Tenable Q2 2025 Earnings Report

Tenable EPS Results

• Actual EPS: $0.34
• Consensus EPS: $0.30
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: $0.31

Tenable Revenue Results

• Actual Revenue: $247.30 million
• Expected Revenue: $242.15 million
• Beat/Miss: Beat by +$5.15 million
• YoY Revenue Growth: +11.80%

Tenable Announcement Details

• Quarter: Q2 2025
• Date: 7/30/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, July 30, 2025
• Conference Call Time: 4:30PM ET

Tenable (NASDAQ:TENB) provides cyber exposure solutions for in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan. Its platforms include Tenable Vulnerability Management, a cloud-delivered software as a service that provides organizations with a risk-based view of traditional and modern attack surfaces; Tenable Cloud Security, a cloud-native cloud security solutions for security teams to continuously assess the security posture; Tenable Identity Exposure, a solution to secure Active Directory environments; Tenable Web App Scanning, which provides scanning for modern web applications; Tenable Lumin Exposure View, a measurement tool; Tenable Attack Surface Management, an external attack surface management solution; Tenable Security Center, an on-premises solution that provides a risk-based view of an organization's IT, security and compliance posture; and Tenable OT Security, an operational technology security solution which provides threat detection, asset tracking, vulnerability management, and configuration control capabilities. The company also offers Nessus, a vulnerability assessment solution for cybersecurity industry and enterprise platform; and Nessus Expert, that enables users to programmatically detect cloud infrastructure misconfigurations and vulnerabilities in the design and build phase. Tenable Holdings, Inc. was founded in 2002 and is headquartered in Columbia, Maryland.

Tenable Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Tenable beat all guided metrics in Q2 with 12% year-over-year revenue growth and a 19% non-GAAP operating margin.
• Positive Sentiment: The company raised its full-year 2025 guidance, increasing the midpoint by $8 million and the high end by $3 million.
• Positive Sentiment: Tenable One drove momentum, accounting for 40% of total new sales and contributing to a growing number of six- and seven-figure deals.
• Positive Sentiment: Management announced a new $250 million share repurchase authorization, reflecting confidence in free cash flow and capital return.
• Negative Sentiment: The net dollar expansion rate eased to 107%, pressured by spending scrutiny and longer sales cycles in the U.S. federal renewal base.

Presentation

[Operator]

Greetings, and welcome to the Tenable Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Erin Knee, Vice President, Investor Relations. Thank you. You may begin.

[Erin Karney, VP - IR at Tenable]

Thank you, operator, and thank you all for joining us on today's conference call to discuss Tenable's second quarter twenty twenty five financial results. With me on the call today are Co Chief Executive Officers Steve Vince and Mark Thurmond. Prior to this call, we issued a press release announcing our financial results for the quarter. You can find the press release on our IR website at tenable.com. We will make forward looking statements during the course of this call, including statements relating to our guidance and expectations for the third quarter and full year 2025, growth and drivers in our business changes in the threat landscape in the security industry and our competitive position in the market growth and customer demand for and adoption of our solutions, including Tenable.

[Erin Karney, VP - IR at Tenable]

One, cloud security and exposure management our ability to expand integrations with third party tools and data sources planned innovation and new products and services, including new capabilities from our acquisition of Apex and our expectations regarding long term profitability and free cash flow. These forward looking statements involve risks and uncertainties, some of which are beyond our control, which could cause actual results to differ materially from those anticipated by these statements. You should not rely upon forward looking statements as a prediction of future events. Forward looking statements represent our beliefs and assumptions only as of today and should not be considered representative of our views as of any subsequent date, and we disclaim any obligation to update any forward looking statements or outlook. For a further discussion of the material risks and other important factors that could affect our actual results, please refer to those contained in our most recent annual report on Form 10 ks and subsequent reports that we file with the SEC.

[Erin Karney, VP - IR at Tenable]

In addition, all of the financial results we will discuss today are non GAAP financial measures, with the exception of revenue. These non GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non GAAP financial measures versus their closest GAAP equivalents. Our press release includes GAAP to non GAAP reconciliations for these measures. I'll now turn the call over to Steve.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

Thank you, Erin. We're excited to share our strong results for the quarter, discuss momentum and recent enhancements to our exposure management platform, including recent investments in AI, and highlight some key customer wins for the quarter. In Q2, we beat all of our guided metrics, delivering 12% revenue year over year growth and 19% operating margin. We attribute our performance in the quarter to the growing adoption of our exposure management platform Tenable One, which was 40% of total new sales this quarter. Exposure management is about providing the unified risk based and business contextualized view of an organization's cyber risk, enabling them to continuously prioritize and remediate the most critical exposures before they can be exploited.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

And And the benefit of exposure management to our customers is clear, unified visibility, smarter data driven decisions and faster, more effective risk reduction. For Tenable, this important secular shift in the market to preemptive security is resulting in broader asset coverage and larger deal sizes, including a growing number of 6 and 7 figure deals. Mark will delve into our customer wins in the quarter, as we are seeing more customers consolidate on Tenable One. And now with the acquisition of Apex Security, which closed during the quarter, we are expanding our AI aware and AI SPM capabilities in the platform to secure the rapidly expanding AI attack surface. Drilling a little further into the specific areas of traction in the quarter, cloud and VM continue to be critical priorities for our customers within Tenable.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

One. We also saw strong adoption with OT. As you recall, in April, we highlighted public sector as an area where we were expecting to experience some pressure. The quarter played out slightly better than expected in PubSEC, driven largely by strong platform sales in our SLED business, which was aided by their June fiscal year end. Specifically with regard to U.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

