Tenable Announces First Quarter 2020 Financial Results
- Added 319 new enterprise platform customers and 24 net new six-figure customers
- Revenue of $102.6 million, up 28% year-over-year
- Net cash provided by operating activities of $4.5 million
- Free cash flow of $3.9 million, which is our first quarter of positive free cash flow as a public company
COLUMBIA, Md., April 28, 2020 (GLOBE NEWSWIRE) -- Tenable (Nasdaq: TENB), the Cyber Exposure company, today announced financial results for the quarter ended March 31, 2020.
"In this unprecedented time and incredibly uncertain environment, Tenable has delivered a successful first quarter," said Amit Yoran, Chairman and CEO of Tenable. "Our highly resilient and deeply committed team has come together to deliver impressive top- and bottom-line results, highlighted by our first quarter of positive free cash flow. We believe our Cyber Exposure solutions continue to be strategic, and we are well positioned to serve our customers' needs as their risk profiles continue to evolve."
First Quarter 2020 Financial Highlights
- Revenue was $102.6 million, representing a 28% increase year-over-year.
- Calculated current billings was $99.2 million, representing a 22% increase year-over-year.
- GAAP loss from operations was $21.7 million, compared to a loss of $22.7 million in the first quarter of 2019.
- Non-GAAP loss from operations was $7.7 million, compared to a loss of $13.2 million in the first quarter of 2019.
- GAAP net loss was $23.0 million, compared to a loss of $21.4 million in the first quarter of 2019.
- GAAP net loss per share was $0.23, consistent with the first quarter of 2019.
- Non-GAAP net loss was $8.8 million, compared to a loss of $12.6 million in the first quarter of 2019.
- Non-GAAP net loss per share was $0.09, compared to a loss per share of $0.13 in the first quarter of 2019.
- Cash and cash equivalents and short-term investments were $226.7 million at March 31, 2020, compared to $212.3 million at December 31, 2019.
- Net cash provided by operating activities was $4.5 million, compared to $0.9 million net cash used in operating activities in the first quarter of 2019.
- Free cash flow was $3.9 million, compared to $(3.2) million in the first quarter of 2019.
- Both cash flows from operating activities and free cash flow included a reduction related to employee stock purchase plan activity of $3.7 million and $4.9 million in the first quarter of 2020 and 2019, respectively. The first quarter of 2020 also included $0.7 million of acquisition-related payments for Indegy and $0.1 million of capital expenditures for our new headquarters.
Recent Business Highlights
- Added 319 new enterprise platform customers and 24 net new six-figure customers.
- Unveiled new Tenable.io® Web Application Scanning product enhancements to help enterprises secure the web applications that power the digital economy and represent the most common cyber attack threat they face.
- In response to the COVID-19 crisis, Tenable launched a program designed to help customers secure their remote workforces:
- Extended all Tenable.io licenses to cover additional assets through June 15 to assist with remote workforce transition.
- Offered Tenable.io licenses with agent scanning to Tenable.sc™ and Nessus® customers through June 15.
- Coordinated weekly virtual webinars with Tenable’s principal engineers which included tips on how to set up agent scanning, deployment best practices and live Q&A with experts to help address specific queries.
Financial Outlook
For the second quarter of 2020, we currently expect:
- Revenue in the range of $101.0 million to $103.0 million.
- Non-GAAP loss from operations in the range of $5.5 million to $3.5 million.
- Non-GAAP net loss in the range of $6.0 million to $4.0 million.
- Non-GAAP net loss per share in the range of $0.06 to $0.04.
- 99.8 million basic weighted average shares outstanding.
Given the uncertainty around the duration of the current public health crisis and its impact on the overall economy, there is a wide range of outcomes for this year. As such, we are withdrawing our 2020 guidance for revenue, calculated current billings, non-GAAP loss from operations, non-GAAP net loss and non-GAAP net loss per share, which we provided on February 4, 2020.
