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Tenable (NASDAQ:TENB) Beats Q4 Sales Targets, Outlook For Next Year Is Optimistic


Radek Strnad /
2022/02/01 4:12 pm EST
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Cybersecurity software maker Tenable (NASDAQ:TENB) beat analyst expectations in Q4 FY2021 quarter, with revenue up 26.1% year on year to $149 million. On top of that, guidance for next quarter's revenue was surprisingly good, being $153 million at the midpoint, 3.39% above what analysts were expecting. Tenable made a GAAP loss of $11 million, down on its loss of $1.93 million, in the same quarter last year.

Is now the time to buy Tenable? Access our full analysis of the earnings results here, it's free.

Tenable (TENB) Q4 FY2021 Highlights:

  • Revenue: $149 million vs analyst estimates of $144.5 million (3.09% beat)
  • EPS (non-GAAP): $0.05 vs analyst estimates of $0.03 ($0.03 beat)
  • Revenue guidance for Q1 2022 is $153 million at the midpoint, above analyst estimates of $147.9 million
  • Management's revenue guidance for upcoming financial year 2022 is $666 million at the midpoint, predicting 23% growth (vs 23.5% in FY2021)
  • Free cash flow of $19.1 million, roughly flat from previous quarter
  • Gross Margin (GAAP): 79.3%, down from 82.7% same quarter last year

"Q4 capped a tremendous year for Tenable, and included accelerated year-over-year CCB growth of 29%,” said Amit Yoran, chairman and chief executive officer of Tenable.

Founded in 2002 by three cybersecurity veterans, Tenable (NASDAQ:TENB) provides software as a service that helps companies understand where they are exposed to cyber security risk and how to reduce it.

The demand for cybersecurity is growing as more and more businesses are moving their data and processes into the cloud, which along with a major increase in employees working remotely, has increased their exposure to attacks and malware. Additionally, the growing array of corporate IT systems, applications and internet connected devices has increased the complexity of network security, all of which has substantially increased the demand for software meant to protect data breaches.

Sales Growth

As you can see below, Tenable's revenue growth has been strong over the last year, growing from quarterly revenue of $118 million, to $149 million.

Tenable Total Revenue

This quarter, Tenable's quarterly revenue was once again up a very solid 26.1% year on year. On top of that, revenue increased $10.3 million quarter on quarter, a very strong improvement on the $8.4 million increase in Q3 2021, which shows re-acceleration of growth, and is great to see.

Analysts covering the company are expecting the revenues to grow 18.2% over the next twelve months, although estimates are likely to change post earnings.

There are others doing even better than Tenable. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 400% since the IPO in December. You can find it on our platform for free.

Profitability

What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. Tenable's gross profit margin, an important metric measuring how much money there is left after paying for servers, licenses, technical support and other necessary running expenses was at 79.3% in Q4.

Tenable Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.79 left to spend on developing new products, marketing & sales and the general administrative overhead. Despite it going down over the last year, this is still a good gross margin that allows companies like Tenable to fund large investments in product and sales during periods of rapid growth and be profitable when they reach maturity.

Key Takeaways from Tenable's Q4 Results

With a market capitalization of $5.52 billion Tenable is among smaller companies, but its more than $512.2 million in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.

We enjoyed Tenable's revenue forecast for the full year. And we were also glad that the revenue guidance for the next quarter exceeded analysts' expectations. On the other hand, there was a deterioration in gross margin. Overall, we think this was a strong quarter, that should leave shareholders feeling very positive. The company is flat on the results and currently trades at $52 per share.

Should you invest in Tenable right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.