Tenable's Q3 2025 Earnings Call: Contradictions Emerge on Federal Shutdown Impact, Tenable One Growth, and Guidance Philosophy

Date of Call: October 29, 2025

Financials Results

• Revenue: $252.4M, up 11.2% YOY
• EPS: $0.42 non-GAAP, up 31.3% YOY (from $0.32 in Q3 2024)
• Gross Margin: 81.6% non-GAAP, up from 81.4% in Q3 2024
• Operating Margin: 23.3% non-GAAP (income from operations $58.9M), compared to 19.8% in Q3 2024

Guidance:

• Full-year CCB raised to $1.040B–$1.048B (≈7.7% YOY at midpoint)
• Q4 revenue guide $249.1M–$253.1M (≈6.5% YOY at midpoint)
• Full-year revenue raised to $988M–$992M (≈10.0% YOY at midpoint)
• Q4 non-GAAP operating income $55.7M–$59.7M (~23.0% of revenue at midpoint)
• Full-year non-GAAP operating income $211M–$215M (~21.5% of revenue at midpoint; +100 bps YOY)
• Q4 non-GAAP net income $47.9M–$51.9M (≈-1.6% YOY at midpoint); Q4 EPS $0.39–$0.43 (flat at midpoint)
• Full-year non-GAAP net income $185M–$189M (≈17.9% YOY at midpoint); FY EPS $1.51–$1.54 (≈18.2% YOY at midpoint)
• Cash/short-term investments $383.6M; repurchased 2M shares in Q3; $250M repurchase authorization remaining

Business Commentary:

* Revenue and Growth: - Tenable reported revenue of $252.4 million, representing a 11.2% year-over-year growth for Q3, with calculated current billings (CCB) increasing 7.7%. - The growth was driven by strong performance from Tenable One, which represented approximately 40% of new business, and a 13% increase in new enterprise platform customers compared to Q3 2024.

• Operating Margin and R&D Investment:
• Tenable's non-GAAP operating margin was 23.3% of revenue, reflecting a 23.3% increase compared to Q3 2024.

• The increase in profitability was supported by a 18% year-over-year rise in research and development expenses, signifying significant investments in Tenable One's innovation and capabilities.

• Strategic Customer Wins and Market Leadership:

• Tenable secured several major customer wins, including displacing top cloud security providers and vulnerability management players, demonstrating market momentum and leadership.

• Recognized as a leader in exposure management by industry analyst firms, Tenable's strategic wins are attributed to its comprehensive platform and ability to unify visibility and insights across various domains.

• Federal Business and Political Environment:

• Tenable's U.S. federal business performed in line with expectations despite a seasonally high mix, which is notable given the current political environment and potential impact from government shutdowns.
• This outcome reflects Tenable's execution capabilities and strategic positioning in the public sector, enabling it to navigate challenges without significant disruption.

Sentiment Analysis:

Overall Tone: Positive

• Management said they "exceeded all of our guided metrics," reported 11% revenue growth, raised full-year guidance at the midpoint across multiple metrics, and highlighted strong platform momentum (437 new enterprise platform customers and Tenable One representing ~40% of new business). These statements and upward guidance revisions indicate constructive confidence in demand and execution.

Q&A:

• Question from Saket Kalia (Barclays Bank PLC, Research Division): U.S. federal is an important vertical. Can you talk about how that performed this quarter and historical context around prior shutdowns and potential impact going into Q4?
  Response: Public sector/U.S. federal performed in line with expectations this quarter; based on prior shutdown experience they see minimal near-term exposure.

• Question from Brian Essex (JPMorgan Chase & Co, Research Division): The deceleration baked into Q4 revenue — what are you contemplating within guidance and what scenarios could lead to upside for Q4 and the year?
  Response: Q4 deceleration reflects a seasonally smaller federal mix; pipeline and renewals are strong, exposure to shutdowns is limited to a few million dollars, and upside is possible but modest.

• Question from Brian Essex (JPMorgan Chase & Co, Research Division): Any impact from expiration of CISA 2015 on CVE reporting and core VM?
  Response: Based on customer, partner and internal feedback, they currently do not anticipate a significant negative impact on core VM.

