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01/11 04:03
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Revenue $252.4 million, representing growth of 11.2% year-over-year. The growth was underpinned by a solid foundation of renewal business, strong Tenable One adoption, and better-than-expected contribution from professional services.
Recurring Revenue 95% of total revenue, consistent with prior performance, indicating strong subscription-based business.
Calculated Current Billings (CCB) $267.5 million, a year-over-year increase of 7.7%. This growth was driven by new platform growth and changes in upfront billing patterns.
Short-term Remaining Purchase Obligations (CRPO) Grew 12.9% year-over-year, reflecting increasing contract durations and strong platform adoption.
Net Dollar Expansion Rate 106%, in line with expectations, indicating stable customer retention and expansion.
Non-GAAP Gross Margin 81.6%, an increase from 81.4% in Q3 2024, showing steady improvement in profitability.
Non-GAAP Income from Operations $58.9 million or 23.3% of revenue, compared to $45 million or 19.8% of revenue in Q3 2024. This increase reflects operational leverage and targeted investments, including an 18% growth in R&D expenses.
Non-GAAP Earnings Per Share $0.42, compared to $0.32 in Q3 2024, an increase of 31.3%, driven by higher profitability and a decrease in diluted shares outstanding.
Cash and Short-term Investments $383.6 million, reflecting strong liquidity.
Unlevered Free Cash Flow $58.5 million, compared to $60.8 million in Q3 2024. Year-to-date unlevered free cash flow increased by 24.7% to $189.6 million, driven by operational efficiency.
Tenable One adoption: Strong growth with Tenable One, representing approximately 40% of new business in Q3 2025. Launched Tenable AI Exposure to address risks associated with generative AI.
R&D Investments: R&D spending increased by over 20% year-to-date, focusing on innovations in Tenable One and AI-driven solutions.
Platform Integrations: Surpassed 300 validated integrations in the Tenable One platform, enhancing its open and interconnected ecosystem.
Customer Growth: Added 437 new enterprise platform customers in Q3 2025, a 13% increase compared to Q3 2024.
Global Expansion: Strong momentum globally, with half of new customers adopting exposure solutions.
Revenue Growth: Achieved 11% year-over-year revenue growth, reaching $252.4 million in Q3 2025.
Profitability: Non-GAAP income from operations increased to $58.9 million, representing 23.3% of revenue.
Recurring Revenue: Maintained a high percentage of recurring revenue at 95%.
Shift to Preemptive Security: Tenable is leading a shift from reactive to preemptive cybersecurity, driven by AI advancements and exposure management.
Customer Wins: Secured major contracts, including a global real estate firm, a national electric utility provider, and a public sector technology provider, emphasizing Tenable One's capabilities.
AI-driven threat landscape: AI is reshaping the threat landscape, making attacks faster, more automated, and sophisticated. This exposes the limitations of traditional reactive defenses and increases the urgency for preemptive security measures.
Customer complexity in hybrid environments: Many customers face challenges managing risk across hybrid environments with assets spread across on-prem infrastructure, multiple cloud providers, and third-party systems. This complexity can lead to visibility gaps and operational inefficiencies.
Operational technology (OT) security: The convergence of IT and OT environments, especially in critical sectors like energy, creates challenges in integrating security frameworks and protecting national-scale infrastructure.
Vulnerability prioritization: Enterprises are overwhelmed with vulnerability findings, making it difficult to determine which risks require immediate action. This can lead to inefficiencies in remediation efforts.
Regulatory and compliance pressures: Organizations, especially those in sensitive sectors like public utilities and government, face increasing regulatory and compliance requirements, adding complexity to their security operations.
Market shift to preemptive security: The shift from reactive to preemptive security requires significant changes in mindset, technology adoption, and investment, which can be challenging for organizations to implement effectively.
Revenue Expectations: For Q4 2025, revenue is expected to range between $249.1 million and $253.1 million, representing a year-over-year increase of 6.5% at the midpoint. For full year 2025, revenue guidance has been raised to a range of $988 million to $992 million, representing a year-over-year increase of 10.0% at the midpoint.
Operating Income: Non-GAAP income from operations for Q4 2025 is expected to range between $55.7 million and $59.7 million, or 23.0% of revenue at the midpoint. For full year 2025, non-GAAP operating income guidance has been raised to a range of $211 million to $215 million, or 21.5% of revenue at the midpoint, representing a year-over-year increase of 100 basis points.
Earnings Per Share (EPS): Non-GAAP EPS for Q4 2025 is expected to range between $0.39 and $0.43, flat at the midpoint compared to Q4 2024. For full year 2025, non-GAAP EPS guidance has been raised to a range of $1.51 to $1.54, representing year-over-year growth of 18.2% at the midpoint.
Capital Allocation: The company plans to continue share repurchases, with $250 million of repurchase authorization remaining, as part of its capital allocation strategy.
Market Trends and Strategic Direction: The company anticipates a significant shift in cybersecurity spending from reactive post-breach technologies to preemptive security approaches, driven by advancements in AI. This shift is expected to benefit Tenable's exposure management platform, Tenable One.
Product and R&D Investments: R&D investments have increased by over 20% year-to-date, focusing on innovations in Tenable One, including AI-driven capabilities and integrations with third-party tools. The company plans to continue investing in preemptive security solutions and expanding its ecosystem.
Share Repurchase Program: During the third quarter, we repurchased 2 million shares for $60 million. In total, we have now repurchased 8.3 million shares for $300 million since November 2023 and have $250 million of repurchase authorization remaining. We intend to continue to repurchase shares, which we believe is an effective use of capital.
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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