Tenable Holdings, Inc. (TENB) Bundle
Understanding Tenable Holdings, Inc. (TENB) Revenue Streams
Understanding Tenable Holdings, Inc.’s Revenue Streams
Revenue Overview:
For the third quarter of 2024, total revenue was $227.1 million, representing a 13% increase year-over-year from $201.5 million in Q3 2023.
Revenue Breakdown by Source
| Revenue Source | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Year-over-Year Growth (%) |
|---|---|---|---|
| Subscription Revenue | $208,554 | $183,268 | 13.8% |
| Perpetual License and Maintenance Revenue | $11,769 | $12,200 | -3.5% |
| Professional Services and Other Revenue | $6,765 | $6,061 | 11.6% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate has shown resilience, with the growth rate for the nine months ended September 30, 2024, reaching 13.4% compared to $585.4 million in the same period of 2023 against $664.3 million in 2024.
Contribution of Different Business Segments
Recurring revenue, which includes subscription arrangements, accounted for 96% of total revenue in Q3 2024, compared to 95% in Q3 2023. This highlights a strong reliance on subscription-based revenue.
Significant Changes in Revenue Streams
In Q3 2024, subscription revenue continued to dominate, increasing significantly while perpetual license revenue experienced a slight decline. The company added 386 new enterprise platform customers and 60 net new six-figure customers, indicating a growing demand for its services amidst evolving market conditions.
Forecasts for Q4 2024 suggest expected revenue in the range of $229 million to $233 million, which reflects ongoing growth trends and strategic expansions in product offerings.
| Forecasted Revenue Metrics for Q4 2024 | Low Estimate (in millions) | High Estimate (in millions) |
|---|---|---|
| Revenue | $229.0 | $233.0 |
| Non-GAAP Income from Operations | $47.0 | $49.0 |
| Non-GAAP Net Income | $42.0 | $44.0 |
A Deep Dive into Tenable Holdings, Inc. (TENB) Profitability
A Deep Dive into Tenable Holdings, Inc.'s Profitability
Gross Profit
For the third quarter of 2024, the company reported a gross profit of $176.6 million, compared to $155.8 million in the same quarter of 2023. This reflects a growth trend in gross profit year-over-year.
Operating Profit
The loss from operations in Q3 2024 was $2.1 million, a significant improvement from a loss of $7.9 million in Q3 2023. The company's non-GAAP income from operations for the same period was $45.0 million, up from $36.6 million in Q3 2023.
Net Profit Margins
The GAAP net loss for Q3 2024 was $9.2 million, compared to $15.6 million in Q3 2023. The net loss per share decreased to $0.08 from $0.13 year-over-year. The non-GAAP net income was reported at $39.3 million, compared to $27.7 million in Q3 2023.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Gross Profit | $176.6 million | $155.8 million |
| Loss from Operations | ($2.1 million) | ($7.9 million) |
| Non-GAAP Income from Operations | $45.0 million | $36.6 million |
| GAAP Net Loss | ($9.2 million) | ($15.6 million) |
| Net Loss per Share | ($0.08) | ($0.13) |
| Non-GAAP Net Income | $39.3 million | $27.7 million |
Trends in Profitability Over Time
The company's profitability metrics show a positive trend over the last year, with improvements in both gross and operating profits. The non-GAAP operating margin has also increased to 20% in Q3 2024 from 18% in Q3 2023.
Comparison with Industry Averages
The industry average for non-GAAP operating margins in the cybersecurity sector is approximately 15%. The company's current margin of 20% indicates strong operational efficiency relative to its peers.
