Tenable Holdings, Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (1) our consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, or this Form 10-Q, and (2) our consolidated financial statements, related notes and management's discussion and analysis of financial condition and results of operations in our Annual Report on Form 10-K for the year ended December 31, 2024, or the 10-K, filed with the Securities and Exchange Commission on February 24, 2025. This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would” or the negative or plural of these words or similar expressions or variations. Such forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors,” set forth in Part I, Item IA of the 10-K, in Part II, Item 1A of this Form 10-Q and in our other filings with the SEC. You should not rely upon forward-looking statements as predictions of future events. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (1) our consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, or this Form 10-Q, and (2) our consolidated financial statements, related notes and management's discussion and analysis of financial condition and results of operations in our Annual Report on Form 10-K for the year ended December 31, 2024, or the 10-K, filed with the Securities and Exchange Commission, or the SEC, on February 24, 2025. This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would” or the negative or plural of these words or similar expressions or variations. Such forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors,” set forth in Part I, Item IA of the 10-K, in Part II, Item 1A of this Form 10-Q and in our other filings with the SEC. You should not rely upon forward-looking statements as predictions of future events. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Previous wording

Tenable One is an AI-powered exposure management platform that gives enterprises a single, unified view of risk across all types of assets and attack pathways. The platform combines broad, industry-leading vulnerability coverage, spanning IT assets, cloud resources, containers, web apps and identity systems. Tenable One builds on the speed and breadth of vulnerability coverage from our research team of cybersecurity and data science experts, or Tenable Research, and adds aggregated exposure view analytics, guidance on mitigating attack pathways and a centralized asset inventory. It leverages AI, and machine learning, or ML, rapidly analyzing and interpreting vast data sets to pinpoint priority weaknesses and high-risk attack paths, deliver recommendations and automate routine tasks.

Current wording

Tenable One is an AI-powered exposure management platform that gives enterprises a single, unified view of risk across all types of assets and attack pathways. The platform combines broad, industry-leading vulnerability coverage, spanning IT assets, cloud resources, containers, web apps, identity systems and third-party data connectors. Tenable One builds on the speed and breadth of vulnerability coverage from our research team of cybersecurity and data science experts, or Tenable Research, and adds aggregated exposure view analytics, guidance on mitigating attack pathways and a centralized asset inventory. It leverages AI, and machine learning, or ML, rapidly analyzing and interpreting vast data sets to pinpoint priority weaknesses and high-risk attack paths, deliver recommendations and automate routine tasks.

Previous wording

Tenable One integrates Tenable Vulnerability Management, Tenable Cloud Security, Tenable Identity Exposure, Tenable Web App Scanning, Tenable Lumin Exposure View, Tenable Attack Surface Management, Tenable Security Center and Tenable OT Security. Our products, including Nessus are also offered on a standalone basis.

Current wording

Tenable One integrates Tenable Vulnerability Management, Tenable Web App Scanning, Tenable Cloud Security, Tenable Identity Exposure, Tenable OT Security, Tenable Attack Surface Management, Tenable One Connectors and Tenable Security Center. Our products, including Nessus are also offered on a standalone basis.

Previous wording

Recurring revenue, which includes revenue from subscription arrangements for software (both recognized ratably over the subscription term and upon delivery) and cloud-based solutions and maintenance associated with perpetual licenses, represented 96% of revenue in the three months ended March 31, 2025 and 2024.

Current wording

Recurring revenue, which includes revenue from subscription arrangements for software (both recognized ratably over the subscription term and upon delivery) and cloud-based solutions and maintenance associated with perpetual licenses, represented 96% of revenue in the three and six months ended June 30, 2025 and 2024.

Previous wording

(1) Deferred revenue (current), beginning of period for the three months ended March 31, 2025 includes $6.6 million related to acquired deferred revenue.

Current wording

(1)Deferred revenue (current), beginning of period for the three months ended June 30, 2025 and 2024, and the six months ended June 30, 2025 and 2024 includes $0.1 million, $0.1 million, $6.7 million and $0.1 million, respectively, related to acquired deferred revenue.

Previous wording

We have historically experienced, and expect in the future to experience, seasonality in entering into agreements with customers. We typically enter into a significantly higher percentage of agreements with new customers, as well as renewal agreements with existing customers, in the third and fourth quarters of the year. The increase in customer agreements in the third quarter is primarily attributable to U.S. government and related agencies, and the increase in the fourth quarter is primarily attributable to large enterprise account buying patterns typical in the software industry. We anticipate that these historical trends will be impacted by current macroeconomic conditions and U.S. policy decisions related to the funding of government agencies and the imposition of tariffs, which could lengthen purchasing and approval phases of our sales cycle in 2025. The ratable nature of our subscription revenue makes this seasonality less apparent in our overall financial results.

