Q1 2025 Tenable Holdings Inc Earnings Call

April 29, 2025

<unk> session will follow the formal presentation, if anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Erin Karney, Vice President of Investor Relations. Thank you you may begin thank you.

Operator: Listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Erin Karney, Vice President of Investor Relations. Thank you. You may begin.

Operator: And we now like to open the call for questions. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker Change: Later and thank you all for joining us on today's conference call to discuss <unk> first quarter 2025 financial results with me on the call today are co chief Executive officers Stevens and Mark Thurman prior to this call we issued a press release announcing our financial results for the quarter you can find the press release on our IR web.

Erin Karney: Thank you, operator, and thank you all for joining us on today's conference call to discuss Tenable's Q1 2025 financial results. With me on the call today are Co-Chief Executive Officers Steve Vintz and Mark Thurmond. Prior to this call, we issued a press release announcing our financial results for the quarter. You can find the press release on our IR website at tenable.com.

Operator: We ask that analysts limit themselves to one question so that others may have an opportunity to ask questions. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key. One moment, please, while we poll for questions.

Speaker Change: Site at <unk> Dot Com, we will make forward looking statements. During the course of this call, including statements relating to our guidance and expectations for the second quarter and full year 2025.

Brian Essex: Our first question comes from Brian Essex of J.P. Morgan. Please proceed with your question. Hi, good afternoon. Thank you for taking the question. And congrats to both of you on the CEO appointments. Great to see Thank you. Thank you.

Erin Karney: We will make forward-looking statements during the course of this call, including statements relating to our guidance and expectations for the second quarter and full year 2025, growth and drivers in our business, changes in the threat landscape in the security industry and our competitive position in the market, growth and customer demand for and adoption of our solutions, including Tenable One cloud security exposure management, our ability to expand integrations with third-party tools and data sources, including new capabilities from our Vulcan acquisition, planned innovation and new products and services, and our expectations regarding long-term profitability and free cash flow. These forward-looking statements involve risks and uncertainties, some of which are beyond our control, which could cause actual results to differ materially from those anticipated by these statements. You should not rely upon forward-looking statements as a prediction of future events.

Speaker Change: <unk> and drivers in our business changes in the threat landscape and the security industry and our competitive position in the market.

Stephen Vintz: Maybe, Steve, if you could maybe touch on the guidance and what you're seeing in the business that's driving that incremental caution. I mean, you mentioned that, you know, things from an APPA perspective were a little bit more, you know, volatile, perhaps, than we saw at the end of the year. But what specifically are you seeing in the business? And what's the philosophy around, you know, the level of incremental conservatism that you're baking into guide? Thank you. Sure, Brian, good question. As we mentioned earlier, we did revise our CCB outlook for the year due to ongoing macro uncertainty, and that's most notably in our public sector business.

Speaker Change: Growth in customer demand for and adoption of our solutions, including Tenable, one cloud security exposure management, our ability to expand integrations with third party tools and data sources, including new capabilities from our Vulcan acquisition.

Speaker Change: <unk> innovation, and new products and services and our expectations regarding long term profitability and free cash flow.

Speaker Change: These forward looking statements involve risks and uncertainties some of which are beyond our control, which could cause actual results to differ materially from those anticipated by these statements you should not rely upon forward looking statements as a prediction of future events forward looking statements represent our beliefs and assumptions only as of today and should.

Stephen Vintz: We're off to a terrific start for the year. We're pleased with the print in the quarter and top of the funnel remains exceptionally strong. And the one thing I want to be very clear about today is that demand gen in the quarter exceeded our own expectations. And there's certainly more appetite for a broader platform play and expansion within our own customer base. That said, we have to acknowledge, you know, what's playing out and potentially could come our way. Subsequent to our last call, we've seen an acceleration in doge-related activities and disruption from a personnel perspective, a lot of disruption.

Erin Karney: Forward-looking statements represent our beliefs and assumptions only as of today and should not be considered representative of our views as of any subsequent date, and we disclaim any obligation to update any forward-looking statements or outlook. For a further discussion of the material risks and other important factors that could affect our actual results, please refer to those contained in our most recent annual report on Form 10-K and subsequent reports that we file with the SEC. In addition, all of the financial results we will discuss today are non-GAAP financial measures, with the exception of revenue. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their closest GAAP equivalents.

Speaker Change: Not be considered representative of our views as of any subsequent date and we disclaim any obligation to update any forward looking statements or outlook for a further discussion of the material risks and other important factors that could affect our actual results. Please refer to those contained in our most recent annual report on form 10.

Speaker Change: K and subsequent reports that we file with the SEC and.

Speaker Change: In addition, all of the financial results, we will discuss today are non-GAAP financial measures with the exception of revenue. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measure.

Stephen Vintz: And there are several notable open leadership roles in Fed. And all of that creates a confluence of activities and creates less visibility in our business short term. We spent a lot of time analyzing and scrubbing our pipeline and taking a data-driven approach to provide our outlook today. We disaggregated our opportunities and looked at them by geo, industry, you know, such as Fed and other sites of customer, and we're assuming longer lead times here for procurement decisions. This is most notably in our public sector business, but we're also applying that level – some level of caution to our enterprise business, which has the potential to be disrupted due to tariffs and geopolitical events.

Speaker Change: Yours versus their closest GAAP equivalents. Our press release includes GAAP to non-GAAP reconciliations for these measures I will now turn the call over to Steve.

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

Steve: Thank you Erin.

Steve: We're excited to share our strong results for the quarter discuss customer and market dynamics and provide our outlook for the remainder of the year.

Steve Vintz: Thank you, Erin. We're excited to share our strong results for the quarter, discuss customer and end market dynamics, and provide our outlook for the remainder of the year. Before delving into these areas, I do want to acknowledge that Mark and I are honored to be named co-CEOs. We are committed to advancing our exposure management strategy and accelerating the expansion of our market opportunities. I also would like to welcome Eric Doerr as our new Chief Product Officer and thank Shai Morag for leading the product organization over the past year and helping us at an important time. I'm very excited that Eric is joining us, as he brings nearly three decades of experience at Microsoft and Google building and scaling security products, and his leadership in developing innovative security solutions aligns perfectly well with Tenable's mission.

Steve: Before delving into these areas I do want to acknowledge that mark and I are honored to be named co Ceos.

Steve: We are committed to advancing our exposure management strategy and accelerating the expansion of our market opportunities.

Stephen Vintz: We think this is a prudent approach, and we think this sets us up well for the rest of Does that impact your free cash flow? Because you pretty much reiterated, you're, you know, adjusting for Vulcan, which you said would hit unlevered free cash flow about about 20 million. You're pretty much reiterating your Vulcan adjusted free cash flow for the year. Yes, that's a great point. We are a balanced grower, and we have a strong track record of success, expanding our operating margins. And so there's a lot of natural leverage in the business. And we are reiterating our outlook, despite the visibility that comes with some of these recent policy actions, but we're reiterating our outlook for operating income and free cash.

Speaker Change: I also would like to welcome Eric door, as our new Chief product Officer, and thanks, Shai Moraga for leaving the product organization over the past year and helping us at an important time I'm very excited that Eric is joining us as he brings nearly three decades of experience at Microsoft and Google building and scaling security products and leadership.

Speaker Change: And developing innovative security solutions aligns perfectly well with tenable as mission.

Speaker Change: I am pleased to say, we're off to a great start to the year this quarter, we'd be all of our guided metrics on the top and bottom line, we delivered 11% growth year over year, and a 36% unlevered free cash flow margin, which reflects our balanced growth approach and ability to drive continued operating leverage in the business.

Steve Vintz: With that, I'm pleased to say we're off to a great start to the year. This quarter, we beat all of our guided metrics on the top and bottom line. We delivered 11% growth year-over-year and a 36% unlevered free cash flow margin, which reflects our balanced growth approach and ability to drive continued operating leverage in the business. Our outperformance in the quarter also reflects the continued momentum with our exposure management platform, which drove acceleration in new sales due to a high conversion rate with large deals. In fact, this was our best quarter ever for seven-figure wins, and Tenable One was certainly the catalyst for that success.

Unknown Executive: Excellent. Thank you so much.

Saket Kalia: Our next question comes from Saket Kalia with Barclays. Please proceed with your question. Okay, great. Hey, guys, thanks for taking my question here.

Speaker Change: Our outperformance in the quarter also reflects the continued momentum with our exposure management platform, which drove acceleration in new sales due to a high conversion rate with large deals.

Mark Thurmond: Very, very helpful answer earlier there, Steve, on why maybe the CCB guide is changing.

Speaker Change: In fact, this was our best quarter ever for seven figure wins and Tenable, one was certainly the catalyst for that success.

Mark Thurmond: But Mark, maybe for you, just to make sure the question is asked, can we just talk a little bit about the competitive environment here in VM? I think we all know your established players, but curious what you're seeing from other players here, like Endpoint, for example, in VM. Sure. No, absolutely. Great, great question. When you take a look at Q1, it was actually an extremely strong quarter in regard to the competitive environment. If you kind of break this up and look at just the pure play VM players, so take a look at their Qualus and Rapid, we had historically high win rates.

Speaker Change: It's also worth mentioning that are on our February call, we highlighted the potential for a more modest fed contribution this quarter due to uncertainties related to the change in the administration and that played out as expected.

Steve Vintz: It's also worth mentioning that on our February call, we highlighted the potential for a more modest Fed contribution this quarter due to uncertainties related to the change in the administration, and that played out as expected. Clearly, enterprises are becoming more thoughtful and strategic in how they invest. These organizations are growing with us, adopting Tenable One to identify, prioritize, and remediate exposures across an expanding attack surface and diverse asset types. As a result, we're seeing increased opportunity, larger deal sizes, broader platform adoption, and greater asset coverage. What's clear is that few vendors can deliver solutions that address the needs of an enterprise operating in a complex multi-cloud hybrid work environment. This is becoming increasingly more important. Our platform addresses a rapidly evolving world where customers are constantly evaluating the right deployment model to fit their needs.

Speaker Change: Literally enterprises are becoming more thoughtful and strategic in how they invest these organizations are growing with us adopting tenable, one to identify prioritize and remediate exposures.

Speaker Change: Across an expanding attack surface and diverse asset types.

Speaker Change: As a result, we're seeing increased opportunities larger deal sizes broader platform adoption and greater asset coverage. What's clear is that few vendors can deliver solutions that address the needs of an enterprise operating in a complex multi cloud hybrid work environment.

Mark Thurmond: A couple of the deals that I referenced in the beginning of the call were seven-figure replacements of traditional VM players. So our compete level is extremely high and that is continuing from the end of last year and now we're seeing it again this year. So extremely strong, very, very historically high win rates. In regard to the end point players, say a CrowdStrike and or a Microsoft, same type of trend in regard to no massive shifts or changes in regard to the competitive dynamics. We do see them. We don't see them a significant amount of times though compared to obviously the traditional VM players.

Speaker Change: This is becoming increasingly more important our platform addresses a rapidly evolving world where customers are constantly evaluating the right deployment model to fit their needs.

Speaker Change: In fact, we're making great progress executing on our product roadmap as we continue to find ways to breakdown longstanding security silos and give organizations a more unified way to reduce risk.

Steve Vintz: In fact, we're making great progress executing on our product roadmap as we continue to find ways to break down long-standing security silos and give organizations a more unified way to reduce risk. A top priority is expanding integrations with third-party tools and data sources, including new capabilities from our Vulcan Cyber acquisition. These integrations feed Tenable One's analytics engine with rich data from application security tools, code repos, and more, broadening the attack surface visibility and sharpening prioritization so customers can focus on what matters most. Now, the same rich contextual data is also the foundation of our AI strategy. The power of AI lies in the quality, diversity, and history of the data it learns from. This is where we see a decisive advantage.

Speaker Change: Top priorities expanding integrations with third party tools and data sources, including new capabilities from our Vulcan cyber acquisition.

Mark Thurmond: So our win rates are high. Our compete level is very high in that space. And so we're very, very optimistic, especially based on those seven-figure wins. And I think as you know, it takes a lot to rip and replace an incumbent. And to be able to do that on seven-figure deals, we were pretty excited about what we did in Q1.

Speaker Change: These integrations fee tenable once analytics engine with rich data from application security tools code repos and more broadening the attack surface visibility and sharpening prioritization, so customers can focus on what matters most.

Speaker Change: Now the same rich contextual data. There is also the foundation of our AI strategy. The power of AI lies in the quality diversity and history of the data. It learns from and this is where we see a decisive advantage. We believe no vendor in the market can match the depth and breadth of our exposure data we've assembled.

Unknown Executive: Very helpful. Thanks, guys.

Andrew Nowinski: Our next question comes from Andrew Nowinski with Wells Fargo. Please proceed with your question. Great, thank you for taking the question and congrats on both your appointments to a co CEO. I wanted to ask a question on your cloud business. So you talked about how cloud is a critical pillar of exposure management. So I'm wondering, do customers understand that cloud security and exposure management go hand in hand? And really what I'm trying to get is, like, how are you thinking about the impact of Google's acquisition of Wiz in the cloud space? And, you know, do customers want to buy exposure management and cloud together?

Steve Vintz: We believe no vendor in the market can match the depth and breadth of our exposure data we've assembled over the past two decades. This gives us a real competitive moat with a uniquely comprehensive view of risk, spanning assets, vulnerabilities, misconfigurations, identities, and more. That's why we think we are positioned to lead in AI-powered exposure management. We're working toward building the most intelligent, scalable, and complete exposure management solution on the market. With these advancements, Tenable One is evolving from a system of record to a system of action, closing the loop on exposure management by not just identifying risk, but also by helping customers act on it in real time. A great example of this is our recent research into the security posture of AI workloads. Our research team found that 70% of cloud workloads leveraging AI services contain unresolved vulnerabilities.

Speaker Change: Over the past two decades.

Speaker Change: This gives us a real competitive moat with a uniquely comprehensive view of risk spanning assets vulnerabilities myths configurations identities and more and that's why we think we are positioned to lead in AI powered exposure management.

