Tenable Announces Third Quarter 2020 Financial Results

• Added 335 new enterprise platform customers and 56 net new six-figure customers
• Revenue of $112.3 million, up 22% year-over-year
• GAAP loss from operations of $3.5 million; Non-GAAP income from operations of $12.4 million
• Net cash provided by operating activities of $24.8 million; Free cash flow of $16.7 million

COLUMBIA, Md., Oct. 27, 2020 (GLOBE NEWSWIRE) -- Tenable (Nasdaq: TENB), the Cyber Exposure company, today announced financial results for the quarter ended September 30, 2020.

“We are pleased with our results for the quarter which includes attractive topline growth and expanding operating and free cash flow margins,” said Amit Yoran, Chairman and CEO of Tenable. “Remote work models have accelerated digital transformation and cloud adoption and organizations are increasingly relying on Tenable to secure these dynamic, modern environments. Tenable is helping customers invest in the cloud confidently and securely, empowering them to take a unified, risk-based approach to vulnerability management.”

Third Quarter 2020 Financial Highlights

• Revenue was $112.3 million, representing a 22% increase year-over-year.
• Calculated current billings was $133.7 million, representing a 21% increase year-over-year.
• GAAP loss from operations was $3.5 million, compared to a loss of $18.3 million in the third quarter of 2019.
• Non-GAAP income from operations was $12.4 million, compared to a loss of $7.7 million in the third quarter of 2019.
• GAAP net loss was $5.9 million, compared to a loss of $17.6 million in the third quarter of 2019.
• GAAP net loss per share was $0.06, compared to a loss per share of $0.18 in the third quarter of 2019.
• Non-GAAP net income was $10.5 million, compared to a loss of $6.7 million in the third quarter of 2019.
• Non-GAAP diluted earnings per share was $0.09, compared to a loss per share of $0.07 in the third quarter of 2019.
• Cash and cash equivalents and short-term investments were $269.1 million at September 30, 2020, compared to $212.3 million at December 31, 2019.
• Net cash provided by operating activities was $24.8 million, compared to $4.7 million of net cash used in operating activities in the third quarter of 2019.
• Free cash flow was $16.7 million, compared to $(9.6) million in the third quarter of 2019.

Recent Business Highlights

• Added 335 new enterprise platform customers and 56 net new six-figure customers.
• Unveiled Frictionless Assessment, a new cloud security capability for Tenable.io ® that empowers customers to instantly and continuously evaluate their cloud assets and allows them to quickly detect new vulnerabilities without the need to schedule a scan or deploy an agent.
• Announced enhancements to Tenable Lumin™, including new capabilities to assess organizations’ remediation maturity, an inventory of endpoint security controls and predictive scoring for more comprehensive insight into an organization’s cyber exposure.
• Achieved “In Process” designation from the Federal Risk and Authorization Management Program (FedRAMP) for Tenable.io, our cloud-based vulnerability management platform.
• Announced a new partnership with the Center for Internet Security, Inc. (CIS®) that will bolster cyber hygiene for both public and private sector organizations, making foundational cybersecurity more affordable, accessible and actionable.

Financial Outlook

For the fourth quarter of 2020, we currently expect:

• Revenue in the range of $113.0 million to $115.0 million.
• Non-GAAP income from operations in the range of $8.0 million to $9.0 million.
• Non-GAAP net income in the range of $6.0 million to $7.0 million.
• Non-GAAP diluted earnings per share in the range of $0.05 to $0.06.
• 113.0 million diluted weighted average shares outstanding.

For the year ending December 31, 2020, we currently expect:

• Revenue in the range of $435.1 million to $437.1 million.
• Non-GAAP income from operations in the range of $18.4 million to $19.4 million.
• Non-GAAP net income in the range of $12.4 million to $13.4 million.
• Non-GAAP diluted earnings per share in the range of $0.11 to $0.12.
• 110.6 million diluted weighted average shares outstanding.

Conference Call Information

Tenable will host a conference call 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 . A replay of the webcast will be available until November 10, 2020.

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
Andrea DiMarco
investors@tenable.com

Media Relations
Cayla Baker
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, 2019, our Quarterly Report on Form 10-Q for the quarter ended June 30, 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 (used in) 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. 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)

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(1) Includes stock-based compensation as follows:

TENABLE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS

TENABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

TENABLE HOLDINGS, INC.
REVENUE COMPONENTS AND RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(unaudited)

_______________
(1) Recurring revenue, which includes revenue from subscription arrangements for software and cloud-based solutions and maintenance associated with perpetual licenses, represented 94% and 92% in the three months ended September 30, 2020 and 2019, respectively, and represented 93% and 91% of revenue in the nine months ended September 30, 2020 and 2019, respectively.

________________
(1) Free cash flow included reductions related to employee stock purchase plan activity of $2.3 million and $3.7 million in the three months ended September 30, 2020 and 2019, respectively, and $2.7 million, and $4.7 million in the nine months ended September 30, 2020 and 2019, respectively. The three and nine months ended September 30, 2020 included $5.6 million and $14.2 million, respectively, in proceeds from lease incentives as well as $6.8 million and $16.6 million, respectively, in capital expenditures for our new headquarters. The three and nine months ended September 30, 2019 included $2.4 million in capital expenditures for our new headquarters. The nine months ended September 30, 2020 also included $0.7 million of acquisition-related payments for Indegy.

________________
(1) The tax impact of stock-based compensation is based on the tax treatment for the applicable tax jurisdictions.
(2) The tax impact of amortization of acquired intangible assets is not material.
(3) Adjustment to reconcile GAAP net loss per share, which excludes potentially dilutive shares, to non-GAAP earnings per share, which includes potentially dilutive shares.
(4) 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.

________________
(1) Adjustment to reconcile GAAP net loss per share, which excludes potentially dilutive shares, to non-GAAP earnings per share, which includes potentially dilutive shares.