Tenable Holdings, Inc. Piper Sandler 5th Annual Growth Frontiers Conference

Good afternoon, everyone. I'm Rob Owens, pardon me, with Piper. I head up our technology research group and cover the cybersecurity and infrastructure software universe. Happy to welcome our next management team, Steve Vintz, Co-CEO of Tenable.

Thank you, Rob. Great to be here.

Steve, welcome. Thanks for coming to Nashville.

We always enjoy ourselves when we come to conference.

Yeah. That's good. Should we start with football games over the weekend? You had probably a pretty good weekend there.

I don't think this is the time or place to talk about how good the Ravens will be this year. That's a topic of another conversation.

They looked very good. Unfortunately, my Chargers did not, and I'm out of my suicide pool right away week one. Maybe talk a little bit about the second quarter and net dollar expansion rate ticking up for the first time in several years, and just speak to the puts and takes around retention, expansion, and the opportunity for this to be sustained moving forward or potentially an accelerant.

Sure. Good question here. Just a quick recap on the quarter. Basically, over-deliver on the top line and the bottom line and raise our outlook for the year for both revenue and earnings per share, and gave a very strong free cash flow guide. I think $268 million in revenue, so almost $270 million, over $1 billion for the year. That makes us one of the largest security companies in the world, I think one of the ten largest pure play cybersecurity companies. The other thing I'll say here is we delivered over 300 new enterprise customers, and one of the things we talked about on the call, even though we don't guide to CCB, we understand directionally that CCB is directionally a corollary to what we sell.

We said that our CCB is tracking better than expected since the beginning of the year when we provided an initial estimate of CCB of where we would land for the full year. We said on the last earnings call that CCB so far is tracking $8 million-$10 million better. The expansion rate was higher in the quarter. It was the first time the expansion rate ticked up since 2022. Why is that? Mythos was released in April, so during the course of the quarter. While we acknowledge that the demand signals are really strong from customers in a post-Mythos world, both at the top of the funnel and bottom of the funnel. We had one of our best quarters for net new six-figure customers.

We said that, look, the first tell on accelerating growth, because Mark and I have been very adamant and very public about our ability to inflect growth higher here. Said the first tell will be in CCB, so revenue's more of a lagging indicator. With regard to CCB, the early leading indicator will be an inflection in the expansion rate. So pleased to see the expansion rate tick higher. We have confidence in our ability to continue to drive that higher as customers look to expand. I think it's also fair to say that Mythos is one of the biggest demand catalysts that exposure management, the category, will ever see here. We like how we're positioned, and we have a big role to play here as well.

Unpack that expansion and that acceleration within the customer base in terms of, is this them moving to Tenable One, allowing them broader exposure and so the uplift in there is it's sticking with what they have and just having more assets? Are they adding more capabilities on top? Kind of sack rank for us.

Yeah. Within the quarter, Tenable One, which is our exposure management platform, was 50% of new sales, which was an all-time high for us. We said in terms of total sales, we acknowledge, but by the end of the year, we expect Tenable One as a percent of total sales to approach 40%. So very pleased with what we saw in the quarter. One of the reasons we had one of our best quarters ever for net new six-figure customers is because of Tenable One. Selling prices are higher, close rates are higher, the highest renewal rates. One of the big reasons why is because it covers a wide range of domains. So yes, asset expansion. We have an asset-centric model.

As customers deploy more agents, more applications, more AI infrastructure into their environment, they increasingly turn to us to not only expand, but also to secure more of that. Asset expansion is a part of that. We have a number of products that are integrated into the exposure management platform. Yes, there's some core VM capability in there, but it's also OT. It's also things like cloud security, identity, ASM, historically have been sold in the market as standalone point products. But to say that customers are migrating to Tenable One because of consolidation really undersells the value. Tenable One, and specifically Exposure Management, solves a much, much bigger problem here in the agentic era. It's about unified visibility. You do have a complete inventory of your entire digital footprint, whether it's on the network, in the cloud, on the factory floor, to be able to take all of that data, enrich it with ownership data, asset criticality, external threats, to identify your most important exposures, is not optional to survival in this area.

Then more importantly, Hexa is our agentic engine to help orchestrate fixes. In short, the value prop of Tenable has evolved quite a bit historically here from the find a company, the visibility company, to the fix a company, and Hexa and AI plays a very important role.