Tenable Announces First Quarter 2021 Financial Results

  • Added 331 new enterprise platform customers and 29 net new six-figure customers
  • Revenue of $123.2 million, up 20% year-over-year
  • GAAP loss from operations of $5.8 million; Non-GAAP income from operations of $13.9 million
  • Net cash provided by operating activities of $38.6 million; Free cash flow of $37.6 million

COLUMBIA, Md., April 27, 2021 (GLOBE NEWSWIRE) -- Tenable (Nasdaq: TENB), the Cyber Exposure company, today announced financial results for the quarter ended March 31, 2021.

“We are off to a great start for the year as reflected in our Q1 results, which include strong topline growth and free cash flow,” said Amit Yoran, Chairman and CEO of Tenable. “We have extended our technology and market leadership with the introduction of Tenable.ep, our new unified exposure platform, and the recent acquisition of Alsid. Our best-of-breed product platform and expansive ecosystem of partners are helping today's digital enterprises tackle their toughest security challenges with a holistic, risk-based approach.”

First Quarter 2021 Financial Highlights

  • Revenue was $123.2 million, representing a 20% increase year-over-year.
  • Calculated current billings was $119.5 million, representing a 20% increase year-over-year.
  • GAAP loss from operations was $5.8 million, compared to a loss of $21.7 million in the first quarter of 2020.
  • Non-GAAP income from operations was $13.9 million, compared to a loss of $7.7 million in the first quarter of 2020.
  • GAAP net loss was $7.7 million, compared to a loss of $23.0 million in the first quarter of 2020.
  • GAAP net loss per share was $0.07, compared to a loss per share of $0.23 in the first quarter of 2020.
  • Non-GAAP net income was $14.7 million, compared to a loss of $8.8 million in the first quarter of 2020.
  • Non-GAAP diluted earnings per share was $0.13, compared to a loss per share of $0.09 in the first quarter of 2020.
  • Cash and cash equivalents and short-term investments were $340.3 million at March 31, 2021, compared to $291.8 million at December 31, 2020.
  • Net cash provided by operating activities was $38.6 million, compared to $4.5 million in the first quarter of 2020.
  • Free cash flow was $37.6 million, compared to $3.9 million in the first quarter of 2020.

Recent Business Highlights

  • Added 331 new enterprise platform customers and 29 net new six-figure customers.
  • Launched Tenable.ep, a unified, risk-based vulnerability management exposure platform designed to provide visibility across Tenable’s solutions and prioritize vulnerabilities using predictive analytics. The offering combines our industry-leading products — Tenable.io® Vulnerability Management, Tenable.io Web Application Scanning, Tenable.io Container Security and Tenable Lumin.
  • Completed the acquisition of Alsid SAS ("Alsid") and launched Tenable.ad — a solution designed to secure Active Directory environments and disrupt one of the most common attack paths in both advanced persistent threats and common hacks.
  • Announced our new partnership with IBM Security where we are a preferred partner for fully integrated vulnerability insights, native within the QRadar Security Information and Event Management (SIEM). IBM chose Tenable as a preferred partner due to our technology leadership, including covering more vulnerabilities and providing both on-premises and cloud-based offerings, ease of transition and market leadership.
  • Entered into a new partnership with HCL BigFix, a leading endpoint management platform, making it easier for our customers to automate remediation using the infrastructure platforms they’ve already selected.

Financial Outlook

For the second quarter of 2021, we currently expect:

  • Revenue in the range of $124.0 million to $126.0 million.
  • Non-GAAP income from operations in the range of $7.0 million to $8.0 million.
  • Non-GAAP net income in the range of $5.0 million to $6.0 million, assuming a provision for income taxes of $1.5 million.
  • Non-GAAP diluted earnings per share in the range of $0.04 to $0.05.
  • 114.5 million diluted weighted average shares outstanding.

For the year ending December 31, 2021, we currently expect:

  • Calculated current billings in the range of $575.0 million to $585.0 million.
  • Revenue in the range of $520.0 million to $524.0 million.
  • Non-GAAP income from operations in the range of $34.0 million to $38.0 million.
  • Non-GAAP net income in the range of $28.0 million to $32.0 million, assuming a provision for income taxes of $3.5 million.
  • Non-GAAP diluted earnings per share in the range of $0.24 to $0.28.
  • 115.5 million diluted weighted average shares outstanding.

