Tenable Holdings, Inc.
Q3 2020 Earnings Call Transcript

Published: 27 Oct 2020

[Operator:]

Greetings and welcome to the Tenable Third 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 of 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 third quarter 2020 financial results. With me on the call today are, Amit Yoran, Tenable’s Chief Executive Officer; and Steve Vintz, Chief Financial Officer. Prior to this call, we issued a press release announcing our third quarter financial results. You can find the press release on the IR website at tenable.com.

[Amit Yoran:]

Thank you, Andrea. And thank you for joining us today. I hope you and your families continue to be healthy and safe. I remain incredibly pleased to see the Tenable team come together to support our customers in this unpredictable macro environment. We continue to remain laser focused on our mission to help customers measure and manage their cyber risk especially in an environment of increased risk and accelerated digital transformation. The current environment has forced so many organizations to rapidly shift to cloud to maintain productivity for remote employees, allowing them to securely connect and collaborate with colleagues. Additionally, as web and app traffic surge, organizations are looking to modernize and strengthen their cloud security posture, digital transformation journeys and just to the cloud are accelerating across the globe. All this innovation is occurring in the mix of a threat environment that remains elevated.

[Steve Vintz:]

Thanks Amit. As Amit commented earlier, we are very pleased with our results for the third quarter highlighted by attractive top line growth, continued momentum with large enterprise deals and strong profitability and free cash flow. I'll discuss our results for the quarter momentarily. But first, please note that all financial results we will discuss today are non-GAAP financial measures with the exception of revenue. 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 results. Revenue for the quarter was a $112.3 million, which represents 22% growth year-over-year. Revenue in the quarter exceeded the midpoint of our guidance range by approximately $3 million. Our percentage of recurring revenue remained high at 94%, which is a result of our annual prepaid subscription model. Revenue was aided by better than expected demand not only in terms of flow and the number of new enterprise deals, but also the number of large six-figure wins. Specifically, we added 335 new enterprise platform customers and 56 net new six-figure customers in the quarter. This brings the total number of customer spending in excess of $100,000 annually to $771. To provide some context here, 56 was one of our best quarters ever for net new six-figure customers with particular strengths in the 500K plus category, including another quarter of strong competitive takeaways. While we continue to see a healthy number of wins from Greenfield opportunities, some of our largest deals in the quarter were displacements, which we believe is a testament to our cyber exposure value proposition and our best of breed strategy. Another important highlight for the quarter is the growing demand for our solutions that help secure the cloud, which has resulted in an increased adoption of Tenable.io and other cloud security modules such as Lumin, web application security and container security. This trend is an expansion beyond the traditional asset VM use case and TAM as customers are increasingly trying to manage the risk and complexity related to digital transformation and hybrid cloud deployments.

[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 attack surface. It's a cloud and OT deployment. Our strengthening product portfolio positions us for long-term success as our customers shift to the cloud and maintain hybrid environments. We hope to see many of you virtually at the Gartner Invest Virtual Conference, AWS Reinvent and at the Barclays, Stifel, UBS and Wells Fargo Tech conferences in the coming months. We'd 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 Matt on for Sterling. Thanks for taking the question. I was wondering, if you guys could give a little bit more color on the new customers. What was the average deal size for new customers? And how has that kind of changed from previous trends? Thanks.

[Steve Vintz:]

Well, first and foremost, we're very pleased with a velocity of new customers that we continue to add even during the pandemic. We added over 300 new enterprise platform customers in the quarter. Amit commented earlier, but we have particular traction on larger deals, not just 100K opportunities, but we call it out the 500K plus category so, not only the ability to attract new logos during a pandemic which is increasingly difficult in an uncertain macro, but also transacting and closing larger deals. And we also saw strength with competitive takeaway. So overall, I think we're very, very pleased with the traction in new logos. And we think all of this really underscores the growing importance of VM, more specifically cyber exposure. And a good part of this is attributed our ability to secure the cloud as well, with a higher mix of IO sales, and increasing adoption of our cloud based applications such as web apps, container security, even Lumin. So, very pleased overall with the way of new business that we're closing.

