Tenable (TENB) 31 Jul 242024 Q2 Earnings call transcript

Greetings, and welcome to Tenable Q2 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Ms. Erin Karney, Senior Director, Investor Relations. Thank you, Ms. begin. may you Karney,

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

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

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

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

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

those that report please could material most risks the results, other XX-K contained with affect to subsequent SEC. on and that Form in actual our annual reports we our the discussion factors important recent refer further of file For and

results financial discuss measures. financial of are will addition, all today non-GAAP our we In

in accordance of in GAAP measures financial these prepared limitations with non-GAAP and to their of of for substitute are a measures of to the superior measures financial equivalents. exception non-GAAP There These financial versus addition number or With are to related revenue. use performance a not the GAAP. closest

Our now turn to call press these Amit. release reconciliations for over GAAP non-GAAP includes measures. I'll to the

lower-than-expected Thank results outperformance as CISOs. management you, Tenable demand, security and particularly with quarter for revenue in continues with Erin. We One Exposure but and earnings. to for areas CCB, the key mixed generate delivered for priority cloud

requiring to oversee regulators risk. the have that for We get like to of quarter, first and briefly I Before path cyber role will independent one reduce importance fiduciary incident outage. This forward the and in we with failure deviating single transparency. assessments critical promoting consequences enterprise increases Boards platforms one of negative cybersecurity empower reliance resiliency into just I'd recent play vendor. in the enterprises hygiene, Excessive best-of-breed believe improve hygiene. reduces on from the points expect cyber on organizations highlights comment modern responsibility global any platforms lies increasingly and any best-of-breed risk the an CrowdStrike and exposure to of interoperable as creating resilience vendor to

few quarter. A notable areas the stood to as QX. on Now out in

and scrutinize investments. First, rigorously to their highly spend customers continue prioritize their

their are momentum seeing our need to believe across and that their in their traction Second, environment momentum customers surface, the increasing industry for strong positive to strong resulted and is management cloud, understand us analysts. gaining and of risk is is level as exposure solution. we rely customers that this exposure infrastructure, a in Customers And among Tenable One. want trend attack their we and critical for increasingly on cloud has from IT cloud to the for third,

about was for products company. a few will with major deals largest talk for our more minutes. of one financial I our services in security fact, the In quarter cloud a that

point first that QX. the on we noticed deeper on dig me in spending patterns Let

QX see in close X trend And pronounced traditional shift This dynamics and of seen scrutiny. offset new spending. These deals our to mix healthy. makes We it Vulnerability as to get faster-growing apparent were transact projects more as great Management more cyclical business we what our not of becomes than continue more sizes difficult cyber enough solutions greatest is business. VM to to stand-alone getting our the deal in exposure the our This while new is impact larger. had deal around historically. certainty and customer a It procurements are

is opportunities. groundwork remain cyclical, the One clear we more adoption future drive to While Tenable and VM becoming upsell for continues leaves initial the leader. VM

compelling strong. Exposure Our with win point customers and in across our an risk exposure be platform this critical This deliver actual unified Tenable is there's a and of to incomplete where We One, category a types environments. asset pioneered customers. continue for stack. management approach their to ROI that Tenable who spend increasingly consolidate leave customers And shines. in reduce view their to individual provides security products very rates products management consolidate becoming also alone visibility is knowing cannot provide. that complexity insights

broadening Tenable risk. XX% into a has play enterprises. Tenable business out source of are exposure businesses One and become boards mix seeing QX. reach We expanding new represented their our trusted needing budgets beyond We're understand our VM as of in in and product truth to executives and within for this

to with momentum We're quarter. Tenable security cloud delivers different such seeing growth cloud immediate our an the strong riskiest our in the toxic features solution. utilization also in and and and cloud attack quickly land security. to as combinations customers ] asset cloud with enables path sophisticated exposures in as with are exceptionally user-friendly starting types, We assess We're value seeing customers for wins multi-cloud security business. which of enterprises. analytics, security CNAPP allows leverage resulted safeguard their spend, visualize to significant [ increased coupled technical to also offering Prioritization large

including deals, security. of largest in In the our a in that cloud fact, row is second quarter one

which piece to company integral I this for Fortune CNAPP. As the financial team, an XXX services mentioned, quarter is selected us

security best their meet The for was other needs. for we deliver to CNAPP visibility to not identity able in provider provider are cloud, where cloud the

customer Eureka AI the a this we add security how capabilities X to and and with products, AI into We we Tenable posture maximize our to to securing new expanding also DSPM is seeing offering, of integrating excited happen having we're discovering data management expect adoption During identify company, capabilities operating to to generative which acquired platform data customer in enhanced to exposure our value. introduced cloud. rapid Along management quarter, where also in QX. environments. We're AI year. We're leading our CNAPP our