Speaker Change: We're working towards building the most intelligent scalable and complete exposure management solution on the market with these advancements tenable one is evolving from a system of record the system of action closing the loop on exposure management by not just identify your Roes, but also by helping customers Act on it in real time, a great exam.

Stephen Vintz: Does that make sense? Sure.

Stephen Vintz: I'll start and Mark may provide additional color. But in short, the acquisition of Wiz we think creates certainly a market opportunity for us. It's clear that Google views with more than just a security business, as it's widely believed, and talking to some of these customers that will see more innovation, perhaps on the Google platform will be used as a means to sell more workloads there than perhaps on other platforms. So we're actively talking to customers in that regard and, you know, we're seeing the outsize growth in cloud. We talked about the record number of large seven-figure deals this quarter.

Speaker Change: All of this is our recent research into the security posture of AI workloads, our research team from about 70% of cloud workloads, leveraging AI services contained unresolved vulnerabilities. This isn't just an interesting data point is actionable intelligence that we operationalized and tenable one.

Steve Vintz: This isn't just an interesting data point, it's actionable intelligence that we operationalized in Tenable One. We're also seeing growing momentum in our AI-aware discovery capabilities, with many of our customers using Tenable to help secure their expanding AI footprint. While the broader market for securing AI is in the early stages, Tenable is already delivering at scale. In Q1 alone, Tenable One detected 22 million AI-related applications, up from 14 million the prior quarter. We identified over 160 million instances of AI-embedded browser plugins. These are not just numbers, they're a testament to Tenable's ability to help customers stay ahead of the emerging threats tied to AI. We're also investing heavily in remediation to tie exposures to fixes. We're expecting to roll out powerful new capabilities, including bidirectional ticketing and automated workflows, to help customers close risk faster with greater accountability across fragmented environments.

Speaker Change: We're also seeing growing momentum in our AI aware discovery capabilities with many of our customers using tenable to help secure their expanding AI footprint.

Speaker Change: While the broader market for securing the AI is in the early stages tenable is already delivering that scale in Q1 alone tenable, one detected $22 million AI related applications up from $14 million in the prior quarter.

Mark Thurmond: We're seeing a lot of expansion opportunities within our own VM customer base, customers that are stepping up, buying the larger exposure management platform, and cloud is an important part of that in their ability to assess other asset types. So if you look at kind of the underlying trends of the business between VM and cloud and specifically exposure solutions, we're seeing a continuation of those trends. Real strong growth, certainly, in exposure solutions with outsize growth in cloud and certainly lots of opportunities in our VM business. But we think we're still very early on and we're continuing to take and win share here and cloud's an important part of the exposure management story.

Speaker Change: We identified over 160 million instances of AI embedded browser plug ins.

Speaker Change: These are not just numbers they are a testament to <unk> ability to help customers stay ahead of the emerging threats tied to AI.

Speaker Change: We're also investing heavily in remediation to tie exposures to fixes.

Speaker Change: We're expecting to rollout powerful new capabilities, including bidirectional ticketing and automated workflows to help customers close risk faster with greater accountability across fragmented environment.

Speaker Change: In short we are executing on our strategic initiatives that we outlined at the beginning of the year by accelerating innovation in our platform and expanding our footprint in cloud.

Steve Vintz: In short, we are executing on our strategic initiatives that we outlined at the beginning of the year by accelerating innovation in our platform and expanding our footprint in cloud. We're also already seeing progress in both these areas. While there's a lot of uncertainty in this macro, we continue to be very valuable partner to our customers by helping them reduce risk with greater efficiency across the enterprise. I'd now like to turn the call over to Mark.

Mark Thurmond: Yeah, and I will just add on to Steve's comment. It is definitely a net positive for us, right? When you have an acquisition of that size to a very dominant player, it does create a bit of uncertainty. And so we definitely have heard that from our prospects. And they are coming to us where in the beginning when WIS was a standalone, they might not have even included certain players in regard to RFPs and to do proof of values and proof of concepts. You know, we have seen over the last three and a half weeks an increase in the amount of activity and being invited to participate in RFPs.

Speaker Change: We're also already seen progress in both these areas.

Speaker Change: There's a lot of uncertainty in this macro we continue to be very valuable partner to our customers by helping them reduce risk with greater efficiency across the enterprise.

Mark Thurman: I would now like to turn the call over to Mark.

Mark Thurman: Thanks, Steve Steve.

Mark Thurmond: Thanks, Steve. Steve underscored a critical point. Our leadership in vulnerability management is not only holding strong, it's driving real acceleration in Tenable One adoption. Our customers are taking this journey with us. As the threat landscape has evolved, so has the mandate of exposure management. It's no longer just about finding vulnerabilities, it's about understanding how those risks connect across your entire environment. That's why we made deliberate strategic investments to expand Tenable One into a comprehensive exposure management platform, and our customers are responding. This quarter, that partnership was on full display with major Tenable One expansions across industries. We had strong win rates against major players in the VM, EM, and cloud space. This is a direct result not just of extending our leadership, but reshaping what exposure management looks like. In Q1, we secured a major federal win with the organization undertaking a global modernization effort.

Mark Thurman: Steve Underscored a critical point our leadership in vulnerability management is not only holding strong is driving real acceleration and tenable one adoption.

Mark Thurman: Our customers are taking this journey with us.

Mark Thurmond: We have customers that are saying, hey, before this might have been a locked-in WIS deal. We're now opening it up. We want to look at options. We have a multi-cloud environment using Azure, AWS, OCI, and they do not want to get locked in. So this is definitely going to be a net positive for us. And one thing I will highlight is this hybrid environment of being able to look not just at your cloud environment, but be able to look at holistically these other asset types is a massive differentiator. And that kind of what exposure management and the Tenable One platform is all about.

Mark Thurman: As the threat landscape has evolved so has the mandate of exposure management, it's no longer just about finding vulnerabilities.

Mark Thurman: Understanding how those risks connect across your entire environment.

Mark Thurman: That's why we made deliberate strategic investments to expand tenable, one into a comprehensive exposure management platform.

Mark Thurman: And our customers are responding.

Mark Thurman: This quarter that partnership was on full display.

Mark Thurman: With major tenable, one expansions across industries.

Mark Thurman: We had strong win rates against major players in the V M M and cloud space.

Mark Thurmond: So we view this as a net positive moving forward.

Mark Thurman: This is a direct result, not just of extending our leadership, but reshaping what exposure management looks like <unk>.

Unknown Executive: Super. Thanks, guys.

Mark Thurman: In Q1, we secured a major federal win with the organization undertaking a global modernization effort.

Mike Cikos: Next question comes from Mike Cikos with Needham & Co. Please proceed with your question. Hey guys, this is Matt Coletreon from Mike Cikos over at Needham. Thanks for taking our questions and like to echo my congratulations.

Mark Thurman: The organization is using tenable to manage over 1 million assets globally.

Mark Thurmond: The organization is using Tenable to manage over 1 million assets globally. Hosted in a private cloud environment, our solution is providing them scalable, centralized visibility and consistent risk insights across their global footprint, an essential foundation for enhancing their overall security posture. Beyond the public sector this quarter, we also secured a $7-figure expansion with a global financial institution. This institution was an existing Tenable customer, underscoring the value of delivering in a highly regulated industry. These organizations need a unified, comprehensive view of risk, particularly as they prepare for regulatory audits. In this case, the customer upgraded to Tenable One to support both audit readiness and vendor consolidation across a complex attack surface. The deal includes hundreds of thousands of assets, reflecting a broad market shift. Customers want to centralize control of their environments, and they're turning to Tenable to make that happen.

Mark Thurman: <unk> in a private cloud environment, our solution is providing them scalable centralized visibility and consistent risk insights across the global footprint and a central foundation for enhancing their overall security posture.

Mark Thurmond: Stephen Mark, on the calendar 25 guidance cut, can you help us think about how to quantify how much of that impact is in the public versus private sector? And can the move up market help combat any of this weakness you're projecting? Sure, well, if you look at kind of the revision to our guidance today, specifically on CCB, we say about two thirds, approximately two thirds is in US public sector. And then obviously, the remaining third is in our enterprise Now, look, we had a strong print. We transacted a record number of seven-figure deals. We're seeing momentum in the enterprise market.

Mark Thurman: On the public sector. This quarter, we also secured a seven figure expansion with a global financial institution.

Mark Thurman: This institution was an existing tangible customer underscoring the value of delivering in a highly regulated industry.

Mark Thurman: These organizations need a unified comprehensive view of risk, particularly as they prepare for regulatory audits.

In this case, the customer upgraded to tenable want to support both audit readiness and vendor consolidation across into complex attack surface.

Stephen Vintz: We had some of our highest conversion rates than we've ever seen. And new business was strong. But we do have to recognize what potentially could come our way. It just feels like there's more uncertainty now since our February call than there was early in the year. And we think this is certainly the right approach to take. And we're pleased to see top of the funnel remain strong. Understood. That makes sense.

Mark Thurman: The deal includes hundreds of thousands of assets, reflecting a broad market shifts.

Mark Thurman: Customers want to centralize control of their environment and they are turning to tenable to make that happen.

Mark Thurman: We believe this also opens up significant opportunities as customers are beginning integrating third party security data into tenable one.

Mark Thurmond: We believe this also opens up significant opportunities as customers are beginning integrating third-party security data into Tenable One, giving them a more complete picture of risk and fueling momentum for platform consolidation and upsell. By combining our first-party assessments with third-party inputs, we're making it even easier for organizations to manage their full exposure landscape through a single platform. Another significant new customer win that underscores the momentum behind our unified platform strategy and the value of our Vulcan Cyber acquisition was with a Fortune 100 customer. This customer has selected Tenable as their North Star for exposure management as part of a broader cybersecurity consolidation effort. They're replacing multiple vendor solutions, choosing to standardize on Tenable One. The ability to ingest third-party data combined with first-party assessments was the differentiator for this customer, as it allows us to deliver insights on holistic risk.

Stephen Vintz: And then just generally in the U.S. federal business, are budgets on hold or is there any sort of clarity coming up now that we're a couple months into the new administration? How is FedRAMP impacting any of this? Just any general color would be helpful. Yeah, I think it's really a question of visibility. You know, when we talked at the beginning of the year, we provided an income rentally more a cautious approach to our outlook, and specifically the U.S. public sector. And that was really due to the change in the administration and a budget uncertainty surrounding continuing resolution.

Mark Thurman: Giving them a more complete picture of risks and fueling momentum for platform consolidation and up sell.

Mark Thurman: By combining our first party assessments with third party inputs, we're making it even easier for organizations to manage their full exposure landscape through a single platform.

Mark Thurman: Another significant new customer win that underscores the momentum behind our unified platform strategy and the value of our bulk when the acquisition was with a fortune 100 customer.

Mark Thurmond: And we said we would get, you know, less contribution from PubSec the first half of the year, most notably in Q1, and that played out as expected, despite this sizable seven-figure deal that we closed on the defense side. Federal. As we look out the rest of the year, I think just more generally, there's just more uncertainty. There's been a lot of disruptions from a personnel perspective, certainly more so on the civilian side than the defense side. And we're just taking more of a cautious approach for the remainder of the year. And just assuming, you know, longer lead times here.

Mark Thurman: This customer has selected tenable as their north star for exposure management as part of a broader cyber security consolidation effort.

Mark Thurman: They're replacing multiple vendor solutions.

Mark Thurman: Turning to standardize on tenable one.

Mark Thurman: The ability to ingest third party data combined with first party assessments was the differentiator for this customer.

Mark Thurman: As it allows us to deliver insights on holistic risk.

Mark Thurman: We consider this multiyear commitment is a strong validation of our ability to deliver integrated high impact solutions that align with enterprise needs for simplicity consolidation and clear ROI.

Mark Thurmond: We consider this multi-year commitment as a strong validation of our ability to deliver integrated, high-impact solutions that align with enterprise needs for simplicity, consolidation, and clear ROI. As we said many times now, we see cloud as a critical pillar of exposure management, and this quarter showed exactly why. We landed a seven-figure deal with a global software and services company operating in over 180 countries. With a massive multi-cloud environment spanning AWS, Azure, GCP, and OCI, they needed a smarter, more scalable way to manage risk across their cloud footprint. With compliance pressure rising and thousands of assets to secure, they launched a competitive review of multiple vendors to replace their Microsoft deployment. Tenable came out on top for our fast deployment, seamless multi-cloud integrations, and real-time visibility and control across their cloud infrastructure. In under 2 months, we proved our value.

Mark Thurmond: Yeah, and I think let me just kind of piggyback on that too. So When you take a look at what has gone on in regard to some of the doge cuts and also some of the leadership changes, right, there have been pretty significant leadership positions within the federal government, especially on cyber side of the house, that have not been filled yet. And so while we're seeing, you know, a positive top-of-the-funnel build-out, we now are FedRAMP authorized for Tenable 1, which is new here, coming into Q2. We actually see huge opportunity for the consolidation. The biggest theme that's coming out of the federal government right now is what vendors can save us money, what vendors can consolidate multiple products onto a single platform.

Mark Thurman: As we said many times now.

We see cloud as a critical pillar of exposure management.

Mark Thurman: In this quarter showed exactly why.

Mark Thurman: We landed a seven figure deal with a global software and services company operating in over 180 countries.

Mark Thurman: With a massive multi cloud environment spanning AWS Azure DCP and OCI.

Mark Thurman: They needed a smarter more scalable way to manage risk across their cloud footprint.

Mark Thurman: With compliance pressure rising and thousands of assets to secure they launched a competitive review of multiple vendors to replace the Microsoft deployment.

Mark Thurmond: So we actually feel good in the top-of-the-funnel. But it really is what Steve hit on. It is just a challenging environment determining how deals are going to happen, when they're going to actually close, who's going to be processing and doing the mechanics of getting the deal done, and then getting some of these leadership positions done. So, you know, it is just a bit gray right now. We are optimistic about the business and Fed and PubSec, but we just need to get a little more clarity to be able to call the business.

Mark Thurman: Carnival came out on top for.

Mark Thurman: For our fast deployment.

Mark Thurman: Seamless multi cloud integration and real time visibility and control across their cloud infrastructure.