Current wording

We have historically experienced, and expect in the future to experience, seasonality in entering into agreements with customers. We typically enter into a significantly higher percentage of agreements with new customers, as well as renewal agreements with existing customers, in the third and fourth quarters of the year. The increase in customer agreements in the third quarter is primarily attributable to U.S. government and related agencies, and the increase in the fourth quarter is primarily attributable to large enterprise account buying patterns typical in the software industry. We anticipate that these historical trends will be impacted by current macroeconomic conditions and U.S. policy decisions related to the funding of government agencies and the imposition of tariffs, which may lengthen purchasing and approval phases of our sales cycle in 2025. The ratable nature of our subscription revenue makes this seasonality less apparent in our overall financial results.

Previous wording

We expect our general and administrative expense to continue to increase in absolute dollars and decrease as a percentage of our revenue over the long term, although our general and administrative expense may fluctuate from period to period due to the timing and extent of these expenses. In the three months ended March 31, 2025 our general and administrative expense included $15.5 million of termination benefits, including cash compensation and accelerated equity award vesting, related to the passing of our Chairman and Chief Executive Officer.

Current wording

We expect our general and administrative expense to continue to increase in absolute dollars and decrease as a percentage of our revenue over the long term, although our general and administrative expense may fluctuate from period to period due to the timing and extent of these expenses. In the six months ended June 30, 2025 our general and administrative expense included $15.5 million of termination benefits, including cash compensation and accelerated equity award vesting, related to the passing of our Chairman and Chief Executive Officer.

Previous wording

(2)Stock-based compensation in the three months ended March 31, 2025 includes $14.6 million of expense related to the accelerated equity award vesting of our late CEO.

Current wording

(2) Stock-based compensation in the six months ended June 30, 2025 includes $14.6 million of expense related to the accelerated equity award vesting of our late CEO.

Previous wording

The increase in cost of revenue of $3.5 million was primarily due to:

Current wording

The increase in cost of revenue of $5.6 million was primarily due to:

Previous wording

•a $1.2 million increase in amortization of intangible assets due to acquired intangible assets;

Current wording

•a $1.8 million increase in amortization of intangible assets due to acquired intangible assets;

Previous wording

•a $1.1 million increase in depreciation expense;

Current wording

•a $1.1 million increase in third-party cloud costs;

Previous wording

•a $0.2 million increase in subscription costs.

Current wording

•a $0.3 million increase in subscription costs; and

Previous wording

The increase in sales and marketing expense of $3.4 million was primarily due to:

Current wording

The increase in sales and marketing expense of $6.0 million was primarily due to:

Previous wording

•a $1.4 million increase in expenses for demand generation programs, including advertising, sponsorships and brand awareness efforts;

Current wording

•a $1.3 million increase in expenses for demand generation programs, including advertising, sponsorships and brand awareness efforts;

Previous wording

•a $0.9 million increase in sales commissions.

Current wording

•a $1.2 million increase in sales commissions;

Previous wording

The increase in research and development expense of $9.5 million was primarily due to:

Current wording

The increase in research and development expense of $14.1 million was primarily due to:

Previous wording

The increase in general and administrative expense of $17.0 million was primarily due to:

Current wording

The increase in general and administrative expense of $3.7 million was primarily due to:

Previous wording

The increase in revenue of $23.2 million included $22.6 million from existing customers as of April 1, 2024 and $0.6 million from new customers. U.S. revenue increased $9.9 million, or 8%. International revenue increased $13.3 million, or 13%.

Current wording

The increase in revenue of $49.2 million included $46.6 million from existing customers as of July 1, 2024, and $2.6 million from new customers. U.S. revenue increased $22.6 million, or 10%. International revenue increased $26.6 million, or 13%.

Previous wording

•a $2.1 million increase in acquisition-related expenses;

Current wording

•a $2.1 million increase in sales commissions;

Previous wording

•a $0.3 million decrease in depreciation expense,

Current wording

•a $0.4 million decrease in depreciation expense; and

Previous wording

•an $8.4 million increase in personnel costs, including a $1.8 million increase in stock-based compensation;

Current wording

•a $1.8 million increase in acquisition-related expenses;

Previous wording

•a $13.9 million increase in personnel costs, including $15.5 million in termination benefits including cash compensation and accelerated equity award vesting related to the passing of our Chairman and Chief Executive Officer;

Current wording

•a $15.8 million increase in personnel costs, including $15.5 million in termination benefits including cash compensation and accelerated equity award vesting related to the passing of our Chairman and Chief Executive Officer;

Previous wording

•a $0.1 million increase in tax credits.

