Tenable Holdings, Inc.
Q2 2020 Earnings Call Transcript

Published: 28 Jul 2020

[Operator:]

Greetings and welcome to the Tenable Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Andrea DiMarco, Vice President, Investor Relations and Strategy. Thank you, you may now begin.

[Andrea DiMarco:]

Thank you, operator, and thank you all for joining us on today’s conference call to discuss Tenable’s second quarter 2020 financial results. With me on the call today are, Amit Yoran, Tenable’s Chief Executive Officer; and Steve Vintz, Chief Financial Officer.

[Amit Yoran:]

Thank you, Andrea and thank you all for joining us today. As you mentioned on our last call, Tenable is an incredibly resilient organization. I was very pleased with how our team came together in the second quarter to support our customers in this virtual environment and deliver on our mission. Steve will discuss our financial performance in greater detail, but there are a few broader comments I would like to make regarding our results for the quarter. Revenue grew 26% year over-year-over in Q2, overall it was a strong quarter of top line growth in this uncertain macro environment. I’m also excited to note that we delivered our first quarter of positive non-GAAP operating income as a public company and continue to improve our free cash flow profile.

[Steve Vintz:]

Thanks, Amit. As Amit commented earlier, we are very pleased with our results for the second quarter and remain excited about the opportunity to extend our leadership in this market by helping customers measure and manage their cyber exposure. Let’s talk about our results to the second quarter then turn to guidance. First, please note that with the exception of revenue all financial results that we will discuss today are non-GAAP financial measures. As Andrea mentioned at the start of this call, GAAP to non-GAAP reconciliations may be found in our earnings release issued earlier today and posted on our website. Now, on to our Q2 results. Revenue for the quarter was 107 million which represents 26% year-over-year growth. Revenue in the quarter exceeded the midpoint of our guided range by approximately $5 million. Revenue was aided by better than expected demand in both new and renewal business and overall healthy flow throughout the quarter. Our percentage of recurring revenue continues to remain high at 93%, which is a testament to our annual prepaid subscription model. In terms of demand, and despite the backdrop of the challenging macro environment, we saw strength in winning new logos that included some sizable competitive takeaways. We added 341 new enterprise platform customers and 50 net new six-figure customers this quarter just over 2x higher than the number of net new six-figure customers we added last quarter, and it is one of our best ever. This brings the total number of customers spending in excess of $100,000 annually to 715. It is also worth noting that we are seeing increased demand for securing cloud applications, which has resulted in accelerating adoption of Tenable IO and cloud security model, which is web application security and container secure. This trend is contributing to an overall higher percentage mix of new enterprise platform customers choosing our cloud platform. To summarize, we continue to add a healthy number of new customers and six-figure customers in an uncertain macro environment from the back of higher cloud adoption that speak to the growing importance of VM and our best-of-breed strategy. Calculated current - define us the change in current deferred revenue plus total revenue recognized in the quarter, it was 13% year-over-year to 111 million. As I said on the last call, during the pandemic CCB may not be a good leading indicator of future revenue growth, as it is influenced by a number of factors such as real timing, early renewals, and multiyear prepaid deals.

[Amit Yoran:]

Thanks Steve. Regardless of the macro environment, we believe vulnerability management will continue to grow in priority. For Tenable our core strength in VM has driven our success and aided in our natural expansion across the surface of attack into cloud and OT deployment. Our second lien product portfolio positions us for long-term success. We hope to see many of you virtually at the city and DA Davidson conferences in September. We would now like to open the call up for questions.

[Operator:]

Thank you. Our first question comes from the line of Sterling Auty with JP Morgan. Please proceed with your question.

[Unidentified Analyst:]

Hi, guys this is