Tenable Holdings Inc at Morgan Stanley Technology, Media & Telecom Conference Transcript

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

Question: Hamza Fodderwala - Morgan Stanley - Analyst : <_ALACRA_META_ABSTRACT>Before we get into -- I'll start with you, Steve. Tenable has been going through a transition in the last few years to what's known traditionally as Vulnerability Management to a more comprehensive Exposure Management Solution. So maybe just if you could walk investors through -- or some of the investors that may be relatively newer to the story, what that transition entails and what that means for Tenable?

Question: Hamza Fodderwala - Morgan Stanley - Analyst : Got it. Got it. And you guys have definitely separated yourself as a category leader in that vulnerability management and exposure management space. I think I read a stat the other day, I think the number of CVEs, common vulnerabilities and exploits, is up something like over 40% in the last year. Yet when we think about demand for Vulnerability Management Solutions or Exposure Management Solutions in general, it's not entirely clear as public market investors if that demand is as strong as it is. So maybe just explain to us just the demand environment for VM and Exposure Management in general.

Question: Hamza Fodderwala - Morgan Stanley - Analyst : Got it. Will definitely be on the lookout for those. And maybe just remind me, I think you were alluding to Tenable One, the full platform. Roughly what percentage of the base has migrated to that?

Question: Hamza Fodderwala - Morgan Stanley - Analyst : Got it. It's a good segue into the next question on Vulcan Cyber. Mark, maybe I'll bring you in here. So a big acquisition. It seems like a game changer for Tenable. Just maybe explain why that is and what's your value props are.

Question: Hamza Fodderwala - Morgan Stanley - Analyst : Yes. And I mean, Steve alluded to earlier, you've got 40,000 customers. I think millions of user downloads because obviously Nessus and Tenable have a big installed base. So from a monetization standpoint, you're monetizing the third-party assets and you're integrating with other security companies. But vice versa, what's the upside of other companies integrating with Tenable?

Question: Hamza Fodderwala - Morgan Stanley - Analyst : And maybe just on the integration. I mean, it was a recently announced acquisition, not sure if it's closed yet even, but how has that been gone so far?

Question: Hamza Fodderwala - Morgan Stanley - Analyst : Okay. Maybe shifting to Cloud Security. You made some investments there in the last year as well. To me, selling vulnerability management and cloud security posture management, it seems like a natural adjacency, right? Both of them are -- you're trying to basically assess security posture in various different ways. So I'm curious, in the last couple of years, as you've really expanded your efforts in this market, what's been some of the cross-sell that you're seeing there?

Question: Hamza Fodderwala - Morgan Stanley - Analyst : Another sort of market that I'm hearing more about is AI security posture management, right? And I think, again, similar sort of use case that Tenable could solve for. Is that something that's also expanding the attack surface area and something that you're helping with as well?

Question: Hamza Fodderwala - Morgan Stanley - Analyst : Maybe shifting a little bit to following up on cloud security. Could you give us a sense of what the ARR for that is today roughly or percentage of sales around that? And then when you think about some of the emerging cloud security players, there's been consolidation in that market, but to what extent is Tenable separating itself as a top three, top five player in that space?

Question: Hamza Fodderwala - Morgan Stanley - Analyst : Mark, Tenable has always had really strong traction with the channel. You've got a very large channel partner ecosystem. When you think about selling the broader platform, is the channel enabled to do that? And is there a change in the incentive structure or the strategy around that at all? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 04, 2025 / 9:05PM, TENB.OQ - Tenable Holdings Inc at Morgan Stanley Technology, Media & Telecom Conference

Question: Hamza Fodderwala - Morgan Stanley - Analyst : Maybe just one question. I'd love to open up to the audience as well for any Q&A. Public Sector. DOGE. I know, Steve, you've gotten a few questions about this. I believe public sector overall, state, local, or worldwide, is about 15% of Tenable's business. Just curious, you're close to DC and do sell a lot to the Federal government, just what you're seeing there in light of some of the recent news coming out of that vertical.

Question: Hamza Fodderwala - Morgan Stanley - Analyst : Any questions from the audience? You got one here. Unidentified Participant Well, first of all, my condolences again for passing of Amit, (inaudible). I guess two quick questions. One is, how is the search process going forward, the CEO role? And then two is, you mentioned that 20% of the Exposure Management business is growing very healthily, like 30%. Cloud is doubling, which is great. Just wondering what kind of growth rate profile do you imagine the 80% of the more core VM business going for the next three to five years? And then take it, like three- to five-year point of view, where do you see the business mix will look like? Like is it going to be half and half, VM versus EM? Or it's more like going to be even more Exposure Management versus VM?

Question: Hamza Fodderwala - Morgan Stanley - Analyst : We got one more here. Unidentified Participant The comment on the Federal side and the DOGE impact is very helpful. But what are you guys kind of seeing on the sled side? Is there's some kind of comments around like the industry about kind of what's happening on the federal side, having like a downstream impact to higher education and state and local that kind of relies on government grants, and given the uncertainty there, you're just kind of seeing more pull back? So kind of curious whether you are seeing on the ground any change or feedback from the sled side.

Question: Hamza Fodderwala - Morgan Stanley - Analyst : Maybe just one final question. Steve, just some of the profitability improvements in the last couple of years have been pretty significant, 30% free cash flow margins roughly. And as you think about Tenable going forward, how do you balance those very high margins but still growing double digits? How are you thinking about that?

Question: Hamza Fodderwala - Morgan Stanley - Analyst : Longer term. With that, for what it's worth, in our opinion, I think you've managed the business exceptionally well, both you and Mark, under pretty tough circumstances. Thank you for making it out to our TMT conference. It's always a privilege and honor to have you both, and thank you for the investors for joining us.