Tenable (TENB) 1 Nov 232023 Q3 Earnings call transcript

Greetings, and welcome to Tenable's Q3 2023 Earnings Conference Call. [Operator Instructions] As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Erin Karney, Vice President Investor Relations. Thank you, Ms. Karney, you may begin.

Thank you, operator, and thank you all for joining us on today's conference call to discuss Tenable's third quarter 2023 financial results. call Steve Amit Financial Vintz the Executive our Officer. on and Officer; Stephens, me today Yoran, are Chief With our Chief our Prior press quarter. we call, financial announcing to the results issued for this release a

can tenable.com. at You IR the on press the find website release

flow. These growth the let to during our quarter expectations our including products impact and and planned customer for demand and the Tenable of some in growth expectations cause of we beyond XXXX recent for guidance One, involve in the and business, in forward-looking these and statements risks and profitability forward-looking begin, of financial statements. XXXX, we and the results to and new make uncertainties, the including in fourth actual control. potential remind free of and our benefits our first changes those differ materially me Before this drivers full and and expectations anticipated the long-term that regarding the from are quarter by our call, security Aromatic acquisition solutions, innovation competitive you market; landscape threat cash our will statements adoption our course services, which relating year our industry statements which of of for in could and position

events. You should not future a forward-looking statements of rely upon prediction as

not be We of to management's represent date. our statements any obligation or representative beliefs and and assumptions considered statements update outlook. should of views Forward-looking any any as as only our disclaim subsequent of forward-looking today

XXXX, our report XX-Q in SEC subsequent the most affect website reports are our we Form with SEC, on and risks to recent XX, sec.gov. which For could annual that for on and ended actual that those the report a at available refer further material of quarter June Form the quarterly factors discussion results, file on the our please contained important XX-K

measures. performance their of discuss are of for of are versus addition These financial with non-GAAP measures today's There accordance in limitations a non-GAAP in financial we during financial GAAP to to financial call, and prepared addition, non-GAAP measures equivalents. number In these related to closest the use will substitute superior a GAAP. not measures or

we the includes section GAAP to Amit. also call Our available to that measures for the our Relations earnings and issued over these release website. I'll reconciliations today on turn now non-GAAP Investor of is

the with solid Thank you, provide Erin. context and accelerating Tenable we QX in a on [indiscernible] seeing our and touch are cloud. We strong financial discuss delivered the with contributions OT strategy our growth our some public performance platform from with quarter, momentum on sector. the One,

continue by addition, we to significant million income. delivering beat a to deliver margin leverage operating In $XX

business While led typically than good services to sales strength an contribution divergence CCB. this licenses and perpetual the mix underlying between was to outsized to was unusual in performance see of we mix the business sector, with we high a larger quarter, and different much shift CCB. At our and minimal saw a public of the due the to level,

and our in architecture through customer the gives vendor model the and only to our exposure or address We customers deployment both ability their to cloud, management. optimize which the are deliver customers we benefits enables directly for flexible simplified Our believe our deployments, visibility management deployments on-premise to hydra, which us on-premises unified hybrid bias.

to added solutions and customers, large our importance a record testament growing and a public of we the During number enterprise. our sector in strength of the quarter, X-figure

into trusting strong surface, signaling traction seeing strategic of and large areas outperformance leadership customers expansion their use signing mix great also federal Our and in understand expand products. base positions around customer early larger, products helping deals installed more portfolio secure business organizations beyond them are our in our believe tax even still risk to going consolidating cases We OT to help VM of we think our are their a that leadership of. Tenable. down boils deals. In in expanding the us innings risk in manage helping our our This more for particular, our to of We're growing reflects us space. this we using forward opportunity in considerable

our the to year. with some pleased persist mid-market, we're into next While QX in quarter in performance we we're strength and saw deals, in expect the softness and seeing in large which

risk. facing clarity dots As at and to and accurately connects identities, surface inventories around environment of in identifying including permissions, attack are and all identifying top a the of most including use the their the systems, surface continues customers delivers which and expand, the are attack prioritizing configurations their prioritizing for technology vulnerabilities Tenable looking assets attack points entire analytics, areas across of asset and building One path from externally risk. magnify the surface of differentiated which

continue we to innovator, out One. build an As Tenable capabilities within

can customers focus We efficient AI successful intuitive using and deliver preventing are resources on be now more faster, so more generative attacks. more insights to

