Tenable Holdings, Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K, or this Form 10-K. This Form 10-K 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 1A of this Form 10-K 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 our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K, or this Form 10-K. This Form 10-K contains forward-looking statements within the meaning of Section 27A of 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 1A of this Form 10-K 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

We are a leading provider of exposure management solutions. Exposure managementis the evolution of vulnerability management, advancing risk assessment and prioritization across the entire attack surface – from IT infrastructure to cloud environments to critical infrastructure. Tenable unifies security visibility, insight and action across this attack surface, equipping modern organizations to expose and close the cybersecurity gaps that erode business value, reputation and trust.

Current wording

We are the leading provider of exposure management solutions. Exposure managementis an increasingly critical category that extends foundational vulnerability management capabilities to advance risk assessment and prioritization across the entire attack surface – from IT infrastructure and cloud environments to critical infrastructure and AI. Tenable unifies security visibility, insight and action across this attack surface, equipping modern organizations to quickly identify and close the cybersecurity gaps that erode business value, reputation and trust.

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, our AI-powered exposure management platform, 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, third-party connectors and AI-related assets and workloads.

Previous wording

Our platform offerings are primarily sold on a subscription basis with a one-year term. Our subscription terms are generally not longer than three years. These offerings are typically prepaid in advance.

Current wording

Our solutions are primarily sold on a subscription basis with a one-year term, but are increasingly being sold with longer contractual durations. Our subscription terms are generally not longer than three years. These subscriptions are typically invoiced in advance at the beginning of the term, however multi-year subscriptions are increasingly being invoiced annually in installments.

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 2024 and 95% of revenue in 2023 and 2022.

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 2025 and 2024 and 95% of revenue in 2023.

Previous wording

Calculated current billings consists of revenue recognized in a period plus the change in current deferred revenue in the corresponding period. We believe that calculated current billings, which excludes deferred revenue for periods beyond twelve months in a customer’s contractual term, more closely correlates with annual contract value. Variability in total billings, depending on the timing of large multi-year contracts and the preference for annual billing versus multi-year upfront billing, may distort growth in one period over another.

Current wording

Calculated current billings consists of revenue recognized in a period plus the change in current deferred revenue in the corresponding period. Variability in total billings, depending on the timing of large multi-year contracts and the preference for annual billing versus multi-year upfront billing, may distort growth in one period over another.

Previous wording

We use the non-GAAP measure of calculated current billings, which we believe is a key metric to measure our periodic performance. Given that most of our customers pay in advance, we typically recognize a majority of the related revenue ratably over time. We use calculated current billings to measure and monitor our ability to provide our business with the working capital generated by upfront payments from our customers.

Current wording

Historically we have used calculated current billings as a key metric to measure our periodic performance and to measure and monitor our ability to provide our business with the working capital generated by upfront payments from our customers. Recently, however, the shift to annual installment billing for larger multi-year transactions is reducing our overall billing duration. We believe this shift creates a negative distortion in calculated current billings that fails to accurately represent the growth of our business and as such we have transitioned away from relying on calculated current billings to monitor performance of our business. We have included calculated current billings for comparative purposes.

Previous wording

The following table presents a reconciliation of revenue, the most directly comparable financial measure calculated in accordance with GAAP, to calculated current billings:

Current wording

The following table presents calculated current billings, including a reconciliation of revenue, the most directly comparable financial measure calculated in accordance with GAAP:

Previous wording

(1)Deferred revenue (current), beginning of period for 2024, 2023 and 2022 includes $0.1 million, $4.1 million and $0.9 million, respectively, related to acquired deferred revenue.

Current wording

(1) Deferred revenue (current), beginning of period for 2025, 2024 and 2023 includes $6.7 million, $0.1 million and $4.1 million, respectively, related to acquired deferred revenue.

Previous wording

(1)The number of new enterprise platform customers added in 2023 includes 104 legacy customers of Ermetic, Ltd. ("Ermetic").

Current wording

(1) The number of new enterprise platform customers added in 2023 includes 104 legacy customers of Ermetic, Ltd. ("Ermetic").