S. Federal, we feel incrementally more positive as we head into the second half of the year, particularly in our renewal base, where visibility is improving despite a spending environment with heightened levels of review and scrutiny. The momentum we're experiencing with our platform is a reflection of the importance our customers are placing on preemptive security, which is the practice of reducing risk before a breach occurs, rather than solely detecting and responding after an attacker has already gained access. We're building on that momentum by continuing to advance our product roadmap and extend our leadership in this category. Exposure management as a discipline is built on three foundational pillars, unifying visibility to discover and monitor every asset, unifying insight to contextualize and prioritize risk, and unifying action to mobilize remediation and measure impact.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

These pillars are essential to reducing cyber risk at scale, and Tenable is leading the way across all three. First, unifying visibility. Effective risk reduction starts with comprehensive visibility. That's why broad continuous discovery is foundational to exposure management. Tenable continues to make strong progress here, particularly in expanding third party integrations across the security stack.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

We recently surpassed 300 validated integrations spanning cloud, application security, identity and more, making Tenable one the most open and interconnected exposure management platform in the market. These connections not only expand visibility, but also lay the groundwork for deeper insight and smarter action. AI is also enhancing visibility by helping customers discover and classify assets that might otherwise remain hidden from misconfigured cloud workloads to unmanaged devices and ephemeral containers. By analyzing network traffic, configuration drift and usage patterns, our AI reduces blind spots and ensures customers a more accurate and comprehensive view of their attack surface. Second, unifying insight.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

Once assets and exposures are discovered, the next challenge is understanding what matters and what needs to be prioritized. That's where context comes in, and it's where Tenable sets itself apart. Our integrated dataset enriched with over two decades of exposure telemetry and real time threat intelligence powers a suite of AI capabilities purpose built for exposure management. Tenable's AI doesn't just detect known risk, it's evolving to proactively identify emerging threat, map likely attack path and surface exposures that are most likely to be exploited in our customer specific environments. It's being designed to use predictive modeling to assess the blast radius of vulnerabilities, analyze attacker behavior to anticipate their next move and continuously update prioritization and conditions as they change.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

This isn't just a smarter way to triage alerts, it's a more strategic way to understand interconnected risk across hybrid environments and focus on what truly matters. And finally, unifying action. Insight is only valuable if it drives results. That's why we're transforming Tenable One from a system of record into a system of action. Our AI now delivers intelligent, environment specific remediation guidance designed to help security teams reduce mean time to remediate and focus on what matters most.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

The majority of breach victims are compromised by known vulnerabilities that went unaddressed, not because the risks weren't identified, but because they weren't acted upon. It's a clear example of the last model problem, which is getting the right exposure data into the right teams with the right context to drive resolution. And remediation isn't just patching, it's adjusting configurations, disabling risky accounts, tightening access controls and more. Exposure management demands a broader, more adaptive response than traditional vulnerability management. That's why we're embedding automation analytics and decision support directly into customer workflows, closing the gap between insight and action.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

The result here is faster remediation, broadening adoption, and we believe a stronger position for Tenable as a leader in exposure management. And remember, in this new AI powered world, we're seeing more frequent pervasive attacks leveraging AI resulting in shorter mean time from known vulnerabilities to exploitation, which demands faster remediation. In short, while understanding, contextualizing and prioritizing risk is critical, preemptive security increasingly means leveraging that visibility and insight to empower customers to act in real time and seamlessly integrate remediation into their process. I'd now like to turn the call over to Mark.

[Mark Thurmond, Co-CEO & Director at Tenable]

Thanks, Steve. Our customers consistently face the same challenges, complex hybrid systems to secure, interconnected systems with siloed views, and new technologies evolving faster than they can be secured. Our mandate is to help our customers identify and address the risk these problems introduce, and that's precisely what we're doing. Our deep roots in VM are the foundation of our EM leadership enabling Tenable One to provide a profound understanding of hybrid environments. And our expansion into other areas of the attack surface uniquely position us to break down silos.

[Mark Thurmond, Co-CEO & Director at Tenable]

This is why we're seeing constant traction with Tenable. One. This quarter, that partnership was on full display with major Tenable. One expansions across industries. We secured strong wins against major players in VM, EM and the cloud, directly resulting from not just extending our leadership, but also shaping what exposure management looks like.

[Mark Thurmond, Co-CEO & Director at Tenable]

During the quarter, we had a number of notable wins spanning products, theaters and industries. I'd like to take a moment to highlight a few that are a good reflection of what we're seeing broadly across the business and what we've highlighted in our prepared remarks today. We kicked off the quarter with a major win at the state level. One of two significant public sector victories this quarter. What started as a straightforward VM expansion quickly evolved into a full Tenable One adoption.

[Mark Thurmond, Co-CEO & Director at Tenable]

The customer expanded beyond VM to include cloud, identity, and web app security, consolidating multiple capabilities into a single unified platform. It's a great example of a growing trend. Organizations are turning to Tenable One to streamline and strengthen their preemptive security strategies. That momentum carried into the private sector as well. A standout example is a major entertainment company that turned to Tenable One to secure its OT environment and gain a more complete view of risk.

[Mark Thurmond, Co-CEO & Director at Tenable]

What began as a search for better OT coverage quickly led to consolidation on Tenable One with a focus on both VM and OT. This is where we shine. Tenable's ability to expand IT and OT environments with unified visibility gives us a competitive edge. Not every customer is looking to rip and replace, and that's where our flexibility truly stands out. A European global luxury brand with a mature security program wanted deeper risk insights and stronger preemptive security without disrupting their existing stack.

[Mark Thurmond, Co-CEO & Director at Tenable]

They chose Tenable to expand their third party asset and risk management program, tapping into the power of Tenable while maintaining the tools they already rely on. It's a great example of how we meet customers where they are, delivering value without forcing a full consolidation. What is increasingly clear from all these customer examples is that as cyber threats become more frequent and sophisticated, customers are shifting their focus toward preemptive strategies. And industry analysts and others are following suit, placing greater emphasis on exposure management and the platforms that enable it. This growing momentum was reinforced by two key pieces of industry research that were recently released.