Current wording

•a $0.1 million increase in software subscription costs.

Previous wording

Restructuring in the prior year included $1.4 million in non-ordinary course severance, employee related benefits and other charges to reorganize business operations.

Current wording

Restructuring in the prior year included a $4.5 million non-cash impairment of leasehold improvements and furniture and fixtures that was recorded in connection with the sublease of a portion of our headquarters and $1.6 million in non-ordinary course severance and employee related benefits.

Previous wording

The $0.7 million decrease in interest income was due to a decrease in short-term investments. Interest expense decreased $1.1 million due to a decrease in the interest rate on our Term Loan. Other income, net increased $1.8 million primarily due to foreign exchange gains.

Current wording

The $2.6 million decrease in interest income was due to a decrease in short-term investments. Interest expense decreased $2.0 million due to a decrease in the interest rate on our Term Loan. Other income (expense), net increased $1.7 million primarily due to an increase in foreign exchange gains partially offset by a $1.5 million gain on conversion of one of our SAFE investments in the prior year.

Previous wording

•$2.1 million of income taxes in foreign jurisdictions in which we conduct business; and

Current wording

•$2.1 million of income taxes in foreign jurisdictions in which we conduct business;

Previous wording

At March 31, 2025, we had $233.4 million of cash and cash equivalents, which consisted of bank deposits and money market funds, and $226.8 million of short-term investments, which consisted of commercial paper, asset backed securities, U.S. Treasury and agency obligations and corporate and Yankee bonds.

Current wording

At June 30, 2025, we had $175.0 million of cash and cash equivalents, which consisted of cash deposits and money market funds, and $211.5 million of short-term investments, which consisted of commercial paper, asset backed securities, U.S. Treasury and agency obligations and corporate and Yankee bonds.

Previous wording

Since our inception, we have primarily financed our operations through cash provided by operations, including payments received from customers using our software products and services. Prior to our IPO, we did not raise any primary institutional capital, and the proceeds of our Series A and Series B redeemable convertible preferred stock financings were used to repurchase shares of capital stock from former stockholders. We have generated significant operating losses as reflected by our accumulated deficit of $884.3 million at March 31, 2025.

Current wording

Since our inception, we have primarily financed our operations through cash provided by operations, including payments received from customers using our software products and services. Prior to our IPO, we did not raise any primary institutional capital, and the proceeds of our Series A and Series B redeemable convertible preferred stock financings were used to repurchase shares of capital stock from former stockholders. We have generated significant operating losses as reflected by our accumulated deficit of $899.0 million at June 30, 2025.

Previous wording

We typically invoice our customers annually in advance and, to a lesser extent, multi-years in advance. Therefore, a substantial source of our cash is from such prepayments, which are included in deferred revenue on our consolidated balance sheets. Deferred revenue consists primarily of the unearned portion of billed fees for our subscriptions and perpetual licenses, which is subsequently recognized as revenue in accordance with our revenue recognition policy. At March 31, 2025, we had deferred revenue of $808.4 million, of which $633.2 million was recorded as a current liability and is expected to be recognized as revenue in the next 12 months, provided all other revenue recognition criteria are met.

Current wording

We typically invoice our customers annually in advance and, to a lesser extent, multi-years in advance. Therefore, a substantial source of our cash is from such prepayments, which are included in deferred revenue on our consolidated balance sheets. Deferred revenue consists primarily of the unearned portion of billed fees for our subscriptions and perpetual licenses, which is subsequently recognized as revenue in accordance with our revenue recognition policy. At June 30, 2025, we had deferred revenue of $797.8 million, of which $624.5 million was recorded as a current liability and is expected to be recognized as revenue in the next 12 months, provided all other revenue recognition criteria are met.

Previous wording

Our principal uses of cash in recent periods have been funding our operations, expansion of our sales and marketing and research and development activities, investments in infrastructure, acquiring complementary businesses and technology, and repurchasing shares of our common stock. In February 2025, we acquired Vulcan for $148.5 million in cash. We expect to enter into arrangements to acquire or invest in other complementary businesses, services and technologies, including intellectual property rights, in the future.

Current wording

Our principal uses of cash in recent periods have been funding our operations, expansion of our sales and marketing and research and development activities, investments in infrastructure, acquiring complementary businesses and technology, and repurchasing shares of our common stock. In 2025, we acquired both Vulcan and Apex for a combined $196.2 million in cash. We expect to enter into arrangements to acquire or invest in other complementary businesses, services and technologies, including intellectual property rights, in the future.

