Tenable Holdings, Inc.

Greetings. Welcome to Tenable's third quarter 2022 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. Please note that this conference is being recorded. At this time, I'll now turn the conference over to Erin Carney, Senior Director, Investor Relations. Erin, you may now begin.

Thank you, Operator, and thank you all for joining us on today's conference call to discuss Tenable's third quarter 2022 financial results. With me on the call today are Amit Yaran, our Chief Executive Officer, and Steve Vince, our Chief Financial Officer. Prior to this call, we issued a press release announcing our financial results for the quarter. You can find the press release on the IR website at tenable.com. Before we begin, let me remind you that we will make forward-looking statements during the course of this call including statements relating to our guidance and expectations for the fourth quarter and full year 2022, growth in drivers in our business, changes in the threat landscape in the security industry and our competitive position in the market, growth in our customer demand for and adoption of our solutions, planned innovation and new products and services, and our expectations regarding long-term profitability and free cash flow. These forward-looking statements involve risks and uncertainties, some of which are beyond our control, which could cause actual results to differ materially from those anticipated by these statements. You should not rely upon forward-looking statements as a prediction of future events. Forward-looking statements represent our management's beliefs and assumptions only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. For a further discussion of the material risks and other important factors that could affect our actual results, please refer to those contained in our most recent annual report on Form 10-K and subsequent reports that we file at the SEC, which are available on the SEC website at sec.gov. In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their closest GAAP equivalent. Our earnings relief that we issued today include GAAP to non-GAAP reconciliations for these measures and is also available on the Investor Relations section of our website. I will now turn the call over to Amit.

Thank you, Erin. Today I'll discuss our financial performance in Q3 traction with our exposure solutions, and the exciting release of Tenable One, our exposure management platform. With that, let me first touch on our Q3 results. We delivered strong revenue growth for the quarter at 26%. We also delivered non-GAAP EPS of 15 cents and unlevered free cash flow of $34.8 million, both significantly above expectations. Additionally, we had another strong quarter for new enterprise customer acquisitions, adding 712, which is a record for us. We had 89 large net new six-figure customers, which grew 44% year over year, demonstrating particular strength in the enterprise. Underpinning this demand was our tenable EP platform, which remains strong at low double digits of new sales. Notably, EP has only single digit penetration into our current customer base, providing a significant opportunity for additional expansion. Overall, we're very pleased with the demand in the quarter as we saw strength in both new logos and upsell to existing customers. In addition to success in the large enterprise market, public sector was also a highlight as we continue to win federal, state, and local markets. We are excited that even in a challenging macro environment, cyber and vulnerability management remain a key priority. Customers regularly talk to us about needing more visibility across the attack surface, how to focus efforts on prevention, and how to make better cyber risk management decisions. We believe our leadership in vulnerability management earns us the right to not only have these conversations, but also be the leading vendor when they are looking into understanding and managing cyber risk. Over the last few years, we have broadened our product suite and launched additional exposure solutions to address other parts of the attack surface, such as operational technologies, cloud native, infrastructure as code, and cloud security posture management. Active Directory and Identity, and External Attack Surface Discovery and Management. Exposure solutions include Tenable.io, which is frequently used to help customers protect mobile and remote workers, probe their external facing assets, and assess the integrity of their cloud environments. Combined, these exposure solutions and analytics make up approximately 50% of our overall sales relative to 5% pre-IPO and approximately 30% at 2020. With the introduction of EP, we made it easier for customers to purchase multiple assessment technologies from us. Over the past year, we have seen the uplift in ASPs for EP reach approximately 70%. we've seen the market demand increase for exposure management through the adoption and consumption of EP. This gives us great confidence that an integrated exposure management platform will be even more compelling. And this month, we announced the release of Tenable One, the strategic evolution of Tenable EP. Tenable One brings data together from across Tenable's exposure management solutions and delivers new insights and analytics beyond what siloed products are capable of delivering. 10.1 brings the customer's entire attack circle, whether it's on-premise or in the cloud, into a single unified view across vulnerability management, cloud security, active directory and identities, and external attack surface management to deliver context-driven risk analytics, providing actionable intelligence. This holistic approach breaks down silos and disparate data sources, offering customers a new way to understand and manage their cyber risk, as well as measure their improvement over time. Tenable One helps our customers analyze the relationship between assets, exposures, privileges, and threats across attack paths in order to more completely understand and reduce risk. For customers that prefer to consume individual products, Tenable One also delivers enhanced actionable analytics that differentiate Tenable. For example, Tenable I.O., purchased with a standalone license, delivers outstanding vulnerability management. Buying Tenable One for VM gives customers enhanced analytics, like asset criticality-based prioritization and attack path analytics, new analytics that will identify potential lateral movement that combinations of unpatched vulnerabilities can create. Tenable One makes each individual product even better. With this month's release, we've introduced three new analytic capabilities that we believe are foundational to exposure management programs. Lumen Exposure Views, which provides insights into an organization's cyber exposure. Attack path analysis, enabling security teams to view attack paths from external sources to their most critical systems. And asset inventory, providing users with a centralized view of assets and their context. The success we've seen with EP gives us great confidence in leading our go-to-market efforts with Tenable One. Gartner continues to highlight the importance of exposure management. And while using slightly different terminology, other analysts are increasingly talking about cyber risk and operationalizing the process of managing exposures as increasingly critical. As a platform-first company and the leader in vulnerability management, we're helping customers understand, measure, and manage risk across their entire tax surface, IT, cloud, Active Directory, and beyond. Tenable One represents an unprecedented opportunity to cement our role as the leading cyber exposure management platform. Tenable One represents a major milestone in our vision. And over time, we will ingest and incorporate more data from a variety of sources and can deliver even more actionable analytics and insights. While operating in one of the most challenging environments in many years, we're excited to be able to continue delivering both attractive growth, strong earnings, and an exciting path to transforming cyber risk management. The value proposition for helping our customers more easily understand and prioritize how to reduce cyber risk is resonating, especially in this economic environment where many companies are seeking to emphasize efficiency. The investments we have made to develop and broaden our exposure management platform, coupled with investments in our go-to-market efforts, give us confidence in our ability to continue delivering on the 20% plus growth target we outlined last year. Macro side, we believe that we've never been in a better position to deliver significant growth at scale. We are also on track to meaningfully scale margins and cash flows as we generate leverage from previous investments and increase our focus on driving operational efficiency. We expect to deliver over $120 million in unlevered free cash flow in 2022 and believe we can double that in 2024. I will now turn the call over to Steve for further commentary on our financial results.