Tenable Q3 Earnings Call Highlights

Key Points

• Tenable exceeded third-quarter guidance, with revenue rising 9.5% year over year to $276.4 million and non-GAAP EPS reaching $0.63. The company raised its full-year outlook for revenue, operating income, net income and EPS.
• Tenable One adoption accelerated: the platform generated 59% of new business, up from 50% in the prior quarter, while net dollar expansion rose to 107%. More than 5,000 customers now use Tenable One, supporting larger account values and customer expansion.
• AI security remains a key growth initiative, with Hexa AI and planned Claude-powered Adversary View features aimed at identifying attack paths and automating remediation. Tenable also strengthened liquidity through an $800 million convertible-note offering, debt refinancing and share repurchases.

Tenable NASDAQ: TENB reported third-quarter results above the high end of its guidance, citing growing adoption of its Tenable One exposure-management platform, higher customer expansion and demand for AI-enabled security capabilities.

Revenue rose 9.5% year over year to $276.4 million, while recurring revenue represented 95% of total revenue, Chief Financial Officer Matt Brown said. Non-GAAP operating income increased to $74.9 million, or 27.1% of revenue, from $58.9 million, or 23.3% of revenue, a year earlier. Non-GAAP earnings per share were $0.63, including a $0.03 benefit from a one-time discrete tax item.

The company raised its full-year outlook for revenue, non-GAAP operating income, net income and earnings per share following the quarter.

Platform adoption drives expansion

Co-Chief Executive Officer Steve Vintz said Tenable’s net dollar expansion rate increased to 107% from 106% in the second quarter, representing the second consecutive quarter of acceleration. The company’s customer count growth rate, or CCB, accelerated to 9% in the third quarter.

Tenable One accounted for a record 59% of new business, up from 50% in the preceding quarter and 39% in the year-earlier period. The company ended the quarter with more than 5,000 customers using Tenable One.

Brown said Tenable added 413 new enterprise customers and 39 net new six-figure accounts during the quarter. New six-figure account annual contract value increased 18% year over year, which management attributed to larger deals and the transition toward the platform.

“Average customer value is double in the platform what it is versus standalone SKUs,” Brown said during the question-and-answer session. He also said customers moving from the company’s Nessus offering directly to the platform pay 15 times what Nessus customers pay.

Co-CEO Mark Thurmond said the quarter’s growth came from several sources, including new logos adopting Tenable One, conversions from standalone vulnerability-management deployments and migrations from legacy Tenable One offerings to newer packages. He said hundreds of vulnerability-management customers transitioned to Tenable One during the quarter.

Management said the Advanced package has been particularly important, with more than half of new Tenable One logos selecting that tier. Brown said roughly three-quarters of the company’s new platform business is entering through Tenable One Advanced.

AI security and remediation initiatives

Tenable positioned AI-driven exposure management as a central growth opportunity, arguing that organizations need broader visibility and faster remediation as AI models, agents and related infrastructure expand their attack surfaces.

Vintz pointed to the recently disclosed PHP2Shell vulnerability as an example of the environment security teams face. He said PHP is widely used across enterprise web applications, cloud workloads, containers and legacy systems, and customers increased prompt volume on Tenable’s Hexa AI platform by as much as fivefold following the disclosure.

Tenable said it issued plugins overnight after the vulnerability was disclosed and held customer webinars that Thurmond said drew unusually high attendance. Vintz cautioned that it was too early to quantify any business impact from PHP2Shell, noting that it had little effect on third-quarter results because of the timing of the disclosure.

The company also announced plans to incorporate Anthropic’s Claude Mythos into Tenable One through a feature called Adversary View. According to Vintz, the capability uses telemetry collected by Tenable to analyze how lower-signal exposures could be combined into attack paths toward critical systems and recommend fixes intended to break those paths.

Tenable expanded its Hexa AI agentic engine into what Vintz called a coordinated fleet of agents that can identify exposures, orchestrate remediation and verify fixes. Since June, Hexa has evaluated more than 2 billion assets and findings, he said.

Brown said Hexa AI is a factor in customers moving to the platform and particularly to the Advanced package. Customers receive allotted usage through their packages, while an add-on SKU is available for customers that exceed those allocations. He said add-on activity increased during the third quarter, although the primary revenue driver remains platform adoption.

Profitability, liquidity and capital allocation

Non-GAAP gross margin was 81.5%, essentially unchanged from 81.6% a year earlier. Brown said he expects gross margin to remain around the low-80% range, adding that Hexa AI has not created pressure because customer upgrades and usage-based add-ons help offset the cost of AI usage.

Unlevered free cash flow increased 18.7% to $69.4 million. Tenable ended the quarter with $495.3 million in cash and short-term investments.

During the quarter, the company raised $800 million through a convertible note offering. It used proceeds to repay its existing term loan B, enter a capped-call transaction with a cap price of $64.06 per share, and repurchase 5.3 million shares for $170.5 million. Tenable also closed a $400 million revolving credit facility on Oct. 13.

Brown said the transactions extended debt maturity to September 2031, expanded liquidity and added $186 million in cash to the balance sheet at a lower overall cost of capital. The company additionally repurchased 1.5 million shares for $53 million during the quarter and had $54 million remaining under its repurchase authorization at quarter-end.

Raised 2026 outlook

Tenable raised its full-year 2026 revenue forecast to a range of $1.084 billion to $1.087 billion, representing 8.6% growth at the midpoint. The company projected fourth-quarter revenue of $277 million to $280 million, or 6.9% growth at the midpoint.

• Full-year non-GAAP operating income is expected to be $270 million to $273 million, or 25% of revenue at the midpoint.
• Fourth-quarter non-GAAP operating income is expected to be $67.1 million to $70.1 million.
• Full-year non-GAAP net income is forecast at $250 million to $253 million.
• Full-year non-GAAP diluted earnings per share are expected to be $2.16 to $2.19.
• Fourth-quarter non-GAAP diluted earnings per share are projected at $0.56 to $0.58.

Brown said third-quarter performance and pipeline growth entering the fourth quarter supported the guidance increase. He expects the net dollar expansion rate to remain at approximately 107% in the fourth quarter, with federal business contributing in both the third and fourth quarters.

About Tenable (NASDAQ:TENB)

Tenable is a cybersecurity company that helps organizations identify, assess and reduce cyber risk across their technology environments. Its exposure management platform is designed to provide visibility into vulnerabilities and other security exposures affecting cloud systems, applications, endpoints, networks, operational technology, Internet of Things devices and identities.

The company's product portfolio includes Nessus, a widely used vulnerability assessment solution, and Tenable One, an exposure management platform that brings together vulnerability management, cloud security, identity exposure and related capabilities.

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