Tenable Holdings, Inc. ("Tenable") (Nasdaq: TENB), the Exposure
Management company, today announced financial results for the
quarter ended June 30, 2023.
"We are very pleased with our Q2 results, which included better
than expected top-line growth and a sizable beat in earnings," said
Amit Yoran, Chairman and CEO of Tenable. "Our traction with Tenable
One strategically positions us to win in the exposure management
market as we help customers protect their organizations and
consolidate their security spend."
Second Quarter 2023
Financial Highlights
- Revenue was $195.0 million, a 19%
increase year-over-year.
- Calculated current billings was
$200.2 million, a 15% increase year-over-year.
- GAAP loss from operations was $10.7
million, compared to a loss of $23.2 million in the second quarter
of 2022.
- Non-GAAP income from operations was
$30.2 million, compared to $12.2 million in the second quarter of
2022.
- GAAP net loss was $16.0 million,
compared to a loss of $27.5 million in the second quarter of
2022.
- GAAP net loss per share was $0.14,
compared to a loss per share of $0.25 in the second quarter of
2022.
- Non-GAAP net income was $26.3
million, compared to $6.0 million in the second quarter of
2022.
- Non-GAAP diluted earnings per share
was $0.22, compared to $0.05 in the second quarter of 2022.
- Cash and cash equivalents and
short-term investments were $645.5 million at June 30, 2023,
compared to $567.4 million at December 31, 2022.
- Net cash provided by operating
activities was $30.2 million, compared to $30.5 million in the
second quarter of 2022.
- Unlevered free cash flow was $39.8
million, compared to $29.1 million in the second quarter of
2022.
Recent Business Highlights
- Added 426 new enterprise platform
customers and 63 net new six-figure customers.
- Launched new AI-fueled identity
security into our Exposure Management Platform.
- Integrated Tenable Security Center
into Tenable One to support on-premises and hybrid security
deployments.
- Released new Tenable Cloud Security
features that deliver automated operating system (OS) vulnerability
detection across container images, registries and pipelines that
prevents OS vulnerabilities and other risks from being deployed in
runtime environments.
- Announced a strategic partnership
with Splunk to improve data-driven incident response.
- Named Security Partner of the Year
by both Snowflake and Cohesity.
Financial Outlook
For the third quarter of 2023, we currently expect:
- Revenue in the range of $197.0
million to $199.0 million.
- Non-GAAP income from operations in
the range of $26.0 million to $27.0 million.
- Non-GAAP net income in the range of
$22.0 million to $23.0 million, assuming interest expense of $8.1
million, interest income of $6.5 million and a provision for income
taxes of $2.4 million.
- Non-GAAP diluted earnings per share
in the range of $0.18 to $0.19.
- 122.5 million diluted weighted
average shares outstanding.
For the year ending December 31, 2023, we currently expect:
- Calculated current billings in the
range of $879.0 million to $887.0 million.
- Revenue in the range of $783.0
million to $791.0 million.
- Non-GAAP income from operations in
the range of $96.0 million to $100.0 million.
- Non-GAAP net income in the range of
$79.0 million to $83.0 million, assuming interest expense of $31.5
million, interest income of $25.0 million and a provision for
income taxes of $8.6 million.
- Non-GAAP diluted earnings per share
in the range of $0.65 to $0.69.
- 121.0 million diluted weighted
average shares outstanding.
- Unlevered free cash flow in the
range of $180.0 million to $185.0 million.
Conference Call Information
Tenable will host a conference call on July 25, 2023 at
4:30 p.m. Eastern Time to discuss its financial results. The
conference call can be accessed at 877-407-9716 (U.S.) and
201-493-6779 (international). A live webcast of the event will be
available on the Tenable Investor Relations website at
https://investors.tenable.com. An archived replay of the live
broadcast will be available on the Investor Relations page of the
website following the call.
About Tenable
Tenable® is the Exposure Management company. Approximately
43,000 organizations around the globe rely on Tenable to understand
and reduce cyber risk. As the creator of Nessus®, Tenable extended
its expertise in vulnerabilities to deliver the world’s first
platform to see and secure any digital asset on any computing
platform. Tenable customers include approximately 60 percent of the
Fortune 500, approximately 40 percent of the Global 2000, and large
government agencies. Learn more at tenable.com.