within cloud security management detects that capability and ensures First, AWS offering security Azure Bedrock their in and services an with misconfigurations policies. and posture our compliance AI organization's like security OpenAI

to security unauthorized software libraries may in AI identify be teams plug-ins detection use Second, the we environments. innovative now may be and capability within the where place enterprise. to provide an that is AI browser use this alert We runtime taking believe their of in

we focus As we investing to to by matter are ahead, business in the most profitability continuing that optimizing the look our in business. areas on to while going drive customers

million right problems leverage this free the but cash believe a durable flow go in We'll as look strong growth, add CNAPP our enhance level growth our forward Tenable products to the flow to second to initial forward for cash On and are of profitability. to appropriate to commitment of $XXX continue you is detail, representing through will $XXX get solve exciting Tenable. today. We in target and additional is introducing our and target year. into going to the of This time Steve One our an deliver to for continue note, evaluate million to efficiency balance customers. updating resources that AI the XXXX more features unlevered investment we strike we offering, drive of will we to and half We our

and and We momentum over financial in are challenges ensuing broader management call this leadership major our grow now and confident Despite to strategy am over platform. for cloud commentary our results I years. I'll in turn Steve position further ability for seeing our outlook. the on quarter, the exposure delivering leveraging to our long-term in

revenue Amit. Calculated defined recognized plus million. billings in current $XXX.X change Thanks, the XX% to current revenue grew in quarter, deferred as the year-over-year

an accordingly, fair say of reflect fell growth guide basis, to a expectations. CCB selling in quarter more to only on challenging we short are it's year annual And to our for revising we While I our think the the environment. CCB outlook

total our security Tenable last represented where into geos. Other areas deals includes America, was quarter. One experienced budgetary VM, operational defer as X- stand-alone we environment, expected with up and of a results in constraints. challenging Exposure to and which new other macro into context Now we is let's North solutions and cloud enterprise in of X-figure projects than provide it We our more shortfall sales number of more get of sales continue traction to business longer a opportunities. full cycles large from solutions, the closed to new the get XX% went with XX% quarter grew particularly and ], specific the year. [ to face Tenable and environment new modest and for quarter quarter. XX% tighter of fewer a technology in selling despite pipeline the will the in as the the healthy One sales identity total over for outlook comparison large opportunities Overall new to This customers growth

Exposure was comparison, XX% in under enterprise QX total of As as a of solutions of point new XXXX.

into and we've This exposure this deliver and the and mix expand the ability years business CISOs we healthy teams. to insights of reflect new the to product progress growing security lot actionable new regard. a their So over demand and markets the broaden for made our management in of portfolio demonstrates

us services also large market, X-figure commented the our global defense software is cybersecurity believe that including contractor payments enterprise sizable highlight and multinational to [indiscernible] faster-growing a company. the a We and large continue take a security in with major cloud share we of indication Amit of the earlier, a financial clear market. for As will several here one areas wins firm in success was a

current also the I XX%. RPO note Finally, was in want to that growth quarter

XX highlights. We enterprise quarter. added platform customers and Turning during new net X-figure other the XXX to customers new

strong. Our with renewal rate rate [ ] was consistent XXX% net expansion dollar this quarter, last remained quarter our

guided quarter. midpoint by Now million. the represents on quarter our year-over-year range the which $X.X was $XXX.X Revenue for growth. the of in exceeded Revenue the P&L XX% to million,

QX. with offerings quarter. Sales last go-to-market cost marketing over other Overall, recurring our of ability kickoff expect last I'll beyond. R&D was margin, was expense investments dollar million higher marketing and million, promote higher which revenue quarter than $X.X which revenue partially million. the quarter. compared to $XX.X sales Operating ability revenue, and better the and absolute million guided and reflects Our basis management of sales XXX continued points is XX% approximately was primarily to continually of from X% of quarter. from related to quarter. as of lower our which up exposure well due range. The our quarter, marketing percent quarter guided percentage flat EPS quarter, a and we in brand, was a the last $XX.X this compared cost midpoint primarily the the related the expense sequentially cloud XX% size quarter. the related last XX% was to significant with in outperformance markets. in million our was was million to start to primarily was the quarter last cloud annual range making our margin Eureka. our to in expense of security in trend was our an better remains and public to basis, be of lower investments scale better acquisition conference. our notable this resulted $XX.X was quarter, divesting quarter. points compared our now effectively to midpoint of the efficiency security XX expense at will [indiscernible] in XX%, than build range. payroll margin by management this as QX G&A to for offset as $X.XX, XX% expected quarter. to exceeded cloud-based R&D Income last modestly exposure expense and of expenses. I'll expense a $XX.X of $XX.X this are high turn efforts in to of and from $XX.X quarter exposure percentage infrastructure on taxes, pleased And quarter while the platform revenue as as [indiscernible] to Gross [indiscernible] our was The due was was gross last drive upside. due our RSUs greater million, percentage operations than remainder to revenue quarter. spend up were which midpoint this offerings. from our G&A was marketing was down year improved EPS and percentage to which earnings Wages $X.XX business continue from up Sales to by the $XX.X as management cloud guided for for XX% million, XX% leverage a basis this

