Summary
Tenable reported revenue of $164.3 million for the second quarter of fiscal 2022, up 26% from $130.3 million in the prior-year quarter. Calculated current billings, a non-GAAP measure of upfront customer payments, came in at $174.1 million, up 27% year over year. Gross profit rose to $128.3 million, up 23.6%, but gross margin slipped to 78.1% from 79.7%. Recurring revenue, which covers subscriptions and maintenance tied to perpetual licenses, represented 95% of revenue in the quarter, up from 94% a year earlier.
Profitability went the other way. The GAAP operating loss widened to $23.2 million from $11.9 million, and operating margin fell to -14.1% from -9.1%. Net loss was $27.5 million, or $0.25 per diluted share, compared with $11.6 million, or $0.11 per diluted share, in the second quarter of 2021. On the company's non-GAAP basis, income from operations was $12.2 million against $11.5 million, while non-GAAP net income dropped to $6.0 million from $10.2 million and non-GAAP diluted earnings per share was $0.05, down from $0.09. The gap between the two views comes largely from stock-based compensation, acquisition-related expenses, costs tied to intra-entity asset transfers and amortization of acquired intangibles, all excluded from the non-GAAP numbers.
Cash generation was the strongest part of the release. Net cash provided by operating activities was $30.5 million in the quarter, up 84.6% from $16.5 million a year earlier, and capital expenditures were $4.8 million, up from $1.5 million. Unlevered free cash flow, which adds back cash paid for interest, was $29.1 million against $15.1 million. Through six months, operating cash flow reached $63.4 million, up 14.9%. Current deferred revenue ended the quarter at $415.4 million, up 24.3% from the prior-year quarter, and remaining performance obligations were $567.7 million, up 23.0%.
Customer activity held up. Tenable added 540 new enterprise platform customers and 79 net new six-figure customers during the quarter. The count of customers with annual contract value of $100,000 or more was 1,191 at June 30, 2022, up 28% from a year earlier, and the dollar-based net expansion rate exceeded 110% on a last-twelve-months basis. Management credited strong demand through higher new enterprise platform additions and a rising number of net new six-figure customers, and said the first-half momentum leaves the business positioned well.
Guidance assumes growth continues but profitability thins. For the third quarter of 2022, the company guided to non-GAAP income from operations of $9.0 million to $10.0 million, non-GAAP net income of $3.2 million to $4.2 million and non-GAAP diluted earnings per share of $0.03 to $0.04. For the full fiscal year 2022, guidance calls for calculated current billings of $768.0 million to $776.0 million, non-GAAP income from operations of $45.0 million to $49.0 million, non-GAAP net income of $19.7 million to $23.7 million and non-GAAP diluted earnings per share of $0.17 to $0.20.
Several risks sit behind those targets. Management flagged the strengthening U.S. dollar, inflation, the Covid-19 pandemic and the Russian invasion of Ukraine as items it continues to monitor, and warned that further dollar strength could make its products more expensive abroad while also lowering international operating costs. The cybersecurity market stays highly competitive, and the business is seasonal, with a large share of new and renewal agreements signed in the third quarter, mostly with U.S. government and related agencies, and in the fourth quarter, driven by large enterprise buying patterns. Tenable closed the Bit Discovery acquisition and launched Tenable.asm in the quarter, and it expects to keep incurring operating losses in the near term.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $164.3M | $159.4M | +3.1% | $130.3M | +26.2% |
| Gross profit | $128.3M | $124.4M | +3.1% | $103.8M | +23.6% |
| Gross margin | 78.1% | 78.1% | -0.0 pp | 79.7% | -1.6 pp |
| Research & development | $36.2M | $34.3M | +5.7% | $28.2M | +28.5% |
| Sales & marketing | $88.4M | $81.6M | +8.4% | $65.7M | +34.6% |
| General & administrative | $26.9M | $26.1M | +2.8% | $21.8M | +23.1% |
| Total operating expenses | $151.5M | $142.0M | +6.7% | $115.7M | +30.9% |
| Operating income (loss) | -$23.2M | -$17.5M | -32.3% | -$11.9M | -95.4% |
| Operating margin | -14.1% | -11.0% | -3.1 pp | -9.1% | -5.0 pp |
| Net income (loss) | -$27.5M | -$24.5M | -12.2% | -$11.6M | -136.3% |
| Net margin | -16.7% | -15.4% | -1.3 pp | -8.9% | -7.8 pp |
| Diluted EPS | -$0.25 | -$0.22 | -$0.03 | -$0.11 | -$0.14 |
| Customers | 253,448 | 123,189 | +105.7% | 209,857 | +20.8% |
Risks
MD&A states the U.S. Dollar strengthened versus other currencies during the quarter and impacted international sales; continued strength could lower international sales because products become more expensive, though it could lower international operating costs. International revenue was 43% of revenue in the six months ended June 30, 2022.