[Mark Thurmond, Co-CEO & Director at Tenable]

Last week, Forrester named Tenable a leader in unified vulnerability management, awarding us the highest score for the strength of our strategy. In fact, Tenable received the highest possible scores in seven different categories, more than any other vendor, including vision and roadmap. In addition, Tenable was recognized as a major player in IDC's inaugural CNAP MarketScape. We were chosen from a very substantial list of vendors for our ability to enable customers to reduce their risk by reducing noise and prioritizing remediation through clear actionable insights. We see this recognition as validation of our strategy and further evidence that exposure management is becoming central to modern cybersecurity.

[Mark Thurmond, Co-CEO & Director at Tenable]

Finally, Gartner now predicts that by 2028, investments in technologies that reduce threat exposure will grow twice as fast as those focused on detection and response. The takeaway is customers recognize the value of a unified exposure management platform, and Tenable is leading the shift to exposure management. As organizations modernize with cloud, AI, and hybrid ITOT environments, they're turning to us to unify and simplify their security strategy. Our platform is the foundation for how forward looking teams manage risk. Looking forward, as Steve highlighted, we are investing in areas that are tackling our customers' largest pain points.

[Mark Thurmond, Co-CEO & Director at Tenable]

Knowing how to secure AI is one of the greatest frustrations facing customers today. With our acquisition of Apex, we plan to offer a holistic approach to understanding their AI risk. By providing visibility into AI usage, detecting AI related vulnerabilities, securing AI resources and data configurations, and integrating AI security into our broader exposure management platform, we believe we will be able to make AI security a key part of our customers' preemptive security program. With that, I'll turn the call back over to Steve to dive deeper into our results for the quarter. Thank you.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

Thanks, Mark. As a reminder, our results include the impact of the Apex Security acquisition, which closed on June 6. Calculated current billings defined as revenue recognized in the quarter plus the change in current deferred revenue grew 8% year over year to $238,600,000 Our growing momentum with Tenable One is inflecting deal sizes higher as we added 76 net new 6 figure customers during the quarter on an LTM basis. We also added three sixty seven new enterprise platform customers, and our net dollar expansion rate was 107% this quarter. We continue to have strong gross dollar renewal rates.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

We're also pleased to continue to see our backlog accelerate significantly during the quarter. Current RPO grew 12% year over year, 400 basis points ahead of CCB growth, while total RPO growth was 19%, reflecting over 40% year over year growth in long term RPO. RPO reflects the increasing momentum with our Tenable One platform, as more customers are making multi year commitments to more fully deploy exposure management solutions, given the strategic importance to understand and reduce risk holistically across the enterprise. Now on to the P and L for the quarter. Revenue was $247,300,000 which represents 12% year over year growth.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

Revenue in the quarter exceeded the midpoint of our guided range by 5,300,000.0 This level of outperformance was driven in part by a more favorable mix of business with upfront revenue recognition that we're not anticipating in the second half of the year. Our percentage of recurring revenue remains high at 96%. Gross margin was 82% this quarter, flat relative to last quarter. Looking at the second half of the year, we expect gross margins to be flat to modestly lower due to the launch of third party data, remediation automation workflows and new AI security capabilities. Sales and marketing expense was $89,000,000 up from $85,500,000 last quarter, and as a percentage of revenue was 36%, flat relative to last quarter.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

Sales and marketing expense was higher sequentially, primarily due to industry events and incremental investments in sales capacity, partially offset by cost in Q1 related to our annual sales kickoff conference. Looking ahead, we expect sales and marketing as a percent of revenue to trend somewhat lower, reflecting higher levels of sales productivity and greater efficiency in our go to market organization. R and D expense was $43,400,000 which is up from $39,000,000 last quarter. As a result, R and D expense as a percentage of revenue was 18% this quarter, up from 16% last quarter. This increase on both a dollar basis and as a percentage of revenue was primarily related to the continued investment in R and D, including additional personnel costs related to our acquisitions of Vulcan and Apex.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

G and A expense was $22,700,000 which was flat relative to last quarter on an absolute dollar basis and as a percentage of revenue. Income from continuing operations was $47,700,000 and exceeded the midpoint of our guided range by nearly 4,000,000 Operating margin for the quarter was 19%, which is approximately 100 basis points better than the midpoint of our guided range. We are very pleased with our ability to drive continued leverage in the business, while investing for growth and absorbing the additional OpEx related to our acquisitions completed in the first half of the year. EPS for the quarter was $0.34 which was $04 better than the midpoint of our guided range. Now let's turn to the balance sheet. We finished the quarter with $387,000,000 in cash and short term investments. Accounts receivable was $181,000,000 and total deferred revenue was $798,000,000 Current deferred revenue was $625,000,000 which gives us a lot of visibility into expected revenue over the next twelve months. We generated $44,000,000 of unlevered free cash flow during the quarter bringing year to date January of unlevered free cash flow, putting our annual guide well within reach.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

During the quarter, we utilized $48,000,000 of net cash for the Apex acquisition, as well as $65,000,000 repurchased 2,000,000 shares. In total, we've now repurchased 6,300,000.0 shares for approximately $240,000,000 since November '3 and have 60,000,000 of the previous repurchase authorization remaining. With our strong operating leverage and increasing free cash flow generation, we're very pleased to announce today an additional $250,000,000 increase to our share repurchase program, which demonstrates our continued commitment to effectively deploy and return capital to shareholders. We have confidence in our ability to drive continued leverage in the business while investing for growth and delivering compelling unlevered free cash flow margins over time. With the results of the quarter behind us, I'd like to discuss our outlook for Q3 and the full year 2025.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