Previous wording

We expect to continue incurring operating losses in the near term. Even though we generated positive cash flows from operations and free cash flow in the three months ended March 31, 2025, we may not be able to sustain these cash flows. We believe that our existing cash and cash equivalents and short-term investments will be sufficient to fund our operating and capital needs for at least the next 12 months and for the foreseeable future. Our future capital requirements will depend on many factors, including our revenue growth rate, subscription renewal activity, the timing and extent of spending to support further infrastructure and research and development efforts, the timing and extent of additional capital expenditures to invest in new and existing office spaces, the expansion of sales and marketing and international operating activities, any acquisitions of complementary businesses and technologies, the timing of our introduction of new product capabilities and enhancements of our platform and the continuing market acceptance of our platform. It may be necessary to seek additional equity or debt financing to fund our operating and capital needs. In the event that financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, operating results and financial condition would be adversely affected.

Current wording

We expect to continue incurring operating losses in the near term. Even though we generated positive cash flows from operations and free cash flow in the six months ended June 30, 2025, we may not be able to sustain these cash flows. We believe that our existing cash and cash equivalents and short-term investments will be sufficient to fund our operating and capital needs for at least the next 12 months and for the foreseeable future. Our future capital requirements will depend on many factors, including our revenue growth rate, subscription renewal activity, the timing and extent of spending to support further infrastructure and research and development efforts, the timing and extent of additional capital expenditures to invest in new and existing office spaces, the expansion of sales and marketing and international operating activities, any acquisitions of complementary businesses and technologies, the timing of our introduction of new product capabilities and enhancements of our platform and the continuing market acceptance of our platform. It may be necessary to seek additional equity or debt financing to fund our operating and capital needs. In the event that financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, operating results and financial condition would be adversely affected.

Previous wording

In November 2023, our Board of Directors authorized the repurchase of up to $100 million of our common stock. In October 2024, our Board of Directors increased the repurchase authorization by $200 million. Since the inception of the repurchase program and through March 31, 2025, we have purchased a total of 4.3 million shares for $174.9 million.

Current wording

In November 2023, our Board of Directors authorized the repurchase of up to $100 million of our common stock. In October 2024, our Board of Directors increased the repurchase authorization by $200 million. In July 2025, our Board of Directors increased the repurchase authorization by $250 million. Since the inception of the repurchase program and through June 30, 2025, we have purchased a total of 6.3 million shares for $239.9 million.

Previous wording

From January to March 2025, interest rates on our Term Loan were between 7.18% and 7.22%. The Term Loan is being amortized at 1% per annum in equal quarterly installments until the final payment of $350.6 million on the July 7, 2028 maturity date. We may be subject to mandatory Term Loan prepayments related to the excess cash provisions in the Credit Agreement if our first lien net leverage ratio (as defined in the Credit Agreement) exceeds 3.5. At March 31, 2025, our first lien net leverage ratio was 0.86.

Current wording

From January to June 2025, interest rates on our Term Loan were between 7.18% and 7.22%. The Term Loan is being amortized at 1% per annum in equal quarterly installments until the final payment of $350.6 million on the July 7, 2028 maturity date. We may be subject to mandatory Term Loan prepayments related to the excess cash provisions in the Credit Agreement if our first lien net leverage ratio (as defined in the Credit Agreement) exceeds 3.5. At June 30, 2025, our first lien net leverage ratio was 0.88.

Previous wording

Net cash used in investing activities increased by $120.5 million, primarily due to a $148.5 million increase in cash paid for acquisitions, a $5.9 million net increase in purchases of property and equipment and a $2.8 million decrease in proceeds from other investments, partially offset by a $34.8 million net decrease in purchases of short-term investments and a $1.9 million decrease in capitalized software development costs in the three months ended March 31, 2025.

Current wording

Net cash used in investing activities increased by $124.3 million, primarily due to a $167.0 million increase in cash paid for acquisitions, a $9.7 million net increase in purchases of property and equipment and a $2.6 million net decrease in proceeds from other investments, partially offset by a $51.6 million net decrease in purchases of short-term investments and a $3.4 million decrease in capitalized software development costs in the six months ended June 30, 2025.

Previous wording

Net cash used in financing activities increased by $36.7 million, primarily due a $35.0 million increase in repurchases of our common stock under our stock repurchase program, a $1.5 million decrease in proceeds from the exercise of stock options and a $0.2 million decrease in proceeds from stock issued in connection with our employee stock purchase program.

Current wording

Net cash used in financing activities increased by $78.5 million, primarily due to a $75.0 million increase in repurchases of our common stock under our repurchase program, a $1.9 million decrease in proceeds from the exercise of stock options, a $1.3 million increase in cash paid for taxes related to net share settlement of equity awards and a $0.2 million decrease in proceeds from stock issued in connection with our employee stock purchase program.