Contact Information
Investor Relationsinvestors@tenable.com
Media Relationstenablepr@tenable.com
Forward-Looking Statements
This press release includes forward-looking statements within
the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. All statements contained
in this press release other than statements of historical fact,
including statements regarding our future results of operations and
financial position, business strategy and plans and objectives for
future operations, are forward-looking statements and represent our
views as of the date of this press release. The words “anticipate,”
"believe,” “continue,” “estimate,” “expect,” “intend,” “may,”
“will” and similar expressions are intended to identify
forward-looking statements. We have based these forward-looking
statements on our current expectations and projections about future
events and financial trends that we believe may affect our
financial condition, results of operations, business strategy,
short-term and long-term business operations and objectives and
financial needs. These forward-looking statements are subject to a
number of assumptions and risks and uncertainties, many of which
involve factors or circumstances that are beyond our control that
could affect our financial results. These risks and uncertainties
are detailed in the sections titled "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our Annual Report on Form 10-K for the
year ended December 31, 2022 and other filings that we make from
time to time with the SEC, which are available on the SEC's website
at sec.gov. Moreover, we operate in a very competitive and rapidly
changing environment. New risks emerge from time to time. It is not
possible for our management to predict all risks, nor can we assess
the impact of all factors on our business or the extent to which
any factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking
statements we may make. In light of these risks, uncertainties and
assumptions, the future events and trends discussed in this press
release may not occur and actual results could differ materially
and adversely from those anticipated or implied in any
forward-looking statements. Except as required by law, we are under
no obligation to update these forward-looking statements subsequent
to the date of this press release, or to update the reasons if
actual results differ materially from those anticipated in the
forward-looking statements.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are
prepared and presented in accordance with GAAP, we use
certain non-GAAP financial measures, as described below, to
understand and evaluate our core operating performance.
These non-GAAP financial measures, which may be different
than similarly titled measures used by other companies, are
presented to enhance the overall understanding of our financial
performance and should not be considered a substitute for, or
superior to, the financial information prepared and presented in
accordance with GAAP.
We believe that these non-GAAP financial measures
provide useful information about our financial performance, enhance
the overall understanding of our past performance and future
prospects and allow for greater transparency with respect to
important metrics used by management for financial and operational
decision-making. We include these non-GAAP financial measures to
present our financial performance using a management view and
because we believe that these measures provide an additional
comparison of our core financial performance over multiple periods
with other companies in our industry.
Reconciliations of non-GAAP financial measures to the most
directly comparable GAAP financial measures are included in the
financial tables accompanying this press release.
Calculated Current Billings: We define calculated current
billings, a non-GAAP financial measure, as total revenue recognized
in a period plus the change in current deferred revenue in the
corresponding period. We believe that calculated current billings
is a key metric to measure our periodic performance. Given that
most of our customers pay in advance (including multi-year
contracts), but we generally recognize the related revenue ratably
over time, we use calculated current billings to measure and
monitor our ability to provide our business with the working
capital generated by upfront payments from our customers. We
believe that calculated current billings, which excludes deferred
revenue for periods beyond twelve months in a customer’s
contractual term, more closely correlates with annual contract
value and that the variability in total billings, depending on the
timing of large multi-year contracts and the preference for annual
billing versus multi-year upfront billing, may distort growth in
one period over another.
Free Cash Flow and Unlevered Free Cash Flow: We define free cash
flow, a non-GAAP financial measure, as net cash provided by
operating activities less purchases of property and equipment and
capitalized software development costs. We believe free cash
flow is an important liquidity measure of the cash (if any) that is
available, after purchases of property and equipment and
capitalized software development costs, for investment in our
business and to make acquisitions. We believe that free cash flow
is useful as a liquidity measure because it measures our ability to
generate or use cash. We define unlevered free cash flow as free
cash flow plus cash paid for interest and other financing costs. We
believe unlevered free cash flow is useful as a liquidity measure
as it measures the cash that is available to invest in our business
and meet our current debt obligations and future financing needs.
However, given our debt obligations, non-cancelable commitments and
other contractual obligations, unlevered free cash flow does not
represent residual cash flow available for discretionary
expenses.
Non-GAAP Income from Operations and Non-GAAP Operating Margin:
We define these non-GAAP financial measures as their respective
GAAP measures, excluding the effect of stock-based compensation,
acquisition-related expenses, costs related to the intra-entity
asset transfers resulting from the internal restructuring of legal
entities and amortization of acquired intangible assets.
Acquisition-related expenses include transaction expenses and costs
related to the intercompany transfer of acquired intellectual
property.
Non-GAAP Net Income and Non-GAAP Earnings Per Share: We define
non-GAAP net income as GAAP net loss, excluding the effect of
stock-based compensation, acquisition-related expenses and
amortization of acquired intangible assets, including the
applicable tax impacts. In addition, we exclude the tax impact and
related costs of intra-entity asset transfers resulting from the
internal restructuring of legal entities as well as deferred income
tax benefits recognized in connection with acquisitions. We use
non-GAAP net income to calculate non-GAAP earnings per share.
Non-GAAP Gross Profit and Non-GAAP Gross Margin: We define
non-GAAP gross profit as GAAP gross profit, excluding the effect of
stock-based compensation and amortization of acquired intangible
assets. Non-GAAP gross margin is defined as non-GAAP gross profit
as a percentage of revenue.