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 May 12, 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
[email protected]
Media Relations
Cayla Baker
[email protected]
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 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 (used in) 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 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 Loss and Non-GAAP Net Loss Per Share: We define non-GAAP net 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 loss to calculate non-GAAP net 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) | 2020 | 2019 | |||||
| Revenue | $ | 102,648 | $ | 80,301 | |||
| Cost of revenue(1) | 18,701 | 13,226 | |||||
| Gross profit | 83,947 | 67,075 | |||||
| Operating expenses: | |||||||
| Sales and marketing(1) | 59,855 | 52,689 | |||||
| Research and development(1) | 26,831 | 21,935 | |||||
| General and administrative(1) | 18,933 | 15,136 | |||||
| Total operating expenses | 105,619 | 89,760 | |||||
| Loss from operations | (21,672 | ) | (22,685 | ) | |||
| Interest income, net | 734 | 1,556 | |||||
| Other expense, net | (960 | ) | (214 | ) | |||
| Loss before income taxes | (21,898 | ) | (21,343 | ) | |||
| Provision for income taxes | 1,079 | 97 | |||||
| Net loss | $ | (22,977 | ) | $ | (21,440 | ) | |
| Net loss per share, basic and diluted | $ | (0.23 | ) | $ | (0.23 | ) | |
| Weighted-average shares used to compute net loss per share, basic and diluted | 98,855 | 93,738 | |||||
_______________
(1) Includes stock-based compensation as follows:
| Three Months Ended March 31, | |||||||
| 2020 | 2019 | ||||||
| Cost of revenue | $ | 747 | $ | 652 | |||
| Sales and marketing | 4,496 | 3,366 | |||||
| Research and development | 2,948 | 2,030 | |||||
| General and administrative | 4,844 | 3,271 | |||||
| Total stock-based compensation | $ | 13,035 | $ | 9,319 | |||
TENABLE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
| March 31, 2020 | December 31, 2019 | ||||||
| (in thousands, except per share data) | (unaudited) | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 107,769 | $ | 74,363 | |||
| Short-term investments | 118,924 | 137,904 | |||||
| Accounts receivable (net of allowance for doubtful accounts of $399 and $764 at March 31, 2020 and December 31, 2019, respectively) | 74,378 | 94,827 | |||||
| Deferred commissions | 28,751 | 28,499 | |||||
| Prepaid expenses and other current assets | 25,632 | 27,369 | |||||
| Total current assets | 355,454 | 362,962 | |||||
| Property and equipment, net | 30,534 | 26,847 | |||||
| Deferred commissions (net of current portion) | 41,991 | 43,766 | |||||
| Operating lease right-of-use assets | 41,283 | 42,847 | |||||
| Intangible assets, net | 14,929 | 15,508 | |||||
| Goodwill | 54,138 | 54,138 | |||||
| Other assets | 11,245 | 12,544 | |||||
| Total assets | $ | 549,574 | $ | 558,612 | |||
| Liabilities and Stockholders’ Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 4,404 | $ | 1,732 | |||
| Accrued expenses | 14,536 | 8,436 | |||||
| Accrued compensation | 23,357 | 36,634 | |||||
| Deferred revenue | 270,916 | 274,348 | |||||
| Operating lease liabilities | 4,866 | 5,209 | |||||
| Other current liabilities | 750 | 1,284 | |||||
| Total current liabilities | 318,829 | 327,643 | |||||
| Deferred revenue (net of current portion) | 87,175 | 88,779 | |||||
| Operating lease liabilities (net of current portion) | 40,301 | 40,663 | |||||
| Other liabilities | 2,893 | 2,622 | |||||
| Total liabilities | 449,198 | 459,707 | |||||
| Stockholders’ equity: | |||||||
| Common stock (par value: $0.01; 500,000 shares authorized; 100,003 and 98,587 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively) | 1,000 | 986 | |||||
| Additional paid-in capital | 687,311 | 662,990 | |||||
| Accumulated other comprehensive income | 163 | 50 | |||||
| Accumulated deficit | (588,098 | ) | (565,121 | ) | |||
| Total stockholders’ equity | 100,376 | 98,905 | |||||
| Total liabilities and stockholders’ equity | $ | 549,574 | $ | 558,612 | |||
TENABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| Three Months Ended March 31, | |||||||
| (in thousands) | 2020 | 2019 | |||||
| Cash flows from operating activities: | |||||||
| Net loss | $ | (22,977 | ) | $ | (21,440 | ) | |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
| Depreciation and amortization | 2,678 | 1,622 | |||||
| Stock-based compensation | 13,035 | 9,319 | |||||
| Deferred income taxes | 41 | — | |||||
| Other | 474 | (284 | ) | ||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | 20,813 | 11,104 | |||||
| Prepaid expenses and other current assets | 1,663 | 1,374 | |||||
| Deferred commissions | 1,523 | (377 | ) | ||||
| Other assets | 2,155 | 54 | |||||
| Accounts payable and accrued expenses | 3,669 | 3,372 | |||||