Operational Efficiency Analysis
Cost management has played a crucial role in enhancing profitability. The cost of revenue for Q3 2024 was $50.5 million, up from $45.8 million in Q3 2023, but the gross margin improved slightly to 78% from 77% year-over-year. This indicates effective cost control measures, contributing to the overall profitability.
| Metric | Q3 2024 | Q3 2023 | Industry Average |
|---|---|---|---|
| Non-GAAP Operating Margin | 20% | 18% | 15% |
| Gross Margin | 78% | 77% | N/A |
Debt vs. Equity: How Tenable Holdings, Inc. (TENB) Finances Its Growth
Debt vs. Equity: How Tenable Holdings, Inc. Finances Its Growth
The financial structure of Tenable Holdings, Inc. reveals a balanced approach between debt and equity financing. As of September 30, 2024, the company reported total liabilities of $1,229.9 million and total stockholders’ equity of $404.6 million.
Overview of the Company's Debt Levels
Tenable's debt structure consists of both short-term and long-term obligations. The breakdown is as follows:
- Short-term Debt: Current liabilities total $657.1 million, which includes accounts payable and accrued expenses.
- Long-term Debt: The term loan, net of issuance costs, amounts to $357.3 million.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio is a crucial measure of financial leverage. For Tenable, this ratio is calculated as follows:
Debt-to-Equity Ratio = Total Liabilities / Total Equity = 1.67
This ratio is higher than the industry average of approximately 1.2, indicating that Tenable relies more heavily on debt financing compared to its peers.
Recent Debt Issuances and Credit Ratings
Tenable has actively managed its debt profile. Recent activities include:
- Interest Expense: For the third quarter of 2024, interest expense was $8.1 million.
- Credit Ratings: The company maintains a stable outlook, though specific ratings have not been disclosed in the latest reports.
How the Company Balances Between Debt Financing and Equity Funding
Tenable has strategically balanced its debt and equity financing to support growth while managing risk. In the latest quarter, cash and cash equivalents were reported at $312.2 million, providing liquidity to meet short-term obligations.
| Financial Metric | Amount (in millions) |
|---|---|
| Total Liabilities | $1,229.9 |
| Total Equity | $404.6 |
| Debt-to-Equity Ratio | 1.67 |
| Short-term Debt | $657.1 |
| Long-term Debt | $357.3 |
| Interest Expense (Q3 2024) | $8.1 |
| Cash and Cash Equivalents | $312.2 |
Assessing Tenable Holdings, Inc. (TENB) Liquidity
Assessing Tenable Holdings, Inc.'s Liquidity
As of September 30, 2024, the liquidity position of Tenable Holdings, Inc. can be evaluated through its current and quick ratios, along with an analysis of its working capital trends.
Current and Quick Ratios
The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, is calculated as follows:
| Current Assets (in thousands) | Current Liabilities (in thousands) | Current Ratio |
|---|---|---|
| $843,530 | $657,117 | 1.28 |
The quick ratio, which accounts for the most liquid assets, is calculated using cash and cash equivalents, short-term investments, and accounts receivable:
| Quick Assets (in thousands) | Current Liabilities (in thousands) | Quick Ratio |
|---|---|---|
| $312,207 + $236,242 + $192,648 = $740,097 | $657,117 | 1.13 |
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, indicates the short-term financial health of the company. As of September 30, 2024:
| Working Capital (in thousands) | 2024 |
|---|---|
| $843,530 - $657,117 | $186,413 |
This represents a positive trend compared to December 31, 2023, when working capital was:
| Working Capital (in thousands) | 2023 |
|---|---|
| $805,473 - $675,838 | $129,635 |
Cash Flow Statements Overview
The cash flow statement provides insights into the company's operational, investing, and financing activities:
Operating Cash Flow
| Cash Flow from Operating Activities (in thousands) | 2024 | 2023 |
|---|---|---|
| Net Cash Provided by Operating Activities | $136,357 | $111,350 |
Investing Cash Flow
| Cash Flow from Investing Activities (in thousands) | 2024 | 2023 |
|---|---|---|
| Net Cash Used in Investing Activities | ($27,099) | $19,619 |
Financing Cash Flow
| Cash Flow from Financing Activities (in thousands) | 2024 | 2023 |
|---|---|---|
| Net Cash Used in Financing Activities | ($31,744) | $16,043 |
Potential Liquidity Concerns or Strengths
The company's cash and cash equivalents totaled $312,207,000 at the end of Q3 2024, which is an increase from $237,132,000 at the beginning of the year. This growth in liquidity indicates a strengthening cash position.