Conference Call Information

Tenable will host a conference call today, April 27, 2021, at 4:30 p.m. Eastern Time to discuss its financial results. The conference call can be accessed at 877-407-9716 (U.S.) and 201-493-6779 (international). A live webcast of the event will be available on the Tenable Investor Relations website at https://investors.tenable.com. An archived replay of the live broadcast will be available on the Investor Relations page of the website following the call.

About Tenable

Tenable® is the Cyber Exposure company. Over 30,000 organizations around the globe rely on Tenable to understand and reduce cyber risk. As the creator of Nessus®, Tenable extended its expertise in vulnerabilities to deliver the world’s first platform to see and secure any digital asset on any computing platform. Tenable customers include more than 50 percent of the Fortune 500, more than 30 percent of the Global 2000, and large government agencies. Learn more at tenable.com.

Contact Information

Investor Relations
investors@tenable.com

Media Relations
tenablepr@tenable.com

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release other than statements of historical fact, including statements regarding our future results of operations and financial position, business strategy and plans and objectives for future operations, are forward-looking statements and represent our views as of the date of this press release. The words “anticipate,” believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of assumptions and risks and uncertainties, many of which involve factors or circumstances that are beyond our control that could affect our financial results. These risks and uncertainties are detailed in the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2020 and other filings that we make from time to time with the SEC, which are available on the SEC's website at sec.gov. Such risks and uncertainties may be amplified by the COVID-19 pandemic and its potential impact on our business and the global economy. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated or implied in any forward-looking statements. Except as required by law, we are under no obligation to update these forward-looking statements subsequent to the date of this press release, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.

Non-GAAP Financial Measures and Other Key Metrics

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important metrics used by management for financial and operational decision-making. We present these non-GAAP financial measures to assist investors in seeing our financial performance using a management view and because we believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.

Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the financial tables accompanying this press release.

Calculated Current Billings: We define calculated current billings, a non-GAAP financial measure, as total revenue recognized in a period plus the change in current deferred revenue in the corresponding period. We believe that calculated current billings is a key metric to measure our periodic performance. Given that most of our customers pay in advance (including multi-year contracts), but we generally recognize the related revenue ratably over time, we use calculated current billings to measure and monitor our ability to provide our business with the working capital generated by upfront payments from our customers. We believe that calculated current billings, which excludes deferred revenue for periods beyond twelve months in a customer’s contractual term, more closely correlates with annual contract value and that the variability in total billings, depending on the timing of large multi-year contracts and the preference for annual billing versus multi-year upfront billing, may distort growth in one period over another.

Free Cash Flow: We define free cash flow, a non-GAAP financial measure, as net cash provided by operating activities less purchases of property and equipment. We believe free cash flow is an important liquidity measure of the cash (if any) that is available, after purchases of property and equipment, for investment in our business and to make acquisitions. We believe that free cash flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash.

Non-GAAP Income (Loss) from Operations and Non-GAAP Operating Margin: We define these non-GAAP financial measures as their respective GAAP measures, excluding the effect of stock-based compensation, acquisition-related expenses and amortization of acquired intangible assets. Acquisition-related expenses include transaction expenses and costs related to the transfer of acquired intellectual property.

Non-GAAP Net Income (Loss) and Non-GAAP Earnings (Loss) Per Share: We define non-GAAP net income (loss) as GAAP net loss, excluding the effect of stock-based compensation, acquisition-related expenses and amortization of acquired intangible assets, including the applicable tax impact. In addition, we exclude the tax impact of intra-entity asset transfers resulting from the internal restructuring of legal entities. We use non-GAAP net income (loss) to calculate non-GAAP earnings (loss) per share.

Non-GAAP Gross Profit and Non-GAAP Gross Margin: We define non-GAAP gross profit as GAAP gross profit, excluding the effect of stock-based compensation and amortization of acquired intangible assets. Non-GAAP gross margin is defined as non-GAAP gross profit as a percentage of revenue.

Non-GAAP Sales and Marketing Expense, Non-GAAP Research and Development Expense and Non-GAAP General and Administrative Expense: We define these non-GAAP measures as their respective GAAP measures, excluding stock-based compensation and acquisition-related expenses.

TENABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

 Three Months Ended March 31,
(in thousands, except per share data)2021 2020
Revenue$123,189  $102,648 
Cost of revenue(1)22,073  18,701 
Gross profit101,116  83,947 
Operating expenses:   
Sales and marketing(1)58,635  59,855 
Research and development(1)26,838  26,831 
General and administrative(1)21,445  18,933 
Total operating expenses106,918  105,619 
Loss from operations(5,802) (21,672)
Interest (expense) income, net(28) 734 
Other expense, net(66) (960)
Loss before income taxes(5,896) (21,898)
Provision for income taxes1,852  1,079 
Net loss$(7,748) $(22,977)
    
Net loss per share, basic and diluted$(0.07) $(0.23)
Weighted-average shares used to compute net loss per share, basic and diluted104,531  98,855 

       

(1)Includes stock-based compensation as follows:


 Three Months Ended March 31,
 2021 2020
Cost of revenue$937 $747
Sales and marketing6,296 4,496
Research and development4,156 2,948
General and administrative5,563 4,844
Total stock-based compensation$16,952 $13,035


TENABLE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

 March 31, 2021 December 31, 2020
(in thousands, except per share data)(unaudited)  
Assets    
Current assets:   
Cash and cash equivalents$228,386  $178,223 
Short-term investments111,945  113,623 
Accounts receivable (net of allowance for doubtful accounts of $326 and $261 at March 31, 2021 and December 31, 2020, respectively)82,822  115,342 
Deferred commissions31,936  32,143 
Prepaid expenses and other current assets42,570  44,462 
Total current assets497,659  483,793 
Property and equipment, net38,910  38,920 
Deferred commissions (net of current portion)45,364  46,733 
Operating lease right-of-use assets38,364  39,426 
Acquired intangible assets, net12,614  13,193 
Goodwill54,414  54,414 
Other assets13,522  14,110 
Total assets$700,847  $690,589 
    
Liabilities and Stockholders’ Equity   
Current liabilities:   
Accounts payable and accrued expenses$9,555  $5,731 
Accrued compensation26,787  35,509 
Deferred revenue325,113  328,819 
Operating lease liabilities4,298  3,815 
Other current liabilities1,097  1,028 
Total current liabilities366,850  374,902 
Deferred revenue (net of current portion)103,749  105,691 
Operating lease liabilities (net of current portion)53,201  54,529 
Other liabilities5,108  4,802 
Total liabilities528,908  539,924 
    
Stockholders’ equity:   
Common stock (par value: $0.01; 500,000 shares authorized; 105,513 and 103,715 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively)1,055  1,037 
Additional paid-in capital786,476  757,470 
Accumulated other comprehensive income8  10 
Accumulated deficit(615,600) (607,852)
Total stockholders’ equity171,939  150,665 
Total liabilities and stockholders’ equity$700,847  $690,589 


TENABLE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

 Three Months Ended March 31,
(in thousands)2021 2020
Cash flows from operating activities:   
Net loss$(7,748) $(22,977)
Adjustments to reconcile net loss to net cash provided by operating activities:  
Depreciation and amortization2,816  2,678 
Stock-based compensation16,952  13,035 
Other313  515 
Changes in operating assets and liabilities:   
Accounts receivable32,455  20,813 
Prepaid expenses and other assets5,427  5,958 
Accounts payable, accrued expenses and accrued compensation(6,003) (9,608)
Deferred revenue(5,648) (5,036)
Other current and noncurrent liabilities61  (886)
Net cash provided by operating activities38,625  4,492 
    
Cash flows from investing activities:   
Purchases of property and equipment(1,061) (614)
Purchases of short-term investments(29,361) (58,831)
Sales and maturities of short-term investments31,000  78,175 
Net cash provided by investing activities578  18,730 
    
Cash flows from financing activities:   
Proceeds from stock issued in connection with the employee stock purchase plan8,046  7,307 
Proceeds from the exercise of stock options4,015  3,978 
Other financing activities(3) (4)
Net cash provided by financing activities12,058  11,281 
Effect of exchange rate changes on cash and cash equivalents and restricted cash(1,068) (1,097)
Net increase in cash and cash equivalents and restricted cash50,193  33,406 
Cash and cash equivalents and restricted cash at beginning of period178,463  74,665 
Cash and cash equivalents and restricted cash at end of period$228,656  $108,071 


TENABLE HOLDINGS, INC.