| Accrued compensation | (13,277 | ) | (7,233 | ) | |||
| Deferred revenue | (5,036 | ) | 2,002 | ||||
| Other current liabilities | (535 | ) | (429 | ) | |||
| Other liabilities | 266 | 42 | |||||
| Net cash provided by (used in) operating activities | 4,492 | (874 | ) | ||||
| Cash flows from investing activities: | |||||||
| Purchases of property and equipment | (614 | ) | (2,306 | ) | |||
| Purchases of short-term investments | (58,831 | ) | (53,915 | ) | |||
| Sales and maturities of short-term investments | 78,175 | 41,750 | |||||
| Net cash provided by (used in) investing activities | 18,730 | (14,471 | ) | ||||
| Cash flows from financing activities: | |||||||
| Principal payments under finance lease obligations | (4 | ) | (4 | ) | |||
| Proceeds from stock issued in connection with the employee stock purchase plan | 7,307 | 8,579 | |||||
| Proceeds from the exercise of stock options | 3,978 | 9,878 | |||||
| Net cash provided by financing activities | 11,281 | 18,453 | |||||
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | (1,097 | ) | (258 | ) | |||
| Net increase in cash and cash equivalents and restricted cash | 33,406 | 2,850 | |||||
| Cash and cash equivalents and restricted cash at beginning of period | 74,665 | 165,378 | |||||
| Cash and cash equivalents and restricted cash at end of period | $ | 108,071 | $ | 168,228 | |||
TENABLE HOLDINGS, INC.
REVENUE COMPONENTS AND RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(unaudited)
| Revenue | Three Months Ended March 31, | ||||||
| (in thousands) | 2020 | 2019 | |||||
| Subscription revenue | $ | 86,390 | $ | 64,737 | |||
| Perpetual license and maintenance revenue | 13,419 | 13,527 | |||||
| Professional services and other revenue | 2,839 | 2,037 | |||||
| Revenue(1) | $ | 102,648 | $ | 80,301 | |||
_______________
(1) Recurring revenue, which includes revenue from subscription arrangements for software and cloud-based solutions and maintenance associated with perpetual licenses, represented 93% and 91% of revenue for the three months ended March 31, 2020 and 2019, respectively.
| Calculated Current Billings | Three Months Ended March 31, | ||||||
| (in thousands) | 2020 | 2019 | |||||
| Revenue | $ | 102,648 | $ | 80,301 | |||
| Add: Deferred revenue (current), end of period | 270,916 | 214,508 | |||||
| Less: Deferred revenue (current), beginning of period | (274,348 | ) | (213,644 | ) | |||
| Calculated current billings | $ | 99,216 | $ | 81,165 | |||
| Free Cash Flow | Three Months Ended March 31, | ||||||
| (in thousands) | 2020 | 2019 | |||||
| Net cash provided by (used in) operating activities | $ | 4,492 | $ | (874 | ) | ||
| Purchases of property and equipment | (614 | ) | (2,306 | ) | |||
| Free cash flow(1) | $ | 3,878 | $ | (3,180 | ) | ||
________________
(1) Free cash flow included a reduction related to employee stock purchase plan activity of $3.7 million and $4.9 million in the three months ended March 31, 2020 and 2019, respectively. The three months ended March 31, 2020 also included $0.7 million of acquisition-related payments for Indegy and $0.1 million of capital expenditures for our new headquarters.
| Non-GAAP Loss from Operations and Non-GAAP Operating Margin | Three Months Ended March 31, | ||||||
| (dollars in thousands) | 2020 | 2019 | |||||
| Loss from operations | $ | (21,672 | ) | $ | (22,685 | ) | |
| Stock-based compensation | 13,035 | 9,319 | |||||
| Acquisition-related expenses | 339 | — | |||||
| Amortization of acquired intangible assets | 579 | 151 | |||||
| Non-GAAP loss from operations | $ | (7,719 | ) | $ | (13,215 | ) | |
| Operating margin | (21 | )% | (28 | )% | |||
| Non-GAAP operating margin | (8 | )% | (16 | )% | |||
| Non-GAAP Net Loss, Non-GAAP Net Loss Per Share and Non-GAAP Net Loss Per Share | Three Months Ended March 31, | ||||||
| (in thousands, except per share data) | 2020 | 2019 | |||||
| Net loss | $ | (22,977 | ) | $ | (21,440 | ) | |
| Acquisition-related expenses | 339 | — | |||||
| Stock-based compensation | 13,035 | 9,319 | |||||
| Tax impact of stock-based compensation(1) | 198 | (649 | ) | ||||
| Amortization of acquired intangible assets(2) | 579 | 151 | |||||
| Non-GAAP net loss | $ | (8,826 | ) | $ | (12,619 | ) | |
| Net loss per share, basic and diluted | $ | (0.23 | ) | $ | (0.23 | ) | |
| Acquisition-related expenses | — | — | |||||
| Stock-based compensation | 0.13 | 0.10 | |||||
| Tax impact of stock-based compensation(1) | — | — | |||||
| Amortization of acquired intangible assets(2) | 0.01 | — | |||||
| Non-GAAP net loss per share, basic and diluted | $ | (0.09 | ) | $ | (0.13 | ) | |
| Weighted-average shares used to compute non-GAAP net loss per share, basic and diluted | 98,855 | 93,738 | |||||
________________
(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.