[Unidentified Analyst:]

Great, that's very helpful. And then one follow-up, you talked about some of the success you saw in the federal space this quarter. What's really been driving that those trends that you've been seeing?

[Steve Vintz:]

This is Steve.

[Amit Yoran:]

On the Fed…

[Steve Vintz:]

Sorry, go ahead Amit.

[Amit Yoran:]

No, just I think the federal market is an incredibly strategic sector for us. I think we've got to very sizeable footprint for a strong market leadership and terrific relationships in and across the federal government. And we're seeing some of that demand performance and relationships translate directly into momentum building in state and local and some notable wins there. I think I mentioned one of them on the call earlier. We saw seasonally strong sort of uptick in Q3, and this quarter was no different from kind of seasonally strong Q3s in previous years. And we continue to invest in the market. We're excited about our FedRAMP in process -- being in process with FedRAMP. And see that there's additional -- I believe that there's additional opportunity for us in the cloud and web based opportunities in the federal space.

[Unidentified Analyst:]

Great, thanks so much, guys.

[Operator:]

Our next question comes from the line of Hamza Fodderwala with Morgan Stanley. Please proceed with your question.

[Hamza Fodderwala:]

Hey guys, thank you for taking my question. Amit, my first is question for you. So, it seems like vulnerability management clearly growing in priority, especially as we remain in a more distributed work environment. I was wondering if you could expand on that a little bit, because obviously, you talked about the prioritization of VM for quite some time. And as you talk to your customers on their spending priorities into 2021 right, what are you seeing as far as vulnerability management in Tenable in particular becoming a more strategic focus for Chief Security Officers? And are you seeing customers who perhaps saw VM as a nice to have, and now it's becoming more of a must have in this current environment?

[Amit Yoran:]

Yeah, I think there's really a great maturation happening in the security market. I think, folks in years past may have looked at VM as a requirement for some compliance driver, some compliance needs, that they have some regulatory driver. I think people are starting to understand and the market is starting to appreciate the fact that via vulnerability management and understanding your asset base, understanding your compute base, understanding your level of exposure, and what that means to you, from a risk perspective, are just fundamental building blocks for security. And so over the last three years, we've seen vulnerability -- security spend remain strong, but we've seen vulnerability management in the last two or three years rise to the number one, two or three position in just about every single CISO survey, and in many instances, even rating extremely high in CIO surveys. So, I think that's a very strong trend. And candidly, I still think we're in the early innings. We look at the number of new customer lands that we're achieving out on our enterprise platforms. We're looking at the Greenfield accounts and analyzing our larger transactions, which ones are currently chosen from Greenfield and we believe they're still great opportunity in the market, both from a Greenfield perspective as well as an expansion in the existing customer base as a great opportunity. And even more broadly outside of VM or traditional VM, looking at new and modern parts of the attack surface, the cloud based infrastructure, the web applications, the analytic opportunities to create additional value, the operational technology. So, we believe strongly that we're still in the early innings of this market.

[Hamza Fodderwala:]

Got it. Thank you.

[Operator:]

Our next question comes from the line of Rob Owens with Piper Sandler. Please proceed with your question.

[Rob Owens:]

Great, thank you for taking my questions. Amit, with the emphasis on cloud as we have remote work and digital transformation and other cloud adoption, you mentioned DevOps integrated container security. And I think it begs the question, does this require any type of channel adjustments or changing go-to-market motion relative to how these technologies are adopted versus how security has traditionally been purchased and deployed?

