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Tenable Holdings, Inc. (TENB)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 delivered solid top-line and strong profitability: revenue $235.7M (+11% YoY), Non-GAAP op margin 25% (vs 17% LY), and record unlevered FCF $85.7M, driven by Tenable One and cloud security; billings (CCB) rose 11% to $302.2M .
  • Management cited outperformance vs company guidance on revenue (+$4.7M vs midpoint) and EPS (+$0.07 vs midpoint), with gross margin at 82% and recurring revenue at 95% in Q4 .
  • FY25 initial outlook (ex-Vulcan) guided revenue $971–$981M and UFCF $285–$295M; after closing Vulcan (Feb 7), FY25 revenue was nudged up to $975–$985M but EPS and UFCF were reduced given added opex and integration costs (EPS $1.41–$1.49; UFCF $265–$275M) .
  • Key catalyst: robust cloud/Tenable One momentum (Tenable One = 40% of new business in Q4) vs incremental caution on U.S. Federal due to administration transition; the Vulcan integration is expected to enhance data ingestion and automated remediation but near-term depress EPS/FCF, which may weigh on sentiment near-term .

What Went Well and What Went Wrong

  • What Went Well

    • Tenable One and cloud security were primary growth drivers; management called out “exceptional results” and noted Tenable One reached a record ~40% of new business sales in Q4, with cloud security sales “more than doubled” YoY .
    • Profitability leverage: Non-GAAP operating margin improved to 25% (vs 17% LY), with sales and marketing efficiency improving and gross margin at 82% (up 100bps QoQ) .
    • Cash generation: record Q4 unlevered FCF of $85.7M (vs $43.3M LY), supported by strong billings and renewals; company repurchased 1.2M shares for $50M in the quarter .

  • What Went Wrong

    • Estimates access was unavailable at query time; we cannot quantify Street beat/miss vs S&P Global consensus (See Estimates Context) [GetEstimates error].
    • Incremental caution on U.S. Federal due to administration transition/CR overhang; modeling lower Fed contribution early in 2025, potentially tempering near-term growth cadence .
    • Post-close update lowered FY25 non-GAAP EPS (to $1.41–$1.49) and UFCF (to $265–$275M) to incorporate Vulcan costs; adds execution risk around integration timing and expense run-rate .

Financial Results

Q4 2024 vs Q3 2024 vs Q4 2023 (chronologically ordered)

MetricQ4 2023Q3 2024Q4 2024
Revenue ($M)$213.3 $227.1 $235.7
YoY Growth+11% +13% +11%
GAAP Diluted EPS$(0.19) $(0.08) $0.02
Non-GAAP Diluted EPS$0.25 $0.32 $0.41
Calculated Current Billings (CCB, $M)$271.6 $248.4 $302.2
Non-GAAP Operating Margin17% 20% 25%
Non-GAAP Gross Margin81% 81% 82%
Unlevered Free Cash Flow ($M)$43.3 $60.8 $85.7

Revenue mix

Revenue Components ($M)Q2 2024Q3 2024Q4 2024
Subscription$202.5 $208.6 $215.9
Perpetual License & Maintenance$12.0 $11.8 $11.8
Professional Services & Other$6.7 $6.8 $8.0
Total Revenue$221.2 $227.1 $235.7

Billing, RPO, cash flow and mix KPIs

KPIQ2 2024Q3 2024Q4 2024
Calculated Current Billings ($M)$221.1 $248.4 $302.2
Remaining Performance Obligations ($M)$747.5 (6/30) $771.6 (9/30) $867.5 (12/31)
Current Deferred Revenue ($M)$562.6 $583.9 $650.4
Recurring Revenue Mix96% 96% 95%
Non-GAAP Gross Margin82% 81% 82%
Unlevered Free Cash Flow ($M)$36.5 $60.8 $85.7

Go-to-market KPIs

KPIQ2 2024Q3 2024Q4 2024
New Enterprise Platform Customers (Adds)408 386 485
Net New Six-Figure Customers76 60 135
Net Dollar Expansion RateN/A108% 108%

