Tenable Holdings, Inc.

Greetings. Welcome to the Tenable's second quarter 2023 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 should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. At this time, I'll turn the conference over to Erin Carney, Vice President, Investor Relations. Ms. Carney, you may now begin.

Thank you, Operator, and thank you all for joining us on today's conference call to discuss Tenable's second quarter 2023 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 third 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, including Tenable One, 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 with the FCC, which are available on the FCC website at fcc.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 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 will now turn the call over to Amit.

Thank you, Erin. Today I'll cover some context on our financial performance in the quarter, discuss the accelerating momentum we're seeing with our platform, including strong demand in cloud, and also touch on some exciting product updates. Q2 surpassed expectations on every metric, outperforming on both the top and bottom lines. Our results for the quarter are a testament to the growing importance of exposure management and our ability to pivot in a difficult market. Tenable solutions are enabling customers to secure critical areas of their attack surface while doing more with less. This is incredibly relevant at a time when customers are focused on ROI. Our sellers executed incredibly well during the quarter by combining our strong business use case with our industry-leading technology. In Q2, we added 426 new enterprise customers and 63 net new six-figure customers, signaling a return to our typical quarterly ads. The upside to our results was driven by demand for Tenable One, where we continue to exceed expectation with record levels of deals closing and strong pipeline generation. We also saw a high volume of large deals as customers look to reduce risk, consolidate spend, and security tools sprawl with Tenable One. Our OT business also delivered strong results with notable traction in public sector. Last quarter, we highlighted our competitive differentiation, and we continue to experience a shorter time to tech win and very strong win rates. We believe this is a direct result of our strategy to broaden the use cases for our technologies and enable our customers to discover and secure the proliferation of assets in increasingly complex environments, including hybrid, multi-cloud, OT, identity, and beyond. As we increase the Tenable One customer base, we continue to experience larger ASPs and adoption of more platform use cases, such as identity and cloud security. During the quarter, we saw Tenable One increase from a teens percentage of new bookings to over 20%, and now comprises low double-digit percentage of new and renewal business. We're also seeing increased Tenable One growth from our on-prem customers, driven by the need to expand coverage of their attack service, coupled with new advanced analytics provided by Tenable One. For all customers, securing the cloud is a critical objective. The speed and skill of cloud often leave environments with undetected and unremediated exposures, such as misconfigurations, system vulnerabilities, and excess privileges. In many cases, customers do not even know what assets they have and what access has been granted to those assets. With cloud security as part of Tenable One platform, we can bring greater context to a customer's overall preventative security program so that they can better understand risk and prioritize mitigating actions. Most organizations operate multi-cloud and hybrid environments, and we can consistently enforce cloud security posture and compliance across their operating environments. With our unified platform, we're helping organizations better measure and communicate improvements in security posture, which has become a board-level issue. During the quarter, we announced our Identity Risk Score. Identity Risk Score uses mature AI and machine learning models to quantify risk. Using modern AI techniques with conceptual exposure data, Tenable Solutions can quickly identify and prioritize identity and entitlement-related problems on-prem and in cloud environments. We believe cybersecurity and exposure management in particular are big data problems and that we are best suited to address them. Through our analytics and artificial intelligence, we're helping security teams quickly identify issues and prioritize remediations across the modern attack surface. We've recently expanded Tenable One to allow customers to ingest vulnerability and misconfiguration data from their other security tools. This, combined with our expansive coverage across the attack surface and vulnerabilities, misconfigurations, and identities, allows us to deliver deeper analytics and more insights into customer risk. In short, we believe that our data lake is the largest repository of contextual exposure data in the world. This data repository helps to power mature and next-gen AI technologies for exposure management. Stay tuned for further announcements and demos at Black Hat. In addition to Tenable One, we saw strength in both the public sector and OT. Cybersecurity is increasingly a focal point for public policy, including CISA's operational directives for operational technology, presidential decision directives, and Defense Authorization Act, all of which mandate improvements in cybersecurity for OT. As customers in the public sector and broader cyber industry face more rules and regulations, they frequently mature their risk management practices. We have both market leading product in this area and a deep understanding of both OT and IT converged environments. This combination is necessary as CISOs are increasingly becoming a critical part of the OT security purchasing process. This year, we plan to integrate OT into Tenable One, another milestone for our platform that will further enrich the data and differentiate our offering. We're incredibly excited about our performance, where we are today, and where we are going. We have industry-leading technologies unified in a differentiated platform. We're seeing demand at the top end of the funnel, particularly in cloud and identity, and we're achieving tech validation wins at a faster rate. We're doing all this with our balanced growth strategy and continuing to invest for growth and expanding margins. I'm particularly proud of our ability to successfully navigate the ongoing uncertainty in the macro environment. We had a great quarter, and we are confident in our strategy and in our ability to execute. I'll now turn the call over to Steve for further commentary on our financial results and outlook.