Non-GAAP Sales and Marketing Expense, Non-GAAP Research and
Development Expense and Non-GAAP General and Administrative
Expense: We define these non-GAAP measures as their respective GAAP
measures, excluding stock-based compensation, acquisition-related
expenses and costs related to intra-entity asset transfers
resulting from the internal restructuring of legal entities.
|
TENABLE HOLDINGS, INC.CONSOLIDATED
STATEMENTS OF OPERATIONS(unaudited) |
| |
| |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(in thousands, except per share data) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Revenue |
$ |
195,036 |
|
|
$ |
164,341 |
|
|
$ |
383,875 |
|
|
$ |
323,709 |
|
| Cost of revenue(1) |
|
43,514 |
|
|
|
36,037 |
|
|
|
89,020 |
|
|
|
70,967 |
|
| Gross profit |
|
151,522 |
|
|
|
128,304 |
|
|
|
294,855 |
|
|
|
252,742 |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
Sales and marketing(1) |
|
97,800 |
|
|
|
88,426 |
|
|
|
194,991 |
|
|
|
169,996 |
|
|
Research and development(1) |
|
37,845 |
|
|
|
36,228 |
|
|
|
76,028 |
|
|
|
70,518 |
|
|
General and administrative(1) |
|
26,622 |
|
|
|
26,870 |
|
|
|
53,737 |
|
|
|
52,996 |
|
| Total operating expenses |
|
162,267 |
|
|
|
151,524 |
|
|
|
324,756 |
|
|
|
293,510 |
|
| Loss from operations |
|
(10,745 |
) |
|
|
(23,220 |
) |
|
|
(29,901 |
) |
|
|
(40,768 |
) |
|
Interest income |
|
6,566 |
|
|
|
693 |
|
|
|
11,661 |
|
|
|
943 |
|
|
Interest expense |
|
(7,750 |
) |
|
|
(3,588 |
) |
|
|
(15,089 |
) |
|
|
(7,164 |
) |
|
Other expense, net |
|
(944 |
) |
|
|
(1,863 |
) |
|
|
(1,491 |
) |
|
|
(2,807 |
) |
| Loss before income taxes |
|
(12,873 |
) |
|
|
(27,978 |
) |
|
|
(34,820 |
) |
|
|
(49,796 |
) |
| Provision (benefit) for income
taxes |
|
3,101 |
|
|
|
(479 |
) |
|
|
6,251 |
|
|
|
2,209 |
|
| Net loss |
$ |
(15,974 |
) |
|
$ |
(27,499 |
) |
|
$ |
(41,071 |
) |
|
$ |
(52,005 |
) |
| |
|
|
|
|
|
|
|
| Net loss per share, basic and
diluted |
$ |
(0.14 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.47 |
) |
| Weighted-average shares used
to compute net loss per share, basic and diluted |
|
115,131 |
|
|
|
111,041 |
|
|
|
114,465 |
|
|
|
110,287 |
|
_______________
(1) Includes stock-based compensation as
follows:
| |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
| Cost of revenue |
$ |
2,906 |
|
$ |
2,114 |
|
$ |
5,531 |
|
$ |
3,627 |
| Sales and marketing |
|
16,423 |
|
|
12,766 |
|
|
30,817 |
|
|
22,831 |
| Research and development |
|
9,764 |
|
|
8,077 |
|
|
18,629 |
|
|
14,540 |
| General and
administrative |
|
8,767 |
|
|
8,956 |
|
|
17,000 |
|
|
16,313 |
|
Total stock-based compensation |
$ |
37,860 |
|
$ |
31,913 |
|
$ |
71,977 |
|
$ |
57,311 |
|
TENABLE HOLDINGS, INC.CONSOLIDATED BALANCE
SHEETS |
| |
| |
June 30, 2023 |
|
December 31, 2022 |
| (in thousands, except
per share data) |
(unaudited) |
|
|
| Assets |
|
|
|
| Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
376,059 |
|
|
$ |
300,866 |
|
|
Short-term investments |
|
269,487 |
|
|
|
266,569 |
|
|
Accounts receivable (net of allowance for doubtful accounts of $308
and $1,400 at June 30, 2023 and December 31, 2022,
respectively) |
|
154,436 |
|
|
|
187,341 |
|
|
Deferred commissions |
|
45,036 |
|
|
|
44,270 |
|
|
Prepaid expenses and other current assets |
|
54,703 |
|
|
|
58,121 |
|
| Total current assets |
|
899,721 |
|
|
|
857,167 |
|
| Property and equipment,
net |
|
44,764 |
|
|
|
46,726 |
|
| Deferred commissions (net of
current portion) |
|
64,546 |
|
|
|
67,238 |
|
| Operating lease right-of-use
assets |
|
37,124 |
|
|
|
38,495 |
|
| Acquired intangible assets,
net |
|
69,224 |
|
|
|
75,376 |
|
| Goodwill |
|
316,520 |
|
|
|
316,520 |
|
| Other assets |