For the third quarter, we currently expect revenue to be in the range of $246,000,000 to $248,000,000 non GAAP income from operations to be in the range of 52,000,000 to 54,000,000 Non GAAP net income to be in the range of 44,000,000 to 46,000,000, assuming interest expense of 7,200,000.0, interest income of 3,300,000.0 and a provision for income taxes of 3,400,000.0 and non GAAP diluted earnings per share to be in the range of $0.36 to $0.37 assuming 123,000,000 fully diluted weighted average shares outstanding. For the full year, we currently expect calculated current billings to be in the range of 1,038,000,000.000 to $1,048,000,000 revenue to be in the range of $981,000,000 to $987,000,000 non GAAP income from operations to be in the range of $2.00 5,000,000 to $215,000,000 non GAAP net income to be in the range of 179,000,000 to $189,000,000 assuming interest expense of $28,500,000 interest income of $15,600,000 and a provision for income taxes of 12,800,000.0 Non GAAP diluted earnings per share to be in the range of $1.45 to $1.53 assuming 123,500,000.0 fully diluted weighted average shares outstanding and unlevered free cash flow to be in the range of $265,000,000 to $275,000,000 As discussed since our last earnings call in April, we continue to gain traction with our Tenable One platform and visibility into the spending environment and public sector has improved, specifically with respect to renewals.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

As a result, we raised the midpoint of our guided range by $8,000,000 and the high end by $3,000,000 This improved outlook will modestly benefit Q3 and Q4 to a greater degree. Turning to operating income. The outlook today reflects our strong outperformance in the second quarter, as well as the improved outlook for the rest of the year, offset by the incremental OpEx related to the Apex acquisition. Therefore, are pleased to reiterate our expectations for the full year. Similarly, we reiterated our unlevered free cash flow guidance of $265,000,000 to $275,000,000 while absorbing approximately $6,500,000 of expected impact from Apex.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

The takeaway here is we are pleased with the results of the quarter, balancing growth with profitability, while expanding our market opportunities. Moreover, we're excited for the second half of the year. That said, Mark and I would like to thank everyone for joining us today on the call. We're very excited about the opportunity ahead and look forward to updating you throughout the year. We also hope to see you at the Stifel and Piper Sandler conferences in the coming weeks. We'd now like to open the call for questions.

[Operator]

Thank you. We will now be conducting a question and answer session. We ask that analysts limit themselves to one question so that others can have the opportunity to do so as well. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

[Operator]

Our first question comes from Rob Owens with Piper Sandler. Please proceed with your question.

[Rob Owens, MD & Senior Research Analyst at Piper Sandler Companies]

Great. Thank you so much for taking my question. Would love for you to compare and contrast a little bit this quarter with, I guess, where you were ninety days ago. I mean, clearly, we're a little closer to the Fed fiscal year end. And Steve, you talked about U.

[Rob Owens, MD & Senior Research Analyst at Piper Sandler Companies]

S. Fed, how you're getting incrementally more positive. It does feel like we're getting cross currents from other vendors out there talking about potential truncation of of deals, things going maybe even less than one year. So, love to better understand how, you know, your visibility is is better here and your confidence is better. On the commercial front, maybe just help us understand, it seems like you're seeing a nice upsell relative to Tenable One in consolidation.

[Rob Owens, MD & Senior Research Analyst at Piper Sandler Companies]

Just what's driving some of those underlying trends and strength there? Thank you very much.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

Hey, Rob, this is Steve. I'll talk about what's different now versus ninety days ago. And first, we're delighted to deliver upside in the quarter. We beat our expectations for CCB and consequently, we're raising the guide, dollars 8,000,000 at the midpoint and $3,000,000 at the high end of the range. And as we commented earlier, visibility we believe, particularly with our federal business where we provided some cautionary comments on our last call, seems to be improving there and most notably in our renewal base. We have a major leadership position in U. S. Federal, specifically with regard to VM, and we have a sizable customer base there as we head into the second half of the year.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

We have strong pipeline, lots of opportunities. We do recognize that some of those opportunities will take longer to transact, perhaps more so on the civilian side, but just more broadly across U. S. Federal. And we have greater visibility into our renewal base, and that's what's reflected into the outlook today.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

So in short, we have a lot of confidence in our ability to continue to drive momentum in the business and we're getting a lot of traction It's now 40% of our total sales, 3040% of our total new sales and 30% or more of our total sales. And we're seeing some of the highest selling prices, some of our highest close rates and some of our highest renewal rates

[Operator]

Our next question comes from Brian Essex with JPMorgan. Please proceed with your question.

[Brian Essex, Executive Director at JP Morgan]

Hi, good afternoon and thank you for taking the question. Maybe to pivot on that last point, Steve, on 101 penetration. Great to see the call out in the press release and the strength that you're seeing across the platform. But I guess what's embedded in your expectations maybe for the remainder of the year? How meaningful can Tenable One and non VM exposure solutions penetration be within the installed base?

[Brian Essex, Executive Director at JP Morgan]

Maybe what might it take to get a little bit better acceleration there? Thank you.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

Sure. We often talk about our business in the context of this growth algo, which is exposure solutions and the underlying growth and mix of business there relative to VM, vulnerability management. And exposure solutions represent over 20% of our total sales. So the mix continues to inflect higher there, and we're getting great traction seeing outsized growth. And we're seeing good durable growth in vulnerability management.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

So the big opportunity for us is really with the platform. We're seeing a ton of market pull. It's clear that customers want to be able to unify visibility, unify insights and unify actions. And that's a real challenge for a lot of our customers today. And we're one of the only providers in the market that has the ability to consolidate both world class first party assessment data as well as rich data from other security providers into a single correlated view of risk across cloud and OT the network and SaaS.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

So this is really important for us to deliver to our customers. And that's why we're seeing success there really with the platform. And we're focusing a lot of our go to market efforts around the platform. We're focusing a lot of our engineering efforts around the platform and certainly leveraging AI to be able to deliver incremental capability to customers.