The cybersecurity market is intensely competitive and includes Qualys, Rapid7, CrowdStrike, Microsoft and Palo Alto Networks; larger competitors can bundle products, offer lower prices and may restrict access to their cloud platforms. MD&A describes the market as highly competitive and says Tenable must keep innovating.
Tenable derived 92% of revenue in the six months ended June 30, 2022 from subscriptions and perpetual licenses sold through channel partners; Ingram Micro alone accounted for 38% of revenue and 34% of accounts receivable at June 30, 2022. The Ingram Micro agreement can be terminated on 30 days' written notice.
As a cybersecurity vendor, Tenable may be a higher-value target for cyberattacks; its solutions could fail to detect vulnerabilities, incorrectly detect them or contain defects, harming customers and reputation. The filing notes prior disruptions and increased threat risk tied to nation-state activity, ransomware and the invasion of Ukraine.
Net loss widened to $27.5 million in FY2022 Q2 from $11.6 million in the prior-year quarter, and to $52.0 million YTD from $19.4 million prior-year YTD; operating loss also widened. Accumulated deficit was $706.5 million at June 30, 2022 and costs are expected to increase.
The sales cycle is long and unpredictable, averaging approximately four months for enterprise customers, and unfavorable macroeconomic conditions, foreign exchange rates, inflation, China COVID-19 lockdowns and additional customer expenditure controls could lengthen it. Longer cycles may delay revenue and increase sales effort costs.
Tenable relies on AWS and third-party data centers for its network infrastructure; the AWS agreement allows AWS to terminate with two years' written notice and to temporarily restrict hosting access without prior notice. Cost of revenue increased partly due to third-party cloud infrastructure costs.
The company is subject to GDPR, CCPA/CPRA and cross-border data transfer restrictions; violations could lead to fines up to 4% of annual global revenue under GDPR, processing bans and limits on serving customers. Compliance requires significant resources and the legal framework remains uncertain.
A portion of revenue comes from U.S. and foreign governmental and highly regulated entities, subject to government audits, termination for convenience, preferential pricing, FCPA, export controls and certification requirements. Noncompliance could lead to penalties, debarment or lost contracts.
The business depends on highly skilled personnel, including senior management and engineering, sales and technology professionals; MD&A reports personnel cost increases across sales and marketing, research and development and general and administrative expense due to headcount growth. Failure to hire or retain key personnel could slow product and sales execution.
Gross margin decreased to 78.1% in FY2022 Q2 from 79.7% in the prior-year quarter, and to 78.1% YTD from 80.9% prior-year YTD. MD&A expects gross margin to decrease as cloud-based subscriptions increase as a percentage of revenue.
The July 2021 Credit Agreement includes a $375.0 million Term Loan; interest expense net increased $2.9 million in the quarter and $6.2 million YTD due to the Term Loan, and the effective rate rose to 5.56% for July 29 to October 30, 2022. Covenants include leverage tests and potential mandatory prepayments.
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 (LTM)
Non-GAAP Income from Operations
Recurring Revenue as % of Revenue
Organizations relying on Tenable
Summary, forecast, risks and KPIs are extracted from Tenable Holdings, Inc.'s SEC filings for Q2 FY2022 (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.