|
33,940 |
|
|
|
38,008 |
|
| Total assets |
$ |
1,465,839 |
|
|
$ |
1,439,530 |
|
| |
|
|
|
| Liabilities and
Stockholders’ Equity |
|
|
|
| Current liabilities: |
|
|
|
|
Accounts payable and accrued expenses |
$ |
24,855 |
|
|
$ |
18,722 |
|
|
Accrued compensation |
|
45,220 |
|
|
|
52,620 |
|
|
Deferred revenue |
|
495,199 |
|
|
|
502,115 |
|
|
Operating lease liabilities |
|
5,620 |
|
|
|
5,821 |
|
|
Other current liabilities |
|
6,177 |
|
|
|
4,882 |
|
| Total current liabilities |
|
577,071 |
|
|
|
584,160 |
|
| Deferred revenue (net of
current portion) |
|
154,995 |
|
|
|
162,487 |
|
| Term loan, net of issuance
costs (net of current portion) |
|
360,609 |
|
|
|
361,970 |
|
| Operating lease liabilities
(net of current portion) |
|
51,005 |
|
|
|
52,611 |
|
| Other liabilities |
|
7,598 |
|
|
|
7,436 |
|
| Total liabilities |
|
1,151,278 |
|
|
|
1,168,664 |
|
| |
|
|
|
| Stockholders’ equity: |
|
|
|
|
Common stock (par value: $0.01; 500,000 shares authorized; 115,529
and 113,056 shares issued and outstanding at June 30, 2023 and
December 31, 2022, respectively) |
|
1,156 |
|
|
|
1,131 |
|
|
Additional paid-in capital |
|
1,101,928 |
|
|
|
1,017,837 |
|
|
Accumulated other comprehensive loss |
|
(701 |
) |
|
|
(1,351 |
) |
|
Accumulated deficit |
|
(787,822 |
) |
|
|
(746,751 |
) |
| Total stockholders’
equity |
|
314,561 |
|
|
|
270,866 |
|
| Total liabilities and
stockholders’ equity |
$ |
1,465,839 |
|
|
$ |
1,439,530 |
|
|
TENABLE HOLDINGS, INC.CONSOLIDATED
STATEMENTS OF CASH FLOWS(unaudited) |
| |
| |
Six Months Ended June 30, |
|
(in thousands) |
|
2023 |
|
|
|
2022 |
|
| Cash flows from
operating activities: |
|
|
|
| Net loss |
$ |
(41,071 |
) |
|
$ |
(52,005 |
) |
| Adjustments to
reconcile net loss to net cash provided by operating
activities: |
|
|
|
Depreciation and amortization |
|
12,624 |
|
|
|
10,141 |
|
|
Stock-based compensation |
|
71,977 |
|
|
|
57,311 |
|
|
Other |
|
(2,795 |
) |
|
|
665 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
33,997 |
|
|
|
27,664 |
|
|
Prepaid expenses and other assets |
|
12,649 |
|
|
|
16,765 |
|
|
Accounts payable, accrued expenses and accrued compensation |
|
(1,276 |
) |
|
|
(14,250 |
) |
|
Deferred revenue |
|
(14,408 |
) |
|
|
16,075 |
|
|
Other current and noncurrent liabilities |
|
(2,758 |
) |
|
|
1,014 |
|
|
Net cash provided by operating activities |
|
68,939 |
|
|
|
63,380 |
|
| |
|
|
|
| Cash flows from
investing activities: |
|
|
|
| Purchases of property and
equipment |
|
(1,098 |
) |
|
|
(3,236 |
) |
| Capitalized software
development costs |
|
(2,813 |
) |
|
|
(6,327 |
) |
| Purchases of short-term
investments |
|
(147,434 |
) |
|
|
(119,619 |
) |
| Sales and maturities of
short-term investments |
|
148,760 |
|
|
|
108,858 |
|
| Business combinations, net of
cash acquired |
|
— |
|
|
|
(66,993 |
) |
|
Net cash used in investing activities |
|
(2,585 |
) |
|
|
(87,317 |
) |
| |
|
|
|
| Cash flows from
financing activities: |
|
|
|
| Payments on term loan |
|
(1,875 |
) |
|
|
(1,875 |
) |
| Proceeds from loan
agreement |
|
424 |
|
|
|
572 |
|
| Proceeds from stock issued in
connection with the employee stock purchase plan |
|
9,914 |
|
|
|
8,882 |
|
| Proceeds from the exercise of
stock options |
|
1,537 |
|
|
|
8,676 |
|
| Other financing
activities |
|
(129 |
) |
|
|
(6 |
) |
|
Net cash provided by financing activities |
|
9,871 |
|
|
|
16,249 |
|
| Effect of exchange rate
changes on cash and cash equivalents and restricted cash |
|
(1,032 |
) |
|
|
(2,471 |
) |
| Net increase (decrease) in
cash and cash equivalents and restricted cash |
|
75,193 |
|
|
|
(10,159 |
) |
| Cash and cash equivalents and
