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01/11 04:06
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance, with revenue and income exceeding guidance, and a solid operating margin. The acquisition of Vulcan and strong cloud security sales highlight growth potential. Despite guidance revision due to macro uncertainties, especially in the public sector, the company maintains a positive outlook on free cash flow and competitive positioning. Share repurchases further enhance shareholder value. The Q&A session indicates confidence in strategic priorities and market opportunities, although some uncertainty remains in the public sector. Overall, the sentiment leans positive, with a prediction of 2% to 8% stock price increase.
Revenue $239,100,000 (11% year-over-year growth) - Revenue exceeded the midpoint of the guided range by $5,100,000.
Calculated Current Billings $215,400,000 (9% year-over-year growth) - Driven by Tenable One, including cloud security.
Current RPO 13% year-over-year growth - 400 basis points ahead of CCB growth as backlog accelerated.
Gross Margin 82% - Flat relative to last quarter and in line with expectations.
Sales and Marketing Expense $85,500,000 (up from $80,100,000 last quarter) - Increased due to costs associated with the annual sales kickoff conference.
R&D Expense $39,000,000 (up from $32,500,000 last quarter) - Higher due to increased personnel costs from the Vulcan acquisition.
G&A Expense $22,700,000 (up from $20,500,000 last quarter) - Increased due to compensation expenses and payroll taxes.
Income from Operations $48,700,000 - Exceeded the midpoint of the guided range by $7,700,000.
Operating Margin 20% - Approximately 300 basis points better than the midpoint of the guided range.
EPS $0.36 per share - $0.95 better than the midpoint of the guided range.
Unlevered Free Cash Flow $87,000,000 - Record amount influenced by seasonal timing of collections from Q4 sales.
Cash and Short-term Investments $460,000,000 - Reflects $149,000,000 of net cash used for the Vulcan acquisition.
Accounts Receivable $168,000,000 - Total deferred revenue was $800,000,000.
Current Deferred Revenue $633,000,000 - Provides visibility into expected revenue over the next twelve months.
Share Repurchase 1,600,000 shares for $60,000,000 - Total repurchased shares since November 2023 is 4,300,000 for $175,000,000.
Tenable One: Tenable One continues to drive significant growth, with over 30% of new business sales attributed to it this quarter. It has been a catalyst for large deals, including record 7-figure wins.
AI Capabilities: Tenable is investing heavily in AI to enhance its exposure management platform, aiming to provide actionable insights and improve risk management.
Vulcan Acquisition: The acquisition of Vulcan is expected to enhance Tenable One by allowing the ingestion of third-party data, which will improve the platform's capabilities.
Market Positioning: Tenable is positioned as a leader in exposure management, with strong momentum in cloud security and vulnerability management, particularly in the public sector.
Federal Sector Expansion: Tenable secured a major federal win, managing over 1,000,000 assets globally, indicating strong demand in the public sector.
Competitive Landscape: Tenable reported historically high win rates against traditional VM players, indicating strong competitive positioning.
Financial Performance: Tenable reported $239.1 million in revenue for Q1 2025, an 11% year-over-year growth, exceeding guidance.
Cash Flow: The company generated a record $87 million in unlevered free cash flow during the quarter.
Recurring Revenue: Recurring revenue remains high at 96%, reflecting strong customer retention.
Strategic Focus: Tenable is focused on expanding its exposure management platform and enhancing integrations with third-party tools.
Growth Strategy: The company aims to consolidate its market position by leveraging its comprehensive view of risk and enhancing its AI capabilities.
Economic Uncertainty: The company acknowledges increased economic uncertainty impacting visibility into enterprise business, particularly in the public sector, which could lengthen sales cycles.
Public Sector Risks: Two-thirds of the guidance cut is attributed to the U.S. public sector, with concerns over lower visibility on new deals and potential disruptions due to personnel changes.
Regulatory Issues: The company is facing challenges related to compliance pressures and regulatory audits, particularly in the public sector and financial institutions.
Competitive Pressures: The competitive landscape remains strong, with high win rates against traditional vulnerability management players, but there is ongoing pressure from new entrants and established players.
Supply Chain Challenges: The company is cautious about potential disruptions in the supply chain due to geopolitical events and tariffs, which could impact procurement decisions.
AI Security Risks: The company identified that 70% of cloud workloads leveraging AI services contain unresolved vulnerabilities, highlighting a significant risk in the evolving threat landscape.
Strategic Initiatives: Tenable is focused on advancing its exposure management strategy and expanding market opportunities, particularly through the integration of third-party tools and data sources, including capabilities from the Vulcan acquisition.
Product Roadmap Execution: Tenable is executing on its product roadmap to break down security silos and provide a unified approach to risk reduction, with a focus on AI integration and enhanced analytics.
AI Strategy: Tenable aims to leverage its extensive exposure data to lead in AI-powered exposure management, enhancing its platform's capabilities to provide actionable insights.
Customer Engagement: Tenable is seeing increased adoption of Tenable One, with significant expansions in customer contracts, particularly in the public sector and financial institutions.
Q2 2025 Revenue Guidance: Expected revenue in the range of $241 million to $243 million.
Full Year 2025 Revenue Guidance: Expected revenue in the range of $970 million to $980 million.
Operating Income Guidance: Non-GAAP income from operations expected to be in the range of $205 million to $215 million for the full year.
Free Cash Flow Guidance: Expected unlevered free cash flow in the range of $265 million to $275 million for 2025.
Caution in Outlook: The company is adopting a more cautious approach due to economic uncertainties, particularly in the U.S. public sector, which may affect visibility and sales cycles.
Share Repurchase: During the quarter, we repurchased 1,600,000 shares of our common stock for an aggregate purchase price of $60,000,000. In total, we’ve repurchased almost 4,300,000 shares for $175,000,000 since November 2023 and have $125,000,000 of remaining authorization.
The earnings call reveals strong performance in the U.S. federal vertical, optimistic revenue guidance, and robust enterprise customer growth. The integration of Apex and focus on AI security are strategic positives. Management's confidence in sustaining billings levels and the positive sentiment in the Q&A further support a positive outlook. Despite some lack of clarity on long-term billings, the overall sentiment is positive, suggesting a stock price increase in the short term.
The earnings call summary and Q&A indicate a positive outlook with strong financial performance, improved federal market visibility, and growth in new sales and RPO. Tenable One's traction and cloud strategy, alongside AI integration, further enhance prospects. Despite some challenges in the federal market, the overall sentiment is positive due to raised guidance and strong customer expansion.
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