| Non-GAAP Gross Profit and Non-GAAP Gross Margin | Three Months Ended March 31, | ||||||
| (dollars in thousands) | 2020 | 2019 | |||||
| Gross profit | $ | 83,947 | $ | 67,075 | |||
| Stock-based compensation | 747 | 652 | |||||
| Amortization of acquired intangible assets | 579 | 151 | |||||
| Non-GAAP gross profit | $ | 85,273 | $ | 67,878 | |||
| Gross margin | 82 | % | 84 | % | |||
| Non-GAAP gross margin | 83 | % | 85 | % | |||
| Non-GAAP Sales and Marketing Expense | Three Months Ended March 31, | ||||||
| (dollars in thousands) | 2020 | 2019 | |||||
| Sales and marketing expense | $ | 59,855 | $ | 52,689 | |||
| Less: Stock-based compensation | 4,496 | 3,366 | |||||
| Non-GAAP sales and marketing expense | $ | 55,359 | $ | 49,323 | |||
| Non-GAAP sales and marketing expense as % of revenue | 54 | % | 61 | % | |||
| Non-GAAP Research and Development Expense | Three Months Ended March 31, | ||||||
| (dollars in thousands) | 2020 | 2019 | |||||
| Research and development expense | $ | 26,831 | $ | 21,935 | |||
| Less: Stock-based compensation | 2,948 | 2,030 | |||||
| Non-GAAP research and development expense | $ | 23,883 | $ | 19,905 | |||
| Non-GAAP research and development expense as % of revenue | 23 | % | 25 | % | |||
| Non-GAAP General and Administrative Expense | Three Months Ended March 31, | ||||||
| (dollars in thousands) | 2020 | 2019 | |||||
| General and administrative expense | $ | 18,933 | $ | 15,136 | |||
| Less: Stock-based compensation | 4,844 | 3,271 | |||||
| Less: Acquisition-related expenses | 339 | — | |||||
| Non-GAAP general and administrative expense | $ | 13,750 | $ | 11,865 | |||
| Non-GAAP general and administrative expense as % of revenue | 13 | % | 15 | % | |||
| Forecasted Non-GAAP Loss from Operations | Three Months Ending June 30, 2020 | ||||||
| (in millions) | Low | High | |||||
| Forecasted loss from operations | $ | (22.3 | ) | $ | (20.3 | ) | |
| Forecasted stock-based compensation | 16.2 | 16.2 | |||||
| Forecasted amortization of acquired intangible assets | 0.6 | 0.6 | |||||
| Forecasted non-GAAP loss from operations | $ | (5.5 | ) | $ | (3.5 | ) | |
| Forecasted Non-GAAP Net Loss and Non-GAAP Net Loss Per Share | Three Months Ending June 30, 2020 | ||||||
| (in millions, except per share data) | Low | High | |||||
| Forecasted net loss | $ | (23.2 | ) | $ | (21.2 | ) | |
| Forecasted stock-based compensation | 16.2 | 16.2 | |||||
| Tax impact of stock-based compensation | 0.4 | 0.4 | |||||
| Forecasted amortization of acquired intangible assets | 0.6 | 0.6 | |||||
| Forecasted non-GAAP net loss | $ | (6.0 | ) | $ | (4.0 | ) | |
| Forecasted net loss per share, basic and diluted | $ | (0.23 | ) | $ | (0.21 | ) | |
| Forecasted stock-based compensation | 0.16 | 0.16 | |||||
| Tax impact of stock-based compensation | — | — | |||||
| Forecasted amortization of acquired intangible assets | 0.01 | 0.01 | |||||
| Forecasted non-GAAP net loss per share, basic and diluted | $ | (0.06 | ) | $ | (0.04 | ) | |
| Forecasted weighted-average shares used to compute net loss per share, basic and diluted | 99.8 | 99.8 | |||||