features, expect we new for to only to Additionally, accelerate including customers. identity assessment value AI-fueled time will our serve that

patterns types, specialty to products. Looking from distribution see particularly of customers, broad we our at continue buying a the of asset

base. saw Tenable adoption hybrid environments. Security They're from increasingly customers strong quarter. One also center customers a from center represent We very operating security our this sizable in

naturally highly specialty resonate Snap areas insights requiring as securing to security customers. Within structural how everywhere cloud understand service active those critical is on Customers changes competitive with and that customers complete of to them. continue access even and granted risks has identities Security prioritize security struggle deliver [indiscernible] security of them and offering. and customers deeply many machine difficult Our [ address they organizations teams incredibly in in to Tenable adequately identities, the to their and assets most assets. tax The have, these ]. and urgent web multiplies cloud challenges the seeing those accelerates situation of alone what we're user Tenable let today. helping the cloud most know complex. analytics cases, to complex risk without [indiscernible] the and ] cloud exponentially. Tenable been from which to cloud go code do is cloud increased the One with to find our grow now products, [ adoption a have complicated manage cloud, directory to how with further through emphasis experts In security be entitlements, address and ability not is as are what to some

infrastructure security meet security cloud solutions relentless increasing are the to Our cloud for simplifying demand and growth. management

and speed and Even the gives tightly security unique and risk permission not with being which cloud delivering the vulnerabilities reduce with have insights We're program absolutely offering. simplify combination elegant and And protection and assets, application of infrastructure mature from Additionally, integrated organizations cloud. The for professionals [indiscernible] code, complexity products cloud deployed security integrated the more access, identities in the and adoption. across they environments. in explosion point greater to Tenable entitlement management, risk is customers by An users minimizes One hand-in-hand environments. bring cloud entitlement by cloud and integration enable insights volume a cloud unified cloud commonly and security workloads. protection Tenable can caused costs. go into into critical customers' like their relationships across of cloud-native together complex can and also infrastructure the capabilities posture integrating platform context identities experience CNO and the workload Aromatic Tenable in reduce and single customers multiple understand machine overall yet unparalleled and security these can a tools user and to our management securing identities consolidate, of to configurations

of out sellers engagement is gate is Our excitement high. with having are customers. strong running incredible the Pipeline and our

We with our continue to vision execute strategy. and balanced well product growth

fundamental integrate we more map to in never us expect Over we'll product to quarters, it which to leverage few elevate on is the our requiring business business. hermetic, to than our next been within security more to our corporate their cybersecurity execute demonstrate and nor today, continue important economies leaders Cyber organizations. enable has road more and

and recent Companies Tenable risks role example, customers, disclosures board and will threats. to management exposed managing turn over the on from for risk. I'll and financial one results turn now continue commentary just disclosure and increasingly, assessing call rules teams, management's and they're material to cyber Steve the risk pressure where require will understand from further reduce feel management shareholders and on cybersecurity in Boards oversight infinite to and to As our regulators, we and to how to continue SEC's outlook.

Thank you.

current are more measures billings. financial with As I please earlier, is calculated of non-GAAP provide the Amit reflected note pleased today are this which quarter underlying all not business will but discussed with revenue. we our that exception in results discuss financial first, the the momentarily, commentary we of performance

release earnings non-GAAP of this start As may Erin in mentioned call, earlier at be reconciliations found our to GAAP today. the issued

in quarter. in on year-over-year recognized results million. as the quarter, the to current X% current change grew plus the billings, defined Now to Calculated deferred $XXX.X the for revenue revenue

I on As our CCB the as such renewals. of is in the prior of but typically line deal in not business. is proxy timing, sales including have influenced of generally perfect underlying sales for factors and close a mentioned IPO, early tracked growth with mix quarter a has number by calls, business, CCB Since the growth

underlying which XX% quarter. However, the a RPO performance a this closer was and Current this was such business there the first is is disparity. quarter the quarter of in growth in the large of approximation

