508      2,121 
Non-GAAP net income$27,668  $17,183  $66,997  $30,111 
        
Net loss per share, diluted$(0.13) $(0.17) $(0.49) $(0.64)
Stock-based compensation 0.32   0.29   0.94   0.81 
Tax impact of stock-based compensation(1) (0.01)     0.01   0.01 
Acquisition-related expenses(2) 0.04      0.04   0.02 
Costs related to intra-entity asset transfers(3)          0.01 
Amortization of acquired intangible assets(4) 0.02   0.03   0.08   0.08 
Tax impact of acquisitions(5)    (0.01)     (0.04)
Tax impact of intra-entity asset transfers(6)    0.01      0.02 
Adjustment to diluted earnings per share(7) (0.01)     (0.02)  (0.01)
Non-GAAP earnings per share, diluted$0.23  $0.15  $0.56  $0.26 
        
Weighted-average shares used to compute GAAP net loss per share, diluted 115,954   111,937   114,967   110,843 
        
Weighted-average shares used to compute non-GAAP earnings per share, diluted 121,473   117,334   120,273   117,524 

________________

(1) The tax impact of stock-based compensation is based on the tax treatment for the applicable tax jurisdictions.
(2) The tax impact of acquisition-related expenses is not material.
(3) The costs related to the intra-entity asset transfers resulted from our internal restructuring of Cymptom.
(4) The tax impact of the amortization of acquired intangible assets is included in the tax impact of acquisitions.
(5) The tax impact of acquisitions for all periods presented includes the deferred tax benefits of the Alsid acquisition. Additionally, the tax impact of acquisitions for the nine months ended September 30, 2022 includes a reversal of the $2.5 million income tax benefit recognized for GAAP purposes related to the partial release of our valuation allowance associated with the Bit Discovery acquisition.
(6) The tax impact of the intra-entity transfers is related to current tax expense based on the applicable Israeli tax rates resulting from our internal restructuring of Cymptom.
(7) An adjustment to reconcile GAAP net loss per share, which excludes potentially dilutive shares, to non-GAAP earnings per share, which includes potentially dilutive shares.


Non-GAAP Gross Profit and Non-GAAP Gross MarginThree Months Ended
September 30,
 Nine Months Ended
September 30,
(dollars in thousands) 2023   2022   2023   2022 
Gross profit$155,775  $136,269  $450,630  $389,011 
Stock-based compensation 3,011   2,341   8,542   5,968 
Amortization of acquired intangible assets 3,055   3,080   9,208   8,292 
Non-GAAP gross profit$161,841  $141,690  $468,380  $403,271 
Gross margin 77%  78%  77%  78%
Non-GAAP gross margin 80%  81%  80%  81%


Non-GAAP Sales and Marketing ExpenseThree Months Ended
September 30,
 Nine Months Ended
September 30,
(dollars in thousands) 2023   2022   2023   2022 
Sales and marketing expense$94,759  $88,123  $289,750  $258,119 
Less: Stock-based compensation 15,805   13,589   46,622   36,420 
Less: Acquisition-related expenses          15 
Non-GAAP sales and marketing expense$78,954  $74,534  $243,128  $221,684 
Non-GAAP sales and marketing expense % of revenue 39%  43%  42%  44%


Non-GAAP Research and Development ExpenseThree Months Ended
September 30,
 Nine Months Ended
September 30,
(dollars in thousands) 2023   2022   2023   2022 
Research and development expense$37,052  $36,131  $113,080  $106,649 
Less: Stock-based compensation 9,242   8,754   27,871   23,294 
Less: Acquisition-related expenses          46 
Non-GAAP research and development expense$27,810  $27,377  $85,209  $83,309 
Non-GAAP research and development expense % of revenue 14%  16%  15%  17%