touch on briefly in which from me our excluded Let restructuring results. the is the non-GAAP expense quarter,

related the recognized we $X.X You'll executed sublease leaseholds the estate. of that potential the XXXX, announced and including recall charge sublease of portion in we our to optimization a impairment furniture QX real and and In an plan, million fixtures. QX, a

was a of deferred so feel cash reflects gives as our unlevered our short-term into the the revenue sheet. We balance to can of deferred us free free million cash was receivable for used done which well was visibility guide cash during cash revenue reflecting the next quarter seasonal the unlevered investments, generated Now margin Current $XX.X quarter, which year, which puts reach year achieve revenue over confident billings operating expand Eureka flow net annual with over of cash was and the ensuing to $XXX.X We and since the expected date, the of To million let's total $XXX that million acquisition. raising flow million. in to we million Accounts turn million, $XXX.X $XXX.X years our $XX.X every today. $XX.X the finished the pattern have the XX million IPO. full flow lot during months. within for year. are we and and we We continue us free

we've for authorization under almost $XX we an million of the our X.X million. XXX,XXX initial repurchased and million remaining $XXX million purchase price common repurchase repurchased far, have of $XX.X stock shares During program. quarter, shares share aggregate Thus of

With quarter of remainder the of outlook the discuss us, the for year. behind results our and the like I'd QX to

to And in $XX million operations non-GAAP $XXX net interest reflects the to in interest some full per million For operations share million, income commentary range income be in weighted to XXX range the was million to revenue the for of provision million, the to in of million Non-GAAP diluted assuming million the a $XXX be to be million. I be $XX.X currently be to non-GAAP $XX.X million and a be billings income income of income the revenue earnings of in range revised unlevered $XXX million. to year. like $X.XX million. in third average shares of for $XXX and of the which diluted range $X.XX free and of million provide flow weighted to to to be non-GAAP non-GAAP $XXX $XXX $XXX lower earnings of we $XXX the range diluted for to of of the income curve million, quarter, today, million in per in taxes in $X.XX would taxes expense $X.XX, be the $XX.X average for $XXX provision our revenue of cash $XX to income share range range in in of to $X.X of to to share, range interest to income expense million, $XXX $XXX million, shares we to from net expect range outlook assuming from of the million fully outstanding, of range $X.X $XX currently expect million, $XXX.X non-GAAP per interest regarding the $XX assuming assuming calculated year, diluted million million, CCB $XXX million be outstanding. And to fully $X.X million, million, million to in the

new with think we business, about not are other half opportunities. approach to second only opportunities, more the pipeline the of taking As but also we VM cautious year, large with a

committed also long-term the more expected progress is the note cash which the this drive resourcing targets in flow flow operating rate income raising and our generation and ability recurring updated have remain It's and toward our free near-term confidence is We're evaluate cash of opportunities high scenarios, of unlevered these unlevered this range $XXX our cash the renewal free gross year in our year over funnel demand XX% previously committed the in providing margins are are to on year-over-year flow continued our which to for which be healthy, of and to an we XX% level remains achieve will high level reduction be lot to midpoint, a growth outlook, revenue, line we leverage results. Despite and appropriate flow half the free through anticipated, second important of the expected major top of today in to cash $XXX of XXXX, While are full target we'll outlook constrain XX% we a in than to that in year. at milestone our achieving moderate pleased to continually business. million margin the growth our margin for plus. With unleveraged the on target. to million target and delivering to XXXX investment a of based rates,

growth As turn Amit spend where closing to will areas reprioritize will call and we in we'll cloud-first a back appropriate. I company, other platform outsized see now we some where for in and invest areas the comments.

and very taking revenue more are this today. Thanks, CCB and market a cautious fluid, our to outlook approach summary, we Steve. In is

and we in security, front We the about you cloud We We'd like and company are and open are Stifel Canaccord, us. exposure where very questions. Piper momentum see the in to of as weeks. a Sandler at call in conferences the opportunity hope the upcoming are we to now encouraged management the and by excited for

of comes question Kalia first The line with the Barclays. Instructions] [Operator Saket from

just maybe start in to us off, start about you was your talk becoming with sort the to right talked just make about think can VM. mean sense? Maybe feels the decently more that traditional Does stronger I VM traditional of demand you, some thought I VM. interesting of you remarks for prepared it than why maybe that One cyclical. in And Tenable market now dynamics you

and With but respect for saw market cyclical established in does. transactions, market. modern QX, scrutiny specifically the question. America Tenable clear seeing strategic are to the with North we in It conversation Saket, it, large customers. in of With it's leader. an segment it's In you thank infrastructure more to VM, and respect market. the just patterns some the a having of greater enterprise We're One, we're that a our more we