that software were large deployment VM result in are color, specifically $XX the higher public sector. wins spending U.S. leadership in software position to the few and also planning Consequently, sell purchases public recognized Federal are with in of fiscal are the either significant which We We services next demonstrate licenses future saw mix years, sales on initial in quarter. To note additional sold procurement much robust CCB periods. Also, over will sales listed provide in strategic opportunity in quarter. a upfront. a the closed related exercises perpetual in overall, million these sector benefited in software and our civilian expect higher professional did agency-wide that significant additional minimally our that we government purchases only the and and to U.S. of The very public to contributed year-end. of programs X market Federal, federal that sites. mix the the X-figure the perpetual not the large CCB services deals and a part environment a both OT offerings of here give approximately please little was a us a outperformance included which on or several license not primarily impact not lower more believe During over we of defense total as to some but resulted the side, quarters. from September XX contribute quarter, these product outperformance in tied strategic

excluded is contract annual the from CCP. of [indiscernible] So

It's which the Another major One, quarter new related in grew this funnel buyers some to more of macro, strengths, headwinds we logos. over while and the of impacted start see the remains top the with XXX% constrained, to highlight Tenable where the sales was these in important the XX% conversion note cautious be rates strong, a quarter. represented our mid-market appears from there in spending outlook which particularly to was that did market Despite of new to broader year-over-year. in

reflects of the metrics, Also, also the enterprise X-figure as customers a large we X-figure in net public closed strong And quarter. in as quarter. which well XX earlier, enterprise as record in in added XXX number terms as deals In new large platform market we quarter, of we deals the key added the sector. the customers strength were new discussed

Our last XXX% the in based quarter. quarter, XXX% to rate was net [indiscernible] expansion compared

an the represents by on calculated XX% growth. million. a is basis. exceeded expansion Revenue As of which LTM was reminder, million, the guided range Revenue midpoint in $XXX.X the year-over-year our quarter $X.X rate

prior of XX% compared XX% to start quarter. high which this turn gross with to with which margin, revenue quarter, percentage is was recurring XX% expenses. remains I'll last Our now consistent quarter at this periods. I'll

sequentially approximately higher costs. to of expense last marketing was revenue to lower $XX.X $XX.X and from was the the the is partially increased primarily was offset from marketing $XX.X by expense G&A was lower midpoint the costs, XX% partially to model primarily million XXX up our revenue improved quarter. the due which quarter strength a which million relationships As down analytics. $XX.X we basis our as million, decreased million, expense midpoint this flat of this upcoming time. to upside by period commission percentage last quarter. cloud XX% event as $XX of I last and marketing by was million. G&A to a quarter. expand and industry R&D effectively relative than sequentially, worth due relief flat range cost basis AI-powered the the million was of half quarter. on by lower costs year personnel last public points. our was was from XX%, XX% customers over which Sales guidance. sizable of was public year million of over personnel margin absorb and in cloud mentioned last compared the in expense the quarter. the the significantly that to in percentage of X% and this expense also was to down be better The It's of costs to modestly to last marketing XXX expect quarter for which last second as percentage spend was million, which last expense cyber expense initial earnings quarter, Sales timing business as revenue a Asset Management $XX quarter operations expense points comparison those from margins noting better exceeded we than approximately call, and ability expected Operating conferences, reflects Sales and $XX.X related guided was operating and $XX.X and expense. R&D offset margin R&D and related our same of our acquire decreased quarter. Income

in to privately will held Additionally, is other strategic million investment this net quarter. related of charge million in $X note Included this a a company. amount you impairment $X.X a expense

of this was midpoint in than of All our approximately better the guided of EPS which $X.XX, $X.XXX range. resulted

into Accounts million to and was million sheet. the Year-to-date, was unlevered approximately of gives lot the turn of let's deferred visibility generated investments. with XX to adjusting and we revenue, years. margins free With pushed and acquisition. unlevered that of $XXX.X revenue, which margins reach we receivable months. free achieve target our was recurring gross our balance renewal quarter. Ermetic to $XXX.X XX% which during $XX we today in are cash continue total high including million, over us cash next the flow quarter Now current million cash free revenue $XXX raising flow for operating rates, can which feel unlevered flow We within finished million and the well $XXX revenue the full expand confident over a $XXX.X deferred We million, ensuing the annual cash flow year, us for free expected cash short-term the after

for quarter the outlook X. acquisition us, discuss of impact on I'd Ermetic the of results the behind closed and With like to full fourth quarter which estimated that the XXXX, October year the our reflects