• Question from Michael Cikos (Needham & Company, LLC, Research Division): Any changes to guidance philosophy or what you're bringing to the finance function in your new role?
  Response: No substantive changes to guidance philosophy; he sees a high-functioning finance team and continuity in approach.

• Question from Michael Cikos (Needham & Company, LLC, Research Division): How did you think about the billings guide and the puts and takes that led to the range?
  Response: A stronger Q3 and improved visibility into Q4 drove a modest midpoint bump to CCB (~$1M) and corresponding increases to revenue and operating income guidance.

• Question from Robbie Owens (Piper Sandler & Co., Research Division): Can you parse enterprise adds versus $100K ACV customers and whether velocity/new customer additions are increasing?
  Response: They added 437 new enterprise platform customers; platform deal sizes are materially larger (roughly 50–90%+ vs standalone VM) and land velocity remains strong.

• Question from Meta Marshall (Morgan Stanley, Research Division): Are you making R&D or go-to-market efforts to capture OT opportunities and what other investments are being made to simplify environments for customers?
  Response: OT convergence is accelerating; they're investing in R&D and GTM to ingest OT assets, unify data, and secure AI attack surfaces while also investing in professional services and field enablement.

• Question from Jonathan Ho (William Blair & Company L.L.C., Research Division): What percentage of your base is on Tenable One and what's the upsell opportunity?
  Response: Of ~40,000 customers, ~18,000 use enterprise offerings and 3,000+ use Tenable One; Tenable One is ~40% of new sales and offers significant expansion/upsell potential.

• Question from Joseph Gallo (Jefferies LLC, Research Division): Where is exposure management prioritized in customer budgets and what can you say about billings for 2026?
  Response: Exposure management is gaining budget priority and consolidation traction with partners building practices; they are focused on 2025 execution and it's too early to guide on 2026.

• Question from William Vandrick (Scotiabank Global Banking and Markets, Research Division): How are you thinking about the AI roadmap and will future AI security products be built organically or via M&A?
  Response: They'll use both organic development and M&A as appropriate; AI efforts center on contextualizing risk, anticipating attack paths, securing AI usage, and enabling proactive defenses.

• Question from Roger Boyd (UBS Investment Bank, Research Division): Quantify the trend toward longer, more strategic deals, sales actions, and overlap with Tenable One adoption?
  Response: Customers are signing longer multi-year commitments as they buy into the Tenable One roadmap; focus is on upselling the installed base and many new logos are Tenable One customers.

• Question from Joshua Tilton (Wolfe Research, LLC): What was inorganic contribution to billings this quarter/year and how will you apply prior playbook to Tenable's financial profile?
  Response: Inorganic contribution was very insignificant; he plans to apply a playbook of balancing top-line growth with margin expansion via P&L leverage while investing in the platform.

• Question from Adam Borg (Stifel, Nicolaus & Company, Incorporated, Research Division): Any color on demand across market segments, geographies, verticals?
  Response: Demand is broad-based across segments and geographies; highlights were strong new-logo momentum and platform traction.

• Question from Jonathan Ruykhaver (Cantor Fitzgerald & Co., Research Division): How are conversations changing with the pending Google/Wiz deal and how is Tenable Cloud Security performing?
  Response: Customers are actively evaluating the Google/Wiz situation; Tenable is being invited to more evaluations, achieving displacements (including Wiz), and is optimistic about cloud business within Tenable One.

• Question from Todd Weller (Stephens Inc., Research Division): Revisit the growth equation between traditional VM and exposure management (EM); can VM growth improve or is it just math/time as EM grows?
  Response: Tenable One/EM is the growth lever; VM is stable, EM is smaller but growing faster, and the company expects overall acceleration as EM mix increases.

• Question from Junaid Siddiqui (Truist Securities, Inc., Research Division): How are the 300+ validated integrations contributing to deal velocity and sizes?
  Response: Integrations expand visibility and enable orchestration/mobilization across domains, supporting larger deals and accelerating sales velocity.

• Question from Shrenik Kothari (Robert W. Baird & Co. Incorporated, Research Division): What are the biggest unlocks to accelerate platform mix (pricing, packaging, Flex, field enablement)?
  Response: Primary unlock is installed-base expansion; near-term monetization of third-party asset ingestion and AI (Apex) capabilities, alongside pricing/packaging and field enablement initiatives.