to broadly Tenable One, strong quarter. for for with XX% new growth accounted We leaders continue market our more competitive sales than that's for solutions, we're exposure TX the see We which proving highly [indiscernible] And be demand [ to even cloud ourselves including attractive saw ]. in of and

helpful. about that the VM through Despite Got at it. certainly thinking we just challenges for early free definitely comes on XXXX. cash my and the in That's you're the maybe for you. flow Got how appreciate it. Steve, follow-up, look spoke focus about,

how target, early. even us setting that very the about that Just balance you between of think through anecdotally? growth still margins you just in and kind understanding it's talk Can

achieving XX% long-term Previously, $XXX midpoint. pleased to major $XXX cash cash next the be unlevered long-term initial flow milestone, the for today million. flow That's That's a for by of the target free updated target was we're And free unlevered that's way, million up Well, for also Sure. target cash an for XX%. plus. our towards full Thanks, XXXX, our at year to very XX% year. providing Saket. flow

have our to confidence margin continue leverage. I a in So lot ability to drive of

process half In we're say plays going But the have terms we of of not to for year free we're next that planning I'm how also about to raising the out. appropriate level We're growth second the flow will targets. thing to and comment year, that. through see look, cash outlook to And our our continually for I the committed one not achieve yet. to cash is these the We're unlevered going free our investment on evaluate firmly of levered targets. delivering resourcing And year. flow

where Some areas appropriate. invest to in and will will and areas reprioritize other continue lean

we have drive overall, to So just ability our higher in of confidence levels flow. cash

line of the Essex from Brian comes JPMorgan. question with Next

in Amit, seat. great see the you to back

So to guess where Armedican I an [ to and if you term. wanted can security. the with congratulations you a of analytics that business. the Are as it? lead company? you're plans able And portion would there, I point are it detail seen that, Is to integration integrating on strength cloud security? integrating with talked on where rest ] know on I we love you. but you Maybe to touch seeing the you I more get cloud on only of of for update about success get are longer

of are where they said, CNAPP large a solution. may full that CNAPP CNAPP already Thanks, in It's the That end-to-end Brian. already that's security seeing I'll of great DSPM providing side a full have they resonated market, for we're start off majority talking to strength We're full be customers. have about the bit and capability. little a solution, product. our the with a a cloud in solution, back. cloud sales enterprise very our

We strength have the keen and market-leading capability functionality. identity in around particular

think the very large win key So single I sophisticated think largest they company I segment, a technology Fortune were -- a consumer doing transaction financial quarter from as the bake-offs. services the a came in where of for our XXX

to our product. of ability cloud security terms our with In generate leverage

security We the of our sales. a cloud lot have confidence of majority

security through procurement fact, One our Tenable licensing. In cloud

leverage to exposures that security and One that then types, more procure the get platform. modernly So customers got do move can Tenable ] can the diversifying [ modern we're they we assess and asset cloud recognizing that excited [indiscernible] extremely with we've VM and choosing to an to and resonating, platform, through market-leading integrated

We really strategy the makes in. sense. think we we're So think

early driving think results. we it's So resonating

SLED. Steve. just Steve, you could business you some on quarter, in I I know think quick Fed for last follow-up sector about the out general? felt And public good maybe and I or that behaving it really Great. just And called a comment trickling federal differently than of that is Maybe there. mix business there? the spend enterprise a side on to the just comment strength think reacting down strength or we've of the about business? heard And

was our in sector large quarter There for some line good business this pipeline of with X-figure expectations. and in public Our our are year. second very the opportunities the half agency-wide

Some view some to overall, dozens it I with mean for a and see -- size U.S. up strength second some coordination agencies But say, set year Federal. for and involve sub in across of I'll public continue budgetary introduce sector half the deals, which variability. we're the good can of we

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

or Amit follow question. to public sector the on I up Steve, wanted

mentioned obviously QX. there You for strength good

been of the some if seeing your there in I'm Fed this agencies delays reflected who wondering heard guidance? have year. for with and later is impact that some change that elections if and the bit of uncertain the that perhaps you're administration have given some within sales any are on that We a potential vertical cycles budget the elongate in you

say cycle. significant X- an delivery Yes, is election And to around obviously election and expectations and the X-figure have sector think certain I'll high in understand is public product that sector. there's sector. and remainder in approach a of amount for a in start number and I said, seasonally opportunities sector quarter we QX a in trying public cautious of for our of we're unpredictability year line QX. taking a for That with public saw the we cycle. It the

half more second with is broadly to demand expected deals specifically in is the applying thing And these remain across is, business, are opportunities including I'd more also more the remains we're healthy. is when that And generation in predominantly the half we're here of [indiscernible] our through expecting year there public approach funnel to while moderate. the add This which business, year. Yes. trying sector. only take in the large cautious look second new the but a to VM, of