and of interest from income range range to million, $X.XX Non-GAAP in million trends revenue the the million $XXX to range we of $X.X in in million the and $XX For interest to flow outstanding in regarding million to million million. Non-GAAP be we expense operations average the million, million some persist. full $XX million expected income income currently quarter, calculated And $XX $X.XX, a the $X the per to per per be of to $XX.X weighted be to million, range taxes the XXX $X.XX the for of to diluted to share to of $XXX current $X.XX range $XXX.X to fully range shares in million, to be be assuming be assuming like cash million to range million of the fully diluted $XXX are $X.X million earnings of observed for net free $XXX.X average in a to in of income in we XXX.X unlevered $XX.X million diluted in range to million. assuming income diluted in million be to weighted share, mid-market today. be expense The $X.X income range of million, million share for Non-GAAP $XXX range be of outlook income to provision $XXX.X expect outstanding. fourth to million. Non-GAAP year, shares of from operations the $XXX of million. expect commentary currently million. I'd non-GAAP assuming $XX taxes revenue of the of non-GAAP to to $XX billings to net interest interest the $XXX.X earnings of and to in provide our $XX million, the QX in $XXX be provision of

a think our the to it's QX we the as flow-through materially recurring results not line range $X.X as which and is is contribute So a the QX nature, Ermetic quarter. a revise third CCB in million appropriate, in reflects in the as year a expected our more cautious in of for CCB Also reminder, $X million top quarter. beat outlook fourth the rate. well in Revenue, reflect to to

of $X to operational continue acquisition. impact for of revising the efficiencies our reflects profitability, beaten of million million $XX the of free outlook the related related and raise which we costs terms income for Tenable, less from Ermetic, to to a the acquisition. rate We're less impact full Tenable outlook beat less also includes full in operations for the Ermetic million the by Net for we to year rate $X our of interest due our $XX which the are $X the to business, increasing a impact million In income. due $X year for realize million in million reflect flow cash a income for reflects Tenable unlevered $XX to $XX million foregone million of

an and for growth the is the for fair the QX the call year CCB a input, expectation In is on from earnings year. current upcoming important mid-market the which of QX expectations setting but in Ermetic upcoming the the mid-teen selling believe terms of environment XXXX, we we our will growth, for provide in full February, guidance contribution year. and reflects

we specific data So have hand before point to more discuss we in terms. business want in that the

All growth free and effectively XX% anticipated next expect Ermetic. cash unlevered of will that profitability flow with to year, said, continue we grow impact which reflects approximately of balance to the

of fourth be in for like to At I'd and free closing point, Ermetic over turn year We to flow the accretive call EPS unlevered quarter back some XXXX expect XXXX. to in this the breakeven full the Amit to be cash comments. for and

Thanks, a in clear indication Steve. leverage drive the our of is In QX ability business. to summary, continued

in time you at ton our are next the [indiscernible], look an seeing opportunity We a weeks. to and have our Barclays coming call you Stephens on Davidson, ahead in Fargo, us. business conferences forward updating and Wells D.A. exciting We of at of and

we the expect open Additionally, half to now our XXXX. We'd Day have call in questions. of Investor first up for to like the

The Instructions] Essex the [Operator ahead. line comes with go first Please question Brian from JPMorgan. of

vendors we're Steve, are outlook or really moving How is ahead? in to CCB. that to appreciate different to and certain market. think you, the typically maybe operating -- competitively? what in And color seeing security, you for one. cloud share your pieces just with niches market? do in to space whether it's for you penetrate market space, ability like around With about platform a of this best-of-breed in years a question Amit, the see lot keep your of regard I'll Who larger we the that it companies target of that winning code kind as vendors

Yes.

acquisition been some time. some active time we forward I'll of cloud an ago. with Accurics So market has I off security the Tenable saying in Obviously, start participant for by an guess move

We build assessment along lines. ] integration organic some and continue capability those [ do to agentless

have see in offering code, cloud we of assess at of the like real that look recent fully SNOP highly infrastructure's looks acquisition can how environments. the build-out operating we what systems integrated they're in and most Ermetic, time beginning that a With believe competitive, QX at

code cloud And so the visibility ability very we elegant that go have and also to to inverse.