REVENUE COMPONENTS AND RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(unaudited)

RevenueThree Months Ended March 31,
(in thousands)2021 2020
Subscription revenue$107,402 $86,390
Perpetual license and maintenance revenue12,405 13,419
Professional services and other revenue3,382 2,839
Revenue(1)$123,189 $102,648


(1)Recurring revenue, which includes revenue from subscription arrangements for software and cloud-based solutions and maintenance associated with perpetual licenses, represented 94% and 93% of revenue in the three months ended March 31, 2021 and 2020, respectively.


Calculated Current BillingsThree Months Ended March 31,
(in thousands)2021 2020
Revenue$123,189  $102,648 
Add: Deferred revenue (current), end of period325,113  270,916 
Less: Deferred revenue (current), beginning of period(328,819) (274,348)
Calculated current billings$119,483  $99,216 


Free Cash FlowThree Months Ended March 31,
(in thousands)2021 2020
Net cash provided by operating activities$38,625  $4,492 
Purchases of property and equipment(1,061) (614)
Free cash flow(1)$37,564  $3,878 

      

(1)Free cash flow for the periods presented was impacted by:


 Three Months Ended March 31,
(in millions)2021 2020
Employee stock purchase plan activity$(5.0) $(3.7)
Acquisition-related expenses(1.7) (0.7)
Tax payment on intra-entity asset transfer2.8   
Capital expenditures related to new headquarters(0.2) (0.1)

Free cash flow for the three months ended March 31, 2021 was benefited by approximately $5 million as a result of the accelerated timing of payments for insurance and professional fees in the three months ended December 31, 2020.

Non-GAAP Income (Loss) from Operations and Non-GAAP Operating MarginThree Months Ended March 31,
(dollars in thousands)2021 2020
Loss from operations$(5,802)  $(21,672) 
Stock-based compensation16,952   13,035  
Acquisition-related expenses2,158   339  
Amortization of acquired intangible assets579   579  
Non-GAAP income (loss) from operations$13,887   $(7,719) 
Operating margin(5)% (21)%
Non-GAAP operating margin11 % (8)%


Non-GAAP Net Income (Loss) and Non-GAAP Earnings (Loss) Per ShareThree Months Ended March 31,
(in thousands, except per share data)2021 2020
Net loss$(7,748) $(22,977)
Stock-based compensation16,952  13,035 
Tax impact of stock-based compensation(1)(4) 198 
Acquisition-related expenses(2)2,158  339 
Amortization of acquired intangible assets(2)579  579 
Tax impact of intra-entity asset transfer(3)2,808   
Non-GAAP net income (loss)$14,745  $(8,826)
    
Net loss per share, diluted$(0.07) $(0.23)
Stock-based compensation0.16  0.13 
Tax impact of stock-based compensation(1)   
Acquisition-related expenses(2)0.02   
Amortization of acquired intangible assets(2)  0.01 
Tax impact of intra-entity asset transfer(3)0.03   
Adjustment to diluted earnings per share(4)(0.01)  
Non-GAAP earnings (loss) per share, diluted$0.13  $(0.09)
    
Weighted-average shares used to compute GAAP net loss per share, diluted104,531 98,855
    
Weighted-average shares used to compute non-GAAP earnings (loss) per share, diluted(5)113,934 98,855


(1)The tax impact of stock-based compensation is based on the tax treatment for the applicable tax jurisdictions.
(2)The tax impacts of acquisition-related expenses and the amortization of acquired intangible assets are not material.
(3)The tax impact of the intra-entity asset transfer is related to the internal restructuring of Indegy, resulting in a current tax payment based on the applicable Israeli tax rate.
(4)An adjustment may be necessary to reconcile GAAP net loss per share, which excludes potentially dilutive shares, to non-GAAP earnings per share, which includes potentially dilutive shares.
(5)In periods in which there is a non-GAAP net loss, basic and diluted weighted average shares outstanding are the same, as potentially dilutive shares would be antidilutive.