to So be the guidance and we're trying trying factor into that cautious. to

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

appreciate is customer your that of that the pipelines I can investor business, assuage it you cyclical but to behavior? VM what Amit, here secular either terms not say that concerns And right around comments or seeing in you're it's

recognized. off strategic the I've been start market, got lot and confidence I'll It's one for report market long committees saying to the in tools Boards the have and business. needed [ foundational others that space of a as auditors in a sometimes committees, is VM to those you Directors. a by time, the CISO Yes, of in It's regularly risk and cyber ] of

cautious for sure that a we're to foundational not more requirement trend. It going a with ourselves our within we're macro in to is it's a and and even we're outperformance this It's approach up growth time. market downward the that in So there's to remainder the outlook cyclical, VM a of trying cyber. year. and improved and and successful think guidance take America see do large North for more in one think VM opportunity saw enterprises, secular specifically market I we setting over anticipate or away having an I going improved with We conditions.

Next line Needham Cikos the comes with Co. & of from question Mike

Wanted to Tenable go the us XX% back, One contributed called business historically XX%, start Tenable has percentage, about ASP that contributing I up start it's you if uplift had expecting guys in given spoken out metrics that One. I just Can we think One showing right, had management for I in think right. to can to you when the this stream, the if about new the help quarter, revenue just guess Tenable

Well, thanks, for Mike, question. the

years have clear and drive we to higher our forward. and as as adjacent platform is expect high a will more that leader, growing But business is to security that foundational, markets. able say a And notably that of And the the expanded the broadened here, and continue, VM in be going business confidence business of into but I most that our is portion and that growth mentioned in the we one at earlier, said, commented We course, business, we has total years. become cloud will ensuing have mix our over earlier to thing an that increasing growth very we Amit rate, moderate. represent have we're of

forward even So of percentage that's outcomes going of that's outsized growth. flow growth has seen be higher drive And going the of we then market year have of our we And of half obviously, core be slower cash our a able able year. expected second a to in regardless represent forward right greater expect seen growth next this to we'll total our now business levels business that portion to for the the macro.

of to different in also circle how I on couple can us pause to April, cyber seeing extent progress? year the that know that on in with of tied In in may new maybe I May, deals. was SVB been QX? saw June, up the And March to that hindsight, business think more that that, to wanted fair guys these. scrutiny have the strength increased it were Help showing is strength that new showed customers easier are Was were the you QX, just did up last you of that XQ up in QX? last And the really quarter, the the really when Or in we there showed clarify and you days was something comp? that it that because

] factor strong Yes. [ Obviously, healthy of by with with results. our disproportionately enterprise, [ that out, we some QX of company. financials, America. North play [indiscernible]. a which impact larger And as came in to QX VM which a those the the in and North large comes a a portion the saying pleased transactions, and our a itself softness this, saw large in in X New X we the pipe of ] number on America, We are the quarter size in in large of played has

So got think we've [indiscernible] I businesses a for we saw did like reputation in strengthen QX.

good for felt played the obviously, we with out ourselves QX. So just way. that And quarter

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

that what customer just target we us really when DSPM market very the would Eureka. seems be going product in fit it? the A there, And how portfolio, likely The question to on would helpful. revenue see you Can crowded. help is from that's

platform. strategic Thanks, acquisition. solutions, about Joel. be or unified and the DSPM. to include will Great that some most licensing time, a Eureka over procure of that component organizations of component CNAPP will anticipate DSPM SAP We're back. I component the excited

our offering in DSPM that's unified with that's really capability. of [indiscernible] the one in current integrated We and CNAPP strengths have tightly security workflow the a [indiscernible]

SPM be offering the the into market With Eureka DSPM. next-generation with that the can like we're we our security the acquisition, capabilities and next-generation to able absolute cloud offering introduce highly now feel CNAPP leaders in into competitive features,

too. DSPM So compete do on we the

market think that out can we're we when comes think bail Uniface to to cloud some here out over offering, are it to workflow, innings when team comes that I it to our and prove and time. security of starting lead I early the with excited the

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

on of a deals just back I'm do some you quarter it customers July, in have of occurred that And ask your Is guess, your you exacerbated of Do great that back, your The you're outage this really part I seeing that obviously asking? the the have guess, outage guidance? holding is spending I I because Great. might the is that they're what but think maybe after your you now at about, scrutiny to larger factor in maybe to as in -- Amit. factor outage these QX? wanted in, guidance. CrowdStrike

Yes.