how trace operating code So executing. code the those of from they're in systems can live from systems a operating piece in environments, which toward we and produce cloud back

hybrid we existing we've highly we table. To competitive management to differentiated, there to we're feel major vendors think of leading, key Ermetic customers Ermetic give that CNAP brings what cloud have highly we that a got with visibility feel is the brings and out our of including and market a ahead functionality like infrastructure environments. the the the to market-leading Tenable's the like number and going with in all table be head end, differentiators functionality cloud visibility competitive entitlement So and ability and capabilities of capabilities, capabilities our which to across and integration

they and in not what's cloud exposure. connecting So are accurate just overall picture their systems to happening have, much what cloud or more the their of they

competitively Maybe greenfield a currently Are Or follow-up. is it vendors mostly great. now? treated? those you quick seeing That's

and unified integrate also we're offering, like with market-leading infrastructure's historically, and including vendors Again, direct all of we've and No, win seeing number go including -- vendors and in to share. and a but CNAP I cloud the more those assessment leverage of Ermetic fronts can tightly feel we traditional we we competitively can of the ourselves vulnerabilities those now. elegant code, how CNAP addition on-prem with than the continue differentiated the agentless our differentiators, competition fair think head-to-head

comes question Next the of Piper Sandler. Owens Rob with line from

it And plus revenue was services disclosure I'm the is going just a deferred, ACV turn revenue, around I I given it's those so be a revenue to less? question and billings follow and the into all, in that's the to fact the really there. commentary first Brian perpetual ask that wouldn't deferred confused. actually of CCB? Steve, upfront? in Is it's with going that impacts that discussion, is deal, in are with work? obviously, the CCB the when appreciate change more Because the two. that little Or getting around as one associated line negatively then necessarily you're how contract so

since outperformance was quarter terms performance saw mix quarter you business U.S. -- we we going in previously look public it of any in And this weighed sector, Yes. sector, the so which public. as CCB. public our we've mentioned at experienced if on Federal, in of as Rob, twice specifically, specifically high

is towards complex licenses, Fed perpetual of and are higher weighted large So and higher nature bias came a and of services. deals mix and in these level a procurement with much more strategic business

both it that's X over So was the That's revenue. licenses years. we services are, these licenses, perpetual in perpetual perpetual to amortized combination professional fully CCB. With recognize in how reflected licenses not and effect, regard of

consequently, in are only billings. built to deals calculated several Professional be of reflected these related services the value upfront So our current services X/X customers, not be included. contract annual enterprise next the consequently, delivered and will And over the quarters. they're unlike these cannot of course

Great. And then, Amit, transpired for you. thoughts Obviously, And acquired there. very unfortunate of now. over with given right it the I'm line, as just security geopolitical what's situation and the I any curious in well? cloud the into when integration Middle East time is Ermetic changes was since suite to know

I'll strategic part incredibly the at forward they're move will ability and most focus. off in saying But work the resilient modest. integration we of start just delays changes keep to proud and team a and their That our Yes. is and like activities. there be anticipate that said, feel they level, to for some by incredibly doing modest continue do those

Next question Truist Fishbein line Joel with from comes Securities. of the

there. of Tenable the there? it real the but got you've space for But competitive and just have to like we understand doing dynamics A space. to be well Brian. winning traction are And OT, similar I'd talking but of why some the is there. to I about space seems lot That you companies seems you OT are cover it then seems the crowded, one on love like

color. bit a to more have just get We little

talking in the bullish OT visibility, customer key a There's and opportunities in we've pulling down They're markets that in we're these basis. help diverse public We're cybersecurity our of global what differentiator continued X-figure which a to is we most OT couple on traction a And focus comes coming significant continue a about the to to in deals. risk. and very it differentiators we couple earnings both large control them we're robust importance in us OT a unified larger OT incredibly We strategic We're both and provide, for basis grow quarters public of on across critical a will just a think vendors and think us business. systems. and from with heels about us. One winning provide where used on succession opportunities saying got X-figure And here are perspective. larger call, that Yes. on sector IT to sector, infrastructure. is can that to cyber evaluate very myopic which relative a of for base is on