Mark Thurman: And under two months, we proved our value.

Mark Thurman: We are managing tens of thousands of cloud resources and thousands of identities.

Mark Thurmond: We are managing tens of thousands of cloud resources and thousands of identities, helping them strengthen their overall security posture while laying a foundation for more unified exposure management strategy. The takeaway here is we're seeing exceptional momentum in exposure management and believe we are best positioned to help our customers evolve their solution stack as they implement modern technologies such as cloud, AI, interconnected IT, OT systems, and hybrid environments. With that, I'll turn it back over to Steve to dive deeper into our results for the quarter.

Mark Thurman: Helping them strengthen their overall security posture, while laying a foundation for more unified exposure management strategy.

Unknown Executive: Very helpful. Thanks so much.

Rob Owens: Our next question comes from Rob Owens with Piper Sandler. Please proceed with your question. Great, thanks for taking my question.

Mark Thurman: The takeaway here is we're seeing exceptional momentum in exposure management and believe we are best positioned to help our customers evolve their solutions back as they implement modern technologies such as cloud AI.

Ethan: This is Ethan on for Rob this afternoon. You know, there's been a lot of commotion in the industry recently around the potential end of funding for the CVE program. It seems that the funding has been extended for the time being, but what do you think the implications would be for Tenable or the VM industry more broadly if we were to see the funding end for that program in the future? Sure, well the Mitreback CVE program, there were some questions about funding and then we were pleased to see funding get extended for the remainder of the year.

Mark Thurman: Interconnected.

Mark Thurman: Ot systems and hybrid environments.

Mark Thurman: With that ill.

Mark Thurman: I'll turn it back over to Steve to dive deeper into our results for the quarter.

Mark Thurman: Thanks, Mark I'll now turn to our results in the quarter, which as a reminder includes the impact from the acquisition of Vulcan.

Steve Vintz: Thanks, Mark. I'll now turn to our results in the quarter, which, as a reminder, includes the impact from the acquisition of Vulcan. Calculated current billings, defined as revenue recognized in the quarter, plus the change in current deferred revenue, grew 9% year over year to $215.4 million. As discussed earlier, this outperformance was largely driven by Tenable One, including cloud security. Current RPO grew 13% year over year, 400 basis points ahead of CCB growth as backlog accelerated during the quarter. During the quarter, we added 361 new enterprise platform customers, and our LTM net new six-figure count was 54. Our net dollar expansion rate was consistent this quarter at 108%, and our overall renewal rates remained strong. Now on to the P&L for the quarter.

Stephen Vintz: I think the big takeaway here is that collaboration is really important and that's a program that's used as a means to facilitate sharing of vulnerabilities and exploits. I think there will always be a need for that. We're one of the few companies that's able to contribute and add CVEs to that national database and program. We recognize that's an important effort, so we're here to serve and help customers and we're actively working with members at the highest level both within the public sector as well as the private sector to see if there's a better approach here.

Mark Thurman: <unk> current billings defined as revenue recognized in the quarter plus the change in current deferred revenue grew 9% year over year to $215 4 million as discussed earlier. This outperformance was largely driven by tenable, one including cloud security.

Mark Thurman: Current RPI grew 13% year over year 400 basis points ahead of CCP growth as backlog accelerated during the quarter.

Mark Thurman: During the quarter, we added 361, new enterprise platform customers and our LTM net new six figure count was 54.

Mark Thurman: Our net dollar expansion rate was consistent this quarter at one 8% and our overall renewal rate remains strong.

Stephen Vintz: And certainly, the CVE program has had its limitations, right? There's been a proliferation of vulnerabilities. A lot of those vulnerabilities are categorized as critical or very critical. And so we certainly think there's a better there's an opportunity here. And this is where we'd like to see better collaboration.

Mark Thurman: Now on to the P&L for the quarter revenue was $239 1 million, which represents 11% year over year growth revenue in the quarter exceeded the midpoint of our guidance range by $5 1 million.

Steve Vintz: Revenue was $239.1 million, which represents 11% year-over-year growth. Revenue in the quarter exceeded the midpoint of our guided range by $5.1 million. Our percentage of recurring revenue remains high at 96% this quarter. Gross margin was 82% this quarter, flat relative to last quarter and in line with expectations. Going forward, we continue to expect gross margins to be in the high 70s to low 80% range. While we're investing to deliver enhanced functionality and analytics to customers, the scalability of our platform has enabled gross margins to remain constant. Sales and marketing expense was $85.5 million, up from $80.1 million last quarter. As a percentage of revenue, sales and marketing was 36% compared to 34% last quarter.

Unknown Executive: Appreciate the color.

Mark Thurman: Our percentage of recurring revenue.

Mark Thurman: Mains high at 96% this quarter.

Patrick Colville: Our next question comes from Patrick Colville with Scotiabank. Please proceed with your question. Thank you so much for taking my question.

Mark Thurman: Gross margin was 82% this quarter flat relative to last quarter and inline with expectations.

Mark Thurman: Going forward, we continue to expect gross margins to be in the high <unk> to low 80% range.

Patrick Colville: I guess, can I just ask a cheeky two-parter? So, Stephen, Mark, what are your strategic priorities for the next 100 days as Tenable co-CEOs? And then the second part, if I may, is, I think, in 4Q results, you mentioned that PubSec, US PubSec was 15% of revenue. So, the guidance cut for 2025 is being largely attributed to US PubSec. Do I have my numbers right? And if not, would you mind correcting me? Thank you so much. Yes, with regard to the latter, U.S. public sector is approximately 15% of our total sales. And so the revision to the top line today, we said a majority of it, you know, about two-thirds of the revision is for U.S.

Mark Thurman: While we are investing to deliver enhanced functionality and analytics to customers. The scalability of our platform has enabled gross margins to remain constant.

Mark Thurman: Sales and marketing expense was $85 5 million up from $80 1 million last quarter and as a percentage of revenue sales and marketing was 36% compared to 34% last quarter.

Mark Thurman: Sales and marketing expense was higher sequentially on an absolute dollar basis, and a percentage basis, primarily due to the costs associated with our annual sales kickoff conference in February partially offset by lower sales commissions from a seasonally lower renewal base in the quarter.

Steve Vintz: Sales and marketing expense was higher sequentially on an absolute dollar basis and a percentage basis, primarily due to the costs associated with our annual sales kickoff conference in February, partially offset by lower sales commissions from a seasonally lower renewal base in the quarter. Looking ahead, we expect sales and marketing as a percentage of revenue to be modestly higher in Q2 due to the industry events and other investments we're making, including sales capacity, and trend lower in the second half of the year. R&D expense was $39 million, which was up from $32.5 million last quarter. R&D expense was higher this quarter in comparison to last quarter, primarily due to increased personnel costs resulting from the Vulcan acquisition, as well as the foreign tax credits we received last quarter.

Mark Thurman: Looking ahead, we expect sales and marketing as a percentage of revenue to be modestly higher than Q2 due to the industry events and other investments, we're making including sales capacity and trend lower in the second half of the year.

Stephen Vintz: public sector. And we said we're also taking a bit of a cautious approach to enterprise where we continue to see great momentum and traction there.

Mark Thurman: R&D expense was $39 million, which was up from $32 5 million last quarter.

Stephen Vintz: And with regard to really our priorities here, you know, first, let me just say the co-CEO structure is one that, you know, we're very familiar with and reflect how we've been operating as a company really for the past year. We're committed to certainly expanding our market opportunities and to our mandate. Our roots are in vulnerability management, but the outgrowth of that is exposure management. And so with that, you know, there's, I would say, several opportunities. Number one, we're delivering incremental value to customers, and two, we see a lot of momentum with our exposure management platform.

Mark Thurman: <unk> expense was higher this quarter in comparison to last quarter, primarily due to increased personnel costs, resulting from the Vulcan acquisition as well as the foreign tax credits, we received last quarter.

Mark Thurman: As a result, R&D expense as a percentage of revenue was 16% this quarter up from 14% last quarter.

Steve Vintz: As a result, R&D expense as a percentage of revenue was 16% this quarter, up from 14% last quarter. We expect R&D expense as a percentage of revenue to increase in Q2 due to a full quarter of Vulcan costs with improved margins the second half of the year. G&A expense was $22.7 million, which was up from $20.5 million last quarter, primarily due to compensation expense associated with the passing of our former CEO, and payroll taxes, which reset at the beginning of the year. G&A expense as a percentage of revenue was 9% this quarter, which was flat relative to last quarter. Income from operations was $48.7 million and exceeded the midpoint of our guided range by $7.7 million.

Mark Thurman: We expect R&D expense as a percentage of revenue to increase in Q2 due to a full quarter of Vulcan cost with improved margins the second half of the year.

Mark Thurman: G&A expense was $22 7 million, which was up from $25 million last quarter, primarily due to compensation expense associated with the passing of our former CEO and payroll taxes, which reset at the beginning of the year G&A expense as a percentage of revenue was 9% this quarter, which was flat relative to last quarter.

Stephen Vintz: Exposure management platform is a catalyst to higher deal sizes. The ESPs this quarter were very high in part to those seven-figure deals that we announced. And we're using that really as the tip of the spear to be able to consolidate spend in areas like cloud, like web application, like OT and other areas. So that's certainly one bigger opportunity is to use the platform as a means to assess other asset types and do more first-party assessment. You know, the second thing is, we recognize that the security market is fragmented, and there's a lot of players and there's been vendor sprawl.

Mark Thurman: Income from operations was $48 7 million and exceeded the midpoint of our guided range by $7 7 million.

Mark Thurman: Operating margin for the quarter was 20%, which was approximately 300 basis points better than the midpoint of our guidance range. We're very pleased with our ability to drive continued leverage in the business while investing for growth.

Steve Vintz: Operating margin for the quarter was 20%, which was approximately 300 basis points better than the midpoint of our guided range. We're very pleased with our ability to drive continued leverage in the business while investing for growth. EPS for the quarter was $0.36 per share, which was $0.095 better than the midpoint of our guided range. Now let's turn to the balance sheet. We finished the quarter with $460 million in cash and short-term investments, reflecting $149 million of net cash used for the Vulcan acquisition. Accounts receivable was $168 million, and total deferred revenue was $808 million. Current deferred revenue was $633 million, which gives us a lot of visibility into expected revenue over the next 12 months.

Stephen Vintz: And so, and no security company can possibly assess all these different asset types. So, we're bringing to market here a more expanded version of our exposure management platform. That will include not only our first party assessment data, but also our third party data that we can ingest from other security providers, whether it's cloud security, application security, whatever it may be. So, combining third party data with our first party assessment data really provides a broader set of exposure data for customers, and help them remediate, mobilize their efforts to reduce risk. The last thing here, I will say, is AI.

Mark Thurman: EPS for the quarter was 36, a share which was nine five cents better than the midpoint of our guided range.

Mark Thurman: Now, let's turn to the balance sheet, we finished the quarter with $460 million in cash and short term investments, reflecting $149 million of net cash used for the Vulcan acquisition.

Mark Thurman: Accounts receivable was $168 million and total deferred revenue was $808 million.

Mark Thurman: Current deferred revenue was $633 million, which gives us a lot of visibility into expected revenue over the next 12 months.

Steve Vintz: We generated a record $87 million of unlevered free cash flow during the quarter. While this quarter's result was influenced by seasonal timing of collections from Q4 sales, we feel confident that we can continue to expand our operating and free cash flow margins over the ensuing years, as we have done so every year since our IPO. During the quarter, we repurchased 1.6 million shares of our common stock for an aggregate purchase price of $60 million. In total, we've repurchased almost 4.3 million shares for $175 million since November 2023 and have $125 million of remaining authorization. Now with the results of the quarter behind us, I'd like to discuss our outlook for Q2 and the full year 2025.

Mark Thurman: We generated a record $87 million of Unlevered free cash flow during the quarter.

Stephen Vintz: AI is a force multiplier on the types of insights that we can deliver to customers. We think in the years to come, the real competitive mode here for exposure management, and AI is kind of central to exposure management. is not so much features and functionality, that will be important, but the insights that you can deliver to customers. So aggregating all that data from all those different asset types, both first-party and third-party assessment data, to be able to integrate it in a way and combine vulnerabilities with threats and identities, is really a powerful offering and a means to help customers not only identify risk, where we've historically been focused, but help them actually reduce risk and tie balls to actual fixes.

Mark Thurman: While this quarter's result was influenced by seasonal timing of collections from Q4 sales, we feel confident that we can continue to expand our operating and free cash flow margins over the ensuing years as we have done so every year since our IPO.

Mark Thurman: During the quarter, we repurchased one 6 million shares of our common stock for an aggregate purchase price of $60 million.

Mark Thurman: In total we've repurchased almost $4 3 million shares for $175 million since November of 2023 and have $125 million of remaining authorization.

Mark Thurman: Now with the results of the quarter behind us I'd like to discuss our outlook for Q2 and the full year 2025 for the second quarter. We currently expect revenue to be in the range of 241% to $243 million.

Stephen Vintz: So we look for more here, investments from us and AI, but certainly it's a big opportunity here and really will create more competitive moat and a catalyst for growth going forward.

Steve Vintz: For Q2, we currently expect revenue to be in the range of $241 to 243 million. Non-GAAP income from operations to be in the range of $43 to 45 million. Non-GAAP net income to be in the range of $36 to 38 million, assuming interest expense of $7.1 million, interest income of $4 million, and a provision for income taxes of $3.2 million. Non-GAAP diluted earnings per share to be in the range of $0.29 to $0.31 per share, assuming 123 million fully diluted weighted average shares outstanding. For the full year, we currently expect calculated current billings to be in the range of $1,025 to 1,045 million. Revenue to be in the range of $970 to 980 million.

Mark Thurman: non-GAAP income from operations to be in the range of $43 million to $45 million.

Mark Thurmond: Yeah, no, very, very well said, Steve, totally agree, and I think when you look at it from a go-to-market, to keep it really basic and simple, we're going to be focused on continuing to drive the T1 message and positioning. With Eric Doerr now joining us from Google, I think you'll see a lot of fantastic innovation. On the point that Steve just hit on, when we talk about Tenable 1, it is truly a very strong consolidation story that is resonating in the market right now. The second big piece is going to continue to be cloud, right?