Furthermore, unlevered free cash flow for the third quarter of 2024 was reported at $60,766,000, up from $48,159,000 in the same period in 2023. This indicates a positive trend in cash generation capabilities.
Overall, the liquidity ratios, working capital trends, and cash flow statements suggest that the company maintains a healthy liquidity position, which is crucial for supporting ongoing operations and future investments.
Is Tenable Holdings, Inc. (TENB) Overvalued or Undervalued?
Valuation Analysis
As of 2024, the valuation analysis of the company indicates several key metrics that help in determining whether the company is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The P/E ratio is an important indicator of a company's valuation based on its earnings. For the year ending December 31, 2024, the company is expected to report a non-GAAP diluted earnings per share in the range of $1.21 to $1.23. Assuming a stock price of approximately $30, the P/E ratio would be calculated as follows:
P/E Ratio = Stock Price / Non-GAAP EPS = $30 / $1.22 (average) = 24.59.
Price-to-Book (P/B) Ratio
The P/B ratio compares a company's market value to its book value. As of September 30, 2024, the total stockholders’ equity was $404.6 million, with approximately 121.3 million shares outstanding, resulting in a book value per share of:
Book Value per Share = Total Stockholders’ Equity / Total Shares Outstanding = $404,555 / 121,344 = $3.34.
Assuming a stock price of $30, the P/B ratio would be:
P/B Ratio = Stock Price / Book Value per Share = $30 / $3.34 = 8.99.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) is calculated as market cap plus debt minus cash. With a market cap of $3.64 billion, total debt of $357.3 million, and cash equivalents of $312.2 million, the EV is:
EV = Market Cap + Total Debt - Cash = $3.64 billion + $357.3 million - $312.2 million = $3.68 billion.
The company’s EBITDA for the year is projected at approximately $171.8 million to $173.8 million. Using an average of $172.8 million, the EV/EBITDA ratio would be:
EV/EBITDA = EV / EBITDA = $3.68 billion / $172.8 million = 21.26.
Stock Price Trends
Over the last 12 months, the stock has experienced significant volatility. The stock price ranged from a low of approximately $22 to a high of about $35. The current stock price is around $30.
Dividend Yield and Payout Ratios
The company does not currently pay dividends, thus the dividend yield is 0% and the payout ratio is also 0%.
Analyst Consensus on Stock Valuation
As of the latest reports, analyst consensus generally leans towards a hold rating, with some analysts recommending a buy based on growth potential in the cybersecurity sector.
| Metric | Value |
|---|---|
| P/E Ratio | 24.59 |
| P/B Ratio | 8.99 |
| EV/EBITDA Ratio | 21.26 |
| Stock Price Range (12 months) | $22 - $35 |
| Current Stock Price | $30 |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Tenable Holdings, Inc. (TENB)
Key Risks Facing Tenable Holdings, Inc.
The financial health of Tenable Holdings, Inc. is influenced by a variety of internal and external risk factors. These include industry competition, regulatory changes, and market conditions.
Industry Competition
The cybersecurity industry is characterized by intense competition. As of 2024, Tenable competes with established firms such as Palo Alto Networks and CrowdStrike, as well as emerging startups. This competition can lead to pricing pressures and impact market share. For instance, the company's revenue for Q3 2024 was $227.1 million, a 13% increase year-over-year, indicating growth despite competitive challenges .
Regulatory Changes
Changes in regulations regarding data privacy and cybersecurity can pose significant risks. Compliance with standards like GDPR in Europe and various U.S. state laws requires constant adaptation. The evolving regulatory landscape may necessitate additional investments in compliance measures, impacting operational costs.
Market Conditions
Economic downturns can reduce IT spending, affecting revenue streams. The projected revenue for the fourth quarter of 2024 is estimated to be between $229.0 million and $233.0 million, reflecting potential market volatility .