[Brian Essex, Executive Director at JP Morgan]

Got it. Is there a level of penetration that you're targeting that could get you to like what would it take to get you to double digit growth rates like from a billings perspective?

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

It wouldn't take a lot to inflect it higher, just looking at that net mix of business. And so what we said was Tenable one is roughly 40% of our total new sales and 30% of total sales. And it just takes modest movement there, to be honest with you. And we'll also we're going to see good stability in the federal market, right? The federal market is a little bit of a headwind right now.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

And despite that, we're delivering better than expected results. It will be a major tailwind of growth for us in the future. We're certainly clear about that. We have a leadership position there. But right now, there's just a little less visibility.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

And as a result, we're taking a bit of a cautious approach. But deals will take a little longer to transact there and close. But it doesn't take a lot certainly to accelerate growth higher. We're confident we can deliver on that. Mark and I are focused on that, and we're investing to do just that.

[Brian Essex, Executive Director at JP Morgan]

Super helpful. Thank you so much.

[Operator]

Our next question comes from Saket Kalia with Barclays. Please proceed with your question.

[Saket Kalia, Managing Director at Barclays Capital]

Okay, great. Hey guys, thanks for taking my questions here and nice quarter.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

Thank you.

[Saket Kalia, Managing Director at Barclays Capital]

Mark, maybe for you just to tie together some of the details that's been talked about. You had some nice examples of customer wins in your prepared remarks. Maybe the question is, could you talk about the competitive landscape a little bit in the exposure space? And maybe touch on how Tenable. One is helping you differentiate versus a traditional VM player or versus other point players in other spaces. Does that make sense?

[Mark Thurmond, Co-CEO & Director at Tenable]

Totally makes sense. No, I love the question. Because it is truly the biggest differentiator we have. As Steve highlighted, we have pivoted this company to be laser focused in driving Tenable One.

[Mark Thurmond, Co-CEO & Director at Tenable]

And that's why you're seeing some of these results and that's why you're kind of seeing us execute on this platform play around Tenable One. And really, when you look at some of those customer examples, and all of those customer examples were competitive deals, meaning we were going against either some of our traditional competitors head to head or nontraditional players. And we were able to beat them. A couple of those deals were 7 figure deals. And what we're able to do is when we go into Tenable One, there's a few points that absolutely differentiate us.

[Mark Thurmond, Co-CEO & Director at Tenable]

First and foremost, very basic, but we are hybrid. So a lot of these environments are still on prem and in the cloud, and we can go in and address all of these complex companies and organizations and governments that are hybrid. So that is a huge differentiator. The second part is when we go in there and we're able to have this compelling discussion around improved and unified visibility, actions, it allows customers to consolidate. So if you looked at some of those examples, and when we look at our largest deals, there are multiple asset types as part of the Tenable One transaction.

[Mark Thurmond, Co-CEO & Director at Tenable]

So you're not just talking about base core VM, you're talking about cloud security, web application scanning, OT, identity, attack surface management. And right now, we are the one player that can actually go out there in a unified platform, bring it all together, be able to have it beautifully laid out elegantly in regard to our dashboard and our capability to allow our users to make really fast, quick decisions and take action and get insights. And when we're able to do that, our win rate this quarter were some of the highest win rates we've seen as a company. And so we feel like we are just going to continue to gain this traction account by account, install base by install base, and show our differentiation. The one last thing, I know this is long winded, but it is super important that I think people realize, this isn't just tenable saying how we've differentiated.

[Mark Thurmond, Co-CEO & Director at Tenable]

We now have an enormous amount of analysts that are listing us, especially over the last few weeks with Forrester and IDC and others, listing us as the leader in these categories, in exposure management, in unified vulnerability management, major player in CNAP. So you're now having analysts really recognize some of the hard work we've been doing is now paying off. So short summary there, but that's really why we're differentiating and why we're doing extremely well against our competitors.

[Saket Kalia, Managing Director at Barclays Capital]

Super helpful. Thanks, guys.

[Operator]

Our next question comes from Andy Nowinski with Wells Fargo. Please proceed with your question.

[Andrew Nowinski, Senior Research Analyst at Wells Fargo]

Good afternoon. Thank you for taking the So nice job on quarter. You noted you're seeing these larger deal sizes of six and seven figure deals. I'm really wondering are those coming from more from like new logos versus renewals because it looks like your net retention rate went down a little bit sequentially. And so I'm assuming that's coming from stronger new logo growth, but would love to hear your thoughts on that and kind of where you see net retention bottoming out here? Thank you.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

Sure. Well, our gross dollar, let's just unpack this a little bit. Our gross dollar renewal rate continues to be very healthy and it demonstrates strength in our customer base. But as you pointed out, our expansion rate did moderate to 107% this quarter. Now a notable contributing factor here is the constrained spending environment in U.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

S. Federal. And as I mentioned earlier, we have a strong leadership position there. We have a sizable customer base and it's just taking longer to convert on some of those expansion opportunities in Fed just due to greater scrutiny and more levels of review and approval. But we believe that indeed will inflect higher certainly over future periods, a big opportunity.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

But looking more broadly at our business, there's a lot of metrics that we provide for investors to understand the overall health momentum. Of note here, as you commented, was really the strength in new business from new logos. We added over three fifty new enterprise customers in the quarter. So demand from new customers remains healthy, especially with large deals due to the growing adoption of Tenable. One.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

And the other thing I'll say is that customers, speaking of Tenable. One are making longer term commitments here. Our CCB growth in the quarter was 8%. But if you look at the growth overall in RPO, current RPO growth was double digit. Long term RPO growth was about 40%.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

So what you're seeing is customers, 70% of all of our multiyear deals with these annual commitments are coming from the platform. So customers are not only spending more, we not only have the highest conversion rates with the platform and the highest renewal rates, but we are developing deeper and longer relationships with our customers because of the platform. So strength of the platform obviously is translating to incremental opportunities, not only within our customer base despite some of the uncertainty or lack of visibility around the Fed, but also is translating to lots of new logos as well and longer term commitments.