[Amit Yoran:]

Yeah, as you unpack the security requirements in DevOps environments and in container environments, they're large and complex and changing quite rapidly as the way people develop changes and evolves right. And we've seen this even in just the last two or three years. What I would say about the opportunity for Tenable, isn't trying to be all things to all people. What we're laser focused on is helping our customer base and the security community understand what their asset base looks like, what that means and how that asset base is exposed and how they can efficiently manage, remediate or lower that risk level. So when it comes to container security, we think it's an integral part of our cloud story. We're not going to try and do every aspect of container security, we're going to help our customers assess what exposures those containers and not DevOps environment is introducing to their cloud deployments, to their enterprise. And so we think we can do that very efficiently. We think we can do it without introducing a whole lot of drag or friction into the DevOps process. And we can do it for existing security users, the enterprises that already trust us with their VM requirements and understanding their level of risk. So if we can do it without impacting DevOps, do it in a frictionless type of way. And we think that's the approach that works for our customer base and will fit nicely with our go-to-market motions. So we're not in today hindering a radical change in who would be bringing that product to or how we could bring it to market.

[Rob Owens:]

And then Steve, you mentioned the 110% renewal rates due to size of land getting bigger, and then asset expansion in the current environment. As cloud continues to ramp and you've run the portfolio, is there a potential inflection point in this metric moving forward?

[Steve Vintz:]

Yes, we think so. And as previously noted renewals were strong in the quarter and came in better than expected. But with larger initial lands, which we talked about earlier and a more moderate pace of asset expansion in the current environment, we did see the dollar-based net expansion rate temper a bit, although it continues to be healthy. We don't manage the business to any one single metric, but its more workloads move to the cloud and with frictionless assessment, we believe customers may want to expand coverage of cloud deployed assets. This quarter, we’re pleased with a number of new logos we added and the number of large deals, because the mix between new and upsell can vary from quarter to quarter. However, because we're adding a healthy number of new logos, we think this bodes well for expansion long-term.

[Rob Owens:]

Great, thank you.

[Operator:]

Our next question comes from the line of Gur Talpaz with Stifel. Please proceed with your question.

[Gur Talpaz:]

Okay, great. Thanks for taking my questions. Amit, this is the second that is directly competitive takeaways. My question is this, do you think the current environment is placing greater emphasis on best of breed VM and if so, why?

[Amit Yoran:]

Well, it's I definitely think that we're growing as a result of our best of breed strategy. I think the enterprise always emphasizes best of breed or historically has emphasized best to breed in a pretty meaningful way. And our ability through native integration into a very rich ecosystem of strategic infrastructure investments that our customers have already made, I think allows them to drive significantly more value from Tenable and at the same time, have tremendous confidence in the results that they're seeing from our product. So I think that in these tough economic markets, there's reflect to quality. And I think we're the quality provider in the space. And feel like we're consistently proving that in the e-valves and proof of values and in the lab testing of the various products.

[Gur Talpaz:]

That's helpful. And Steve, maybe one for you. Last quarter, you noted some late period seasonality. Did you see anything noteworthy this quarter, or would you classify it as more linear or more typical of Q3 here?

[Steve Vintz:]

Not to the degree in which we saw it in Q2, and I'll specifically talk about CCB. As we mentioned earlier, CCB during a pandemic, may not be a good leading indicator of future revenue because it's really predicated on a multitude of factors including overall deal timing, multi or prepaid deals and even URLs, which can have more variability in an uncertain macro. In Q3, deal timing was a consideration. But moreover, we saw a fewer multiyear prepaid deals, meaning less customers elect to pay their subscriptions 300 advanced, which is something we knew could be a possibility headed into the pandemic, something discussed on prior calls, we did not see in Q2, but it certainly it surfaced in Q3. And just to clarify here and connect the dots, with multiyear prepaid deals the long term portion of current deferred revenue automatically runs off into the current portion of deferred revenue each and every period, thereby positively impacting CCB. So that said, it's too early to tell. This is a persistent trend, the CCB and something we’ll certainly continue to monitor during the pandemic. So again, CCB may not be a good leading indicator. That said, we are delighted with the performance in the quarter, CCB growth over 20%. And even CCB aside, short term RPL growth was over 20%. So, while CCB as a metric we continue to track closely. By any measure, I think it's clear we had a good result for the quarter, and we're very pleased.

[Gur Talpaz:]

That's great. Thank you.