Non-GAAP Gross Profit and Non-GAAP Gross MarginThree Months Ended March 31,
(dollars in thousands)2021 2020
Gross profit$101,116  $83,947 
Stock-based compensation937  747 
Amortization of acquired intangible assets579  579 
Non-GAAP gross profit$102,632  $85,273 
Gross margin82% 82%
Non-GAAP gross margin83% 83%


Non-GAAP Sales and Marketing ExpenseThree Months Ended March 31,
(dollars in thousands)2021 2020
Sales and marketing expense$58,635  $59,855 
Less: Stock-based compensation6,296  4,496 
Non-GAAP sales and marketing expense$52,339  $55,359 
Non-GAAP sales and marketing expense as % of revenue42% 54%


Non-GAAP Research and Development ExpenseThree Months Ended March 31,
(dollars in thousands)2021 2020
Research and development expense$26,838  $26,831 
Less: Stock-based compensation4,156  2,948 
Non-GAAP research and development expense$22,682  $23,883 
Non-GAAP research and development expense as % of revenue18% 23%


Non-GAAP General and Administrative ExpenseThree Months Ended March 31,
(dollars in thousands)2021 2020
General and administrative expense$21,445  $18,933 
Less: Stock-based compensation5,563  4,844 
Less: Acquisition-related expenses2,158  339 
Non-GAAP general and administrative expense$13,724  $13,750 
Non-GAAP general and administrative expense as % of revenue11% 13%

The following adjustments to reconcile forecasted non-GAAP income from operations, non-GAAP net income and non-GAAP earnings per share are subject to a number of uncertainties and assumptions, each of which are inherently difficult to forecast. As a result, actual adjustments and GAAP results may differ materially.

Forecasted Non-GAAP Income from OperationsThree Months Ending June 30, 2021 Year Ending December 31, 2021
(in millions)Low High Low High
Forecasted loss from operations$(18.0) $(17.0) $(60.0) $(56.0)
Forecasted stock-based compensation21.0   21.0   84.0   84.0  
Forecasted acquisition-related expenses2.8   2.8   5.0   5.0  
Forecasted amortization of acquired intangible assets(1)1.2   1.2   5.0   5.0  
Forecasted non-GAAP income from operations$7.0   $8.0   $34.0   $38.0  


Forecasted Non-GAAP Net Income and Non-GAAP Earnings Per ShareThree Months Ending June 30, 2021 Year Ending December 31, 2021
(in millions, except per share data)Low High Low High
Forecasted net loss$(18.4) $(17.4) $(66.1) $(62.1)
Forecasted stock-based compensation21.0   21.0   84.0   84.0  
Forecasted tax impact of stock-based compensation0.1   0.1   1.1   1.1  
Forecasted acquisition-related expenses2.8   2.8   5.0   5.0  
Forecasted tax impact of acquisition(1.7) (1.7) (3.8) (3.8)
Forecasted amortization of acquired intangible assets(1)1.2   1.2   5.0   5.0  
Forecasted tax impact of intra-entity asset transfer—   —   2.8   2.8  
Forecasted non-GAAP net income$5.0   $6.0   $28.0   $32.0  
        
Forecasted net loss per share, diluted$(0.17) $(0.16) $(0.62) $(0.58)
Forecasted stock-based compensation0.20   0.20   0.78   0.78  
Forecasted tax impact of stock-based compensation—   —   0.01   0.01  
Forecasted acquisition-related expenses0.03   0.03   0.05   0.05  
Forecasted tax impact of acquisition(0.02) (0.02) (0.04) (0.04)
Forecasted amortization of acquired intangible assets(1)0.01   0.01   0.05   0.05  
Forecasted tax impact of intra-entity asset transfer—   —   0.03   0.03  
Adjustment to diluted earnings per share(2)(0.01) (0.01) (0.02) (0.02)
Forecasted non-GAAP earnings per share, diluted$0.04   $0.05   $0.24   $0.28  
        
Forecasted weighted-average shares used to compute net loss per share, diluted106.0 106.0 107.0 107.0
Forecasted weighted-average shares used to compute non-GAAP earnings per share, diluted114.5 114.5 115.5 115.5

  

(1)Forecast assumes and estimate of approximately $28 million of acquired intangible assets from Alsid amortized over seven years. This estimate is preliminary, as we have not completed our purchase price allocation and the valuation of acquired intangible assets and the estimated useful life is subject to change.
(2)Adjustment to reconcile GAAP net loss per share, which excludes potentially dilutive shares, to non-GAAP earnings per share, which includes potentially dilutive shares.

 


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