Mark Thurman: non-GAAP net income to be in the range of $36 million to $38 million, assuming interest expense of $7 1 million interest income of $4 million and a provision for income taxes of $3 2 million.

Mark Thurman: And non-GAAP diluted earnings per share to be in the range of 29 to 31.

Mark Thurman: A share assuming 123 million fully diluted weighted average shares outstanding.

Mark Thurman: For the full year. We currently expect calculated current billings to be in the range of $1 25 to $1 45.

Mark Thurmond: So cloud is part of Tenable 1, is the two big areas that we're going to go for from a go-to-market perspective.

Unknown Executive: Thank you so much and looking forward to this next chapter.

Mark Thurman: Revenue to be in the range of $970 to $980 million non-GAAP income from operations to be in the range of $205 million to $215 million.

Steve Vintz: Non-GAAP income from operations to be in the range of $205 to 215 million. Non-GAAP net income to be in the range of $178 to 188 million, assuming interest expense of $28.4 million, interest income of $16.8 million, and provision for income taxes of $13.1 million. Non-GAAP diluted earnings per share to be in the range of $1.44 to 1.52 per share, assuming 123.5 million fully diluted weighted average shares outstanding. Unlevered free cash flow in the range of $265 to 275 million.

Rudy Kessinger: Our next question comes from Rudy Kessinger with D.A. Davidson. Please proceed with your question. Hey, thanks for taking my questions, guys. Can you hear me okay? Sure. Great, great.

Mark Thurman: non-GAAP net income to be in the range of $178 million to $188 million.

Mark Thurman: Interest expense of $28 4 million interest income of $16 8 million and provision for income taxes of $13 1 million non.

Rudy Kessinger: Well, congrats both you on the co-CEO roles. Hopefully I'm your last question on public sector.

Mark Thurmond: But, you know, with the two thirds of the cut that is being attributed to public sector, I guess I'm curious, is that mostly just from less visibility on new deals? Or have you actually had any contracts that have been canceled or downsized? And if the answer is yes, Notice, did you have that they were being canceled? Did you kind of have a sense or were they kind of cut out of the Yeah, so you know, commentary around Fed applies both to new as well as renewal, but more so the former than the latter. We have a long standing relationship with federal government.

Mark Thurman: non-GAAP diluted earnings per share to be in the range of $1 44 to $1 52 per share assuming $123 5 million fully diluted weighted average shares outstanding and Unlevered free cash flow in the range of $265 million to $275 million.

Mark Thurman: While we're off to a great start for the year and see real momentum in our business. There is clearly more economic uncertainty in the market now than at the beginning of the year. As a result, we are taking an incrementally more cautious approach with our outlook today.

Steve Vintz: While we're off to a great start for the year and see real momentum in our business, there is clearly more economic uncertainty in the market now than at the beginning of the year. As a result, we are taking an incrementally more cautious approach with our outlook today. Specifically, we extended the cautious first half outlook we provided in February in the US public sector for the remainder of the year. We also acknowledge that recent US policy actions have the potential to reduce visibility in our enterprise business, which could lengthen sales cycles. It's important to note that demand creation and top of the funnel remain strong. A revised guidance today simply reflects the fact that the world is more uncertain and visibility into when deals close has become murkier since we provided our initial guide in February.

Specifically, we extended a cautious first half outlook, we provided in February in the U S public sector for the remainder of the year. We also acknowledged that recent U S policy actions have the potential to reduce visibility in our enterprise business, which could lengthen sales cycles, it's important to note that demand creation and top.

Stephen Vintz: We serve every three letter federal agency from defense to civilian to intel. And so we know this is a foundational piece of their program. As you probably know, just from looking at the headlines, you know, some of the disruption that we've talked about, you know, from a personnel perspective has been more on the civilian side. And so we've seen certainly, you know, lower renewal dollars coming out of some of those civilian agencies that are seeing more disruption from from those related actions. But going forward, we just see longer times, you know, longer lead times here, and cycle times to be able to close the opportunities.

Mark Thurman: The funnel remains strong.

Mark Thurman: Our revised guidance today simply reflects the fact that the world is more uncertain and visibility into when deals close has become murkier. Since we provided our initial guide in February.

Steve Vintz: We believe our updated guidance appropriately balances these potential geopolitical and economic risks and sets us up for success the remainder of the year. Our guidance for operating income remains unchanged and reflects our emphasis on profitable growth. We expect operating margins to generally increase throughout the year, resulting in an approximate 100 basis points improvement over 2024, even as we absorb the costs associated with the Vulcan acquisition. Notably, our disciplined approach to balanced growth has enabled us to manage the business in a way that allows us to continue to drive strong margins in multiple environments. As a reminder, we typically update our unlevered free cash flow with our Q2 call, but we continue to expect to deliver $265 to 275 million of unlevered free cash flow in 2025.

Mark Thurman: We believe our updated guidance appropriately balances these potential geopolitical and economic risks and sets us up for success the remainder of the year.

Stephen Vintz: Mark talked about our two newer products, Tenable One and Cloud Security, getting FedRAMP authorized. We're seeing certainly a lot of market pull there.

Mark Thurman: Our guidance for operating income remains unchanged and reflects our emphasis on profitable growth.

Mark Thurman: We expect operating margins to generally increase throughout the year, resulting in an approximate 100 basis point improvement over 2024, even as we absorbed the costs associated with the Vulcan acquisition.

Stephen Vintz: And the three themes that we're focused on to better serve the federal government is really modernization, that's a big area of emphasis for them, consolidation, and then certainly more efficiency. And the platform strategy and approach that we have here certainly creates a lot more utility for a lot of our federal customers.

Mark Thurman: Notably our discipline approach to balance growth has enabled us to manage the business in a way that allows us to continue to drive strong margins and multiple environments.

Mark Thurman: As a reminder, we typically update our unlevered free cash flow with our Q2 call.

Mark Thurman: But we continue to expect to deliver $265 million to $275 million of Unlevered free cash flow in 2025.

Joseph Gallo: Our next question comes from Joseph Gallo with Jeffries. Please proceed with your question.

Steve Vintz: With that said, Mark and I would like to thank everyone for joining the call today. We're very excited about the opportunity ahead and look forward to updating you throughout the year. We hope to see you at the JPMorgan and D.A. Davidson conferences in the coming weeks, and we'd now like to open the call for questions.

Mark Thurman: With that said Mark and I would like to thank everyone for joining the call today, we're very excited about the opportunity ahead and look forward to updating you throughout the year, we hope to see you at the JP Morgan and da Davidson conferences in the coming weeks.

Anjali Pavlopoulos: Hi, this is Anjali Pavlopoulos for Joseph Gallo. So my question is, can you give us an update? Transcription by Transcription Outsourcing, LLC. Sure, yeah, no, and when you take a look at the Q1 performance, the channel performed extremely well. I mean, the beautiful part of the tenable distribution models, we are 100% channel, so we do all our business through the channel. So we saw great momentum in the channel in Q1, we saw excellent channel in business coming in from the partner community, so that was excellent. We did add some sales capacity in Q1, and we will continue to evaluate looking at certain regions, theaters, and countries that are showing signs of growth.

Mark Thurman: And we now like to open the call for questions.

Operator: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. We ask that analysts limit themselves to one question so that others may have an opportunity to ask questions. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from Brian Essex with JPMorgan. Please proceed with your question.

At this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Mark Thurman: Confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue. We ask that analysts limit themselves to one question. So that others may have an opportunity to ask questions.

Mark Thurman: Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Mark Thurman: One moment, please while we poll for questions.

Mark Thurmond: And if we see significant growth patterns, those are going to be some geographies that we might take a look at adding sales capacity throughout the year.

Speaker Change: Our first question comes from Brian Essex with J P. Morgan. Please proceed with your question.

Brian Essex: Hi, good afternoon, and thank you for taking the question. Congrats to both of you on the CEO appointments. Great to see.

Brian Essex: Hi, good afternoon, and thank you for taking the question congrats to both of you on the CEO appointment, it's great to see.

Joshua Tilton: Our next question comes from Joshua Tilton with Wolf Research. Please proceed with your question.

Steve Vintz: Thank you.

Brian Essex: Maybe, Steve, if you could maybe touch on the guidance and what you're seeing in the business that's driving that incremental caution. I mean, you mentioned that, you know, things from a macro perspective were a little bit more, you know, volatile perhaps than we saw at the end of the year. What specifically are you seeing in the business, and what's the philosophy around, you know, the level of incremental conservatism that you're baking in the guide? Thank you.

Speaker Change: Thank you Steve.

Speaker Change: Maybe Steve if you could maybe touch on the guidance and what Youre seeing in the business thats driving that incremental caution I mean, you mentioned that.

Stephen Vintz: Hey, this is Patrick O'Neill. I'm for Josh, just a quick one for me. Can you talk a little bit about the progress you're seeing with Vulcan and maybe some anecdotes from early anecdotes from customers there and adoption? And then are we still thinking about 5 million contribution from Vulcan for this year? Thanks.

Speaker Change: From macro perspective.

A little bit more.

Speaker Change: Volatile perhaps than than we saw at the end of the year, but what specifically are you seeing in the business and what's the philosophy around.

Speaker Change: The level of incremental conservatism that you're baking into guidance. Thank you.

Stephen Vintz: Yes, this is Steve. So, yes, we said at the beginning of the year, contribute roughly a half a point of wealth, that's roughly $5 million. That's more weighted towards the latter part of the year. So just to be mindful of, you know, what we acquired here from an IP perspective. And, you know, it's very complementary to our Tenable One platform. We now have the ability to ingest third-party data and findings and metadata from other security providers. We'll be in-market with a more expansive Tenable One offering sometime in Q2. So the plan here is kind of build some of these capabilities natively into our platform and then be in-market sometime over the ensuing months.

Steve Vintz: Sure, Brian, good question. As we mentioned earlier, we did revise our CCB outlook for the year, due to ongoing macro uncertainty, and that's most notably in our public sector business. We're off to a terrific start for the year. We're pleased with the print in the quarter, and top of the funnel remains exceptionally strong. The one thing I want to be very clear about today is that demand gen in the quarter exceeded our own expectations. There's certainly more appetite for a broader platform play and expansion within our own customer base. That said, we have to acknowledge, you know, what's playing out and potentially could come our way. Subsequent to our last call, we've seen an acceleration in DOGE-related activities and disruption from a personnel perspective, a lot of disruption, and there's several notable open leadership roles in Fed.

Brian Essex: Sure Brian Good question.

Brian Essex: As we mentioned earlier, we did revise our <unk> outlook for the year due to ongoing macro uncertainty and that's most notably in our public sector business.

Brian Essex: Off to a terrific start for the year, we're pleased with the print in the quarter and top of the funnel remains exceptionally strong and the one thing I want to be very clear about today is that demand gen in the quarter exceeded our own expectations and Theres certainly more appetite for a broader platform play and expansion within our own customer base that said we.

Brian Essex: Have to acknowledge.

Brian Essex: What's playing out and potentially could come our way.

Stephen Vintz: And then we expect the contribution that I just mentioned earlier to be more weighted in the back half of the year. And then, obviously, the remediation capabilities is another important part of the platform. So very complementary to what we do. And we're seeing good traction out of the gate here, but obviously had a little lower contribution in Q1. The one thing I will mention is one of the seven-figure deals that we talked about here was a VM displacement that we had been chasing for really a couple of years now. And Vulkan was the catalyst for that displacement.

Brian Essex: We went to our last call, we've seen an acceleration dose related activities and disruption from a personnel.

Brian Essex: Perspective, a lot of disruption and there are several notable open leadership roles in fed and all of that.

Steve Vintz: All of that creates a confluence of activities and creates less visibility in our business short term. We spent a lot of time analyzing and scrubbing our pipeline and taking a data-driven approach to provide our outlook today. We disaggregated our opportunities.

Brian Essex: Creates a confluence of activities and creates less visibility in our business short term.

Brian Essex: <unk>.

Brian Essex: We spent a lot of time analyzing the scrubbing, our pipelines and taking a data driven approach to provide our outlook today, we disaggregated or opportunities and looked at them by geo industry, such as fed another size of customer and we're assuming longer lead times here for procurement decisions. This is most notably.

Steve Vintz: Look at them by geo, industry, you know, such as Fed and other size of customer. We're assuming longer lead times here for procurement decisions. This is most notably in our public sector business, but we're also applying that level, some level of caution to our enterprise business, which has the potential to be disrupted due to tariffs and geopolitical events. We think this is a prudent approach, and we think this sets us up well for the rest of the year.

Stephen Vintz: So we actually displaced the incumbent VM provider who is using us for VM and now will be turning to us for third-party data, certainly over the ensuing months. And so it certainly creates a lot of expansion opportunities for us.

Brian Essex: And our public sector business, but were also up.

Brian Essex: Playing in that level.

Brian Essex: Some level of caution to our enterprise business, which has the potential to be disrupted due to tariffs and geopolitical events. We think this is a prudent approach and we think that sets us up well for the rest of the year.

Mark Thurmond: Perfect, thank you. Our next question comes from Oscar Saver with Morgan Stanley. Please proceed with your question. Hi, guys. Thank you for taking my question, and congrats to Steve and Mark. I guess for me, it's just a quick one. You know, it's great to see Tenable One being a strong driver of those large deals that you noted. Last quarter, I believe it was 40% of new business sales was attributed to Tenable One. Any update on how that was this quarter? And on the cloud security side, I think... You know, the footprint expansion was like more than doubled in Q4, maybe an update on that.

Brian Essex: Does that impact your free cash flow? Because you pretty much reiterated your, you know, adjusting for Vulcan, which you said would hit unlevered free cash flow about $20 million. You're pretty much reiterating your Vulcan-adjusted free cash flow for the year.

Speaker Change: Does that impact your free cash flow that you're pretty much reiterated your adjusting for Vulcan would.

Brian Essex: Would you said would hit.