restricted cash at beginning of period |
|
300,866 |
|
|
|
278,271 |
|
| Cash and cash equivalents and
restricted cash at end of period |
$ |
376,059 |
|
|
$ |
268,112 |
|
|
TENABLE HOLDINGS, INC.REVENUE COMPONENTS
AND RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES(unaudited) |
| |
| Revenue |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(in thousands) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
| Subscription revenue |
$ |
176,767 |
|
$ |
146,806 |
|
$ |
347,865 |
|
$ |
289,493 |
| Perpetual license and
maintenance revenue |
|
12,154 |
|
|
12,683 |
|
|
24,335 |
|
|
25,556 |
| Professional services and
other revenue |
|
6,115 |
|
|
4,852 |
|
|
11,675 |
|
|
8,660 |
|
Revenue(1) |
$ |
195,036 |
|
$ |
164,341 |
|
$ |
383,875 |
|
$ |
323,709 |
_______________
(1) Recurring revenue, which includes revenue from
subscription arrangements for software (both recognized ratably
over the subscription term and upon delivery) and cloud-based
solutions and maintenance associated with perpetual licenses,
represented 95% of revenue in the three and six months ended June
30, 2023 and 2022.
| Calculated Current
Billings |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(in thousands) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Revenue |
$ |
195,036 |
|
|
$ |
164,341 |
|
|
$ |
383,875 |
|
|
$ |
323,709 |
|
| Deferred revenue (current),
end of period |
|
495,199 |
|
|
|
415,378 |
|
|
|
495,199 |
|
|
|
415,378 |
|
| Deferred revenue (current),
beginning of period(1) |
|
(490,076 |
) |
|
|
(405,594 |
) |
|
|
(502,115 |
) |
|
|
(408,443 |
) |
|
Calculated current billings |
$ |
200,159 |
|
|
$ |
174,125 |
|
|
$ |
376,959 |
|
|
$ |
330,644 |
|
_______________
(1) Deferred revenue (current), beginning of period
for the three and six months ended June 30, 2022 includes
$0.8 million and $0.9 million, respectively, related to
acquired deferred revenue.
| Free Cash Flow and
Unlevered Free Cash Flow |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(in thousands) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Net cash provided by operating
activities |
$ |
30,193 |
|
|
$ |
30,518 |
|
|
$ |
68,939 |
|
|
$ |
63,380 |
|
| Purchases of property and
equipment |
|
(711 |
) |
|
|
(1,229 |
) |
|
|
(1,098 |
) |
|
|
(3,236 |
) |
| Capitalized software
development costs(1) |
|
(1,790 |
) |
|
|
(3,523 |
) |
|
|
(2,813 |
) |
|
|
(6,327 |
) |
|
Free cash flow(2) |
|
27,692 |
|
|
|
25,766 |
|
|
|
65,028 |
|
|
|
53,817 |
|
| Cash paid for interest and
other financing costs |
|
12,123 |
|
|
|
3,315 |
|
|
|
18,943 |
|
|
|
7,366 |
|
|
Unlevered free cash flow(2) |
$ |
39,815 |
|
|
$ |
29,081 |
|
|
$ |
83,971 |
|
|
$ |
61,183 |
|
________________
(1) Capitalized software development costs were
previously included in purchases of property and
equipment. (2) Free cash flow and unlevered free
cash flow for the periods presented were impacted by:
| |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(in thousands) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Employee stock purchase plan
activity |
$ |
4,419 |
|
|
$ |
4,343 |
|
|
$ |
(271 |
) |
|
$ |
307 |
|
| Acquisition-related
expenses |
|
(21 |
) |
|
|
(1,269 |
) |
|
|
(259 |
) |
|
|
(1,997 |
) |
| Costs related to intra-entity
asset transfers |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(838 |
) |
| Tax payment on intra-entity
asset transfers |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,697 |
) |
Free cash flow and unlevered free cash flow for the three and
six months ended June 30, 2022 were benefited by approximately
$2 million and $8 million, respectively, from prepayments
of software subscription costs, insurance and rent in prior
quarters.