[Operator:]

Our next question comes from the line of Jonathan Ho with William Blair. Please proceed with your question.

[Jonathan Ho:]

Hi, good afternoon, I just wanted to start out with some of the Lumin enhancements that you talked about, and perhaps understand a little bit better, what these, I guess differentiators could mean, and how that can potentially impact the pace of adoption of Lumin?

[Operator:]

I mean, we're having trouble with the coms line.

[Amit Yoran:]

Oh, sorry. Well, I guess I take myself off mute that would help greatly. Lumin has a very long sort of vision of where we can go with that product. And I think we're still in the early innings, showing great progress and showing tremendous value through analyzing the vulnerabilities, the asset criticality, translated to risk introduces benchmarking, some real innovative capability across a very large customer base. When you start looking at how people and enterprises assess risk even beyond levels of exposure, there's all sorts of other controls in place. And so we've started inventorying and assessing those security controls, compensating controls, adding those capabilities and insights to Lumin. We've also added things like assessment maturity, which we think is really important, because it's not just hey, how exposed am I, how at risk am I? It's also a question of how confident am I in the answer to that. So, if I have large swaths of my environment, where I don't have visibility, where I don't have understanding where I'm not able to assess risk, or when I assess risk, am I doing it in a real in depth way? Or is it done in a real cursory type of way? And how do all those compared to peers, like we think that type of understanding of assessment maturity of compensating controls or, like very strategic steps forward in what Lumin brings to the table, and there's just a long runway of other innovative capabilities that we're super excited to be adding to the product going forward.

[Jonathan Ho:]

Fantastic. And then just one for Steve, given the COVID uncertainty, how are you thinking about balancing your investments in sales capacity expansion? And can you give us some maybe a sense of how you're thinking about the puts and takes they're just given the environment? Thank you.

[Steve Vintz:]

Sure, that's important to us and something we've talked about for some quarters now. I think the takeaway here is that we are actively balancing growth with profitability of cash flow, we announced almost $17 million in cash flow this quarter, $0.09 in EPS which is an outsize beat for the quarter all with attractive top line growth. We think during the pandemic, it's important to maintain that balance, but I will say this that, of course, we also want to lean in and make sure we invest, invest in go-to-market and innovation, specifically with regard to the latter. We talked about a number of new exciting enhancements to Lumin, as well as frictionless assessment for our ability to go deeper and wider into the cloud. And then on the sales and marketing line, where we're seeing a lot of leverage, that narrative there with leverage in sales and marketing started probably three or even four quarters ago. Last year, we’re spending over 60% of our revenues in sales and marketing, this quarter, I think it was in the low 40% range. One of the reasons why we're seeing leverage is because of the maturity of the sales organization with more reps have been here a year and more than ever. Also management, added a lot of depth to the management team, which we believe now is in the rearview mirror. So a deeper and wider bench in terms of sales leadership. We've also been able to optimize sales overhead and markets where we have critical mass, which is really important. So, lean in to quarter carriers and less on some of the associated overhead that goes with those sales. So as a result, we've been able to drive a lot of leverage in sales and marketing. We did acknowledge or do acknowledge that there are some COVID related savings here in the way of field marketing and travel, which we estimate to be a little less than $3 million a quarter. But some of these savings, to be honest with you, probably will endure even post pandemic as we're demonstrating the ability that not only transact larger deals virtually here, this not just 100k but 500k plus deals. All virtually still requires a lot of intimacy, still requires a lot of touch with both customers and partners alike. We're also able to deploy them virtually here. So we're really proud of the strength and the resiliency of the team here and how we've come together. It also speaks to the value of VM and a market like this. So that's we'll continue to balance growth and profitability. We are going to continue to invest just one of the reasons. We talked about that in the fourth quarter, as reflected in our EPS guide. As we get an early start on 2021 and we'll provide an update on 2021 in our February call. And we look forward to closing the quarter on a good note and updating you on our results in February.

[Operator:]

. Our next question comes from the line of Daniel Ives with Wedbush Securities. Please proceed with your question.