Brian Essex: Unlevered free cash flow by about $20 million, you pretty much reiterating your Vulcan adjusted free cash flow for the year.

Steve Vintz: Yes, that's a great point. We are a balanced grower, and we have a strong track record of success expanding our operating margins. There's a lot of natural leverage in the business, and we are reiterating our outlook, despite the visibility that comes with some of these recent policy actions, but we're reiterating our outlook for operating income and free cash flow.

Brian Essex: Yes, that's a great point, we are balanced grower and we have a strong track record of success expanding our operating margins.

Brian Essex: And so there's a lot of natural leverage in the business and we are reiterating our outlook.

Brian Essex: Despite the visibility that comes with some of these recent policy actions, but we are reiterating our outlook for operating income and free cash flow.

Mark Thurmond: Thank you. Yeah. So yeah, Tenable 1. So first of all, the tail of the tape this quarter and the outperformance was because of Tenable 1 with traction and cloud and other areas of our business. So it continues to represent a sizable percentage of our new business. This quarter was notably over 30%. I think in Q4, it tends to tick a little higher just to budget slush, and it just tends to be a seemingly stronger quarter for us. So certainly seeing a lot of pull for Tenable 1. ASPs are higher anywhere from 50 to 90%. And usually the catalyst for a customer to move to Tenable 1 is this desire to do VM+, VM+, cloud or OT or identity.

Brian Essex: Excellent. Thank you so much.

Operator: Our next question comes from Saket Kalia with Barclays. Please proceed with your question.

Speaker Change: Our next question comes from second Calia with Barclays. Please proceed with your question.

Saket Kalia: Okay, great. Hey, guys. Thanks for taking my question here. Very helpful answer earlier there, Steve, on why maybe the CCB guide is changing. Mark, maybe for you, just to make sure the question is asked, can we just talk a little bit about the competitive environment here in VM? I think we all know your established players, but curious what you're seeing from other players here, like endpoint, for example, in VM.

Speaker Change: Okay, Great Hey, guys. Thanks for thanks for taking my question here very very helpful answer earlier.

Speaker Change: Steve on why maybe the the CCP guide is changing but mark maybe for you just to make sure. The question is asked can we just talk a little bit about the competitive environment here in <unk> I think we all know youre established players, but curious what you're seeing from other players who are like endpoint for example in VM.

Mark Thurmond: or other there. So certainly pleased with the continued momentum that we're seeing with the platform and we'll continue to add capabilities. I talked about earlier, specifically with regard to Vulcan short term, the focus on adding third party data, the ability to ingest that as well as add remediation capabilities, remediation automation capabilities and mobilization capabilities.

Mark Thurmond: Sure. No, absolutely. Great question. When you take a look at Q1, it was actually an extremely strong quarter in regard to the competitive environment. If you kind of break this up and look at just the pure play VM players, so take a look at say, Qualys and Rapid7, we had historically high win rates. A couple of the deals that I referenced in the beginning of the call were seven-figure replacements of traditional VM players. So our compete level is extremely high, and that is continuing from the end of last year, and now we're seeing it again this year. So extremely strong, very, very historically high win rates. In regard to the endpoint players, say a CrowdStrike and/or a Microsoft, same type of trend in regard to no massive shifts or changes in regards to the competitive dynamics. We do see them.

Speaker Change: Sure no absolutely great great question.

When you take a look at Q1, it was actually an extremely strong quarter in regards to the competitive environment.

Speaker Change: If you kind of break this up and look at just the pure play VM players. So take a look at the quality and rapid we had historically high win rates.

Speaker Change: Couple of the deals that I referenced.

Mark Thurmond: Yeah, I mean, the only thing I'll add there too, it's a phenomenal summary, is three buckets you really want to think about with Tenable One. Phenomenal, phenomenal positioning in regard to driving new licensed business. Also, from a competitive displacement, right, when we talk about those seven-figure deals, one of the main factors that's allowing us to beat the competition and get into those accounts is Tenable One. So, allowing us to do big rip and replaces. And then the third is obviously the expansion and the install base. And so, those are the big drivers when you take a look at the Tenable One activity and growth, and we're going to continue to drive that throughout the year.

Speaker Change: And at the beginning of the call were seven figure replacements of traditional VM players. So our compete level is extremely high and that is continuing from the end of last year and now we're seeing it again this year. So extremely strong very very historically high win rates in regard to the endpoint players here.

Speaker Change: Crowd strike, Andrew a Microsoft same type of trend in regard to no massive shifts or changes in regards to the competitive dynamics, we do see them, we don't see them a significant amount of times, though compared to obviously the traditional VM players. So our win rates are high or compete level is very high.

Mark Thurmond: We don't see them a significant amount of times, though, compared to obviously the traditional VM players. Our win rates are high. Our compete level is very high in that space. You know, we're very, very optimistic, especially, you know, based on those seven-figure wins. I think as you know, right, it takes a lot to rip and replace an incumbent and to be able to do that, you know, on seven-figure deals. We were pretty excited about what we did in Q1.

Unknown Executive: Awesome. Very clear.

Unknown Executive: Thank you very much.

Shrenik Kothari: Our next question comes from Kingsley Crane with Canaccord Genuity. Please proceed with your question. Thank you, and I can echo my congrats. Thinking about the shift to exposure management, for many companies that includes OT, how should we think about that ongoing ramp in OT? Are you getting more excited about that opportunity versus maybe two to three years ago? And I'm curious what you're hearing from customers. Thank you. Yeah, you bet, you bet, you bet. So Q1 actually was a strong OT quarter, and we're still seeing momentum there. So year-over-year growth was strong. Very happy with the performance we're seeing there.

Speaker Change: That space and so we're very very optimistic, especially based on those seven figure wins and I think as you know it takes a lot to rip and replace.

Speaker Change: An incumbent and to be able to do that on seven digit deals. We were pretty excited about we did what we did in Q1.

Saket Kalia: Very helpful. Thanks, guys.

Speaker Change: Very helpful. Thanks, guys.

Operator: Our next question comes from Andrew Nowinski with Wells Fargo. Please proceed with your question.

Speaker Change: Our next question comes from Andrew Nowinski with Wells Fargo. Please proceed with your question.

Andrew Nowinski: Great. Thank you for taking the question, and congrats on both of your appointments to co-CEO. I wanted to ask a question on your cloud business. You talked about how cloud is a critical pillar of exposure management. I'm wondering, do customers understand that cloud security and exposure management go hand in hand? And really what I'm trying to get at is, like how are you thinking about the impact of Google's acquisition of Wiz in the cloud space? You know, do customers wanna buy exposure management and cloud together? Does that make sense?

Andrew Nowinski: Great. Thank you for taking the question and congrats on both your appointment to CEO.

Mark Thurmond: And it goes back to the theme that we've talked a little bit about. Every quarter, you're starting to see more of a pickup where OT is being more centralized into the chief security officer, into the CIO, and they want to be able to have that full visibility of the attack surface, obviously including the OT asset. And so this is a driver for us that we still think will be very strong for us throughout 2025, being able to go and consolidate, get the OT asset into Tenable One, and continue to be a driver for it. Really helpful, thank you.

Andrew Nowinski: I wanted to ask a question on your cloud business. So you talked about how cloud is a critical pillar of exposure management.

Speaker Change: Im wondering do customers understand that cloud security and exposure management go hand in hand.

Andrew Nowinski: And really what I'm trying to get at it.

Andrew Nowinski: Like how are you thinking about the impact of Google's acquisition of wins in the cloud space.

Andrew Nowinski: Do customers want to buy exposure management and cloud together because that makes sense.

Steve Vintz: Sure. I'll start and, Mark may provide additional color. In short, the acquisition of Wiz, we think creates certainly a market opportunity for us. It's clear that Google views Wiz in a more than just a security business, as it's widely believed in talking to some of these customers that we'll see more innovation, perhaps on the Google platform will be used as a means to sell more workloads there than perhaps on other platforms. So we're actively talking to customers in that regard. You know, we're seeing outsized growth in cloud. We talked about the record number of large seven-figure deals this quarter. We're seeing a lot of expansion opportunities within our own VM customer base, customers that are stepping up, buying the larger exposure management platform.

Stephen Vintz: Our next question comes from Adam Forgwood-Steeple. Please proceed with your question. Awesome, and thanks so much for taking the question and congrats on the co-CEO structure. Maybe for Steve, just on Bulletin Cyber, love to hear a little bit more on just the R&D priorities and the sales and marketing priorities. It's great to hear that you can bring some new stuff to market, but love to go a step deeper there. That'll be great. Thanks so much.

Andrew Nowinski: Sure.

Andrew Nowinski: I'll start and Marc May.

Andrew Nowinski: Provide additional color but.

Andrew Nowinski: In short.

Andrew Nowinski: The acquisition of <unk>, we think create certainly a market opportunity for us.

Andrew Nowinski: It's clear that Google views.

Andrew Nowinski: With more than just the security business is why we believe in talking to some of these customers that.

Andrew Nowinski: That we'll see more innovation, perhaps on the Google platform will be used as a means to sell more of workloads.

Stephen Vintz: Yeah, I'll talk about the R&D priorities.

Stephen Vintz: Mark can chime in on the go-to-market priorities. But, you know, it's really pretty straightforward. Vulcan ads is very complementary to Tenable 1, as I mentioned earlier. It'll add third-party data into the platform, we'll have the ability to ingest data from other security providers. And not just the basic findings, but also the metadata, a lot of the network info, who's responsible. So we talked about this bigger focus on AI, certainly that will a means for us to expand our exposure data on top of the 40,000 plus customers on top of the 3 million plus you know, users and downloads of our Nesta's product.

Andrew Nowinski: There than perhaps on other platforms.

Andrew Nowinski: So we're actively talking to customers in that regard.

Andrew Nowinski: We're seeing the outsized growth in cloud.

Speaker Change: <unk> talked about the record number of large seven figure deals. This quarter were seeing a lot of expansion opportunities within our own VM customer base customers that are stepping up buying the larger exposure management platform and cloud is an important part of that and their ability to assess other asset types. So if you look at kind of the underlying trends of the business between.

Steve Vintz: Cloud is an important part of that, and their ability to assess other asset types. If you look at kind of the underlying trends of the business between VM and cloud and specifically exposure solutions, we're seeing a continuation of those trends. Real strong growth, certainly in exposure solutions with outsized growth in cloud and, certainly lots of opportunities in our VM business. We think we're still very early on and we're continuing to take and win share here, and cloud's an important part of the exposure management story.

Speaker Change: VM and cloud and specifically exposure solutions, we're seeing a continuation of those trends real strong growth certainly in exposure solutions with outsized growth in cloud and certainly lots of opportunities in our VM business, but.

Stephen Vintz: So we believe certainly one of the big moats here going forward for cyber, the ability to deliver exposure management at scale and evolve us from a system of record to a system of action will be AI involved. Part of that aggregating that data, combining third-party data with first-party assessment. And then the other piece is really tying vols really on the back end to, to actual fixes and driving and automating remediation ops. That's a really important part of the value chain. There's a lot we can do from that perspective from everything from identifying unmanaged applications. bg www.teha.

Speaker Change: But we think we're still very early on and.

Speaker Change: We are continuing to take and when sure sure here in cloud is an important part of the exposure management story and I will just add on to Steve's comments. It is definitely a net positive for US right. When you have a acquisition of that size to a very dominant player. It does create a bit of uncertainty and so we definitely have heard that from our <unk>.

Mark Thurmond: Yeah. I will just add on to Steve Vintz's comment. It is definitely a net positive for us, right? When you have an acquisition of that size to a very dominant player, it does create a bit of uncertainty. We definitely have heard that from our prospects, and they are coming to us where, in the beginning, when Wiz was a standalone, they might not have even included certain players in regard to RFPs and to do proof of values and proof of concepts. You know, we have seen over the last three and a half weeks an increase in the amount of activity and being invited to participate in RFPs. We have customers that are saying, "Hey, before this might have been a locked in Wiz deal. We're now opening it up. We wanna look at options.

Speaker Change: <unk> and they are coming to us where in the beginning when ways was a standalone they might not have even included certain players in regard to rfps and to do proof of values and proof of concepts. We have seen over the last three five weeks and increase in the amount of activity in being vital to participate in rfps, we have customer.

Mark Thurmond: MercuryPro.com and certainly will help enable a lot of the AI. Very, very, very well said.

Speaker Change: <unk> that are saying hey, before this might have been a locked in with deal. We're now opening it up we want to look at options, we have a multi cloud environment using azure AWS OCI and they do not want to get locked in so this is definitely going to be a net positive for us and one thing I will highlight this hybrid.

Mark Thurmond: We have a multi-cloud environment using Azure, AWS, OCI, and they do not wanna get locked in. This is definitely going to be a net positive for us. One thing I will highlight is this hybrid environment of being able to look not just at your cloud environment, but be able to look at holistically these other asset types is a massive differentiator, and that kind of what exposure management and the Tenable One platform is all about. We view this as a net positive moving forward.

Mark Thurmond: And when you take a look at it from a go-to-market perspective, and we touched on this in Q1, the beautiful thing about Vulcan is we've actually been talking and positioning third-party ingest and automated remediation with our customers for quite a bit of time. So our sales force and our channel understand this talk track. They understand how these type of third-party assets and automated remediation flows into the Tenable One consolidation story. So we do not have specialized sellers and specialized SEs. This is mainstreamed into our core sales force and is a core sales play that we're out there talking to customers, prospects, and channel in regard to what we're doing with Vulcan.

Speaker Change: <unk> being able to look not just at their cloud environment, but be able to be able to look at holistically. These other asset types is a massive differentiator and that kind of what exposure management and the <unk> platform is all about so we view this as a net positive moving forward.

Andrew Nowinski: Super. Thank you, guys.

Speaker Change: Super Thanks, guys.

Speaker Change: Yes.

Operator: Next question comes from Mike Cikos with Needham & Co. Please proceed with your question.

Speaker Change: Next question comes from Mike Seacoast with Needham <unk> Co. Please proceed with your question.