| Non-GAAP Income from
Operations and Non-GAAP Operating Margin |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(dollars in thousands) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Loss from operations |
$ |
(10,745 |
) |
|
$ |
(23,220 |
) |
|
$ |
(29,901 |
) |
|
$ |
(40,768 |
) |
| Stock-based compensation |
|
37,860 |
|
|
|
31,913 |
|
|
|
71,977 |
|
|
|
57,311 |
|
| Acquisition-related
expenses |
|
30 |
|
|
|
713 |
|
|
|
130 |
|
|
|
2,054 |
|
| Costs related to intra-entity
asset transfers |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
838 |
|
| Amortization of acquired
intangible assets |
|
3,073 |
|
|
|
2,785 |
|
|
|
6,153 |
|
|
|
5,212 |
|
|
Non-GAAP income from operations |
$ |
30,218 |
|
|
$ |
12,191 |
|
|
$ |
48,359 |
|
|
$ |
24,647 |
|
| Operating margin |
|
(6 |
)% |
|
|
(14 |
)% |
|
|
(8 |
)% |
|
|
(13 |
)% |
| Non-GAAP operating margin |
|
15 |
% |
|
|
7 |
% |
|
|
13 |
% |
|
|
8 |
% |
| Non-GAAP Net Income
and Non-GAAP Earnings Per Share |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(in thousands, except per share data) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Net loss |
$ |
(15,974 |
) |
|
$ |
(27,499 |
) |
|
$ |
(41,071 |
) |
|
$ |
(52,005 |
) |
| Stock-based compensation |
|
37,860 |
|
|
|
31,913 |
|
|
|
71,977 |
|
|
|
57,311 |
|
| Tax impact of stock-based
compensation(1) |
|
1,336 |
|
|
|
188 |
|
|
|
2,253 |
|
|
|
1,254 |
|
| Acquisition-related
expenses(2) |
|
30 |
|
|
|
713 |
|
|
|
130 |
|
|
|
2,054 |
|
| Costs related to intra-entity
asset transfers(3) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
838 |
|
| Amortization of acquired
intangible assets(4) |
|
3,073 |
|
|
|
2,785 |
|
|
|
6,153 |
|
|
|
5,212 |
|
| Tax impact of
acquisitions(5) |
|
(59 |
) |
|
|
(2,907 |
) |
|
|
(113 |
) |
|
|
(3,349 |
) |
| Tax impact of intra-entity
asset transfers(6) |
|
— |
|
|
|
770 |
|
|
|
— |
|
|
|
1,613 |
|
|
Non-GAAP net income |
$ |
26,266 |
|
|
$ |
5,963 |
|
|
$ |
39,329 |
|
|
$ |
12,928 |
|
| |
|
|
|
|
|
|
|
| Net loss per share,
diluted |
$ |
(0.14 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.47 |
) |
| Stock-based compensation |
|
0.33 |
|
|
|
0.29 |
|
|
|
0.63 |
|
|
|
0.52 |
|
| Tax impact of stock-based
compensation(1) |
|
0.01 |
|
|
|
— |
|
|
|
0.02 |
|
|
|
0.01 |
|
| Acquisition-related
expenses(2) |
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
|
0.02 |
|
| Costs related to intra-entity
asset transfers(3) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
| Amortization of acquired
intangible assets(4) |
|
0.03 |
|
|
|
0.02 |
|
|
|
0.05 |
|
|
|
0.05 |
|
| Tax impact of
acquisitions(5) |
|
— |
|
|
|
(0.03 |
) |
|
|
— |
|
|
|
(0.03 |
) |
| Tax impact of intra-entity
asset transfers(6) |
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
|
0.01 |
|
| Adjustment to diluted earnings
per share(7) |
|
(0.01 |
) |
|
|
— |
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
Non-GAAP earnings per share, diluted |
$ |
0.22 |
|
|
$ |
0.05 |
|
|
$ |
0.33 |
|
|
$ |
0.11 |
|
| |
|
|
|
|
|
|
|
| Weighted-average shares used
to compute GAAP net loss per share, diluted |
|
115,131 |
|
|
|
111,041 |
|
|
|
114,465 |
|
|
|
110,287 |
|
| |
|
|
|
|
|
|
|
| Weighted-average shares used
to compute non-GAAP earnings per share, diluted |
|
120,057 |
|
|
|
118,057 |
|
|
|
119,665 |
|
|
|
117,610 |
|
________________
(1) The tax impact of stock-based compensation is
based on the tax treatment for the applicable tax
jurisdictions.(2) The tax impact of acquisition-related
expenses is not material.(3) The costs related to the
intra-entity asset transfers resulted from our internal
restructuring of Cymptom.(4) The tax impact of the
amortization of acquired intangible assets is included in the tax
impact of acquisitions.(5) The tax impact of
acquisitions for all periods presented includes the deferred tax
benefits of the Alsid acquisition. Additionally, the tax impact of
acquisitions for the three and six months ended June 30, 2022
includes a reversal of the $2.5 million income tax benefit
recognized for GAAP purposes related to the partial release of our
valuation allowance associated with the Bit Discovery
acquisition.(6) The tax impact of the intra-entity
transfers is related to current tax expense based on the applicable
Israeli tax rates resulting from our internal restructuring of
Cymptom.(7) An adjustment to reconcile GAAP net loss
per share, which excludes potentially dilutive shares, to non-GAAP
earnings per share, which includes potentially dilutive shares.