with factoring scrutiny [indiscernible] customers, which aware as and very we're think were from security can have great an I increased do and them. I large which which of potent can instances operate we're their at customer do where agent, characterize upgrades. it with of kernel don't have point, aimless asking introduces [ decades where enterprise very that we in for what customers. [indiscernible] Luckily, fashion ] And significant [indiscernible] certainly we answers valves teams outside [indiscernible], an a transactions. we been We seeing safety lot would outage, this that experienced force operate of for questions. in we in mode,

make the to agent want operate minus they the that releases what operate whether disrupt they [indiscernible] operations. a with can has customers in experienced wild X with or sure to want [indiscernible] when So and doesn't that select and

are [ unit of ] procurement. we increased So seeing

great out. that's of the for think year. for we itself procurement of answers that think of as we're outage plays into kind a the lot got baked the half conservatism putting guidance a we've And teams I that second out CrowdStrike the

putting the was a out regarding advisers congrats given guidance we've on impressive. that you that free And -- 'XX that really I news fiscal we've the confirm whether wondering, flow cash Okay. was rumors potential just the or can hired acquisition? seen, you

obviously, we on comment speculation. Obviously, Yes. rumors don't question, and but good

of with line question Jonathan Ho Blair. from comes William the Next

bit -- With drive XXXX commentary terms guidance, see a you us helpful Is be this on opportunity give be cash flow to the to regards to see you'll would incremental opportunity we leverage in -- of additional any where like the your to can there more just understanding this run. where see do color little you drive from rationalization? going free

say, XX% while year security And share efficient the ] with Like, proven marketing play how our had the this our something And for to to take [indiscernible] that of also is we revenue regard [indiscernible] our beginning specifically this has example, is out in and We our wild year. XX% is focus sales in first, no we to business quarter. I about year to continue reflects the this cloud at in to continue Yes. in true. [ part year, market. rather. in it be in be performance marketing drive of percentage of this sales business and last talked ability to more quarter to would a was and as year our the exposure investments management leverage making

gross of absorb increased margin. flow to flow every platform, unlevered we'll sales marketing. Obviously, grow we be able leverage terms those in leverage expect we fully driving are in we'll costs fixed. so in some more -- We're And can continued of some which G&A, and scale, in as our margins cash lines as we've expanded year, And free our our cash security free we've cash public, flows. scale offerings been we've free we our since our -- also and exposure cloud unified management

of So level our raising what XX% X [ the to trend. that we're And now long-term flow cash demonstrated as we date, business I expect plus. to previously ] also confidence from mentioned target from just given our and the earlier, in XX% continuation we've

there's Excellent. on win ability space. very in just quickly, CNAPP to And terms a lot your in clearly, this side, of of competition the

market. a competitive are can you just sort think got your space the how us clear help You've Kim in are differentiation product. Can playing of you given the dynamics targeting or understand the take out really market many with what you players percentage this of how

crowded Yes, market. players security. in there's a of it's a -- There's lot obviously, broadly cloud

with or confidence. get you itself when solutions, have X consider And us we think a proving CNAPP that's bake-offs X I this year, as we're top at look today. X players other I Tier out. as a high top-tier products, whether think into X, I would X degree player of

So out the we've competitive to We've in to of and on in how a bet have that team. field it gain the with over we're -- got confidence lot see And the win rates. ourselves we'll putting got time. plays the

market the door, team solution, put best among in the CNAPP market-leading We can today. I'd which say, experiences a the have

with Next of question comes from the Shaul TD Cowen. Eyal line

let actually, start with me Steve, you.

booked . end anything towards back quarter. XX of course now? the XX, over have Has the of Some the been days past of the seen the might

not I to push for in that we year transacting to cycles, just X-figure the And prudent quarter, the good experience, year. it that of in longer pushed yes. continue upcoming expected our outlook assume with when but a is second close is and the plus out and see will the deals sale deals, only what in second the we specifically But impacts is X what the current of overall, sales pipeline those high range. answer that short seeing is deals have the we're longer that longer deals. The the just means large of The quarter, lots we're will half cycle. the this, be say not quarter assuming it half of opportunities large for we cycle sales are are the we news also but would

And we're cautious. the so it needs to as be factoring guidance what that's into more

'XX, with the beginning of for Amit, Fair that it XQ run geographic? compare quick you've enough. Is Is observed category-driven. it you when the And the contrast would at like? product? back a strictly contrast what maybe it Is look softness compare

curious. Just

driven. Yes. Well, and certainly category product

commercial in So on we large enterprise the in in it our fact, the had and in notable We change. America side, VM the no mid-market segment. with saw North specifically market, product performance business reasonable

of and about with really we to management to driving and with apply amount where conversations success. What in as level they're outlook for same theaters identity what's with exposure cloud that leveraging a competitive scrutiny ourselves exposure the able One I is year, think what where our continue setting which the of customers. that's our strengthen approach And highly make the engage that seeing and and well the is engagement impressive we're trying cautious that growth up product of saw Tenable we're exposure healthy sure to remainder expect are with taking to and other to do we them and in solutions, strategic a as as our is Tenable as we're management talking One platform an with OT.