If at you all center systems. have floor, see you'll you at of their someone a you look data if these all through of look that and if automation. is factory operations, walk manufacturing What systems, a pipeline, a that these understand looking control activities OT to and the help combination it's only impossible assess at of to IT in environment, operation and risk

to competitive strategically in technology a the differentiated rapidly for OT and is we've it's product. a significant that base customer into in combine IT So we've -- risk. evaluation what We ability market. our distribution highly And a got we of think got think a and growing

line the Stanley. from of comes with question Hamza Morgan Next Fodderwala

Steve, well. and a for you question Amit as maybe

environment you year? curious because mid-market here, outlook QX like a you did got of you worse on little bit the that side. for gives for back on sort you seem you to guidance XX% low can teens. out look accelerate confidence I'm then X.X% What acquisition so next if billings the the does it Just next mid-teens just growth this current for somewhere your if The and quarter. XX% between you're year, at guiding about I I guess, implies

is Yes, high XX%, the XX% to guidance and Hamza, fourth the midpoint end, the here. XX% for at this range Steve. at our is quarter does assume the X%

next what next the out specifically the inclusive that Ermetic. conditions growth. direction in today, year, As the That's is we're And contribution from look mid-teens selling mid-market, said we over to persist. we seeing expect think we I the year of for

so if in next environment. compares. slightly look And we're also selling the largely, year, assuming we some same And at have conditions, easier we no change selling

a growth skews that bit. So little

is QX in approach a it's outlook have we're think cautious taking to hand. quarter point data I So next big us. to that for our again, But important And a year.

talk provide we're major was there's we TCB, Federal. really sure cautious So terms, of to outlook. to want performance here. about take outperformance It's mid-market appropriate but saw And in specific the business, cautious February, selling in we'll in make lot the in U.S. a more we not some a we have it's and commenting. think as just approach and conditions that business quarter But in a the reflected the in guidance things the great about our but of given strong,

the traction, dollar guess thing growth the and to in products. terms all on federal. of deals, a quarter overall, only we think million product both exceptional And I of growth One's in fronts candidly, is, add a the as strength competitiveness number of large record product, numbers of percentage Tenable the the strength I just look, enterprise that I the Yes. would in for deals, look the half us, if X-figure you saw

as never differentiate in If our portfolio core and in confidence VM sales in to team's our this our you our in in they're security confidence in capabilities look it's what unified ability board, in at as seeing been the both stronger. as OT, has across identity, well the sale, cloud whether platform

out confidence into going get on plays the us gives the QX we folks to forward we'll and Steve And into see said, QX XXXX. as how like look that So plan call. updating

line Nowinski the Fargo. of from Andrew comes with Wells question Next

is base that there was that mid-market on any percentage you. maybe mid-market And broad-based? mid-market sort I soft? softness, were your just within anything Thank that regions segment? of of any or specific wondering was or that Or particularly to like derived maybe revenue verticals what Great. from installed the was

XX% total sales, we've specifically customers, to be mid-market, of the is appears approximately attributed fluid that the in and in feeling of more to more the broad-based macro, mid-market about it our discussed certainly tends nature before, are smaller-sized quarter-to-quarter. It's of the and from which impact as

looks -- a $XXX,XXX Okay. on basis. quarter the you a customers then spend question down XXX larger year-over-year this the over that which the customers, XXX,XXX like -- was me, excuse on And I had added XX%

larger higher presumably caused adds -- a is sizes, any the have may point larger on So I'm One, of that decline new large that wondering, a was basis? there a deal logo price your to given there softness you I have which Tenable than customers year-over-year believe much

from guess ads just markets. and software think listen, of enterprise what $X.X you're time in tougher that platforms, plus our still tougher and And weaker record hearing in of consistently environment That on that I XXX-plus onto we're by start still saying, number more you're and would a us is X-figure off adds. million Yes. I companies logos new than any of typically $X logo number other macro solid I said, a deals. top million adding is

the more bit base, we mature really customer and So enterprises in have security better. understand a little strength the larger that value

mid-market. the in And even performance solid tougher

Brad comes from line Reback of question Stifel. the Next with

of this vagaries Amit, high-level product depth is the and and an portfolio the What's pivoting sales which of question, down. more of focus? given force at thought mid-market point way upmarket to the up and breadth of the kind always the the that of

transact And at business help we effectively around. look into those achieve And real which we've partners we think you XXX% that balance something direct a sellers, got as team all certainly with working glove to partners, We're and cost to get going we've got We hybrid enterprise through approach, it's sales then touch larger our hand careful try us mid-market. enterprise recall, scale are mid-market customers. where after also channel cost of larger and and opportunities in inside that channel. customers. to Well, dedicated provide and effectiveness sales which our

