Summary
Tenable reported FY2021 third-quarter revenue of $138.7 million, up 23.5% from $112.3 million in the prior-year quarter. Gross profit rose to $111.6 million, up 20.1%. Gross margin slipped to 80.5% from 82.7%, a decline of 2.2 percentage points. The company added 499 new enterprise platform customers and 62 net new six-figure customers. Dollar-based net expansion exceeded 110% on a last-twelve-months basis.
GAAP profitability weakened even as non-GAAP results stayed positive. GAAP operating loss was $11.2 million, compared with a loss of $3.5 million in the third quarter of 2020. Operating margin was -8.1%, down 5.0 percentage points. GAAP net loss was $16.2 million, compared with a loss of $5.9 million. GAAP diluted net loss per share was -$0.15, compared with a loss per share of -$0.06. Non-GAAP income from operations was $13.7 million, compared with $12.4 million. Non-GAAP net income was $8.1 million, compared with $10.5 million, and non-GAAP diluted earnings per share was $0.07, compared with $0.09.
For the first nine months of 2021, revenue was $392.1 million, up 21.7%, and net loss was $35.6 million, compared with a loss of $40.8 million in the prior-year period. GAAP operating loss for the nine months narrowed to $28.9 million from $35.7 million, and GAAP diluted net loss per share narrowed to -$0.34 from -$0.41. Operating cash flow for the nine months was $74.8 million, up 61.5% from $46.3 million.
Cash generation was mixed in the quarter. GAAP net cash provided by operating activities was $19.6 million, down 20.9% from $24.8 million in the prior-year quarter. Free cash flow, a non-GAAP measure, was $18.5 million, compared with $16.7 million. Capital expenditures were $1.2 million, down 85.5% from $8.1 million. Current deferred revenue was $362.3 million, up 22.3% from $296.4 million a year earlier. Remaining performance obligations were $491.9 million, up 23.1% from $399.7 million. Calculated current billings, a non-GAAP metric, was $166.9 million, up 25% year over year.
The quarter also brought FedRAMP authorization for Tenable.io and Tenable.io Web App Scanning, the Accurics acquisition for approximately $160 million in October 2021, and an expanded partnership with Splunk. Tenable ended the quarter with $651.9 million in cash and cash equivalents and short-term investments, including $365.7 million of net proceeds from a credit facility, compared with $291.8 million at December 31, 2020. The balance sheet carried an accumulated deficit of $643.5 million at September 30, 2021. In July 2021 the company entered a $375.0 million term loan and a $50.0 million revolving credit facility. The term loan bears interest at 2.75% over LIBOR. Tenable also committed to spend $140.6 million on Amazon Web Services cloud services through July 2024.
Guidance for the fourth quarter of 2021 calls for non-GAAP income from operations of $7.0 million to $8.0 million and non-GAAP net income of $2.0 million to $3.0 million. Non-GAAP diluted earnings per share is projected at $0.02 to $0.03. For the full year ending December 31, 2021, calculated current billings is expected at $602.0 million to $605.0 million, non-GAAP income from operations at $46.1 million to $47.1 million, non-GAAP net income at $35.0 million to $36.0 million, and non-GAAP diluted earnings per share at $0.30 to $0.31.