Notes:

  • Q4 revenue exceeded the midpoint of company guidance by $4.7M; EPS exceeded by $0.07, per management .
  • Q4 recurring revenue share was 95%; subscription revenue remained the dominant contributor .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q4 2024 (from Q3 call)$229–$233 Actual $235.7 Beat vs guide
Non-GAAP Diluted EPSQ4 2024 (from Q3 call)$0.33–$0.35 Actual $0.41 Beat vs guide
Revenue ($M)Q1 2025$232–$234 (Feb 5) $233–$235 (Feb 7) Raised
Non-GAAP Op Income ($M)Q1 2025$42–$44 (Feb 5) $40–$42 (Feb 7) Lowered
Non-GAAP EPSQ1 2025$0.28–$0.30 (Feb 5) $0.26–$0.27 (Feb 7) Lowered
Revenue ($M)FY 2025$971–$981 (Feb 5) $975–$985 (Feb 7) Raised (slightly)
CCB ($B)FY 2025$1.040–$1.055 (Feb 5) $1.045–$1.060 (Feb 7) Raised (slightly)
Non-GAAP Op Income ($M)FY 2025$213–$223 (Feb 5) $205–$215 (Feb 7) Lowered
Non-GAAP EPSFY 2025$1.52–$1.60 (Feb 5) $1.41–$1.49 (Feb 7) Lowered
Unlevered FCF ($M)FY 2025$285–$295 (Feb 5) $265–$275 (Feb 7) Lowered
Shares Diluted (MM)FY 2025124.5 (Feb 5) 124.5 (Feb 7) Maintained

Context:

  • Feb 7 revisions reflect inclusion of Vulcan Cyber: modest top-line lift but higher opex and integration costs near-term .
  • Management also flagged incremental caution on U.S. Federal in early 2025 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Tenable One / Exposure ManagementMomentum in newer products (Tenable One) noted as offset to lower CCB; platform positioning emphasized .Exposure solutions >50% of new sales; ~35% of total sales; Tenable One ~30% of new sales; premium per asset and upsell motion detailed .Tenable One reached a record ~40% of new business; six-figure additions strong; larger deals/land-and-expand highlighted Accelerating mix/platform adoption
Cloud Security (CNAPP)Product momentum; Eureka (DSPM) acquisition; Deloitte alliance; AWS Abu Dhabi expansion .Fastest-growing product; ~100% YoY growth; added AI-SPM; competitive wins vs top cloud players .Cloud security sales more than doubled YoY; marquee wins incl. public sector; consolidation/value pitch resonating Strengthening growth vector
U.S. Federal/Public SectorNot specifically called out in Q2 release .Q3 seasonally strong as expected; stable execution .Incremental caution for early 2025 due to admin transition/CR; pipeline solid but timing risk Near-term headwind
AI and AnalyticsNo explicit AI feature in Q2 release .Launched AI Aware; AI-SPM added to cloud security; pricing via asset expansion .AI-driven exposure vision reinforced; Vulcan enhances data aggregation -> better AI insights Broader data + AI roadmap
M&A / Product ExpansionAcquired Eureka (DSPM) .No new M&A; platform broadening continues .Announced and then closed Vulcan Cyber; enhances third-party data ingestion (100+ products) and automated remediation Strategic capability add
Sales Efficiency/ChannelRepurchased $25M shares; no channel detail .S&M % revenue trending lower; margins expanding .S&M leverage sustained; 100% channel model emphasized; investing across MSSPs/SIs/VARs Continued leverage

Management Commentary

  • Steve Vintz (Co-CEO & CFO) on drivers: “We delivered exceptional results…primarily driven by continued demand for exposure management and cloud security…Tenable One reaching a record 40% of new business sales” .
  • On Vulcan rationale: “Vulcan will enhance our ability to aggregate…data for more than 100 third-party security products…[and] accelerate our ability to deliver automated remediation capabilities” .
  • Mark Thurmond (Co-CEO & COO) on customer traction: “We are winning marquee, large deals…A major financial services company…recognized the power of Tenable One…turned into a 7-figure expansion deal” .
  • Profitability/tone: “Operating margin was 25%,…significantly better than our expectations…We generated $86M in unlevered free cash flow” .
  • Federal comment: “Incrementally more cautious for U.S. Federal due to the transition of a new administration” .