at look side the we -- and So transactions. the for operate e-commerce on higher-volume also

the appropriate because leverage So we to find probably and is is opportunity a applicable. have solution cost-effective ours balance which and try

going optimizing make we're that our next greatest So the spend that year, go-to-market return. into we'll sure for at to look continue

valuation of Got this then flow Board's the And at it. stock generating cash activity? are share amount repurchase what's significant the thought given on you the all that point, and free the of

that I we'll news of drive to cash flow, higher we're think there's of continue flow. a use Well, the levels and cash have confidence clear increasing good levels of is -- we generating

cash the fragmented. think of of in flow I security the other opportunity deeper wider market accretive We're to strategic using is market comment margins. And a the for say and years the margins security, as shareholders. returns clearly, but operating have cash Amit major we're further, to for terms provide and And which to of very significantly free have assets. can I is expanded over uses use then would cash evaluate cloud going in cash, better acquire us. we'll continue

Next question of line Boyd comes Roger from the with UBS.

CSPM, skewing installed talking of customers, As base? choosing on talked And question, of industry products the the is like could maybe sounds for high-level different where wonder you buyer in CNAP And more point like about then feels the of picking and adoption to any you Amit, update a still I within some it but behavior consolidation CNAP if platform you it cloud et security cetera. been and has gets time. larger, towards terms provide are and

out? perspective I cloud like line how guess consolidation So time on to the get love think your that security you plays for

Yes.

side. point, by to X,XXX First capability delivering cloud all, demand Tenable is I'd tremendous start security over of we're seeing the security this At saying I'll to customers. on acquisition, cloud prior say already

And so continue out seeing organically We're capabilities. Certainly, the inorganically side. invest and to momentum building market-leading in and code infrastructure's we're seeing demand. we those on

Ermetic market cloud absolute think management. when entitlement and infrastructure leader the to is comes it I

it even deployed, both to where your so the consolidation, if with to would said, a identities in shown how other has are cloud it's see alongside been integrated that assets, value and customers has solutions it's these security cloud, to be security really because access earlier, to Ermetic those look to products of entitlements compromised. how tightly for And functionality. to ability capabilities what who we're within what need vulnerable, going you or configured, in team like lot those those of permissions any assets maximize assets, to sell point were believe the do those That because specifically have their I what and have the

a there's and tightly progression natural I of think And vendors the a from platforms. I to that intertwined cloud what I Tenable. table is most that's those point from points bringing compliance hearing you're think market-leading what very security are data perspective, Ermetic from all and for the security CNAP and think both certainly of products in unified cloud

Appreciate the you. Thank color.

Gray from comes BTIG. with of line Powell the question Next

Great.

guys So you I'd outlook. this like the basis, the And then just this maybe today kind feel curious, comparison QX terms just a time in visibility better, yes, feel drill Is expecting you or like versus last it have? a on on environment of worse of same you year? are year? how budget in that just flush be does the

certainly of of to you QX, flush, we're there terms what in -- if QX basis expect look higher today. sequentially an heading Yes, into budget providing to CCB terms on be we'd in absolute relative dollar

do expecting So And But a of total to the about this year, over year in I think experienced this budget tougher seasonally last to the in also We say a comparison the are we fiscal is -- do selling fourth new represent new transact new cycle, to logos tends environment. to we're and strong We the be that It we're XX% fourth fair it's where only selling of are XXX%, budget there. growing prices some conditions us giving pleased it's good demonstrate feel momentum, One, Tenable we we but strength in expect not I we're our in overall, that really to higher large that real in over to the very flush. persist. see mid-market But also deals. seeing guidance with and that would terms We can quarter. think for sales. us. of quarter see the today.

commented also Amit deals, number million deals and of earlier, a we $X.X up. record had X-figure As

So importance to resulting our customers larger deals. the that grow to in value we continues it's of and in terms deliver

cloud macro competitiveness OT the the to and win on have sets, it's product on whether to differentiate capabilities, Yes, thing -- and I on the market teams the our side, only to to from the compete I go-to-market security we're is confidence bringing ability these deliver unification the Tenable and and guess of of other in our One, greater add less sales products win would that identity competition. more had on ability and and the the on value never that

lot there's So of a optimism. cost for

the line from comes with Brian question Colley Next Stephens of Inc.