Mark Thurmond: And so as I discussed earlier, those two big themes of driving Tenable One and driving cloud security, Vulcan fits perfectly into the Tenable One story. Super clear. Thanks again.

Matt Calitri: Hey, guys. This is Matt Calitri. I'm from Mike Cikos over at Needham. Thanks for taking our questions, and I'd like to echo my congratulations to Steve Vintz and Mark Thurmond. On the calendar 25 guidance cut, can you help us think about how to quantify how much of that impact is in the public versus private sector? And can the move up market help combat any of this weakness you're projecting?

Matt: Hey, guys. This is Matt <unk> on for Mike Sickos over at Needham. Thanks.

Speaker Change: Thanks for taking our questions and like to Echo my congratulations to Steve and Mark.

Trevor Arambo: Our next question comes from Trevor Arambo with VTIG. Please proceed with your question. Great, thanks for taking my question. This is Trevor on for Gray Powell. So going back to Tenable One, it was good to hear the positive commentary again around adoption, and that cloud security drove a lot of the outperformance. Could you give us some more color on how the rest of the portfolio performed in relation to cloud security in the quarter?

Speaker Change: On the calendar 'twenty five guidance cut can you help us think about how to quantify how much of that impact is in the public versus private sector and can move up market help combat any of this weakness you're projecting.

Steve Vintz: Sure. Well, if you look at kind of the revision to our guidance today, specifically on CCB, we'd say approximately two-thirds is in US public sector. Then, obviously the remaining third is in our enterprise business. Now, look, we had a strong print. We transacted a record number of seven-figure deals. We're seeing momentum in the enterprise market with some of our highest conversion rates than we've ever seen, and new business was strong. We do have to recognize what potentially could come our way. It just feels like there's more uncertainty now since our February call than there was early in the year. We think this is, you know, certainly the right approach to take, and we're pleased to see top of the funnel remain strong.

Speaker Change: Sure well if you look at kind of the revision to our guidance today is specifically on PCB, we say about two thirds approximately two thirds is in U S public sector.

Mark Thurmond: And then is cloud security something that you see going forward that's going to continue to outperform within that segment? Yeah, listen, you know, at the end of the day, when you look at Tenable One, it was a very, very strong quarter and drove a lot of those seven figure deals, which is outstanding. We touched a little bit in regard to some of the OT asset was very, very strong. Also, cloud security because there was obviously a bunch of very sizable deals and a seven figure deal that was in there. And we do continue to see that type of activity and be able As we discussed earlier in this call, we also are optimistic in regards to the cloud security business because of some of the M&A activity that we hit on before with Wiz and Google, and so we're already starting to see decent pipeline build from a cloud security perspective as part of T1, you know, once that acquisition was announced.

Speaker Change: And then obviously the remaining third is in our enterprise business now look we had a strong print.

Speaker Change: Transacted a record number of seven figure deals were seeing momentum at the in the enterprise market with some of our highest conversion rates than we've ever seen and new business was strong, but we do have to recognize what potentially could come our way. It just feels like there's more uncertainty now since our February call than.

Speaker Change: And then there was early in the year and we think this is certainly the right approach to take.

Speaker Change: And we're pleased to see top of the funnel remained strong.

Matt Calitri: Understood. That makes sense. Then just generally in the US federal business, are budgets on hold or are there any sort of clarity coming up now that we're a couple of months into the new administration? How is FedRAMP impacting any of this? Just any general color would be helpful.

Speaker Change: Understood that makes sense and then just generally in the U S federal business or our budgets on hold or are there any sort of clarity coming up now there were a couple of months into the new administration.

Speaker Change: Fed ramp impacting any of that is just just any general color would be helpful.

Steve Vintz: Yeah. I think it's really a question of visibility. You know, when we talked at the beginning of the year, we provided an incrementally more cautious approach to our outlook and specifically the US public sector. That was really due to the change in the administration and a budget uncertainty surrounding continuing resolution. We said we would get, you know, less contribution from pub sec first half of the year, most notably in Q1, and that played out as expected, despite this sizable seven-figure deal that we closed on the defense side in federal. As we look out the rest of the year, I think just more generally, there's just more uncertainty. There's been a lot of disruptions from a personnel perspective, certainly more so on the civilian side than the defense side.

Mark Thurmond: So, yeah, we expect those two to be big drivers for us in 2025.

Speaker Change: Yes, I think it's really a question of visibility.

Speaker Change: When we talked at the beginning of the year, we provided an incrementally more.

Unknown Executive: Awesome, thanks for the call.

Speaker Change: Our cautious approach to our outlook and specifically will U S public sector and that was really due to the change in the administration and the budget uncertainty surrounding continuing resolution.

Zack Schneider: Our next question comes from Shrenik Kothari with Baird. Please proceed with your question. Great, thanks.

Mark Thurmond: This is Zack Schneider on for Shrenik. Thanks for taking the question and wanted to echo our congrats to Steve and Mark. So wanted to ask about pricing, you know, one thing we've picked up sort of across the sector is just some more aggressive discounting and pricing. So just curious if this is something you're seeing in customer conversations, or if there's been any changes to your pricing strategy. Thanks. Yes, no, we've actually seen no significant changes in pricing. We haven't modified or done anything different in regard to our pricing strategies. Obviously, our margins are extremely stable.

Speaker Change: We will get less contribution from <unk> first half of the year, most notably in Q1 and that played out as expected. Despite the sizable seven figure deal that we closed on the defense side in federal as we look out the rest of the year.

Speaker Change: Just more generally there's just more uncertainty.

Speaker Change: A lot of disruptions from a personnel perspective, certainly more so on the civilian side than the defense side and we're just taking a more of a cautious approach for the remainder of the year and just assuming longer lead times here.

Steve Vintz: You know, we're just taking more of a cautious approach for the remainder of the year and just assuming, you know, longer lead times here.

So we expect, you know, our pricing strategy and the way we're discussing and managing all these different opportunities remain extremely consistent, you know, the way they did in Q1.

Mark Thurmond: Yeah. I think, let me just kind of piggyback on that too. When you take a look at what has gone on in regard to some of the DOGE cuts and also some of the leadership changes, right? There have been pretty significant leadership positions within the federal government, especially on cyber side of the house, that have not been filled yet. While we're seeing, you know, a positive top of the funnel build-out, we now are FedRAMP authorized for Tenable One, which is new here, coming into Q2. We actually see huge opportunity for the consolidation. The biggest theme that's coming out of the federal government right now is what vendors can save us money, what vendors can consolidate multiple products onto a single platform.

Speaker Change: Yeah, I think let me just kind of piggyback on that too so.

Speaker Change: When you take a look at what has gone on in regard to some of the dose cuts and also some of the leadership changes right. There have been pretty significant leadership positions within the federal government, especially on cyber side of the house that have not been filled yet and so while we're seeing a positive top of the funnel build out.

Great, thank you.

We have reached the end of our question and answer session. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: We now are fed ramp authorized for tenable, one which is new here coming into Q2, we actually see a huge opportunity for the consolidation. The biggest theme that's coming out of the federal government right. Now is what vendors can save us money, what vendors can consolidate multiple products onto a single platform.

Mark Thurmond: We actually feel good in the top of the funnel, but it really is what Steve hit on. It is just a challenging environment determining how deals are gonna happen, when they're gonna actually close, who's gonna be processing and doing the mechanics of getting the deal done, and then getting some of these leadership positions done. You know, it is just a bit gray right now. We are optimistic about the business in Fed and pub sec, but we just need to get a little more clarity to be able to call the business.

Speaker Change: So we actually feel good on the top of the funnel, but it really is what Steve hit on it is just a challenging environment determining.

Speaker Change: Our deals are going to happen when theyre going to actually close who's going to be processing and doing the mechanics of getting the deal done and then getting some of these leadership positions done so.

Speaker Change: Is this a big great right now we are optimistic about the business and fed and pub SEC, but we just need to get a little more clarity to be able to call the business.

Matt Calitri: Very helpful. Thanks so much.

Speaker Change: Very helpful. Thanks, so much.

Operator: Our next question comes from Rob Owens with Piper Sandler. Please proceed with your question.

Speaker Change: Our next question comes from Rob Owens with Piper Sandler. Please proceed with your question.

[Analyst] (Piper Sandler): Great. Thanks for taking my question. This is Ethan on for Rob this afternoon. You know, there's been a lot of commotion in industry recently around the potential end of funding for the CVE program, and it seems that the funding's been extended for the time being. What do you think the implications would be for Tenable or the VM industry more broadly if we were to see the funding end for that program in the future?

Ethan Drake: Great. Thanks for taking my question. This is Ethan on for Rob this afternoon. You know, there's been a lot of commotion in industry recently around the potential end of funding for the CVE program, and it seems that the funding's been extended for the time being. What do you think the implications would be for Tenable or the VM industry more broadly if we were to see the funding end for that program in the future?

Ethan: Great. Thanks for taking my question. This is Ethan on for Rob This afternoon.

Speaker Change: There's been a lot of commotion industry recently around the potential end of funding for the CV program. It seems that the funding has been extended for the time being but when do you think the implications would be for tenable in the VM industry more broadly if we were to see the funding for that program in the future.

Steve Vintz: Sure. Well, the MITRE-backed CVE program, there are some questions about funding, and then we were pleased to see funding get extended for the remainder of the year. I think the big takeaway here is that, you know, collaboration is really important. You know, that's a program that's used as a means to facilitate sharing of vulnerabilities and exploits. I think there will always be a need for that. You know, we're, you know, one of the few companies that's able to contribute and add CVEs to that national database and program. We recognize that's an important effort.

Speaker Change: Sure well the Mitre back CV program. There are some questions about funding and then we were pleased to see funding get extended for the remainder of the year.

Speaker Change: I think the big takeaway here is that collaboration drilling important.

Speaker Change: And.

Speaker Change: That's a program that's used as a means to facilitate sharing of only abilities and.

Speaker Change: And exploit.

Speaker Change: I think there will always be a need for that.

Speaker Change: Sure.

Speaker Change: One of the few companies, that's able to contribute and.

Speaker Change: Contributing to add <unk> to that.

Speaker Change: That national database and program.

Steve Vintz: We're here to serve and help customers, and we're actively working with members at the highest level, both within the public sector as well as the private sector to see if there's a better approach here. Certainly, the CVE program has had its limitations, right? There's been a proliferation of vulnerabilities. A lot of those vulnerabilities are categorized as critical or very critical. We certainly think there's an opportunity here, and this is where we like to see better collaboration.

Speaker Change: We recognize that is an important effort. So we're here to serve and help customers.

Speaker Change: And we're actively working with our members at the highest level.

Speaker Change: Both within the public sector as well as the private sector to see if there is a better approach here and certainly the CVA program has had its limitations right theres been a proliferation of own abilities.

Speaker Change: Out of those vulnerabilities are categorized as.

Speaker Change: Critical are very critical and so we certainly think there's a better and if there's an opportunity here and there.

Speaker Change: This is where we'd like to see better collaboration.

[Analyst] (Piper Sandler): Appreciate the color.

Ethan Drake: Appreciate the color.

Speaker Change: I appreciate the color.

Operator: Our next question comes from Patrick Colville with Scotiabank. Please proceed with your question.

Speaker Change: Our next question comes from Patrick Colville with Scotiabank. Please proceed with your question.

Patrick Colville: Thank you so much for taking my question. I guess, can I just ask a cheeky two-parter? Steve and Mark, what are your strategic priorities for the next 100 days as Tenable co-CEOs? The second part, if I may, is, I think in Q4 key results you mentioned that PubSec, US PubSec was 15% of revenue. The guidance cut for 2025 is being largely attributed to US PubSec. Do I have my numbers right? If not, would you mind, like, correcting me? Thank you so much.

Patrick Colville: All right.

Patrick Colville: Thank you so much for taking my question.

Patrick Colville: I guess can I just ask.

Speaker Change: Two parts, so Steve and Mark.

Speaker Change: What are your strategic priorities for the next 100 days.

Speaker Change: Co Ceos and then the second part.

Speaker Change: If I may is I think <unk> results, you mentioned that pub SEC U S up 615% of revenue.

Speaker Change: So the guidance for 2025 is being largely attributed to U S pub sake.

Speaker Change: Do I have my numbers right and if.

Speaker Change: No.

Speaker Change: Would you mind by correcting me. Thank you so much.

Steve Vintz: Yes. With regard to the latter, US public sector is approximately 15% of our total sales. The revision to the top line today, we said a majority of it, you know, about two-thirds of the revision is for US public sector. We said we're also taking a bit of a cautious approach to enterprise, where we continue to see great momentum and traction there. With regard to really our priorities here, you know, first let me just say the co-CEO structure is one that, you know, we're very familiar with and reflects how we've been operating as a company really for the past year. We're committed to certainly expanding our market opportunities and to our mandate. Our roots are in vulnerability management, but the outgrowth of that is exposure management.

Speaker Change: Yes with regard to the latter U S. Popped snack is approximately 15% of our total sales and so the revision to the topline today, we said a majority of it about two thirds of the revision is for U S public sector.

Speaker Change: We're also taking a bit of a cautious approach to enterprise, where we continue to see great momentum and traction there and with regard to really our priority here.

Speaker Change: Firstly, let me just say the co CEO structure is one that we're very familiar with.

Speaker Change: What have we been operating as a company really for the past year, we're committed to certainly expanding our market opportunities and to our mandate. Our roots are in vulnerability management, but the outgrowth of that is exposure management and so.

Steve Vintz: With that, you know, there's I would say several opportunities. Number one, we're delivering incremental value to customers, and two, we see a lot of momentum with our exposure management platform. Exposure management platform is a catalyst to higher deal sizes. The ASPs this quarter were very high in part due to those seven-figure deals that we announced. We are using that really as the tip of the spear to be able to consolidate spend in areas like cloud, like web application, like OT and other areas. That's certainly one bigger opportunity, is to use the platform as a means to assess other asset types and do more first-party assessment. You know, the second thing is we recognize that the security market is fragmented and there's a lot of players and there's been vendor sprawl.

Speaker Change: With that.

Speaker Change: I would say several opportunities number one.