[Daniel Ives:]

Yeah, thanks. So my question a little on the Lumin side, are you getting the sense from talking to the team Dave and whether it's housing partners, I mean, is Lumin changing the conversation with customers for Tenable?

[Steve Vintz:]

Absolutely. When we think about the future of VM or the direction of VM and how enterprises are maturing their VM programs, the vulnerability management programs, it's not just about scanning their systems or deploying agents or understanding all of these different vulnerabilities, it all is they're all data points trying to answer these foundational questions. How secure am I? How at risk am I? Am I exercising a reasonable standard of care with my systems and the data that's entrusted to me as an organization. And so, Lumin is able to really drive at those answers. What do you have? How is it exposed? What does it mean from a risk perspective? How are you rating relative to peers? How confident are you in your answers? And so it is allowing us to move from conversations with users about the efficiency of our products, about the accuracy and the differentiation there to having much more strategic conversations with enterprise leaders and enterprise decision makers. So, it's driving radically different conversations and we couldn't be more pleased about that.

[Daniel Ives:]

Great. And just in terms of federal or state call it government put together, are you sensing that deals are just getting larger in terms of the pipeline as you look out the next two or three, four quarters, just given some of the cloud shifts going on with many of these government agencies in remote environment, which is never even on the table for many of these organizations, called .

[Amit Yoran:]

Yeah, we're definitely seeing new and more opportunities that are web based, that are cloud based and certainly excited to be in process with our FedRAMP designation to align with those requirements. But more broadly federal government is continuing to mature their cyber security and risk management practices, and go through the same digital transformation that we're seeing in the private sector and to some extent having influencer and leading the way for a lot of these large enterprises. So, yeah we think we have a position of great strength in our relationships and customer base in the federal space. And as those compute bases continue to expand and evolve, we think that's going to lead to greater and more opportunity for us.

[Daniel Ives:]

Thanks.

[Operator:]

Our next question comes in the line of Joshua Tilton with Berenberg. Please proceed with your question.

[Joshua Tilton:]

Hi, guys, thanks for taking my questions. I just wanted to follow up on the comments about profitability, maybe from a different perspective. So if we look at the guidance, it implies an incremental non-GAAP operating margin of 75% for FY'20. And I believe this is up from 7% in 2019. So even if you back out the COVID savings that you mentioned, you're still around 65% incremental margin. And I understand that there are COVID savings. But should we expect this metric to meaningfully revert in '21 as you invest in more sales reps, and maybe sales and marketing starts to grow again?

[Steve Vintz:]

Well, as I mentioned earlier we'll talk more about ’21 in February. But what I will say is this that, I believe the leverage that you're seeing today is really a natural reflection of the model. We have 94% recurring revenue. We have over 80% gross margins, we have high renewal rates. And so we have a lot of confidence in both the cash flow and the operating margins of this business long-term. And over the course of -- over the past few years, we've been able to successfully trade points of margin for points of growth, the company have been very profitable in the past. And we know will be very profitable in the future, we have confidence in that, we have confidence in our long term margins for the business. 25% plus free cash flow margins, our ability to become the ruler for the company. And our goal is to try to strike the right balance. There are lots of opportunities to invest here. There's a lot of confidence in the market. We talked about phasing in some early investment for 2021in the fourth quarter and adding -- continuing to add capacity to sales. And obviously, you're seeing some of the investments in innovation and on the product side today with some of the more recent announcements. So yeah, our expectation is we're going to continue to try to walk this off, try to walk this off in the margins in a very careful way, try to balance that with growth. In terms of the macro, there's a lot of uncertainty, there's COVID cases resurging, some parts of the economy shutting down, but we've demonstrated resilience there to close new business. I think that's the one major surprise for us is the success we're having in closing new logos. So we're just going to have to continue to watch this, we're heading into the fourth quarter, which is our largest quarter. And then in our February call, we'll talk about what this means potentially for2021. But, we're excited about our ability to do this in a very balanced way and fully reflection of the model itself.

