Summary
Tenable's fiscal 2021 second quarter grew the top line faster than the bottom line. Revenue was $130.3 million, up 21.5% from $107.2 million in the prior-year quarter. For the six months ended June 30, 2021, revenue was $253.4 million, up 20.8% from $209.9 million. Gross profit of $103.8 million rose 17.9%, while gross margin slipped to 79.7% from 82.1% as third-party cloud infrastructure costs and amortization of acquired intangibles grew. Recurring revenue, which combines subscriptions and maintenance on perpetual licenses, was 94% of revenue, against 93% a year earlier.
Profitability was mixed. GAAP loss from operations was $11.9 million, wider than the $10.6 million loss a year earlier, though operating margin improved to -9.1% from -9.9%. Net loss narrowed to $11.6 million from $12.0 million, and diluted loss per share was $0.11 against $0.12. On a non-GAAP basis, income from operations was $11.5 million versus $5.7 million a year earlier, and non-GAAP net income was $10.2 million, or $0.09 per diluted share, against $4.7 million and $0.04. Stock-based compensation, acquisition-related expenses and amortization of acquired intangibles explain most of the gap between the two sets of results.
Cash flow held fairly steady in the quarter. Net cash provided by operating activities was $16.5 million, down from $17.0 million a year earlier. Free cash flow, which deducts purchases of property and equipment, was $15.0 million, up from $6.6 million. Capital expenditures fell to $1.5 million from $10.4 million. For the six months ended June 30, 2021, operating cash flow was $55.2 million, up from $21.5 million, and net loss narrowed to $19.4 million from $34.9 million. Cash and cash equivalents and short-term investments totaled $261.0 million at June 30, 2021, against $291.8 million at December 31, 2020, after the April 2021 Alsid acquisition and its related spending.
Backlog measures point to healthy demand. Current deferred revenue was $334.1 million, up 21.5% year over year. Remaining performance obligations were $461.6 million, up 22.1%. Calculated current billings, a non-GAAP measure, reached $136.8 million, up 23% year over year.
Customer adds were the highlight. The press release cites 399 new enterprise platform customers and 67 net new six-figure customers in the quarter, and the Alsid acquisition added 91 new enterprise customers. Dollar-based net expansion exceeded 110% on a last-twelve-months basis. Management added that an alternative calculation would have raised that rate by two to five percentage points.
Guidance for the third quarter of 2021 calls for non-GAAP income from operations of $7.0 million to $8.0 million and non-GAAP net income of $1.0 million to $3.0 million, or $0.01 to $0.03 per diluted share, on 115.0 million diluted weighted average shares. For the full fiscal year 2021, the company projects calculated current billings of $590.0 million to $595.0 million, non-GAAP income from operations of $40.0 million to $44.0 million, and non-GAAP diluted earnings per share of $0.25 to $0.29.
Risks are familiar but real. The duration and effect of the COVID-19 pandemic on customer spending remain uncertain, and competition in cybersecurity is intense. Tenable committed to spend $140.6 million on Amazon Web Services cloud capacity across three contract years, and it expects gross margin to decline over time as cloud subscriptions take a larger share of revenue. Calculated current billings can swing with the timing of large multi-year prepaid contracts. Bookings are seasonal, weighted to U.S. government agencies in the third quarter and to large enterprise buying patterns in the fourth. In July 2021 the company closed a credit facility made up of a $375 million term loan and a $50 million revolver, replacing a $45 million facility.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2021 | Q1 FY2021 | QoQ | Q2 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $130.3M | $123.2M | +5.7% | $107.2M | +21.5% |
| Gross profit | $103.8M | $101.1M | +2.7% | $88.1M | +17.9% |
| Gross margin | 79.7% | 82.1% | -2.4 pp | 82.2% | -2.4 pp |
| Research & development | $28.2M | $26.8M | +5.1% | $25.3M | +11.4% |
| Sales & marketing | $65.7M | $58.6M | +12.0% | $55.4M | +18.5% |
| General & administrative | $21.8M | $21.4M | +1.8% | $17.9M | +22.1% |
| Total operating expenses | $115.7M | $106.9M | +8.2% | $98.6M | +17.3% |
| Operating income (loss) | -$11.9M | -$5.8M | -104.8% | -$10.6M | -12.5% |
| Operating margin | -9.1% | -4.7% | -4.4 pp | -9.8% | +0.7 pp |
| Net income (loss) | -$11.6M | -$7.7M | -50.2% | -$12.0M | +2.7% |
| Net margin | -8.9% | -6.3% | -2.6 pp | -11.2% | +2.2 pp |
| Diluted EPS | -$0.11 | — | — | — | — |
| Customers | 209,857 | 102,648 | +104.4% | 165,685 | +26.7% |
Risks
The ongoing and evolving COVID-19 pandemic could materially adversely affect Tenable's business, operations and financial performance. Tenable resumed limited business travel and hybrid work, expects additional costs, and says the full extent of impact on customers, partners and the global economy remains uncertain, including new variants such as Delta.
Tenable faces intense competition from Qualys, Rapid7, CrowdStrike, Tanium and Microsoft, whose 2019 vulnerability management offering is cited. Larger competitors can bundle competing products and may offer lower prices, increasing pricing pressure on Tenable's offerings and average sales prices.
Ingram Micro, a distributor, accounted for 40% of revenue in the six months ended June 30, 2021 and 37% of accounts receivable as of June 30, 2021. Tenable's agreement with Ingram Micro permits termination at Ingram Micro's discretion on 30 days' written notice.
Cost of revenue increased $7.3 million, or 38%, in the three months ended June 30, 2021, largely from a $5.0 million increase in third-party cloud infrastructure costs. Gross margin decreased to 79.7% from 82.1% in the quarter, and Tenable expects gross margin to decrease over time as cloud subscriptions increase as a percentage of revenue.
Tenable sells cybersecurity products and may be at increased risk of cyber attacks designed to penetrate its platform or internal systems. If its solutions fail to detect vulnerabilities or falsely detect them, or contain undetected errors or defects, its brand and reputation could be harmed.
Tenable is subject to GDPR, CCPA, CPRA and other privacy laws, with GDPR fines of up to €20 million or up to 4% of annual global revenue, whichever is greater. Cross-border data transfer mechanisms remain uncertain after the invalidation of the EU-US Privacy Shield.
In July 2021 Tenable entered a credit agreement with a $375.0 million term loan and a $50.0 million revolving credit facility. The term loan bears interest at 2.75% over LIBOR and the agreement includes a total net leverage covenant if at least 35% of the revolver is drawn at quarter end.
In April 2021 Tenable acquired Alsid SAS for $98.5 million. Acquisition-related expenses increased general and administrative expense by $1.5 million in the three months ended June 30, 2021 and $3.4 million in the six months ended June 30, 2021, and integration may not achieve expected benefits.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Calculated Current Billings
New Enterprise Platform Customers Added
Free Cash Flow
Net New Six-Figure Customers
Non-GAAP Gross Margin
Dollar-Based Net Expansion Rate (LTM)
Non-GAAP Income from Operations
Summary, forecast, risks and KPIs are extracted from Tenable Holdings, Inc.'s SEC filings for Q2 FY2021 (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.