| Non-GAAP Gross Profit
and Non-GAAP Gross Margin |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(dollars in thousands) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Gross profit |
$ |
151,522 |
|
|
$ |
128,304 |
|
|
$ |
294,855 |
|
|
$ |
252,742 |
|
| Stock-based compensation |
|
2,906 |
|
|
|
2,114 |
|
|
|
5,531 |
|
|
|
3,627 |
|
| Amortization of acquired
intangible assets |
|
3,073 |
|
|
|
2,785 |
|
|
|
6,153 |
|
|
|
5,212 |
|
|
Non-GAAP gross profit |
$ |
157,501 |
|
|
$ |
133,203 |
|
|
$ |
306,539 |
|
|
$ |
261,581 |
|
| Gross margin |
|
78 |
% |
|
|
78 |
% |
|
|
77 |
% |
|
|
78 |
% |
| Non-GAAP gross margin |
|
81 |
% |
|
|
81 |
% |
|
|
80 |
% |
|
|
81 |
% |
| Non-GAAP Sales and
Marketing Expense |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(dollars in thousands) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Sales and marketing
expense |
$ |
97,800 |
|
|
$ |
88,426 |
|
|
$ |
194,991 |
|
|
$ |
169,996 |
|
| Less: Stock-based
compensation |
|
16,423 |
|
|
|
12,766 |
|
|
|
30,817 |
|
|
|
22,831 |
|
| Less: Acquisition-related
expenses |
|
— |
|
|
|
15 |
|
|
|
— |
|
|
|
15 |
|
|
Non-GAAP sales and marketing expense |
$ |
81,377 |
|
|
$ |
75,645 |
|
|
$ |
164,174 |
|
|
$ |
147,150 |
|
|
Non-GAAP sales and marketing expense % of revenue |
|
42 |
% |
|
|
46 |
% |
|
|
43 |
% |
|
|
45 |
% |
| Non-GAAP Research and
Development Expense |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(dollars in thousands) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Research and development
expense |
$ |
37,845 |
|
|
$ |
36,228 |
|
|
$ |
76,028 |
|
|
$ |
70,518 |
|
| Less: Stock-based
compensation |
|
9,764 |
|
|
|
8,077 |
|
|
|
18,629 |
|
|
|
14,540 |
|
| Less: Acquisition-related
expenses |
|
— |
|
|
|
46 |
|
|
|
— |
|
|
|
46 |
|
|
Non-GAAP research and development expense |
$ |
28,081 |
|
|
$ |
28,105 |
|
|
$ |
57,399 |
|
|
$ |
55,932 |
|
|
Non-GAAP research and development expense % of revenue |
|
14 |
% |
|
|
17 |
% |
|
|
15 |
% |
|
|
17 |
% |
| Non-GAAP General and
Administrative Expense |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(dollars in thousands) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| General and administrative
expense |
$ |
26,622 |
|
|
$ |
26,870 |
|
|
$ |
53,737 |
|
|
$ |
52,996 |
|
| Less: Stock-based
compensation |
|
8,767 |
|
|
|
8,956 |
|
|
|
17,000 |
|
|
|
16,313 |
|
| Less: Acquisition-related
expenses |
|
30 |
|
|
|
652 |
|
|
|
130 |
|
|
|
1,993 |
|
| Less: Costs related to
intra-entity asset transfers |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
838 |
|
|
Non-GAAP general and administrative expense |
$ |
17,825 |
|
|
$ |
17,262 |
|
|
$ |
36,607 |
|
|
$ |
33,852 |
|
|
Non-GAAP general and administrative expense % of revenue |
|
9 |
% |
|
|
11 |
% |
|
|
10 |
% |
|
|
10 |
% |
The following adjustments to reconcile forecasted non-GAAP
income from operations, non-GAAP net income, non-GAAP earnings per
share, free cash flow and unlevered free cash flow are subject to a
number of uncertainties and assumptions, each of which are
inherently difficult to forecast. As a result, actual adjustments
and GAAP results may differ materially.