line question BTIG. of next comes Our Gray the from Powell with

Great. Okay.

of my on couple ones a side. quick Just

new of from plus we'll XX% it the, called disclosures, sales So XX% and sales One. guess, solutions of in terms exposure from of call then new out I you've new Tenable

little but identity that it we is should of new what Or So and And security, XX% like current more sales there? bookings? like this something Does think then make just of that mean basic, else? stand-alone does correlating when products you want that your to Like I might new I'm a OT? sure be are cloud with say enterprise specifically the something correctly. sales. definition that correlate Like

Gray, yes, is this Steve.

then that So often just when we really XX% XX%, as go-to-market about of sales inclusive X is And of enterprise solutions. the total quarter motions. sales, we and exposure is Tenable One have clarification. our of talk We in inclusive That a said right?

have We direct quotas. shoulder with have sales that stand deals. that to And transact organization a partners shoulder they

sales rep our also a without sale online And so collectively, transact to unaided of the we refer engine. or or or either you business deals is customers sales our going large-sized of business. They're that our part through enterprise DMRs mid- assistance and as go-to-market e-commerce an via to then

our So of lower refers our to enterprise and new also sales with yields. to total kind direct in sales collectively, unaided high-velocity motion ASPs, business refers organization

Okay.

of subset just I a to include and like It's enterprise want more sure that not make is ACV. have metric Is that the I total total the correct. So -- does commercial.

ASP not does lower Nessus products. the That include

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

adopting recurring the sector quarter. should was customers perpetual I This uptick in seen wondering and license from in on QX the Ahead [indiscernible] QX if federal One of year next and adoption and same next if fiscal Brad. headwinds CCB quarter? expect we public trends Rob to Tenable opposed for last you've the is federal last as any

Yes.

in patterns out think of we're the behaviors I seeing federal what market is volume segments. similar other and market to

One. when of obviously, Tenable base that's a go seeing the account we're the we multiyear federal One. multiyear, transition some down But account penetration the be as into So a effort market, in Tenable to going we in adoption have to a given is

Kotari Baird Next question comes with W. Shrenik Robert from Bed. of the line

Amit. back, Welcome

highlighted At solutions Just promoting best-of-breed the reducing the and with and half. importance you traction ongoing the after it risk they're in a vendor. being single just of you follow-up a very to elaborate had positioning already scrutiny how in conversations beginning, on second And commentary outage-driven the Can CrowdStrike follow-up an and on are that. over accountable resilience and earlier some to deal associated you the factored on question a address? with reliance if customer your seeing

Yes.

in think I been we from early certainly hey, operating like the are even vendor hear on this you serve customers or to different going that proceed things how have and higher-risk look you consolidation we're for world are agents, at say, tailwinds. CISOs around different the as could us, impacted innings When approaches which responses and usage, system and there kernel, it diversification. characteristics, look at kernel-level some of

an also is resonates. a significant architecture. it a that sense that having We security there makes an think independent think message an independent or we audit, validation think in Tenable not high functionality. And resiliency for So assessment exposure system from it's other providing vendor like great we operating

from tailwind there's So see might we good some that this. arguments

asked great basis headwind. on increased earlier more when they around of by have spoke or we some security are being teams assurances and as I or outages arguments might said think good assurances see for around teams. large And the on answers their different scrutiny levels terms Just the call, liabilities experienced see from But we leadership procurement a they've in by those got different corporate for and leadership think whether earlier enterprises, we prescutiny see consistent the and I failure. call, there's

Got it. dollar And ]. remaining the net XXX Steve, quick [ a rate. follow-up at steady on expansion

provide into you the standard just against of more kind building dynamic So can out it of kind contributing up softness? Is how we're billing just insights this. real-time does indicator, versus this lagging stack that to that missing

expansion its the from is ] expansion new existing right. new each different in and logos obviously, an can from customers. business between mix then that a logos lot employee And vary. quarter from customers of [ deals in between own new new existing Well, and there's quarter And within

ability expansion our specifically the of product add seeing One. expand in VM, But acknowledging rate also, Tenable market, we're this particular, quarter. customer's XXX As in that ], earlier, reflects rate quarter to XXX good last was was the ] to net stabilize. you deals, [ large And where within that you're here that expansion the see and customers mentioned dollar It in [ with moderate and set.