• Question from Gray Powell (BTIG, LLC, Research Division): Traction from the Apex acquisition and AI Exposure — impact on ASPs and incremental adoption?
  Response: Apex capabilities were integrated into Tenable One and launched as AI Exposure; management expects AI Exposure to drive deeper platform adoption via AI-driven prioritization and remediation, increasing platform value.

Contradiction Point 1

U.S. Federal Shutdown Impact

It involves the impact of potential U.S. federal shutdowns on the company's performance, which could affect investor expectations and financial forecasting.

Could you clarify the U.S. federal government's performance this quarter and how shutdowns might affect Q4? - Saket Kalia (Barclays Bank PLC)

2025Q3: Tenable has major market leadership in public sector and U.S. federal, across various agencies. Q3 results were in line with expectations despite a seasonally high U.S. federal mix. There's no significant impact from potential shutdowns. - Stephen Vintz(CEO)

What factors in the U.S. Federal segment are causing caution in your guidance? - Brian Essex (JPMorgan Chase & Co)

2024Q4: We're seeing some distraction due to the new administration. Overhang in Q4, slight hesitancy in Fed due to transition of new administration, but no budget or project issues. - Mark Thurmond(COO)

Contradiction Point 2

Tenable One's Contribution to Revenue Growth

It highlights the differing perspectives on the contribution and growth potential of Tenable One, which is a strategic platform for the company's expansion.

What percentage of customers are on Tenable One, and what potential uplift opportunities are there? - Jonathan Ho (William Blair & Company)

2025Q3: Approximately 3,000-plus customers use Tenable One, representing 40% of new sales. There's significant opportunity for growth as customers expand within the platform. - Stephen Vintz(CEO)

How will Tenable One and non-VM exposure solutions impact your overall growth and billings? - Brian Lee Essex (JPMorgan)

2025Q2: Tenable One is approximately 40% of total new sales and 30% of total sales. Growth in exposure solutions is robust, driven by market pull for unified visibility, insights, and actions. Moderate movement in exposure solutions can significantly impact growth. - Stephen Vintz(CEO, CFO)

Contradiction Point 3

U.S. Federal Revenue Impact

It highlights differing perspectives on the impact of potential U.S. federal government shutdowns on revenue, which is crucial for financial forecasting and investor expectations.

Can you discuss the U.S. government's performance this quarter and potential shutdown impacts on Q4? - Saket Kalia(Barclays Bank PLC)

2025Q3: Q3 results were in line with expectations despite a seasonally high U.S. federal mix. There's no significant impact from potential shutdowns. - Stephen Vintz(CEO)

Can you discuss the guidance and what factors in the business are driving the caution? - Brian Essex(JPMorgan)

2025Q1: We are taking a cautious approach, assuming longer procurement decision lead times, especially in the public sector, and applying some caution to the enterprise business due to geopolitical events. - Steve Vintz(CEO)

Contradiction Point 4

Guidance Philosophy and Market Uncertainty

It involves changes in guidance philosophy and perceptions of market uncertainty, which are critical for investor expectations and strategic decision-making.

Has the guidance philosophy changed since joining, and how was billings guidance improved? - Michael Cikos(Needham & Company)

2025Q3: We have more confidence in the business, higher certainty around deal pipelines and our ability to execute. - Matthew Brown(CFO)

What portion of the 2025 guidance cut is attributable to the public versus private sector? Can the mid-market help combat this weakness? - Matt Calitri(Needham & Co.)

2025Q1: Demand was strong, but the visibility feels more uncertain. - Steve Vintz(CEO)

Contradiction Point 5

Competitive Environment and Market Position

It highlights differing assessments of the competitive landscape and Tenable's market position, which are crucial for strategic planning and investor confidence.

How will the federal shutdown impact Q4 revenue, and what scenarios could exceed expectations? - Brian Essex(JPMorgan Chase & Co)

2025Q3: Strong renewal pipelines and a positive outlook for Q4. The guidance increase is due to incremental positive changes, and Q4 should see good line of sight. - Matthew Brown(CFO)

Can you discuss the guidance and the factors driving the cautious outlook? - Brian Essex(JPMorgan)

2025Q1: We saw strong demand gen in Q1, exceeding expectations, but there’s more uncertainty now since February. - Steve Vintz(CEO)