Operational Risks
Operational risks include potential disruptions in service delivery and the need for continuous innovation. The company reported a GAAP net loss of $9.2 million in Q3 2024, an improvement from $15.6 million in the same quarter of 2023, which highlights the operational challenges faced .
Financial Risks
Financial risks involve fluctuations in interest rates and foreign currency exchange rates, which can affect profitability. The interest expense for Q3 2024 was $8.1 million, consistent with previous periods .
Strategic Risks
Strategic risks arise from potential misalignments in business direction or failure to adapt to market trends. The company has focused on enhancing its product offerings, such as the recent launch of AI Aware, to stay competitive .
Mitigation Strategies
Tenable has implemented several strategies to mitigate these risks. For example, it has expanded its stock repurchase program by $200 million to enhance shareholder value . Additionally, investments in R&D have increased, with research and development expenses reaching $48.0 million for Q3 2024, up from $37.1 million in Q3 2023.
| Risk Factor | Details | Current Financial Impact |
|---|---|---|
| Industry Competition | Intense competition from established firms and startups. | Revenue of $227.1 million (Q3 2024) |
| Regulatory Changes | Compliance with evolving data privacy laws. | Increased operational costs due to compliance measures. |
| Market Conditions | Economic downturns affecting IT spending. | Projected revenue of $229.0 million to $233.0 million (Q4 2024) |
| Operational Risks | Potential service delivery disruptions. | GAAP net loss of $9.2 million (Q3 2024) |
| Financial Risks | Fluctuations in interest rates and currency exchange rates. | Interest expense of $8.1 million (Q3 2024) |
| Strategic Risks | Misalignments in business direction or market trends. | Investment in R&D of $48.0 million (Q3 2024) |
Future Growth Prospects for Tenable Holdings, Inc. (TENB)
Future Growth Prospects for Tenable Holdings, Inc.
Product Innovations: In 2024, Tenable launched several innovative products including AI Aware, which enhances detection capabilities for vulnerabilities related to artificial intelligence, and Tenable Enclave Security, a solution tailored for highly secure environments. The introduction of Vulnerability Intelligence and Exposure Response features also positions the company to deliver actionable intelligence across IT and cloud environments.
Market Expansions: The company has expanded its exposure management capabilities to include new data security posture management (DSPM) and artificial intelligence security posture management (AI-SPM) features for Tenable Cloud Security. This expansion is expected to tap into the growing demand for cloud security solutions.
Recent Financial Highlights: For the third quarter of 2024, Tenable reported:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Revenue | $227.1 million | $201.5 million |
| Non-GAAP Net Income | $39.3 million | $27.7 million |
| Non-GAAP Diluted EPS | $0.32 | $0.23 |
| Calculated Current Billings | $248.4 million | $224.7 million |
| Unlevered Free Cash Flow | $60.8 million | $48.2 million |
Future Revenue Growth Projections: For the fourth quarter of 2024, Tenable expects revenue in the range of $229.0 million to $233.0 million and for the full year, revenue is projected between $893.3 million to $897.3 million.
Earnings Estimates: Non-GAAP net income for the year ending December 31, 2024, is anticipated to be between $149.9 million to $151.9 million with non-GAAP diluted earnings per share in the range of $1.21 to $1.23.
Strategic Initiatives: The company has approved a $200 million expansion of its stock repurchase program, which may support share price stability and provide confidence to investors. Additionally, the company added 386 new enterprise platform customers and 60 net new six-figure customers in the recent quarter.
Competitive Advantages: Tenable's focus on exposure management and its top performer recognition in cloud security by the 2024 CRN Annual Report Card Awards enhances its competitive positioning. The company's robust product suite, which addresses the growing concerns of cybersecurity, particularly in cloud environments, provides a significant edge in the market.
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Article updated on 8 Nov 2024
Resources:
- Tenable Holdings, Inc. (TENB) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Tenable Holdings, Inc. (TENB)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Tenable Holdings, Inc. (TENB)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.