Non-GAAP General and Administrative ExpenseThree Months Ended
September 30,
 Nine Months Ended
September 30,
(dollars in thousands) 2023   2022   2023   2022 
General and administrative expense$31,877  $24,973  $85,614  $77,969 
Less: Stock-based compensation 8,777   7,959   25,777   24,272 
Less: Acquisition-related expenses 4,598   322   4,728   2,315 
Less: Costs related to intra-entity asset transfers          838 
Non-GAAP general and administrative expense$18,502  $16,692  $55,109  $50,544 
Non-GAAP general and administrative expense % of revenue 9%  10%  9%  10%


The following adjustments to reconcile forecasted non-GAAP income from operations, non-GAAP net income, non-GAAP earnings per share, free cash flow and unlevered free cash flow are subject to a number of uncertainties and assumptions, each of which are inherently difficult to forecast. As a result, actual adjustments and GAAP results may differ materially.

Forecasted Non-GAAP Income from OperationsThree Months Ending
December 31, 2023
 Year Ending
December 31, 2023
(in millions)Low High Low High
Forecasted loss from operations$(27.2) $(26.2) $(65.0) $(64.0)
Forecasted stock-based compensation 38.0   38.0   146.8   146.8 
Forecasted acquisition-related expenses 6.8   6.8   11.5   11.5 
Forecasted amortization of acquired intangible assets(1) 5.4   5.4   14.6   14.6 
Forecasted non-GAAP income from operations$23.0  $24.0  $107.9  $108.9 


Forecasted Non-GAAP Net Income and Non-GAAP Earnings Per ShareThree Months Ending
December 31, 2023
 Year Ending
December 31, 2023
(in millions, except per share data)Low High Low High
Forecasted net loss(2)$(35.2) $(34.2) $(91.7) $(90.7)
Forecasted stock-based compensation 38.0   38.0   146.8   146.8 
Forecasted tax impact of stock-based compensation 1.0   1.0   2.0   2.0 
Forecasted acquisition-related expenses 6.8   6.8   11.5   11.5 
Forecasted amortization of acquired intangible assets(1) 5.4   5.4   14.6   14.6 
Forecasted tax impact of acquisitions       (0.2)  (0.2)
Forecasted non-GAAP net income$16.0  $17.0  $83.0  $84.0 
        
Forecasted net loss per share, diluted(2)$(0.30) $(0.29) $(0.79) $(0.79)
Forecasted stock-based compensation 0.32   0.32   1.27   1.27 
Forecasted tax impact of stock-based compensation 0.01   0.01   0.02   0.02 
Forecasted acquisition-related expenses 0.06   0.06   0.10   0.10 
Forecasted amortization of acquired intangible assets(1) 0.05   0.05   0.12   0.12 
Forecasted tax impact of acquisitions           
Adjustment to diluted earnings per share(3) (0.01)  (0.01)  (0.04)  (0.03)
Forecasted non-GAAP earnings per share, diluted$0.13  $0.14  $0.68  $0.69 
        
Forecasted weighted-average shares used to compute GAAP net loss per share, diluted 117.0   117.0   115.5   115.5 
Forecasted weighted-average shares used to compute non-GAAP earnings per share, diluted 123.5   123.5   121.0   121.0 

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(1) Forecast assumes an estimate of approximately $66 million of acquired intangible assets from Ermetic amortized over seven years. This estimate is preliminary, as we have not completed our purchase price allocation, and the valuation of acquired intangible assets and the estimated useful life are subject to change.

(2) The forecasted GAAP net loss assumes income tax expense of $4.0 million and $10.9 million in the three months and year ending December 31, 2023, respectively.

(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.


Forecasted Free Cash Flow and Unlevered Free Cash FlowYear Ending
December 31, 2023
(in millions)Low High
Forecasted net cash provided by operating activities$143.4  $148.4 
Forecasted purchases of property and equipment (3.2)  (3.2)
Forecasted capitalized software development costs (6.8)  (6.8)
Forecasted free cash flow 133.4   138.4 
Forecasted cash paid for interest and other financing costs 34.6   34.6 
Forecasted unlevered free cash flow$168.0  $173.0