Q&A Highlights

  • Competitive landscape in VM: high win rates and competitive displacements; VM expected to grow mid-single digits, foundational to exposure strategy .
  • Federal caution: distraction from admin transition and hiring freezes; budgets intact but timing uncertain; public sector ~15% of sales (incl. federal, state & local) .
  • Cloud consolidation: strong net new lands and expansions, including 7-figure cloud deals; consolidation and hybrid coverage are key value props .
  • Linearity/guidance: billings CCB seasonal flow expected; Vulcan contribution back-half weighted; operating margin to rise through 2025 as investments take hold .
  • Channel leverage: 100% channel company; 5,000+ partners; enablement for exposure management + Vulcan to accelerate in 2025 .
  • CEO search: Board evaluating internal/external candidates; no timeline; confidence in co-CEOs to execute .

Estimates Context

  • Wall Street (S&P Global) consensus for Q4 2024 and forward periods was unavailable at query time due to provider request limits; therefore, we cannot quantify beats/misses vs Street for revenue or EPS at this time.
  • Company-reported vs guidance: management stated Q4 revenue exceeded the midpoint of guidance by $4.7M and EPS by $0.07; Non-GAAP operating margin at 25% was 400bps above guide midpoint .
  • Where estimates become available, we expect upward revisions in cloud/Tenable One driven lines and potentially modest downward adjustments to FY25 EPS/UFCF to reflect Vulcan integration expenses (management lowered FY25 EPS and UFCF in the Feb 7 update) .

Key Takeaways for Investors

  • Exposure management platformization is working: Tenable One mix rose to ~40% of new business, accelerating larger-deal momentum and margin leverage; cloud security bookings more than doubled YoY .
  • Near-term watch: U.S. Federal timing risk could soften early-2025 growth cadence; management is modeling caution while reiterating healthy pipeline .
  • Vulcan adds strategic data ingestion and automated remediation that should strengthen Tenable One’s differentiation; however, FY25 EPS/UFCF were reduced near-term—expect integration headlines and cost phasing to be stock drivers .
  • Profitability compounding: sustained S&M efficiency and high-70s/low-80s gross margins support continued operating and free cash flow margin expansion over time, even as the company invests for growth .
  • Cash flow and visibility improving: record Q4 UFCF, rising RPO/CCB, and higher current deferred revenue provide revenue visibility; share repurchases continue to return capital .
  • Trading setup: Near-term sentiment may hinge on the magnitude/timing of Vulcan integration synergies vs the updated FY25 EPS/UFCF guide cut and Federal caution; continued outperformance in Tenable One/cloud could offset.

Additional Data (Reference)

  • Q4 2024 headline metrics: Revenue $235.7M (+11% YoY), CCB $302.2M (+11% YoY), Non-GAAP op income $59.4M, Non-GAAP EPS $0.41, UFCF $85.7M; GAAP diluted EPS $0.02 .
  • FY 2024: Revenue $900.0M (+13%), CCB $969.5M (+11%), Non-GAAP op income $184.1M, Non-GAAP EPS $1.29, UFCF $237.8M .
  • Q1 2025 guide (Feb 5): Revenue $232–$234M; Non-GAAP EPS $0.28–$0.30; updated Feb 7 to $233–$235M and $0.26–$0.27 including Vulcan .
  • FY 2025 guide (Feb 5): Revenue $971–$981M, UFCF $285–$295M; updated Feb 7 to $975–$985M and $265–$275M including Vulcan .