mid-market. the elaborate competition commentary down Or was just new in whether the I to this on it to less So the drill increased around mid-market? you saw related -- expansion And due logos then business? in part to is Could it more you wanted on the of was -- mid-market?

absolutely is say I Yes. logo new Great would question. the on it side.

renewal to see rates. continue We strength in

improvement. renewal healthy, rates On in and competitive competitive I landscape, think dynamics, consistent strength to and Steve the called continue just remain dollar out enterprise and both mid-market we see a net

in significant rates terms think win and quarters the I of step first was competitive this previous above rates. quarter close

back about economy. really as to logos from in So as perspective good a we're ability competitively, at new we we well feel the to this said, our as where more execute just product difficult mid-market stand in

Got it.

Tenable represented Okay. if business I you the Steve. of sales? And percentage one what Apologies That's helpful. a for and did total as statistic but on you, then One new missed it, disclose

I XX% total sales. new did, enterprise of approximately

Jonathan Ho with of from line Blair. question Next [indiscernible], Garrett comes the William

This is Garrett [indiscernible] on for Jonathan Ho.

as So in Tenable strength quarter. noted the One a you with success selling

you would get anticipated? to to been discounting lot like there of color as for pricing pricing as able some been there. I been has you involved? just specific deals? has realize Or Have how So those much a

dynamics. pricing in change No

see there higher the in to One. continue We XX% prices are strong with Selling to Tenable platform comparison selling VM. traction selling stand-alone

model One. pricing only Tenable types. newer includes asset-based And One because an but with not also have Tenable We VM, asset

more environment. assets customers' covering are We our within

selling ability more So that's what's systems driving of and those the is also insight. to value, more of higher, assets, only more delivering price but capture those greater

consequently pricing. per is but asset in no price the higher, changes So

Matthew the with comes [indiscernible] Needham. line of Next from question

about in wanted linearity of at X which ask the how QX is I both This and [indiscernible] Mike in Needham. throughout to pipeline from over terms I believe both comparison the in also to Matt quarters quarters, first looked Cikos record quarter? on are

Yes.

the those to generate demand funnel we as continue the top for us. on calls, and pipelines prior strong of of remains the say are shape levels I First healthy size And would of we've and very strong. stated

here biggest is conversion factor mid-market I in And any think the and the is very competitive the from changes no funnel. where call the fluid specifically in And relates so the seeing bottom quarter We're or pricing deals as than a be decision. rate. continue we the X macro this impacts the customers not discussed we'll We're more next. dynamics. is of though, to what able seen we're rate market others. to close it's to high some to confident In at the

news So believe, good healthy. the that we remains demand, is

total coverage close the of in consideration in as in more of pipeline last adequate it's of as lot companies, like that terms we a software in, back-end have We we month come all strong and X sales other good into head we now last quarter here of the of or XX%, fourth flow. we're the loaded, just the to quarter, start XX% We're is it the into weeks fourth a take unusual our the off feeling overall that in But month, But us look enterprise new into can to for not couple QX. quarter. quarter.

for it rate a then steady think was in And think pressures should that this at mentioned, we about X this going forward? Is after fair row. decreasing Or you stabilized expansion Awesome. to the net how despite level? in has quarter macro that

expansion net was XXX%. dollar the Well, rate Yes.

the fair we LTM number. with the think this reflects in to consistent stronger last year. it's the was it year the market say quarters. NDRR and quarter. saw what is Keep a an mind, sales culmination little in I of is upgrades It that over than So prior prior the And

at to also the It XXX%. moderation So it optimize metric. we're We encouraged could continue see be any one in for rate. There further to increase. certainly could be don't business the

given And opportunities. think new logos I upsell fluctuate and any important quarter pipeline that's to opportunities in can note. between

and some report be I can important. quarterly. think wanted that's variability there certainly, but we And provide transparency we it here to So

only strong. but also not for news more, expand very And move good and QX is when we they year. expansion as the are renew, gross the So along the themselves here, for continued customers full expect [indiscernible] -- we

[indiscernible] Mr.

you Thank great, Yes, much. so

This concludes teleconference. today's

may time. for You lines at this your you Thank disconnect participation. your