[Andrew Nowinski, Senior Research Analyst at Wells Fargo]

Perfect. Thanks, Steve.

[Operator]

Our next question comes from Patrick Colville with Scotiabank. Please proceed with your question.

[Joe Vandrick, Associate Director - Equity Research at Scotiabank]

Hi. This is Joe Vandrich on for Patrick Colville. Can you talk to us about your strategy to help secure the use of generative AI in the enterprise? With Apex and AI aware, it seems like it's something that you're thinking pretty deeply about. So maybe go over that and why Tenable has the right to win here.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

Well, let's talk a little bit about APEX in the context of our broader AI strategy. And we're transforming our customer security programs and by making Tenable One more intelligent through the use of AI. It's an arms race out there. There's lots of hackers that are leveraging AI for more advanced and persistent attacks with greater frequency. So we have to be able to leverage AI to strengthen our customers' defenses.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

And in terms of APEX, it really accelerates our investment in AI by adopting a government or by adding a government and enforcement layer. Prior to the acquisition, what we have brought to market Tenable organically was really twofold. Number one, AI aware, which is all about Prior discovery and awareness. It tells you what AI we have, what customers have, and where it is, and the known vulnerabilities. And then we also have AI SPM, which focuses on cloud posture and configurations, determines how your AI resources are set up in the cloud and if it's secure.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

APAX really extends our own capabilities with AI by going deeper into the applications, by monitoring prompts and interactions for misuse, and provide a clear governance and enforcement use case to our customers so they can use AI more safely. And then more broadly, AI for us is really a force multiplier for the insights we can deliver to our customers across our best data fabric, which has taken over twenty years of exposure data. And we continue to leverage AgenTic to drive higher levels of remediation and really orchestration for our customers to reduce risk.

[Mark Thurmond, Co-CEO & Director at Tenable]

Yes. And the only I'll piggyback on that is just in regard to kind of seeing the customer demand. I mean, was pretty amazing after we acquired Apex, the type of interest that we saw from our installed base and from our customers. And we talked a little bit earlier in the call, the competitive dynamic. I mean, we are absolutely differentiating ourselves even to the next level in regard to our AI strategy.

[Mark Thurmond, Co-CEO & Director at Tenable]

So a lot of our installed base was very used to using AIAware and AISPM. But we've got now significant enterprise customers wanting to use Apex. And now that we're going to be embedding it into the Tenable One platform, this call this literally solves a real world problem that customers are kind of scratching their head on how to solve. And we're now bringing it to them within the platform. And so we talk about differentiation.

[Mark Thurmond, Co-CEO & Director at Tenable]

This is absolutely something that is gaining a ton of traction. And just keep in mind, the deal just closed in Q2, right? And so we're already seeing pretty significant pipe build in demand. So very, very optimistic. It was one of the customers kind of cheering us on in regard to doing this acquisition because it's something that solves a real problem for them.

[Mark Thurmond, Co-CEO & Director at Tenable]

From a go to market and channel perspective, people are pretty excited.

[Joe Vandrick, Associate Director - Equity Research at Scotiabank]

Makes sense. Thanks, Steve and Mark.

[Operator]

Our next question comes from Roger Boyd with UBS. Please proceed with your question.

[Roger Boyd, Executive Director at UBS Group]

Great. Thanks for taking the question. Maybe to expand on that, I think last quarter you provided some metrics around adoption of aiWARE and it's nice to see that pop post the Apex acquisition. But in addition to that, secondly, can you just remind us what you've said about monetization of aiWARE? I'm guessing that as you embed Apex into Tenable One that story changes a little bit, but we'd love to get your perspective there. Thanks.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

Yes, think what we said publicly is that we have over 6,000 customers that are using AI aware to detect shadow AI application, browser plug ins, internally developed AI applications. And in terms of modernization, how we look at the capabilities that we acquired from APAC, it will not be sold separately. It will be sold as part of the platform. AI, how we look at it is an asset type. And we offer it in Tenable One to help our customers secure the AI attack surface.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

So it's similar to an asset type like VM or cloud or OT. But as Mark mentioned, we're getting some good early traction there. But obviously, see it as an important attack factor we need to help our customers secure and requires a platform approach.

[Roger Boyd, Executive Director at UBS Group]

That's helpful. Thanks, Steve.

[Operator]

Our next question comes from Rudy Kessinger with D. A. Davidson. Please proceed with your question.

[Andres Miranda Lopez, Equity Research Associate at D.A. Davidson]

Hey, guys. This is Andres for Rudy. Thank you for taking my question and great quarter. Maybe I hear you about the level of outperformance in Q2 was driven by a more favorable mix and upfront revenue recognition. But could you maybe unpack what products and verticals did outperform your expectations in Q2?

