Summary
Tenable opened fiscal 2023 with revenue growth and a wider GAAP loss. Revenue was $188.8 million for the first quarter, up 18.5% from the prior-year quarter. Gross profit was $143.3 million, up 15.2%. Gross margin slipped to 75.9%, down 2.2 percentage points, as cost of revenue grew faster than sales. The operating loss was $19.2 million, and the loss widened 9.2% from the prior-year quarter. Net loss was $25.1 million, and that loss widened 2.4%. GAAP diluted loss per share was $0.22, flat with the prior-year quarter. Operating margin was -10.1%, up from the prior-year quarter. The gap between revenue growth and gross profit growth points to pressure in cost of revenue, which management tied to third-party cloud infrastructure and personnel costs.
Cash generation outpaced the prior-year quarter. Operating cash flow was $38.7 million, up 17.9%. Capital expenditures were $0.39 million, down 80.7%. Unlevered free cash flow reached $44.2 million, compared with $32.1 million in the prior-year quarter, and free cash flow was $37.3 million, compared with $28.1 million. On a non-GAAP basis, income from operations was $18.1 million, compared with $12.5 million, and net income was $13.1 million, compared with $7.0 million. Non-GAAP diluted earnings per share was $0.11, compared with $0.06, and non-GAAP operating margin was 10%, compared with 8%. Calculated current billings were $176.8 million, up 13%.
Contract backlog kept growing. Current deferred revenue was $490.1 million, up 21.1%, and remaining performance obligations were $654.7 million, up 17.8%. New customer additions slowed. Tenable added 379 new enterprise platform customers, down 17% from the prior-year quarter, plus 24 net new six-figure customers. Customers with at least $100,000 in annual contract value totaled 1,444, up 30%. The dollar-based net expansion rate was 113%, down from 118%. Recurring revenue represented 95% of revenue. Management pointed to new cloud security posture management features, new OT security functionality, cyber insurance reporting capabilities, and the annual Threat Landscape Report.
Guidance covers both the next quarter and the full fiscal year. For the second quarter of 2023, management guided non-GAAP income from operations to $20.0 million to $21.0 million, non-GAAP net income to $15.0 million to $16.0 million, and non-GAAP diluted earnings per share to $0.12 to $0.13, on 120.5 million diluted shares. For the full year 2023, the company guided calculated current billings to $875.0 million to $885.0 million, non-GAAP income from operations to $90.0 million to $95.0 million, non-GAAP net income to $69.0 million to $74.0 million, non-GAAP diluted earnings per share to $0.57 to $0.61, and unlevered free cash flow to $175.0 million to $180.0 million. The revenue outlook for the full year and the quarterly outlook were reaffirmed alongside the profitability targets.
Risks sit alongside the growth. Management said it saw longer sales cycle times in the purchasing and approval phases at the end of the first quarter and expects that trend to continue in 2023. Gross margin declined year over year, and stock-based compensation remains a significant recurring expense. The term loan carried an interest rate of 7.58% from January 2023 through April 2023, which lifts interest costs. The company also carries a full valuation allowance against deferred tax assets and expects to keep incurring operating losses in the near term. Competition in a fast-changing security market remains a constant constraint on pricing and win rates.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2023 | Q4 FY2022 | QoQ | Q1 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $188.8M | $184.6M | +2.3% | $159.4M | +18.5% |
| Gross profit | $143.3M | $139.4M | +2.8% | $124.4M | +15.2% |
| Gross margin | 75.9% | 75.5% | +0.4 pp | 78.1% | -2.2 pp |
| Research & development | $38.2M | $36.9M | +3.4% | $34.3M | +11.4% |
| Sales & marketing | $97.2M | $91.3M | +6.4% | $81.6M | +19.2% |
| General & administrative | $27.1M | $25.3M | +7.4% | $26.1M | +3.8% |
| Total operating expenses | $162.5M | $153.5M | +5.9% | $142.0M | +14.4% |
| Operating income (loss) | -$19.2M | -$14.1M | -36.0% | -$17.5M | -9.2% |
| Operating margin | -10.1% | -7.6% | -2.5 pp | -11.0% | +0.9 pp |
| Net income (loss) | -$25.1M | -$21.5M | -16.8% | -$24.5M | -2.4% |
| Net margin | -13.3% | -11.6% | -1.6 pp | -15.4% | +2.1 pp |
| Diluted EPS | -$0.22 | -$0.19 | -$0.03 | -$0.22 | ±$0.00 |
| Customers | 159,368 | 43,000 | +270.6% | 123,189 | +29.4% |
Risks
The company discloses that at the end of the first quarter of 2023 it experienced longer sales cycle times in the purchasing and approval phases of its sales cycle, and it expects this trend to continue in 2023. This lengthening could pressure the timing of new agreements and renewals, which are already seasonally weighted toward the third and fourth quarters.
The dollar-based net expansion rate declined to 113% as of March 31, 2023 from 118% as of March 31, 2022, indicating less expansion revenue from the existing customer cohort. MD&A attributes quarter-to-quarter variability to retention, pricing, competing solutions and the timing of customer renewals.
The number of new enterprise platform customers added in the period fell to 379 in the three months ended March 31, 2023 from 459 in the prior-year period, a decrease of 17%. Slower new logo additions could weigh on future growth even as customers with $100,000 and greater in annual contract value rose 30%.
Gross margin declined to 76% in the three months ended March 31, 2023 from 78% in the prior-year period, as cost of revenue rose 30% versus 18% revenue growth. The increase was driven primarily by a $3.7 million increase in third-party cloud infrastructure costs and higher personnel and stock-based compensation costs, with gross margin expected to fluctuate as cloud revenue grows as a percentage of total revenue.
Interest expense rose 105% to $7.3 million in the three months ended March 31, 2023 from $3.6 million in the prior-year period, primarily due to an increase in the rate on the $375.0 million Term Loan. Rates on the Term Loan were 7.16% from October 2022 through January 2023 and 7.58% from January 2023 through April 2023, rising to 7.77% effective April 28, 2023, so a sustained higher rate environment would keep pressuring net loss, which widened to $25.1 million in the quarter.
The company has material required payments to Amazon Web Services, Inc. for cloud services under a contractual commitment disclosed in Note 9, and third-party cloud infrastructure costs were the second-largest driver of the cost of revenue increase in the quarter. Dependence on a limited set of cloud vendors exposes the company to pricing and service-availability risk as cloud-hosted subscriptions grow.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Calculated Current Billings
New Enterprise Platform Customers Added
Unlevered Free Cash Flow
Free Cash Flow
Net New Six-Figure Customers
Non-GAAP Gross Margin
Dollar-Based Net Expansion Rate
Recurring Revenue % of Revenue
Summary, forecast, risks and KPIs are extracted from Tenable Holdings, Inc.'s SEC filings for Q1 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.