Tenable Holdings Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brian Essex - JPMorgan - Analyst : Hi, good afternoon. Thank you for taking the question. Congrats to both of you on the CEO appointment. It's great to see. 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 things from APRA perspective, a little bit more 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 the level of incremental conservatism that you're baking in the guide? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 8:30PM, TENB.OQ - Q1 2025 Tenable Holdings Inc Earnings Call

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

Question: Brian Essex - JPMorgan - Analyst : Excellent. Thank you so much.

Question: Saket Kalia - Barclays - Analyst : Okay, great. Hey, guys, thanks for taking my question here. Very helpful answer earlier there, Steve, on why maybe the CCB 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 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? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 8:30PM, TENB.OQ - Q1 2025 Tenable Holdings Inc Earnings Call

Question: Saket Kalia - Barclays - Analyst : Very helpful. Thanks, guys.

Question: Andrew Nowinski - Wells Fargo - Analyst : Great, thank you for taking the question and congrats on both of your appointments to a co-CEO. I want 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, how are you thinking about the impact of Google's acquisition of Wiz in the cloud space and the customers want to buy exposure management and cloud together? Does that make sense?

Question: Andrew Nowinski - Wells Fargo - Analyst : Superb. Thanks, guys.

Question: Matt Calitri - Needham - Analyst : Hey, guys, this is Matt Calitri on for Mike Cikos over at Needham. Thanks for taking our questions and I'd like to echo my congratulations to Steve and 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?

Question: Matt Calitri - Needham - Analyst : Understood. That makes sense. And 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. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 8:30PM, TENB.OQ - Q1 2025 Tenable Holdings Inc Earnings Call

Question: Matt Calitri - Needham - Analyst : Very helpful. Thanks so much.

Question: Ethan Weeks - Piper Sandler - Analyst : Great, thanks for taking my question. This is Ethan on for Rob this afternoon. There's been a lot of commotional industry recently around the potential end of funding for the CVE program. It seems that the funding's 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?

Question: Ethan Weeks - Piper Sandler - Analyst : Appreciate the color.

Question: Patrick Colville - Scotiabank - Analyst : Thank you so much for taking my question. I guess, can I just ask a cheeky two-parter. So Steve or 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.

Question: Patrick Colville - Scotiabank - Analyst : Terrific. Thank you so much and looking forward to this next chapter.

Question: Rudy Kessinger - D.A. Davidson - Analyst : Congrats, both of you, on the co-CEO roles. Hopefully I'm your last question on public sector, but 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 if you actually had any contracts that have been canceled or downsized? And if the answer is yes, what kind of 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 blue? Thank you.

Question: Patrick O'Neill - Wolfe Research - Analyst : Hi, 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 and maybe some anecdotes from -- early anecdotes from customers there and adoption? And then are we still thinking about $5 million contributions from Vulcan for this year? Thanks.

Question: Patrick O'Neill - Wolfe Research - Analyst : Perfect. Thank you.

Question: Oscar Saavedra - Morgan Stanley - Analyst : 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 -- it's great to see Tenable On 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 the footprint expansion was like more than double in Q4. Maybe an update on that? Thank you.

Question: Oscar Saavedra - Morgan Stanley - Analyst : Awesome, very clear. Thank you very much.

Question: Kingsley Crane - Canaccord Genuity - Analyst : Thank you and echo my congrats. Thinking about the shift to exposure management for many companies that includes OT, how should we think about that ongoing ramp and OT? Are you getting more excited about that opportunity versus maybe two or three years ago? And then I'm curious what you're hearing from customers. Thanks.

Question: Kingsley Crane - Canaccord Genuity - Analyst : Really helpful. Thank you.

Question: Adam Borg - Stifel - Analyst : Awesome and 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, but love to go a step deeper there. That'll be great. Thanks so much.

Question: Adam Borg - Stifel - Analyst : Super clear. Thanks again.

Question: Trevor Rambo - BTIG - Analyst : 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? And then, is cloud security is something that you see going forward that's going to continue to outperform within that segment?

Question: Zach Schneider - Baird - Analyst : Great, thanks. This is Zach Schneider on for Shrenik. Thanks for taking the question and wanted to echo our congrats to Steve and Mark. So I wanted to ask about pricing, 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.

Question: Zach Schneider - Baird - Analyst : Great. Thank you.