[Andres Miranda Lopez, Equity Research Associate at D.A. Davidson]

And maybe if you could give us some data points around the core VM market and what are you seeing there, that will be very helpful as well. Thank you.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

Okay. So just to be clear here, the upfront revenue recognition has nothing to do with CCB. We exceeded expectations for CCB in the second quarter. And that was really driven by strength of the platform. As I mentioned earlier, it's 40% of our new sales and 30% of total sales and OT was also strong here.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

The takeaway here, it's some of our highest selling prices, we're getting great traction. It's a large and growing market opportunity, exposure management and industry analysts and others are taking note. And it will be a catalyst of growth here, the continued traction we have with the platform. And in terms of revenue, there was the mix of business within revenue can vary from quarter to quarter and opportunities among products can also vary. And so this quarter, we the mix was slightly higher than expected with regard to products that have some upfront revenue recognition.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

We don't expect that to continue in the second half of the year and that's factored in our outlook for the full year.

[Mark Thurmond, Co-CEO & Director at Tenable]

Yes. And the only thing I'll add there, you asked a question about VM. VM was strong this quarter. We hit where we thought we would hit for VM. So it wasn't like this massive outperformance, but came in exactly where we forecasted.

[Mark Thurmond, Co-CEO & Director at Tenable]

So we feel really good about that number and about the growth there. I think when you look at some of the overachievement, as Steve kind of highlighted, it is all about driving Tenable One, it's about the multiple asset types. It's about the premium we get when we sell. Tenable One, is kind of where you saw the beat take place here in Q2. But we're very happy with our core VM business.

[Andres Miranda Lopez, Equity Research Associate at D.A. Davidson]

Thank you.

[Operator]

Our next question comes from Jonathan Ho with William Blair. Please proceed with your question.

[Jonathan Ho, Research Analyst at William Blair]

Hi, good afternoon. And let me echo my congratulations as well. Can you you mentioned strength in the OT and hybrid IT OT environments. Can you talk about where you're maybe seeing more opportunities and maybe what's driving sort of resurgence on the OT side? Thank you.

[Mark Thurmond, Co-CEO & Director at Tenable]

You bet. Yes, no, it was a great quarter for OT. And our Q3 for OT actually looks pretty strong too. And what we're seeing there is certain verticals are really starting to play out. So we're seeing really good growth that actually data center build out is a great example of a vertical that's doing extremely well in regard to adopting OT and then looking at a consolidated platform.

[Mark Thurmond, Co-CEO & Director at Tenable]

You look at food processing, you look at manufacturing, you look at the entertainment industry, so think of like casinos and big large hotels are some areas we're doing extremely well. And really what's happening is this convergence. So these folks are saying, hey, we need OT and we also need exposure management. We need to be looking at not just our operational technology, but all of these other asset types. And so one of the deals that I highlighted was actually driven from OT initiative.

[Mark Thurmond, Co-CEO & Director at Tenable]

And then when the CISO fully understood what exposure management was about and then how much more visibility they could get in regard to doing exposure management and looking at VM and then other asset types, that was how we differentiated from a pure play OT provider that cannot do that. So that consolidation story of ITOT going into the CISO, having a massive amount of relevance right now in the market. And we are actually seeing this adoption pick up. And as Steve kind of highlighted in the numbers, we're happy with our Q2 performance and we're looking for a strong Q3 there also. So we're encouraged of what we're seeing.

[Jonathan Ho, Research Analyst at William Blair]

Thank you.

[Operator]

Our next question comes from Mike Chigos with Needham and Co. Please proceed with your question. Mike, are you there? We Mike, if you're not muted right now, we'll put you back in the queue, and we'll move on to the next question here. Our next question is from Jonathan Roccaver with Cantor Fitzgerald. Please proceed with your question.

[Jonathan Ruykhaver, Managing Director at Cantor Fitzgerald]

Yeah. Thank you. Good afternoon. So the three sixty new enterprise platform customers and the 76 net new 6 figure customers was impressive. Can you talk about that sales motion?

[Jonathan Ruykhaver, Managing Director at Cantor Fitzgerald]

Are there any incentives both either direct or through the channel that might be influencing that success? And then looking at the remainder of the year, how should we be thinking of new platform ads versus expansion? Because it does seem that with Apex, OT exposure management, it's just the broadening product portfolio that expansion is also a compelling opportunity.

[Mark Thurmond, Co-CEO & Director at Tenable]

Yes. No, totally agree. It is a compelling opportunity. But in regards to new logos, we didn't actually do anything different. I think what you're seeing is just this basic adoption of Tenable One and of the platform approach, right?

[Mark Thurmond, Co-CEO & Director at Tenable]

So I think as everyone on this call is very aware, we are 100% channel company, so we don't do direct business. And so we've got a very loyal channel. And so they are getting more comfortable in regard to positioning Tenable One. And as you guys do your channel checks, everything I think comes back relatively positive in regard to what our channel is getting enabled on, how they're getting trained, their comfort level of positioning, Tenable One, is pretty significant. And so I think that's really where you're seeing the traction.

[Mark Thurmond, Co-CEO & Director at Tenable]

And in regard to our own sellers, again, no real any major shifts, no big compensation changes or anything like that at all. I think it's just more higher activities. We're seeing good pipeline growth. Some of our marketing and branding exercises are paying off in regard to the top line pipeline build, I think is strong. And again, I don't want to underplay the third party analyst when they're giving you validation in the market.

[Mark Thurmond, Co-CEO & Director at Tenable]

It isn't just tenable in our partner community saying, we're the best EM solution. It's now analysts starting to say it. And I think that's got some forward momentum. So I think that's really it. But no big structural changes, no comp changes, nothing along those lines.

[Operator]

Our next question comes from Junaid with Truist Securities. Please proceed with your question.

[Junaid Siddiqui, Investment Analyst - Software at Truist Securities]

Hi, this is Junaid Siddiqui from Truist. Thanks for taking my question. I just wanted to ask about your cloud strategy around CNAP. And you talked about last quarter about Wizz being the acquisition by Google being a potential net benefit for you. Are you seeing any additional RFPs that you're being invited to?