[Joshua Tilton:]

That was helpful. And then just a follow up, you guys highlighted some deals in the prepared remarks that included Lumin. Could you just possibly comment on the increase in the deal size that you saw from those customers buying Lumin? And then maybe just more broadly, would you say that the $500,000 deals that you saw, was that a function of more assets under coverage or more product purchases?

[Steve Vintz:]

Hi, this is Steve. I'll talk a little bit about Lumin the deal sizes. So yeah, where Lumin is attached, we're seeing a notable uptick in ASPs. The impact on ASPs can range anywhere from 30% to 40% plus. So we're certainly, having success there raising the ASP where Lumin is attached. Now obviously, our focus here given the fact that it's a new product is to drive the attach rates even more. And we think over the course of many years here, I think the attach rates can be50% plus or more. That's not unusual, and with the SaaS companies with successful add-on modules. And then I think your questions pertaining to the 500k plus category. As a combination of both, it's cross out. We are delighted of cross out this quarter, it's up over last quarter, and we continue to have success selling more. And we think it's a compelling long-term opportunity, the ability to secure the cloud, not just tell Tenable.io but sell it with web application security, with Lumin container security. We know our close rates go higher when we actually sell more -- we have more add-on products. So, I think it's a function of both the cross selling in the 500k plus category, but also more asset expansion. As companies undergo digital transformation, spend more money on technology, more assets are coming online, more heterogeneous types of devices and assets create complexity with compute. And we have an ability to be able to assess and discover all that. And as a result, it's having an impact on ASPs and larger deals.

[Joshua Tilton:]

Thank you. And maybe if I could just sneak one more in, any chance you guys to comment on how investors should think about the calculated current growth going into Q4 and what the puts and takes are there?

[Amit Yoran:]

We don't give guidance, as you know on CCB on a quarterly basis. And during our Q1 call this year, we suspended our full year CCB. For reasons I discussed CCB is influenced by a lot of different factors, and may not be a good leading indicator of the underlying performance. We talked about field timing and multi-year prepaid deals for the quarter and early renewals. Given these factors and macro uncertainty surrounding the resurgence of COVID cases, there is the potential for a wider range of outcomes in CCB as we head into what is seasonal, our largest quarter for sales. Despite the potential for variability, though, we feel good about the overall health and momentum of the business. So, the short answer here is that, there's the potential for a wider range of outcomes and feel good about the business, are delighted with the prints of the quarter. And we have the quarter ahead.

[Joshua Tilton:]

Thank you so much. Congrats on the quarter guys.

[Operator:]

Our next question comes from the line of Brian Essex with Goldman Sachs. Please proceed with your question.

[Brian Essex:]

Great, thank you. And thank you for taking the question. Maybe Amit, a quick question for you, on the competitive displacements you mentioned, is there anything we could tease out there with regard to a little more detail? Maybe trends that you're seeing, were these the usual suspects or legacy solutions? Maybe there are projects where you got to the stage of technical evaluation, so you're able to win on the merits of the technology a little bit more effectively? Or maybe they were driven, perhaps they're driven by partnerships where they may have best of breed sin and patch management technology and those deals, maybe just trying to get understanding if there are any kind of trends we can kind of point to for the strong competitive displacement activity in the quarter? And then I have a quick follow-up.

[Amit Yoran:]

Yeah, it's definitely a trend and something that's been picking-up in recent quarters. I think we called out competitive displacements last quarter as well and certainly seeing that continued to accelerate in the third quarter. We believe very strongly in our best of breed strategy. And in the enterprise, the procurement decisions are being driven by the VM program or program officer or Vice President, Director or Senior, whatever sort of level and, and they have a mature understanding of what they're looking for in the program. They're testing the products, they're evaluating the capabilities, and to the extent that they're using our competitive product, and I would say it's predominantly the usual suspects is very sporadic use of other legacy solutions in the enterprise market. It's almost entirely, the sort of primary competitors that ourselves call it as Rapid 7. And so, in the enterprise, we're seeing folks using competitive products, allowing us or doing evolves with us and the ability to convert those into competitive displacements that we're really excited about. And we're also seeing, to just sort of hand in glove with that, a continued very healthy level of Greenfield, adoption of Greenfield accounts, we try and be transparent about this, we measure it quarter and quarter out as well, well north of 30% of our larger transactions coming through us from Greenfield accounts. Meaning they're not using us, call it as Rapid 7 and they have no organic VM capability to speak up. So that's also very exciting.

