VM Market Outlook and Softness
Q: Is weakness in the VM market cyclical or secular?
A: Management believes the weakness in the Vulnerability Management (VM) market is cyclical, not secular. They consider VM a strategic, foundational market that will see improvement with better macro conditions. Despite softness, particularly in North America and among large enterprises, they expect VM growth to return over time.

2025 Free Cash Flow Guidance
Q: What are the drivers behind the strong 2025 free cash flow guidance?
A: They have provided an initial unlevered free cash flow target for 2025 of $280 million to $290 million, up 24% at the midpoint. Key drivers include continued leverage in sales and marketing, improved gross margins, and efficiency gains. They are raising their long-term target for unlevered free cash flow margin to 35% plus, up from 30% previously.

Impact of Market Dynamics on Guidance
Q: How are macro conditions affecting the company's outlook?
A: Due to increased scrutiny and budgetary constraints, particularly in large deals and VM, the company is taking a cautious approach for the second half of the year. They are expecting more moderate growth, reflecting the challenges seen in Q2.

Tenable One's Contribution and Growth
Q: When will Tenable One's growth show in revenue?
A: Tenable One contributed 30% to new sales in the quarter. While VM growth is moderating, areas like cloud security and platform are growing at a high rate and will represent an increasing mix of the business going forward. Over time, Tenable One's impact will become more evident in revenue.

Public Sector Performance and Outlook
Q: How is the public sector business performing?
A: The public sector business was strong and in line with expectations. There are significant opportunities in the pipeline for the second half. However, given the election cycle and potential unpredictability, they are cautious in their outlook.

Cloud Security Position and Competition
Q: How is the company positioned in cloud security and the CNAPP market?
A: They offer a full Cloud-Native Application Protection Platform (CNAPP) solution, which is resonating with customers. The majority of cloud sales include full CNAPP capabilities. They consider themselves a top 5 player in the market and are seeing success with their Keen functionality. They expect to compete effectively against market leaders.

Impact of CrowdStrike Outage
Q: Is the CrowdStrike outage affecting customer scrutiny and guidance?
A: They are factoring in increased scrutiny from large enterprises due to the CrowdStrike outage. Increased procurement scrutiny is incorporated into their guidance. They believe they have strong answers for customer concerns and may benefit from organizations seeking best-of-breed solutions.

Deal Closures and Sales Cycle Length
Q: Are deals that slipped in Q2 closing now?
A: Some deals that slipped are closing, but they are seeing longer sales cycles, especially with large deals. They are cautious about assuming pushed deals will close in the next quarter and have reflected this in their guidance.

Net Dollar Expansion Rate
Q: How is the net dollar expansion rate holding up?
A: The net dollar expansion rate remained steady at 109%, reflecting customers' ability to expand and adopt Tenable One. While the rate of expansion in VM is moderating, they expect the net dollar expansion rate to trend up over time due to a broader product portfolio.

Eureka Acquisition and DSPM Market
Q: How does the Eureka acquisition fit into the product portfolio?
A: They are integrating Eureka to enhance their Data Security Posture Management (DSPM) capabilities within their CNAPP platform. They anticipate customers will procure unified CNAPP solutions that include DSPM. This positions them to compete effectively in a crowded DSPM market.

Clarification on Sales Metrics
Q: Can you clarify new sales metrics and definitions?
A: The 50% of new sales from exposure solutions includes the 30% contribution from Tenable One. The metric refers to total enterprise sales and does not include lower Average Selling Price (ASP) products like Nessus. It encompasses both direct sales and unaided sales motions.

Rumors of Potential Acquisition
Q: Did the company hire advisers regarding a potential acquisition?
A: Management does not comment on rumors or speculation.

Macro Environment and Company Performance
Q: Why is the company's performance different from others reporting macro stabilization?
A: Each quarter is different. While they reported strength in Q1, in Q2 they experienced more levels of review and budgetary constraints, particularly affecting large deals in VM. This is reflected in their outlook for the year.

Expectations for VM Market Recovery
Q: When might the VM market recover?
A: It's difficult to predict a specific timeframe, but management recognizes the importance of the VM market and expects it to return to favor as macro conditions improve. They are not factoring a recovery into this year's outlook.

Federal Adoption of Tenable One
Q: Are federal customers adopting Tenable One?
A: Adoption of Tenable One in the federal market is similar to other segments, but transitioning is a multiyear effort. They are seeing some adoption but expect it to increase over time.