Speaker Change: We're delivering incremental value to customers and we see a lot of momentum with our exposure management platform.

Speaker Change: Exposure management platform as a catalyst to higher deal sizes. The fees. This quarter were very high in parts of those.

Speaker Change: Seven figure deals that we announced and we are using that really as a tip of the spear to be able to consolidate spend in areas like cloud like web application like <unk>.

Speaker Change: In other areas. So that's certainly one bigger opportunity is to use the platform as a means to assess other asset types and do more first party assessment.

Speaker Change: Second thing is we recognize that the security market is fragmented and there's a lot of players and theres been vendor sprawl, and so and no security company can possibly assess all of these different asset types.

Steve Vintz: No security company can possibly assess all these different asset types. We're bringing to market here a more expanded version of our exposure management platform that will include not only our first-party assessment data, but also our third-party data that we can ingest from other security providers, whether it's cloud security, application security, whatever it may be. Combining third-party data with our first-party assessment data really provides a broader set of exposure data for customers and help them remediate and mobilize their efforts to reduce risk. The last thing here I will say is AI. AI is a force multiplier on the types of insights that we can deliver to customers.

Speaker Change: So we're bringing the market to hear more expanded version of our exposure management platform that will include not only our first party assessment data, but also our third party data that we can ingest from other security providers, whether it's cloud security application security.

Speaker Change: Whatever it may be so combining third party data with our first party assessment data really provides a broader set of exposure data for customers and help them remediate mobilize our efforts to reduce risk.

Speaker Change: Last thing here I will say is AI AI is a force multiplier on the types of insights that we can deliver to customers. We think in the years to come the real competitive moat here for exposure management and AI is kind of central to exposure management.

Steve Vintz: We think in the years to come, the real competitive moat here for exposure management, and AI is kind of central to exposure management, is not so much features and functionality that will be important, but the insights that you can deliver to customers. Aggregating all that data from all those different asset types, those first-party and third-party assessment data, to be able to integrate it in a way and combine vulnerabilities with threats and identities is really a powerful offering and a means to help customers not only identify risk, where we've historically been focused, but help them actually reduce risk and tie vulns to actual fixes. Look for more here, investments from us in AI, but certainly it's a big opportunity here and really create more competitive moat and a catalyst for growth going forward.

Speaker Change: Is not so much features and functionality that will be important but the insights that you can deliver to customers. So aggregating all of that data from all those different asset types. Both first party and third party assessment data to be able to integrate it in a way and combine vulnerability for threats in those entities.

Speaker Change: It is really a powerful offering and a means to help customers not only identify risk where we've historically been focused but help them actually reduce risk and tie balls to actual fixes. So look for more here investments from us in AI, but certainly it's a big opportunity here and really create more.

Speaker Change: Additive Moe and a catalyst for growth going forward, Yeah, no very very well said, Steve totally agree and I think when you look at it from a go to market to keep it really basic and simple right. We're going to be focused on continuing to drive the tier one message and positioning with Eric door now joining us from Google I think youll see a lot of fantastic innovation on the points that Steve.

Mark Thurmond: Yeah. No, very, very well said, Steve. Totally agree. I think when you look at it from a go-to-market, to keep it really basic and simple, right? We're gonna be focused on continuing to drive the Tenable One message and positioning. With Eric Doerr now joining us from Google, I think you'll see a lot of fantastic innovation on the points that Steve just hit on. When we talk about Tenable One, it is truly a very strong consolidation story that is resonating in the market right now. The second big piece is gonna continue to be cloud, right? Cloud and Tenable One are the two big areas that we're gonna go for from a go-to-market perspective.

Speaker Change: Just hit on.

Speaker Change: When we talk about tenable one it is truly a very strong consolidation story that is resonating in the market right now the second big piece is going to continue to be cloud right. So cloud as part of kind of a one is the two big areas that we're going to go forward from a go to market perspective.

Patrick Colville: Terrific. Thank you so much, and looking forward to this next chapter.

Speaker Change: Yeah.

Speaker Change: Terrific. Thank you so much in this.

Mark Thurmond: Thank you.

Speaker Change: This next chapter.

Operator: Our next question comes from Rudy Kessinger with D.A. Davidson. Please proceed with your question.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Rudy passenger with D. A Davidson. Please proceed with your question.

Rudy Kessinger: Hey, thanks for taking my questions, guys. Can you hear me okay?

Mark Thurmond: Sure.

Rudy: Hey, Thanks for taking my questions guys can you hear me okay.

Steve Vintz: Yeah.

Rudy Kessinger: Great. Well, congrats to both you on the co-CEO roles. Hopefully I'm on your last question on public sector, but you know, with the two-thirds of the cut that is being attributed to public sector, I guess I'm curious, is that mostly just from less visibility on new deals or have you actually had any contracts that have been canceled or downsized? If the answer is yes, with what kind of notice did you have that they were being canceled? Did you kind of have a sense, or were they kinda cut out of the blue? Thank you.

Speaker Change: Okay.

Speaker Change: Great great.

Speaker Change: Well congrats both your on the co CEO roles hopefully I'm right. Your last question on public sector, but with.

Speaker Change: Two thirds of the cut that is being attributed to public sector. I guess I'm curious is that mostly just from less visibility on new deals or have you actually had any contracts that had been canceled or downsize and if the answer is yes.

Speaker Change: With what kind of <unk>.

Speaker Change: Notice did you have that they were being canceled.

I have a sense or where they kind of cut out of the blue. Thank you.

Steve Vintz: Yeah. You know, commentary around Fed applies both to new as well as renewal, but more so the former than the latter. We have a long-standing relationship with the federal government. We serve every three-letter federal agency from defense to civilian to intel. We know this is a foundational piece of their program. As you probably know, just from looking at the headlines, you know, some of the disruption that we've talked about, you know, from a personnel perspective has been more on the civilian side.

Speaker Change: Yeah. So.

Speaker Change: Our commentary around fed plasma both to new as well as renewal, but more so the former than the latter.

Speaker Change: A long standing relationship with federal government. We serve every three letter Federal agency from defense to civilian Intel and so this is a foundational piece of their program as you probably know just from looking at the headlines.

Speaker Change: The disruption that we've talked about.

Steve Vintz: We've seen certainly, you know, lower renewal dollars coming out of some of those civilian agencies that are seeing more disruption from those related actions. Going forward, we just see longer times, you know, longer lead times here, and cycle times to be able to close the opportunities. Mark talked about our two newer products, Tenable One and Cloud Security getting FedRAMP authorized. We're seeing certainly a lot of market pull there. The three things that we're focused on to better serve the federal government is really modernization, that's a big area of emphasis for them, consolidation, and then certainly more efficiency. The platform strategy and approach that we have here certainly creates a lot more utility for a lot of our federal customers. We'll take your next question, please.

Speaker Change: From a personnel perspective, it's been more on the civilian side.

Speaker Change: And so we've seen.

Certainly.

Speaker Change: Lower renewal dollars coming out of some of those civilian agencies that are seeing more disruption from from dose related actions.

Speaker Change: But going forward, we just see longer times.

Speaker Change: Longer lead times here.

Speaker Change: On cycle times to be able to close the opportunities.

Speaker Change: Mark talked about our two new newer products tenable, one in cloud security getting fed ramp authorize we're seeing certainly a lot of market pull there and the b.

Speaker Change: The three themes that we're focused on to better serve the federal government is really modernization, that's a big area of emphasis for them consolidation and then certainly more and more efficiency in the platform strategy and approach that we have here certainly creates a lot more utility for a lot of our federal customers.

Speaker Change: Okay.

Operator: Our next question comes from Joseph Gallo with Jefferies. Please proceed with your question.

Speaker Change: We'll take your next question.

Operator: Our next question comes from Joseph Gallo with Jefferies. Please proceed with your question.

Speaker Change: Our next question. Our next question comes from Joseph Gallo with Jefferies. Please proceed with your question.

Angelique Papadopoulos: Hi, this is Angelique Papadopoulos for Joseph Gallo. Appreciate you taking our questions. My question is, I guess can you give us an update on how things are progressing with the channel and where you are on a sales quota rep carrying capacity basis, and how we should think about additional go-to-market investments going forward that you haven't touched upon yet?

Joseph Gallo: Hi, This is actually I don't know if it was for just Gallo appreciate you taking our questions.

Speaker Change: My question is I guess can you give us an update on.

Speaker Change: How things are progressing with the channel on where you are on a sales quota carrying capacity basis and how we should think about additional go to market investments going forward that you havent touched upon yet sure yes, no and when you take a look at the Q1 performance the channel performed extremely well I mean, the beautiful part.

Steve Vintz: Sure. Yeah. No, when you take a look at the Q1 performance, the channel performed extremely well. I mean, the beautiful part of the Tenable distribution models, we are 100% channel, so we do all our business through the channel. So we saw great momentum in the channel in Q1. We saw excellent channel in business coming in from the partner community. So that was excellent. We did add some sales capacity in Q1, and we will continue to evaluate looking at certain regions, theaters, and countries that are showing signs of growth. If we see significant growth patterns, those are gonna be some geographies that we might take a look at adding sales capacity throughout the year.

Speaker Change: The tenable distribution models, we are 100% channel. So we do all our business through the channel. So as we saw great momentum in the channel in Q1, we saw excellent channel and business coming in from the partner community.

Speaker Change: So that was excellent we did add some sales capacity in Q1, and we will continue to evaluate looking at certain regions theaters in countries that are showing signs of growth and if we see significant growth.

Speaker Change: Patterns those are going to be some geographies that we might take a look at adding sales capacity throughout the year.

Angelique Papadopoulos: Okay, thanks. Appreciate the color.

Speaker Change: Okay. Thanks, I appreciate the color.

Operator: Our next question comes from Joshua Tilton with Wolfe Research. Please proceed with your question.

Joshua Tilton: Our next question comes from Joshua Tilton with Wolfe Research. Please proceed with your question.

Patrick O'Neill: Hey, this is Patrick O'Neill on for Josh. Just a quick one for me. Can you talk a little bit about the progress you're seeing with Vulcan Cyber and maybe some early anecdotes from customers there and adoption? Are we still thinking about $5 million contribution from Vulcan Cyber for this year? Thanks.

Patrick O'neil: Hey, This is Patrick O'neil on for Josh just a quick one for me.

Patrick O'neil: Can you talk a little bit about the progress you're seeing with Vulcan.

Patrick O'neil: Maybe some anecdotes from cost early anecdotes from customers, there and adoption and then.

Patrick O'neil: Are we still thinking about $5 million contribution from Vulcan for this year. Thanks.

Steve Vintz: Yes, this is Steve. We said beginning of the year contribute roughly a half a point of growth. That's roughly $5 million. That's more weighted towards the latter part of the year. Just to be mindful of what we acquired here from an IP perspective. You know, it's very complementary to our Tenable One platform. We now have the ability to ingest third-party data, and findings and metadata from other security providers will be in market with a more expansive Tenable One offering sometime in Q2. The plan here is kinda build some of these capabilities natively into our platform and then be in market sometime over the ensuing months.

Steve: Yes. This is Steve so yes.

Patrick O'neil: Yes.

Patrick O'neil: We said beginning of the year contributed roughly a half a point of growth that's roughly $5 million, that's more weighted towards the latter part of the year. So just to be mindful of.

Patrick O'neil: What we acquired here from.

Patrick O'neil: From an IP perspective.

Patrick O'neil: It's very complementary to our kind of a one platform. We now have the ability to ingest third party data.

Patrick O'neil: Yes.

Patrick O'neil: And findings and metadata from other security providers will be in market with a more expansive tenable one offering some time in Q2.

Patrick O'neil: The plan here is kind of built some of these capabilities natively into our platform and then be in market sometime over the ensuing months and then we expect the contribution that I just mentioned earlier to be more weighted in the back half of the year and then obviously the remediation capabilities is another important part of the platform. So very complementary to what we do.

Steve Vintz: We expect the contribution that I just mentioned earlier to be more weighted in the back half of the year. Obviously the remediation capabilities is another important part of the platform. Very complementary to what we do. We're seeing good traction out of the gate here, but obviously it had lower contribution in Q1. The one thing I will mention is one of the seven-figure deals that we talked about here was a VM displacement that we had been chasing for really a couple years now, and Vulcan was the catalyst for that displacement. We actually displaced the incumbent VM provider who is using us for VM and now will be turning to us for third-party data certainly over the ensuing months, and so certainly creates a lot of expansion opportunities for us.

Patrick O'neil: And we're seeing good traction out of the gate here, but obviously you had a little.

Patrick O'neil: Lower contribution in Q1, the one thing I will mention is.

Patrick O'neil: One of the seven figure deals that we talked about here was a VM displacement that we had been chasing for really a couple of years now and Vulcan was the catalyst list four that displacement. So we actually displacing incumbent VM provider, who is using us for me and I will be turning to us for third party data certainly over the <unk>.

Patrick O'neil: Nine months until certainly creates a lot of expansion opportunities for us.

Patrick O'Neill: Perfect. Thank you.

Patrick O'neil: Perfect. Thank you.

Operator: Our next question comes from Oscar Saavedra with Morgan Stanley. Please proceed with your question.

Speaker Change: Our next question comes from Oscar Cabrera with Morgan Stanley. Please proceed with your question.

Oscar Saavedra: Hi, guys. Thank you for taking my question, and congrats to Steve and Mark. I guess for me it's just a quick one on, you know, it's great to see Tenable One being a strong driver of those large deals that you noted. Last quarter, I believe it was 40% of new business sales was attributed to Tenable One. Any update on how that was this quarter? On the cloud security side, I think, you know, the footprint expansion was, I'd say, like, more than doubled in Q4. Maybe an update on that. Thank you.

Oscar Cabrera: Hi, guys. Thank you for taking my question and congrats to Steve and Mark.

Speaker Change: I guess for me is just a quick one.

It's great to see tenable, one being a strong driver of those large deals that you noted.

Speaker Change: Last quarter I believe it was 40% of new business sales was attributed to kind of a one.

Speaker Change: Any update on how that was this quarter and on the cloud security side I think.

Speaker Change: The footprint expansion was more than doubled in Q4, maybe an update on that thank you.