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. The ratable nature of our subscription revenue makes this seasonality less apparent in our overall financial results. We expect longer purchasing and approval phases of our sales cycle to continue in 2025.

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 may 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 2026. The ratable nature of our subscription revenue makes this seasonality less apparent in our overall financial results.

Previous wording

Our operating expenses consist of sales and marketing, research and development, general and administrative and restructuring expenses. Personnel costs are the most significant component of operating expenses and consist of salaries, benefits, bonuses, payroll taxes, stock-based compensation and ordinary course severance. Operating expenses also include depreciation and amortization as well as allocated overhead costs, including IT and facilities costs.

Current wording

Our operating expenses consist of sales and marketing, research and development, general and administrative and restructuring expenses. Personnel costs are the most significant component of operating expenses and consist of salaries, benefits, bonuses, payroll taxes, stock-based compensation and ordinary course severance. Operating expenses also include depreciation and amortization, allocated overhead costs, including IT and facilities costs, as well as acquisition-related expenses.

Previous wording

Sales and marketing expense consists of personnel costs, sales commissions, marketing programs, travel and entertainment, expenses for conferences, meetings and events and allocated overhead costs. We capitalize sales commissions, including related fringe benefit costs, and recognize the expense over an estimated period of benefit, which ranges between three and four years for subscription arrangements and five years for perpetual license arrangements. Sales commissions on contract renewals are capitalized and amortized ratably over the contract term, with the exception of contracts with renewal periods that are one year or less, in which case the incremental costs are expensed as incurred. Sales commissions on professional services arrangements are expensed as incurred as the contractual periods of these arrangements are generally less than one year.

Current wording

Sales and marketing expense consists of personnel costs, sales commissions, marketing programs, travel and entertainment, expenses for conferences, meetings and events, allocated overhead costs and acquisition-related expenses. We capitalize sales commissions, including related fringe benefit costs, and recognize the expense over an estimated period of benefit, which ranges between three and four years for subscription arrangements and five years for perpetual license arrangements. Sales commissions on contract renewals are capitalized and amortized ratably over the contract term, with the exception of contracts with renewal periods that are one year or less, in which case the incremental costs are expensed as incurred. Sales commissions on professional services arrangements are expensed as incurred as the contractual periods of these arrangements are generally less than one year.

Previous wording

We intend to continue to make investments in our sales and marketing teams to increase revenue, further penetrate the market and expand our global customer base. We expect our sales and marketing expense to increase in absolute dollars annually and to be our largest operating expense category for the foreseeable future. However, as our revenue increases, we expect our sales and marketing expense to decrease as a percentage of our revenue in 2025 and over the long term. Our sales and marketing expense may fluctuate from period to period due to the timing and extent of these expenses, including sales commissions, which may fluctuate depending on the mix of sales and related expense recognition.

Current wording

We intend to continue to make investments in sales and marketing to increase revenue, further penetrate the market and expand our global customer base. We expect our sales and marketing expense to increase in absolute dollars annually and to be our largest operating expense category for the foreseeable future. However, as our revenue increases, we expect our sales and marketing expense to decrease as a percentage of our revenue in 2026 and over the long term. Our sales and marketing expense may fluctuate from period to period due to the timing and extent of these expenses, including sales commissions, which may fluctuate depending on the mix of sales and related expense recognition.

Previous wording

Research and development expense consists of personnel costs, software used to develop our products, travel and entertainment, consulting and professional fees for third-party development resources as well as allocated overhead. Our research and development expense supports our efforts to continue to add capabilities to our existing products and enable the continued detection of new network vulnerabilities.

Current wording

Research and development expense consists of personnel costs, software used to develop our products, travel and entertainment, consulting and professional fees for third-party development resources, allocated overhead and acquisition-related expenses. Our research and development expense supports our efforts to continue to add capabilities to our existing products and enable the continued detection of new network vulnerabilities.

Previous wording

We expect our research and development expense to continue to increase annually in absolute dollars for the foreseeable future as we continue to invest in research and development efforts to enhance the functionality of our cloud-based platform. However, we expect our research and development expense to decrease as a percentage of our revenue over the long term, although our research and development expense may fluctuate from period to period due to the timing and extent of these expenses.