customer big a base. have we overall, So

that our confident expect net We we range our time back would the up trend are expense years the over portfolio product course sell a over here. and of to base, into broader go

the Research. line Wolf from Tilton comes of question with Joshua Next

macro. Rich on Shilton. back Coming the for Magnus Josh is This to

other you've or be softness is have suggests some starting saying the macro on possible the maybe you to on reported are and Some some commentary who that other may reported. stabilize potential inputs guys give there. from any names your disconnect software results that points and thoughts others Can driving

color any would that quarter-over-quarter helpful. be changed things So additional on

that specifically outlook logos. QX year, logos from the reported a new we and new good strength in new and dollars to raised -- Well, our due was for

were And think QX, in at different quarter mentioned and a when tougher is in earlier, reporting I every softness. As was its others macro that own time I right. a

certainly saw constraints budgetary to review of our with we the and large quarter, reflecting levels for This outlook deals, year. and more respect

is its quarter reflecting QX different our outlook own each for and what again, the in the So second in we we're cautious try in of be saw year. We right. half to

from of Colville Next Patrick Scotiabank. the question with comes line

All right. Steve, this one for please. you,

X%. fall a an billings the quarter, I in rose the current tough big I half. mean, implies rate of off given I growth in But back XQ billings this guidance respectable. model is mean, which, So comp about pretty XX% exit the quite

So I worse entire what in North talking the see you've XQ And right is softness those to worsens? trends about through I softness cyclicality, thinking about of and the shortfall then and it America guess, way? in am VM been large it year, get like worse kind these we because of going trends the

Yes.

So it's our impacting guide I say would a CCB little bit.

XX%, half the If you provided. it, the second to that look we that of year, suggests given at that call we're the expecting grow, range X%,

growth of challenge saw are half said across experienced a year we more to we America. yes, the is So specifically the we relative what North that deals inline and VM half. getting the in expecting first we moderate the second What QX in in specifically the

outlook our for in the reflected the that's year. second of so half And

otherwise. business, to deals public or in to And trying we're we whether thing sector For theaters, whole. large right notably hedge the across large as but our [ that's VM sales ] a It's it's our also think do. more

the second to so a and strong are focus lot of any our the half closing cautious year is on that full of pipelines take opportunities. overall, and and the And approach remains news be funnel large good we're the -- going for those will

an a here through discipline the you pass commentary that now, cyclical when what -- given it's enterprise that That's cycles, think trough. a given of And in right core cycle the you criticality seeing earlier in very going do highlighted you've might When VM, we're helpful. you're is given in grew every CISOs arsenal prior question, the VM.

#X from to think but the perspective that more back will it favor a in point, specifically at budget was that just some in been speculative come Yes, recognition years ago, before has passed. it you number increasing it was and it's years CISO priorities. over And a CIO, saw of it We a from in VM obviously I both X, a some the have time priority a perspective, of an it quite years quarter. then And particular out of macro a And more the #X past market. surveys. couple in share if has way cyclical that, the throw importance as of well. do it It's it

project So ]. one these are quite to it things back cyclical. come difficult believe We that will [

we're our for certainly VM. recent year. see higher And over factoring with the in that years we certainly, is the would our that growth outlook expectation And . not fact into

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

help performance. Steve, growth? if anything bridge could better the CCB bookings current payment billings And CRPO the and wonder CRPO I performance terms seeing you're the or relatively you duration given versus from perspective,

Yes.

as CCB what about we a proxy -- talked RPO of growth XX%. sell. So current grew And we RPO look,

CCB to business. QX talked some is quarters, a And can in RPO In close last better health underlying I quarters, the to the of approximation. and this other correlate we year. think sales about of

of not top a which But timing, expected, also performance CCB say in to But discussed. I other lighter we've corollary in influenced deal of line came it's fair what our talked number metric. here overall, than is it's factors. quarter, regardless to perfect by think we a renewals, metric early which there's the about. And a

strategic with success then cloud another durations Can competition vendors me, or you confidence a as the talk on It of follow-up in in over for existing seeing budget the security. in you're a And to cloud offerings. winning nature Got approaching perspective, and deals color maybe security any alongside other your own their from keen other like having broader it. CNAPP CNAPP lot time the of the ] just that cloud winning quick [ debate just key around seems solutions. the way you're function contract particular, expand not

customers in shine, security majority cloud of highly functionality, pulling begin Yes, I'll have competitive solution. CSPM. that vast we journey security are the a especially by CSPM the early really where CNAPP SNAP for super our specialty to are said, the of We is of pull broader starting organizations, some in replace in CSPM, think transactions down or and of they're approach most and deployed for A we're CNAPP large which on their I again, have that don't start prove CNAPP area already a lot themselves an enterprises have testing. That And and win a doing doing the deployed where side really, competition. big cloud [ sure. with order to budget. displace in out we to rates go the but ] and think usage we unified just an saying

to called security It with I get what to were attractively It budget. budget. the management think cloud the a example identity great enabled wasn't out functionalities sophisticated which vendor. was access also they their team differentiate our we even from and able was tap from to into coming us able existing customer,

that able and up TAM time. us over feel So additional to expanding great, again, continue I we're that one to opens

This question this Next Kessinger there's no questions Rudy comes the Since teleconference. today's from of at point D.A.Davidson. line of concludes time. with

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