Risks remain. The cybersecurity market is highly competitive, COVID-19 still clouds customer spending, and acquisitions add integration work. Management expects gross margin to decrease over time as cloud-based subscriptions grow. The company expects to keep incurring operating losses in the near term, and it maintains a full valuation allowance against deferred tax assets. The credit agreement includes covenants, and the business may need additional equity or debt financing. Tenable also faces the task of integrating Alsid, acquired for $98.5 million in April 2021, and Accurics, acquired for approximately $160 million in October 2021.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2021 | Q2 FY2021 | QoQ | Q3 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $138.7M | $130.3M | +6.5% | $112.3M | +23.5% |
| Gross profit | $111.6M | $103.8M | +7.5% | $92.9M | +20.1% |
| Gross margin | 80.5% | 79.7% | +0.8 pp | 82.7% | -2.3 pp |
| Research & development | $30.7M | $28.2M | +8.8% | $25.1M | +22.1% |
| Sales & marketing | $68.4M | $65.7M | +4.1% | $53.0M | +28.9% |
| General & administrative | $23.8M | $21.8M | +8.9% | $18.2M | +30.8% |
| Total operating expenses | $122.8M | $115.7M | +6.1% | $96.4M | +27.5% |
| Operating income (loss) | -$11.2M | -$11.9M | +5.6% | -$3.5M | -223.8% |
| Operating margin | -8.1% | -9.1% | +1.0 pp | -3.1% | -5.0 pp |
| Net income (loss) | -$16.2M | -$11.6M | -39.6% | -$5.9M | -177.3% |
| Net margin | -11.7% | -8.9% | -2.8 pp | -5.2% | -6.5 pp |
| Diluted EPS | -$0.15 | -$0.11 | -$0.04 | — | — |
| Customers | 322,139 | 209,857 | +53.5% | 257,537 | +25.1% |
Risks
The ongoing and evolving COVID-19 pandemic could reduce customer technology spending, delay purchases or lead to contract concessions, and Tenable expects additional costs as it resumes business travel and hybrid work. As of September 30, 2021, Tenable had not seen a significant adverse impact on its financial position or liquidity, but future effects remain uncertain.
The cybersecurity market is fragmented and intensely competitive, with competitors including Qualys, Rapid7, Microsoft, CrowdStrike and Tanium. Larger competitors can bundle competing products, lower prices or restrict Tenable's access to public cloud environments, which could pressure pricing and revenue.
Tenable derives substantial revenue through third-party channel partners, and Ingram Micro, a distributor, accounted for 40% and 43% of revenue in the nine months ended September 30, 2021 and 2020, respectively, and 43% of accounts receivable as of September 30, 2021. The Ingram Micro agreement can be terminated on 30 days' notice, and partners have no renewal obligation.
Tenable's business depends on customers renewing subscriptions and expanding the number of IT assets or IP addresses under their subscriptions. Most subscription contracts are one year in duration, and some top customers have the right to terminate for convenience, so failure to renew or expand on favorable terms would harm results.
Tenable is subject to stringent and changing privacy and data security laws, including GDPR, UK GDPR, CCPA and CPRA. GDPR fines can reach €20 million or 4% of global annual revenue, and cross-border transfer mechanisms remain uncertain, increasing compliance costs and potential penalties.
Tenable's sales cycle is long and unpredictable, with an average enterprise sales cycle of approximately four months, and COVID-19 has added customer budget controls and internal approvals. Tenable may devote substantial effort to unsuccessful sales efforts and lose other opportunities.
MD&A states Tenable expects gross profit to increase in absolute dollars but gross margin to decrease as cloud-based subscriptions increase as a percentage of revenue. Supporting on-premises, cloud and hybrid deployments requires additional R&D and support expense, and reported gross margin for FY2021 Q3 was 80.5%, down 2.2 percentage points versus the prior-year quarter.
Tenable acquired Alsid for $98.5 million in April 2021 and Accurics for approximately $160 million in cash in October 2021, and may pursue additional acquisitions. Integration may divert management attention and increase expenses, and acquisition-related costs contributed to the increase in general and administrative expense.
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 Credit Agreement contains covenants, including a total net leverage ratio if at least 35% of the revolver is drawn; noncompliance could restrict dividends and affect liquidity.
A portion of revenue comes from U.S. and foreign government entities and highly regulated organizations, subject to the FAR, government audits, termination for convenience and anti-bribery laws including the FCPA. Noncompliance could lead to contract termination, price adjustments, penalties, debarment or suspension.
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
Summary, forecast, risks and KPIs are extracted from Tenable Holdings, Inc.'s SEC filings for Q3 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.