[Junaid Siddiqui, Investment Analyst - Software at Truist Securities]

And has that contributed to any growth in your cloud security business? Thank you.

[Mark Thurmond, Co-CEO & Director at Tenable]

Yes. I mean, we had a really strong cloud security in Q2. Pipeline looks good for Q3, Q4. We did see a bit of an increase in regard to inbound inquiries in regard to RFPs. Once the Wizz Google acquisition was announced, you are not seeing anyone rip and replace Wizz by any stretch of imagination.

[Mark Thurmond, Co-CEO & Director at Tenable]

But there is conversation at the CISO level of dual vendor strategy, opening up the door, looking at other players. So we have seen a pipeline growth there. And I think one of the big factors you've got to always keep in mind with Tenable and our CNAP solution is we sell the majority of that as part of the Tenable One platform. So when we truly go in and differentiate from a platform perspective, that's when we have success selling the cloud. And so we had a good quarter and we're optimistic about Q3, Q4.

[Mark Thurmond, Co-CEO & Director at Tenable]

And we said it last quarter, it's a net positive for us, line. And we're going to continue to drive pipeline off it and then see how we convert.

[Operator]

Our next question comes from Shaul Eyal with TD Cowen. Please proceed with your question.

[Shaul Eyal, MD - Equity Research at Cowen]

Thank you. Good afternoon and congrats on your quarterly performance and improved outlook, Mark or Steve. I wanted to ask specifically about your July performance, which is coming to an end tomorrow. Maybe Mark, it comes as an easy layup with respect to your reply to Jonathan. I'm beginning to hear some bits and pieces that July has been trending ahead of historical seasonality trends, maybe anecdotally, but curious what is it that you're seeing out there as the first month of your third quarter is coming to an end? Thank you.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

Well, question. And today with the July, we take everything into consideration when we provide an outlook for the year. And so we look at the flow of our business. And so we specifically look at the first month and look at the results for the quarter and then combine that with pipeline opportunities and our outlook for the rest of the year when we provide an update on our guidance. So as we mentioned on the top line for CCB, we raised the midpoint by $8,000,000 just due to outperformance in the quarter, due to increasing confidence in the business the second half of the year. But I would also say that flow is no different now than any other quarter, where a lot of our new businesses closed and transacted the last month.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

In this quarter, we're heading into what often is a seasonally strong federal quarter. And so we have a number of pipeline opportunities. We're going to be working hard to close and convert. And these are very sizable opportunities very strategic deals and all focused around not only VM but also the platform.

[Operator]

Our next question is from Sharnik Khothari with Baird. Please proceed with your question.

[Shrenik Kothari, Senior Research Analyst at Robert W. Baird & Co]

Yes. Thanks for taking my questions. Congrats, Steve, Mark and team. Just a follow-up to earlier question by Andrew and your answer around federal scrutiny and net retention. And with the improved visibility in the federal renewals you mentioned, specifically on the retention expansion opportunity, can you comment on whether these federal renewals are skewing towards more tactical VM or but also seeing more opportunity for platform consolidation, Tenable One, for example, or cloud workloads?

[Shrenik Kothari, Senior Research Analyst at Robert W. Baird & Co]

Like any comments on how these renewals can see potential kind of added value from Tenable One, if you may? Thanks.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

Sure. And to clarify, the increased visibility that we have around our renewal base in federal is specifically on the renewal itself. So we have a number of large 6 and 7 figure expansion opportunities within US federal. And so we're not saying that we have increased confidence around that or increased visibility. We're cautiously optimistic.

[Steve Vintz, CFO, Co-CEO & Director at Tenable]

We have a lot of pipeline opportunities. These are big meaningful deals, and we'll be working hard to close them. And We're saying we just have a little more visibility into the renewals themselves. So the expansion opportunities do cut across not only just VM, where historically we've got a sizable base of business there, but also cut across other things like cloud, OT, but more broadly the platform itself.

[Mark Thurmond, Co-CEO & Director at Tenable]

Totally agree. Steve kind of nailed it right there. It is better visibility in regards to that renewal base. And new business is still going to be something where we've got to really micromanage because there's still some issues and challenges that flow through the federal government. But we are definitely a little more optimistic.

[Mark Thurmond, Co-CEO & Director at Tenable]

I think when you look at Tenable One, the great news, right, is we now have FedRAMP authorization for Tenable One and for our cloud security. So as a traditionally very, very strong VM core base there, obviously, we're engaged with that installed base, talking to them about Tenable One, talking to them about cloud security and other asset types. So we're feeling good, and we're happy that we have little more visibility on the renewal base, and we'll go from there.

[Shrenik Kothari, Senior Research Analyst at Robert W. Baird & Co]

Very helpful. Thanks a lot.

[Operator]

We have reached the end of our Q and A session, which concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Erin Karney, VP - IR
• Steve Vintz, CFO, Co-CEO & Director
• Mark Thurmond, Co-CEO & Director

Analysts

• Rob Owens, MD & Senior Research Analyst at Piper Sandler Companies
• Brian Essex, Executive Director at JP Morgan
• Saket Kalia, Managing Director at Barclays Capital
• Andrew Nowinski, Senior Research Analyst at Wells Fargo
• Joe Vandrick, Associate Director - Equity Research at Scotiabank
• Roger Boyd, Executive Director at UBS Group
• Andres Miranda Lopez, Equity Research Associate at D.A. Davidson
• Jonathan Ho, Research Analyst at William Blair
• Jonathan Ruykhaver, Managing Director at Cantor Fitzgerald
• Junaid Siddiqui, Investment Analyst - Software at Truist Securities
• Shaul Eyal, MD - Equity Research at Cowen
• Shrenik Kothari, Senior Research Analyst at Robert W. Baird & Co