Current wording

We expect our research and development expense to continue to increase annually in absolute dollars for the foreseeable future as we continue to invest in research and development efforts to enhance the functionality of our exposure management platform. However, we expect our research and development expense to decrease as a percentage of our revenue over the long term, although our research and development expense may fluctuate from period to period due to the timing and extent of these expenses.

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. We expect general and administrative expenses in Q1 2025 to increase sequentially, primarily due to 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 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 former Chairman and Chief Executive Officer.

Previous wording

Restructuring expenses consist of non-ordinary course severance, employee related benefits and other charges to reorganize business operations.

Current wording

Restructuring expenses consist of non-ordinary course severance, employee related benefits and other charges to reorganize business operations. In the three months ended December 31, 2025, we recorded $3.1 million of restructuring expense for non-ordinary course severance and employee-related benefits. We expect to record approximately $5.0 million in restructuring expense in the year ended December 31, 2026.

Previous wording

Interest Income, Interest Expense and Other Expense, Net

Current wording

Interest Income, Interest Expense and Other Income (Expense), Net

Previous wording

Interest income consists of income earned on cash and cash equivalents and short-term investments. Interest expense consists primarily of interest expense in connection with our Term Loan, unused commitment fees on our senior secured revolving credit facility, or Revolving Credit Facility, and letter of credit fees. Other expense, net consists primarily of foreign currency remeasurement and transaction gains and losses and any realized and unrealized gains and losses, including impairment losses and gains related to our non-marketable investments.

Current wording

Interest income consists of income earned on cash and cash equivalents and short-term investments. Interest expense consists primarily of interest expense in connection with our Term Loan, unused commitment fees on our senior secured revolving credit facility, or Revolving Credit Facility, and letter of credit fees. Other income (expense), net consists primarily of foreign currency remeasurement and transaction gains and losses and any realized and unrealized gains and losses, including impairment losses and gains related to our investments in privately held securities.

Previous wording

Provision for income taxes consists of income taxes in all jurisdictions in which we conduct business and the related withholding taxes on sales with customers. We have recorded deferred tax assets for which a full valuation allowance has been provided, including net operating loss carryforwards and tax credits. We expect to maintain this full valuation allowance for the foreseeable future as it is more likely than not that some or all of those deferred tax assets may not be realized based on our history of losses.

Current wording

Provision for income taxes consists of income taxes in all jurisdictions in which we conduct business and the related withholding taxes on sales with customers. We have recorded deferred tax assets for which a valuation allowance has been provided, including net operating loss carryforwards and tax credits. We expect to maintain this valuation allowance for the foreseeable future as it is more likely than not that some or all of those deferred tax assets may not be realized based on our history of losses. The valuation allowance is subject to change based on our ability to generate future taxable income. We will continue to evaluate the realization of deferred tax assets to determine changes to valuation allowance in future periods.

Previous wording

The increase in revenue of $101.3 million included $101.1 million from existing customers as of January 1, 2024 and $0.2 million from new customers. U.S. revenue increased $44.0 million, or 10%. International revenue increased $57.3 million, or 16%.

Current wording

The increase in revenue of $99.4 million included $95.7 million from existing customers as of January 1, 2025 and $3.7 million from new customers. U.S. revenue increased $40.9 million, or 8%. International revenue increased $58.5 million, or 14%.

Previous wording

The increase in cost of revenue of $16.1 million was primarily due to:

Current wording

The increase in cost of revenue of $19.3 million was primarily due to:

Previous wording

•a $5.6 million increase in amortization of acquired intangible assets;

Current wording

•a $6.5 million increase in amortization of acquired intangible assets;

Previous wording

•a $3.5 million increase in third-party cloud infrastructure costs;

Current wording

•a $4.0 million increase in third-party cloud infrastructure costs;

Previous wording

•a $1.1 million increase in depreciation and amortization;

Current wording

•a $2.4 million increase in depreciation and amortization.