| Forecasted Non-GAAP
Income from Operations |
Three Months EndingSeptember 30, 2023 |
|
Year EndingDecember 31, 2023 |
| (in
millions) |
Low |
|
High |
|
Low |
|
High |
|
Forecasted loss from operations |
$ |
(14.1 |
) |
|
$ |
(13.1 |
) |
|
$ |
(62.3 |
) |
|
$ |
(58.3 |
) |
| Forecasted stock-based
compensation |
|
37.0 |
|
|
|
37.0 |
|
|
|
146.0 |
|
|
|
146.0 |
|
| Forecasted amortization of
acquired intangible assets |
|
3.1 |
|
|
|
3.1 |
|
|
|
12.3 |
|
|
|
12.3 |
|
|
Forecasted non-GAAP income from operations |
$ |
26.0 |
|
|
$ |
27.0 |
|
|
$ |
96.0 |
|
|
$ |
100.0 |
|
| Forecasted Non-GAAP Net
Income and Non-GAAP Earnings Per Share |
Three Months EndingSeptember 30, 2023 |
|
Year EndingDecember 31, 2023 |
| (in millions, except per
share data) |
Low |
|
High |
|
Low |
|
High |
|
Forecasted net loss(1) |
$ |
(17.8 |
) |
|
$ |
(16.8 |
) |
|
$ |
(81.5 |
) |
|
$ |
(77.5 |
) |
| Forecasted stock-based
compensation |
|
37.0 |
|
|
|
37.0 |
|
|
|
146.0 |
|
|
|
146.0 |
|
| Forecasted tax impact of
stock-based compensation |
|
(0.2 |
) |
|
|
(0.2 |
) |
|
|
2.4 |
|
|
|
2.4 |
|
| Forecasted amortization of
acquired intangible assets |
|
3.1 |
|
|
|
3.1 |
|
|
|
12.3 |
|
|
|
12.3 |
|
| Forecasted tax impact of
acquisitions |
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.2 |
) |
|
|
(0.2 |
) |
|
Forecasted non-GAAP net income |
$ |
22.0 |
|
|
$ |
23.0 |
|
|
$ |
79.0 |
|
|
$ |
83.0 |
|
| |
|
|
|
|
|
|
|
| Forecasted net loss per share,
diluted(1) |
$ |
(0.15 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.71 |
) |
|
$ |
(0.67 |
) |
| Forecasted stock-based
compensation |
|
0.32 |
|
|
|
0.32 |
|
|
|
1.26 |
|
|
|
1.26 |
|
| Forecasted tax impact of
stock-based compensation |
|
— |
|
|
|
— |
|
|
|
0.02 |
|
|
|
0.02 |
|
| Forecasted amortization of
acquired intangible assets |
|
0.02 |
|
|
|
0.02 |
|
|
|
0.11 |
|
|
|
0.11 |
|
| Forecasted tax impact of
acquisitions |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Adjustment to diluted earnings
per share(2) |
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.03 |
) |
|
|
(0.03 |
) |
|
Forecasted non-GAAP earnings per share, diluted |
$ |
0.18 |
|
|
$ |
0.19 |
|
|
$ |
0.65 |
|
|
$ |
0.69 |
|
| |
|
|
|
|
|
|
|
| Forecasted weighted-average
shares used to compute GAAP net loss per share, diluted |
|
116.0 |
|
|
|
116.0 |
|
|
|
115.5 |
|
|
|
115.5 |
|
| Forecasted weighted-average
shares used to compute non-GAAP earnings per share, diluted |
|
122.5 |
|
|
|
122.5 |
|
|
|
121.0 |
|
|
|
121.0 |
|
________________(1) The forecasted GAAP net loss
assumes income tax expense of $2.1 million and $10.8 million in the
three months ending September 30, 2023 and year ending December 31,
2023, respectively. (2) Adjustment to reconcile GAAP
net loss per share, which excludes potentially dilutive shares, to
non-GAAP earnings per share, which includes potentially dilutive
shares.
| Forecasted Free Cash
Flow and Unlevered Free Cash Flow |
Year EndingDecember 31, 2023 |
| (in
millions) |
Low |
|
High |
|
Forecasted net cash provided by operating activities |
$ |
156.0 |
|
|
$ |
161.0 |
|
| Forecasted purchases of
property and equipment |
|
(3.5 |
) |
|
|
(3.5 |
) |
| Forecasted capitalized
software development costs |
|
(7.0 |
) |
|
|
(7.0 |
) |
|
Forecasted free cash flow |
|
145.5 |
|
|
|
150.5 |
|
| Forecasted cash paid for
interest and other financing costs |
|
34.5 |
|
|
|
34.5 |
|
|
Forecasted unlevered free cash flow |
$ |
180.0 |
|
|
$ |
185.0 |
|
Tenable (NASDAQ:TENB)
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Tenable (NASDAQ:TENB)
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