[Brian Essex:]

Got it, super helpful. And then maybe if I could circle back on another trend, I think we've been kind of eyeing the potential for this kind of second derivative spin on VM, now that enterprises have spent to like -- spent on access and collaboration tools, is there any insight you can offer in terms of the way that CIOs or CISOs are thinking about this as maybe like a reactionary spend after they've already expanded those platforms or is this maybe an for digital transformation that they have to pursue? Just trying to understand their process strategically as they're trying to, like manage their networks?

[Amit Yoran:]

Yeah, it's definitely a strategic enabler. I think what we're seeing in the business, consistent in Q3 as we called it out in Q2 is a heavier shift from our SaaS based platform from Tenable.io, and I think in the current quarter, an acceleration and continued adoption of our cloud based capabilities in modules. We increased use of the cloud native connectors for all the major cloud infrastructure providers, the acceleration of adoption of the web app, scanning capability, container security and Lumin as well. So we're definitely seeing that and we attribute that part to the digital transformation. I would just stop short of or be a little bit hesitant to call it a second order uptick as a result of increased assets or remote assets that may have been deployed over the last couple of quarters. If you look at our business, I think we're still behind where our original plans were going into the year from a growth perspective. And so, I don't look at the current market or environment and say, hey, there's some sort of COVID tailwind for us or we're expecting any meaningful tailwind.

[Brian Essex:]

Got it. That's super helpful. Thank you very much.

[Operator:]

Our next question comes from the line of Andrew Nowinski with D.A. Davidson. Please proceed with your question.

[Andrew Nowinski:]

All right. Thank you, thanks for squeezing me in. So just two quick ones. First, I want to throw the clarification, I think you said you saw a higher mix of cloud solutions in your large deals, but could you provide the actual mix of cloud versus on-prem revenue within those 56 large deals you mentioned?

[Steve Vintz:]

We don't -- hi, this is Steve. We don't disclose details by product. But clearly, Tenable.io has been a catalyst of growth for us, and certainly is an enabler to large deals.

[Andrew Nowinski:]

Okay, very good. And then I know, you said vulnerability management is a higher priority now and attributable to the work from home trend. But I was wondering if you're seeing that evidenced by growth in your pipeline relative to what it was last year. So just wondering, if you could provide any more color as relates to your pipeline on a year-over-year basis? Thanks.

[Amit Yoran:]

Pipeline is something we continue to track very closely during the pandemic, something that we've talked about previously is just to provide a level of transparency. And we weren't sure headed into the pandemic, what we were going to get in terms of close rates and even our ability to generate pipe. And I think it's fair to say that we've been pleased. And we've exceeded what our expectations. We monitor pipe two ways. Number one, not only the coverage, but also the maturity of the pipe, but we also monitor the activity surrounding the pipeline. So I think our ability here to demonstrate real momentum in closing new business is a reflection of that pipe. We're pleased with our close rates. We're pleased with the attach rates that we're seeing on the cross-sell products. Obviously, our ability to secure the cloud is was one of the -- has a tailwind behind a lot of this and both the growing importance of VM, but pipelines is something we continue to direct very closely, and it can move from quarter-to-quarter and from month-to-month. But our success here in new logos reflects our ability to not only drive leads and opportunities at the top of the funnel, but also the ability to qualify it and pull it through where we're spending a lot of time having success.

[Andrew Nowinski:]

Got it. Thank you.

[Operator:]

That was our final question in queue. This does conclude today's teleconference. Thank you all for participating. You may disconnect your lines at this time and have a wonderful day.