Previous wording

The increase in sales and marketing expense of $1.9 million was primarily due to:

Current wording

The increase in sales and marketing expense of $21.6 million was primarily due to:

Previous wording

•a $2.2 million increase in expenses for demand generation programs, including advertising, sponsorships, and brand awareness efforts; and

Current wording

•a $4.2 million increase in expenses for demand generation programs, including advertising, sponsorships, and brand awareness efforts; and

Previous wording

•a $0.2 million increase in selling expenses, including travel and meeting costs and software subscription costs; partially offset by

Current wording

•a $3.1 million increase in selling expenses, including travel and meeting costs and software subscription costs.

Previous wording

The increase in research and development expense of $28.5 million was primarily due to:

Current wording

The increase in research and development expense of $42.0 million was primarily due to:

Previous wording

•an $8.6 million increase in personnel costs, largely associated with an increase in headcount, including a $4.9 million increase in stock-based compensation;

Current wording

•a $34.9 million increase in personnel costs, largely associated with an increase in headcount, including an $8.9 million increase in stock-based compensation; and

Previous wording

The increase in general and administrative expense of $7.9 million was primarily due to:

Current wording

The increase in general and administrative expense of $21.8 million was primarily due to:

Previous wording

The increase in restructuring of $1.6 million was due to 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 in 2024, net of a decrease of $2.9 million in non-ordinary course severance and employee-related benefits.

Current wording

In 2025, restructuring included $3.1 million in non-ordinary course severance and employee-related benefits. In 2024, restructuring 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 $1.4 million decrease in interest income was primarily due to lower interest rates on our cash and cash equivalents and short-term investments. The $0.6 million increase in interest expense was primarily due to an increase in the variable rate of our Term Loan. The $5.2 million decrease in other expense, net was primarily due to $5.6 million of impairment losses on our simple agreements for future equity, or SAFE, investments in 2023 and a $1.5 million gain on the conversion of a SAFE investment to an investment in preferred stock in 2024, partially offset by a $1.9 million increase in foreign exchange losses.

Current wording

The $7.3 million decrease in interest income was primarily due to a decrease in cash and cash equivalents and short-term investments as well as lower interest rates on our cash and cash equivalents and short-term investments. The $3.5 million decrease in interest expense was primarily due to a decrease in the variable rate of our Term Loan. The $2.1 million decrease in other expense, net was primarily due to a $3.4 million decrease in foreign exchange losses partially offset by a $1.5 million gain on the conversion of one of our simple agreements for future equity, or SAFE, investments in the prior year.

Previous wording

•$5.3 million of discrete expenses primarily related to withholding taxes on sales to customers; partially offset by

Current wording

•$7.0 million of discrete expenses primarily related to withholding taxes on sales to customers; and

Previous wording

•$5.8 million of income taxes in foreign jurisdictions in which we conduct business; and

Current wording

•$6.2 million of income taxes in foreign jurisdictions in which we conduct business;

Previous wording

At December 31, 2024, we had $328.6 million of cash and cash equivalents, which consisted of bank deposits and money market funds, and $248.5 million of short-term investments, which consisted of commercial paper, asset backed securities, U.S. Treasury and agency obligations and corporate and Yankee bonds.

Current wording

At December 31, 2025, we had $187.8 million of cash and cash equivalents, which consisted of bank deposits and money market funds, and $214.4 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 $861.3 million at December 31, 2024.

Current wording

We have generated significant operating losses prior to and during 2025 as reflected by our accumulated deficit of $897.5 million at December 31, 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 December 31, 2024, we had deferred revenue of $833.2 million, of which $650.4 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 in advance, however multi-year subscriptions are increasingly being invoiced annually in installments. 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 December 31, 2025, we had deferred revenue of $899.3 million, of which $706.9 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. We paid $29.2 million, $243.3 million and $66.8 million to acquire businesses in 2024, 2023 and 2022, respectively. In February 2025, we acquired Vulcan Cyber Ltd., or Vulcan Cyber, for approximately $148 million in cash and $2 million of restricted stock units (RSUs) that vest over a future period. 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. We paid $196.2 million, $29.2 million and $243.3 million to acquire businesses in 2025, 2024 and 2023, respectively. See Note 6 to our consolidated financial statements for details about recent acquisitions. We expect to enter into arrangements to acquire or invest in other complementary businesses, services and technologies, including intellectual property rights, in the future.