Tenable Holdings, Inc.

Greetings and welcome to Tenable's first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Aaron Carney, Vice President, Investor Relations. Thank you. You may begin.

Thank you, Operator, and thank you all for joining us on today's conference call to discuss Tenable's first quarter 2023 financial results. With me on the call today are Amit Yoran, 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 second quarter and full year 2023, growth and 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 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 with 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 equivalents. Our earnings release that we issued today includes GAAP to non-GAAP reconciliations for these measures and is also available on the investor relations section of our website. I'll now turn the call over to Amit.

Today I'll provide some financial highlights on the quarter, discuss the current state of the market, and our momentum with Tenable One. We delivered strong revenue, operating income, and cash flow during the quarter. This is particularly notable given the macro headwinds we experienced at the end of March. Based on conversations with customers, we are confident that cybersecurity and specifically cyber exposure management remains a top strategic focus for organizations globally. While we experienced some challenges in the quarter, we saw some incredibly positive signs for our business. Let me start by making a few comments about the broader market, which impacted current calculated billings. Some of the macro conditions we've been discussing, back-end loaded quarters, longer sales cycles, and more scrutiny of large deals, particularly new business, continued during the quarter. The last two weeks of March exacerbated these conditions as the banking crisis came to light. Specifically, we saw longer lead time in purchasing and approval phases of our sales cycles. in the first quarter versus what we had typically experienced. As a direct result, a number of highly qualified committed deals pushed out of the quarter, which is reflected in our net new enterprise and our six-figure ads. Of the deals pushed, many were in banking and financial services and technology and telecom, traditionally strong sectors for Tenable. We expect these macro factors to continue to have an impact this year. As we navigate the current macro environment, there are two points that are important to note. The first is that demand remains strong. New pipeline generation added during the quarter exceeded our expectations and was a record for Tenable. Customers clearly want to understand and reduce their risk, and they're increasingly using Tenable One as the platform of choice to do so. The second is that we believe our competitive dynamics have never been more favorable. We're getting tech evaluation wins at a much faster rate. In fact, the lead to tech win phase of our sales cycle in the quarter was approximately 10% shorter than the same quarter last year, which was also aided by Log4J. In this market, more enterprises are specifically looking to consolidate their investments with a platform-first approach to cybersecurity. This trend is good news for us and one that we intend to use to our full advantage. Tenable One enables our customers to achieve greater return on their cybersecurity investment while also providing the preventative security they desperately need. Tenable One continues to be an exciting area of growth for us and represents a mid-teens percentage of new business and a high single digits percentage of our overall business. It's also noteworthy that within Tenable One, we continue to see a shift in allocation of licenses beyond vulnerability management. Cloud and analytics are key areas of growth with existing customers, validating our investments to unify cloud security posture and vulnerability management, as well as our analytics-led approach to exposure management. The strength we're seeing in Tenable One is a direct result of our pursuit to operationalize preventative security, which has been a driving force for our roadmap. While reactive cybersecurity is necessary, it does little to nothing to address the root causes of a majority of breaches, known vulnerabilities, and misconfigurations. We are leading the industry to change the way it thinks about managing risk. With exposure management capabilities of 10able1, organizations are rethinking their approach to risk, leveraging vulnerability and risk data to proactively unearth weaknesses and prioritize vulnerability remediation. And as I mentioned, We're getting tech wins faster. We believe the speed of our wins reflects a combination of our position as a technology leader, our reputation as a company, and the superiority of our exposure management platform. There's no doubt that security teams need to do more with less and are choosing to do so with a partner they trust. We're committed to delivering more for our customers and We're updating Tenable One to support on-premise and hybrid environments via integration with Tenable Security Center. This enables tens of thousands of organizations and customers with regulatory and data privacy requirements to access Tenable One's features, such as risk analytics, attack path analytics, benchmarking, and asset inventory. Tenable One streamlines exposure management for hybrid vulnerability management deployments and may help on-prem customers transition to the cloud more quickly. Customers want to understand exposures and manage risk. Tenable One provides a means to consistently enforce cloud security posture and compliance across multi-cloud and hybrid environments through a single unified platform. Our solution is more cost-effective and scalable than using one-off or siloed tools. While we are navigating some near-term macro headwinds, which have led us to revise our top-line guide, we have a lot to be excited about. We have an industry-leading technology and are expanding successfully to a platform, enabling our customers to consolidate vendors and increase operating efficiency, both of which are critical in this environment. We're building strong demand with the top end of the funnel. We're achieving tech wins faster. And we believe we've never been better positioned competitively. In short, I believe that Tenable is well positioned strategically for long-term success and could not be more excited about our future. Additionally, we remain committed to delivering on the operating and unlevered free cash flow commitments we made at the beginning of the year. We look forward to updating you as the year progresses. I'll now turn the call over to Steve for further commentary on our financial results and outlook. Thanks, Amit.