Steve Vintz: Yeah. Yeah, Tenable One. First of all, the tail of the tape this quarter and the outperformance was because of Tenable One with traction in cloud and other areas of our business. It continues to represent a sizable percentage of our new business. This quarter was normally over 30%. I think in Q4, it tends to tick a little higher just to budget slosh, and it just tends to be a seasonally stronger quarter for us. Certainly seeing a lot of pull for Tenable One. ASPs are higher, anywhere from 50 to 90%. Usually the catalyst for a customer to move to Tenable One is this desire to do VM plus cloud, or OT, or identity, or other there.

Speaker Change: Yeah.

Speaker Change: So yes, it's kind of a lot. So first of all the Calvert tape this quarter and the outperformance was because of tenable one with traction in cloud in other areas of our business. So it continues to represent a sizable percentage of our new business.

Speaker Change: This quarter was.

Speaker Change: Notably over 30%.

I think in Q4 tends to tick a little higher just a budget flush and it just tends to be it seems like a stronger quarter for us. So certainly seeing a lot of pull for tenable, one asps are higher anywhere from 50.

Speaker Change: To 90% and usually the catalyst for a customer to move to an animal. One is this desire to do VM, plus VM, plus cloud or ot or identity or other there. So certainly.

Steve Vintz: Certainly, pleased with the continued momentum that we're seeing with the platform and we'll continue to add capabilities I talked about earlier, specifically with regard to Vulcan, short term, the focus on adding third-party data, the ability to ingest that, as well as add remediation automation capabilities, and mobilization capabilities.

Speaker Change: With the continued momentum that we're seeing with the platform and we'll continue to add capabilities I talked about earlier, specifically with regard to Vulcan short term the focus on adding third party data the ability to ingest that as well as at remediation capabilities remediation automation capabilities and mobilization capabilities.

Mark Thurmond: Yeah. I mean, the only thing I'll add there too, it's a phenomenal summary, is three buckets you really wanna think about with Tenable One. Phenomenal positioning in regard to driving new license business.

Speaker Change: Yes, I mean, the only thing I'll add there too its a phenomenal summary is three buckets really want to think about with tenable, one phenomenal phenomenal positioning in regards to driving new license business also from a competitive displacement right. When we talk about those seven figure deals one of the main factors, that's allowing us to beat the competition and get into those accounts.

Mark Thurmond: Also from a competitive displacement, right? When we talk about those seven-figure deals, one of the main factors that's allowing us to beat the competition and get into those accounts is Tenable One. Allowing us to do big rip and replaces. Then the third is obviously the expansion in the install base. Those are the big drivers when you take a look at the Tenable One activity and growth, and we're gonna continue to drive that throughout the year.

Speaker Change: As Tom will want so, allowing us to do big Rip and replaces and then the third is obviously the expansion in the installed base and so those are the big drivers when you take a look at the tenable, one activity and growth and we're going to continue to drive that throughout the year.

Oscar Saavedra: Awesome. Very clear. Thank you very much.

Speaker Change: Awesome very clear thank you very much.

Operator: Our next question comes from Kingsley Crane with Canaccord Genuity. Please proceed with your question.

Speaker Change: Our next question comes from Kingsley Crane with Canaccord Genuity. Please proceed with your question.

Kingsley Crane: Thank you. I can echo Mike congrats. Thinking about the shift to exposure management for many companies that includes OT, how should we think about that ongoing ramp in OT? Are you getting more excited about that opportunity versus maybe 2 to 3 years ago? Curious what you're hearing from customers. Thanks.

Kingsley Crane: Thank you and I Echo my congrats.

Kingsley Crane: Looking about the shift to exposure management for any company that includes <unk>, how should we think about the ongoing ramp are you getting more excited about the opportunity versus maybe two to three years ago and I'm curious what you're hearing from customers. Yes. You bet. You bet you bet. So Q1 actually was a strong ot quarter, and we're still seeing momentum there.

Mark Thurmond: Yeah, you bet. Q1 actually was a strong OT quarter, and we're still seeing momentum there. Year-over-year growths are strong. Very happy with the performance we're seeing there. It goes back to the theme that we touched a little bit about. Every quarter, you're starting to see more of a pickup where OT is being more centralized into the chief security officer, into the CIO, and they wanna be able to have that full visibility of the attack surface, obviously including the OT asset. This is a driver for us that we still think will be very strong for us throughout, you know, 2025. Being able to go in and consolidate, get the OT assets into Tenable One and continue to be a driver for us.

Kingsley Crane: So year over year growth was strong very happy with the performance, we're seeing there and it goes back to the theme that we've talked a little bit about every quarter youre starting to see more of a pickup where ot is being more centralized into the chief security officer to the CIO and they want to be able to have that full visibility of the attack surface.

Including the Ot assets and so this is a driver for us that we still think will be very strong for us throughout 2025 being able to go in and consolidate get the ot assets into tenable, one and continue to be a driver for us.

Kingsley Crane: Really helpful. Thank you.

Operator: Our next question comes from Adam Borg with Stifel. Please proceed with your question.

Speaker Change: Our next question comes from Adam Borg with Stifel. Please proceed with your question.

Adam Borg: Awesome. Thanks so much for taking the question and, congrats on the co-CEO structure. Maybe for Steve, just on Vulcan Cyber, I'd love to hear a little bit more on just the R&D priorities and the sales and marketing priorities. It's great to hear that you can bring some new stuff to market. Love to go a step deeper there. That'll be great. Thanks so much.

Speaker Change: Awesome. Thanks, so much for taking the question and congrats on the co CEO structure.

Speaker Change: Maybe for Steve just on both the cyber Lumpier, a little bit more on just the R&D priorities and sales and marketing priorities, it's great to hear that you're going to bring in some of the stuff to market, but love to go sub secret there that'd be great. Thanks, so much.

Steve Vintz: Yeah, I'll talk about the R&D priorities. Mark can chime in on the go-to-market priorities. You know, it's really pretty straightforward. Vulcan Cyber is very complementary to Tenable One. As I mentioned earlier, it'll add third-party data into the platform. We'll have the ability to ingest data from other security providers. Not just the basic findings, but also the metadata, a lot of the network info, and who's responsible. We talked about this bigger focus on AI. Certainly, that will be a means for us to expand our exposure data on top of the 40,000+ customers, on top of the 3 million+ users and downloads of our Nessus product.

Speaker Change: Yes, I'll talk about the R&D priorities Martin can chime in on the go to market priorities, but.

Speaker Change: It's really pretty straightforward Vulcan at its very complimentary to kind of a one as I mentioned earlier.

Speaker Change: I'll add third party.

Speaker Change: Data into the platform will have the ability to ingest data from other security providers and not just the basic findings, but also the metadata them a lot of the network in both our who's responsible so we've talked about this bigger focus on AI is certainly that will be.

Speaker Change: I mean for us to expand our exposure data on top of the 40000 plus customers on top of the 3 million plus.

Steve Vintz: We believe certainly one of the big moats here going forward for cyber, the ability to deliver exposure management at scale, and evolve us from a system of record to a system of action will be AI. Vulcan is an important part of that, aggregating that data, combining third party data with first party assessment data. Then the other piece is really tying vulns really on the back end to actual fixes and driving and automating remediation ops. That's a really important part of the value chain. There's a lot we can do from that perspective, from everything from identifying unmanaged applications and devices to, you know, integrating on the back end with ticketing systems to be able to drive remediation and updates and then closing the loop back into the platform.

Speaker Change: Users downloads of our <unk> products. So we believe certainly one of the big note here going forward for cyber the ability to deliver exposure management at scale.

Speaker Change: And of all of us from a system of record to a system of action will be AI and Vulcan is an important part of that aggregating that data come out in third party data with first party assessment data and then the other piece is really tie involves really on the back end too.

Speaker Change: To actual fixes and driving an automated remediation oxide several important part of the value chain. There's a lot. We can do from that perspective from everything from identifying on manage applications and devices to.

Speaker Change: Then.

Speaker Change: <unk> on the backend with ticketing systems to be able to drive remediation updates and then closing the loop back into the platform. So that's a big area of focus for us going forward Vulcan simply a means to do so but it's complementary to our whole exposure management mandates and certainly will help will help enable a lot of the AI initiatives.

Steve Vintz: That's a big area of focus for us going forward. Vulcan certainly a means to do so, but it's complementary to our whole exposure management mandate and certainly will help enable a lot of the AI initiatives.

Mark Thurmond: Very, very, very well said. When you take a look at it from a go-to-market perspective, and we touched on this in Q1, the beautiful thing about Vulcan is we've actually been talking and positioning third-party ingest and automated remediation with our customers for quite a bit of time. Our sales force and our channel understand this talk track. They understand how these type of third-party assets and automated remediation flows into the Tenable One consolidation story. We do not have specialized sellers and specialized SEs. This is mainstreamed into our core sales force and is a core sales play that we're out there talking to customers, prospects, and channel in regard to what we're doing with Vulcan. As I discussed earlier, those two big themes of driving Tenable One and driving cloud security, Vulcan fits perfectly into the Tenable One story.

Speaker Change: Very very very well said and when you take a look at it from a go to market perspective, and we touched on this in Q1, the beautiful thing about bulk and as we've actually been talking and positioning third party ingests and automated remediation with our customers for quite a bit of time, So our sales force and our channel understand this talk tracks they understand how these type.

Speaker Change: Third party assets and automated remediation flows into the tenable one consolidation story. So we do not have specialized sellers and specialized disease. This is mainstreamed into our core sales force and is a core sales play that were out there talking to customers prospects and channel in regard to what we're doing with <unk>.

Speaker Change: And so as I discussed earlier, those two big themes of driving tenable, one and driving cloud security bulk and fits perfectly into the kind of a one story.

Adam Borg: Super clear. Thanks again.

Operator: Our next question comes from Trevor Rambo with BTIG. Please proceed with your question.

Speaker Change: Super clear thanks again.

Speaker Change: Our next question comes from Trevor Rambo with BTG. Please proceed with your question.

Trevor Rambo: Great. Thanks for taking my question. This is Trevor on for Gray Powell. Going back to Tenable One, it was good to hear the positive commentary again around adoption and that cloud security drove a lot of the outperformance. Could you give us some more color on how the rest of the portfolio performed in relation to cloud security in the quarter? Then, is cloud security something that you see going forward that's going to continue to outperform within that segment?

Trevor Rambo: Alright, Thanks for taking my question.

Trevor on for Gray Powell.

So going back to kind of a one I always good to hear the positive commentary down around adoption and that cloud security drove a lot of the outperformance could you give us some more color on how the rest of our portfolio performed in relation to cloud security in the quarter.

Trevor Rambo: And then just talk security is something that you see going forward, that's going to continue to outperform within that segment.

Mark Thurmond: Yeah. Listen, you know, at the end of the day, when you look at Tenable One, it was a very, very strong quarter and drove a lot of those seven-figure deals, which is outstanding. We touched a little bit in regards to some of the OT assets that were very, very strong also. Cloud security, because there was obviously a bunch of very sizable deals, and a seven-figure deal that was in there. We do continue to see that type of activity and visibility and security as part of Tenable One. As we discussed earlier in this call, we also are optimistic in regards to the cloud security business because of some of the M&A activity that we hit on before with Wiz and Google.

Trevor Rambo: Yeah listen at the end of the day when you look at <unk>. One it was a very very strong quarter and drove a lot of those seven figure deals, which is outstanding we touched a little bit in regards to some of the Ot asset with very very strong also cloud security because there was obviously a bunch of very sizeable deals and a seven figure deal that was in there and we do continue.

Trevor Rambo: To see that type of activity and be able to.

Trevor Rambo: Security as part of Tenable, one as we discussed earlier in this call. We also are optimistic in regards to the cloud security business because of some of the M&A activity that we hit on before with Wisent, Google and so we're already starting to see decent pipeline build.

Mark Thurmond: We're already starting to see decent pipeline build from a cloud security perspective as part of Tenable One, you know, once that acquisition was announced. Yeah, we expect those two to be big drivers for us in 2025.

Trevor Rambo: From a cost appeared pretty perspective as part of <unk>. One once that acquisition was announced so yes, we expect those to be big drivers for us in 2025.

Trevor Rambo: Awesome. Thanks for the call.

Trevor Rambo: Awesome, Thanks for the color.

Operator: Our next question comes from Shrenik Kothari with Baird. Please proceed with your question.

Speaker Change: Our next question comes from shrink got there with Baird. Please proceed with your question.

Zach Schneider: Great. Thanks. This is Zach Schneider on for Shrenik. Thanks for taking the question, and wanted to echo our congrats to Steve and Mark. Wanted to ask about pricing. You know, one thing we've picked up sort of across the sector is just some more aggressive discounting in pricing. Just curious if this is something you're seeing in customer conversations or if there's been any changes to your pricing strategy. Thanks.

Speaker Change: Great. Thanks. This transaction later on for Scott. Thanks for taking the question I just wanted to echo the congrats to Steve and Mark. So wanted to ask about pricing you know one thing we've picked up sort of across the sector. There's just some more aggressive discounting and pricing. So just curious if this is something you are seeing in customer conversations or if theres been any changes to your pricing strategy.

Mark Thurmond: Yes. No, we've actually seen no significant changes in pricing. We haven't modified or done anything different in regards to our pricing strategies. Obviously, our margins are extremely stable. We expect, you know, our pricing strategy and the way we're discussing and managing all these different opportunities to remain extremely consistent, you know, the way they did in Q1.

Speaker Change: Yes.

Speaker Change: Yeah, no we've actually seen no significant changes in pricing, we have been modified or done anything different and we got out in regards to our pricing strategies. Obviously, our margins are extremely stable. So we expect our pricing strategy and the way we are discussing and managing all the different opportunities remain extremely consistent the way they did in Q1.

Zach Schneider: Great. Thank you.

Operator: We have reached the end of our question and answer session. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: Okay. Thank you.

Speaker Change: Yeah.

Speaker Change: We have reached the end of our question and answer session. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

Q1 2025 Tenable Holdings Inc Earnings Call

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