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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 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.
Revenue $247.3 million, representing 12% year-over-year growth. The growth was attributed to a favorable mix of business with upfront revenue recognition and the growing adoption of the Tenable One platform.
Operating Margin 19%, which is approximately 100 basis points better than the midpoint of the guided range. This improvement reflects strong operating leverage and efficient cost management.
Calculated Current Billings $238.6 million, an 8% year-over-year growth. The increase was driven by the growing momentum with Tenable One, which led to higher deal sizes and multiyear commitments.
Net Dollar Expansion Rate 107% this quarter, indicating strong customer retention and expansion within the existing customer base.
Gross Margin 82%, flat relative to last quarter. The margin is expected to remain flat to modestly lower in the second half of the year due to new product launches and AI security capabilities.
Unlevered Free Cash Flow $44 million for the quarter, contributing to a year-to-date total of $131 million. This reflects strong cash flow generation and operational efficiency.
RPO (Remaining Performance Obligations) Current RPO grew 12% year-over-year, while total RPO grew 19%, reflecting over 40% year-over-year growth in long-term RPO. This indicates increasing customer commitments to Tenable's solutions.
Tenable One adoption: 40% of total new sales this quarter, with growing adoption due to its unified risk-based and business contextualized view of cyber risk.
AI and Apex Security integration: Expanded AI Aware and AI SPM capabilities to secure the AI attack surface, enhancing visibility and risk management.
Third-party integrations: Surpassed 300 validated integrations, making Tenable One the most interconnected exposure management platform.
Public sector wins: Achieved significant wins in the public sector, including state-level and U.S. Federal, with improved visibility and renewal rates.
Private sector traction: Secured major wins in entertainment and luxury industries, consolidating security strategies on Tenable One.
Revenue growth: Achieved 12% year-over-year revenue growth, with $247.3 million in Q2 revenue.
Operating margin: Delivered a 19% operating margin, exceeding guidance.
Customer expansion: Added 76 net new six-figure customers and 367 new enterprise platform customers.
AI-powered security: Focused on securing AI environments through Apex acquisition, addressing AI-related vulnerabilities and risks.
Preemptive security strategy: Shifted focus to preemptive security, emphasizing risk reduction before breaches occur.
Public Sector Spending Environment: The public sector spending environment is characterized by heightened levels of review and scrutiny, which could impact visibility and renewal rates. Although visibility has improved, this remains a potential challenge.
AI-Powered Cyber Threats: The increasing frequency and sophistication of AI-powered cyberattacks demand faster remediation and adaptive responses, posing a challenge to maintaining effective security measures.
Complex Hybrid Systems: Customers face challenges in securing complex hybrid systems and interconnected environments, which can introduce risks if not adequately addressed.
AI Security Risks: The rapid evolution of AI technologies has introduced new security risks, including vulnerabilities in AI resources and data configurations, which require specialized solutions.
Sales and Marketing Expenses: Incremental investments in sales capacity and industry events have increased sales and marketing expenses, which could impact profitability if not managed effectively.
R&D Investments: Increased R&D expenses, particularly related to acquisitions, could strain financial resources if not offset by corresponding revenue growth.
Customer Consolidation Challenges: Not all customers are willing to fully consolidate their security tools, which could limit the adoption of Tenable's unified platform solutions.
Economic Uncertainty: Economic uncertainties could impact customer spending behavior, particularly in sectors with tighter budgets or increased scrutiny.
Revenue Expectations: For Q3 2025, revenue is expected to be in the range of $246 million to $248 million. For the full year 2025, revenue is projected to be between $981 million and $987 million.
Non-GAAP Income and EPS: For Q3 2025, non-GAAP income from operations is expected to range from $52 million to $54 million, with non-GAAP diluted EPS between $0.36 and $0.37. For the full year 2025, non-GAAP income from operations is projected to be between $205 million and $215 million, with non-GAAP diluted EPS ranging from $1.45 to $1.53.
Unlevered Free Cash Flow: For the full year 2025, unlevered free cash flow is expected to be between $265 million and $275 million.
Market Trends and Strategic Focus: Tenable anticipates continued growth in exposure management, driven by the adoption of Tenable One and the shift towards preemptive security strategies. The company is investing in AI capabilities to address emerging threats and secure AI attack surfaces. Gartner predicts investments in technologies reducing threat exposure will grow twice as fast as detection and response technologies by 2028.
Public Sector and Federal Visibility: Visibility in the U.S. Federal sector is improving, particularly in the renewal base, despite a scrutinized spending environment. Public sector performance is expected to remain stable, with strong platform sales in the SLED business.
Customer and Product Expansion: Tenable plans to expand its AI security capabilities through the Apex acquisition, focusing on AI risk management and integration into the exposure management platform. The company is also enhancing third-party integrations and automation to improve remediation workflows.
Share Repurchase Program: During the quarter, Tenable utilized $65 million to repurchase 2 million shares. In total, the company has repurchased 6.3 million shares for approximately $240 million since November 2023. Additionally, Tenable announced an additional $250 million increase to its share repurchase program, demonstrating its commitment to returning capital to shareholders.
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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