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Tenable (NASDAQ:TENB) Posts Better-Than-Expected Sales In Q1, Provides Optimistic Full Year Guidance


Radek Strnad /
2022/04/26 4:17 pm EDT
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Cybersecurity software maker Tenable (NASDAQ:TENB) reported Q1 FY2022 results that beat analyst expectations, with revenue up 29.3% year on year to $159.3 million. Guidance for next quarter's revenue was $163 million at the midpoint, which is 1.43% above the analyst consensus. Tenable made a GAAP loss of $24.5 million, down on its loss of $7.74 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) Q1 FY2022 Highlights:

  • Revenue: $159.3 million vs analyst estimates of $153.4 million (3.82% beat)
  • EPS (non-GAAP): $0.06 vs analyst estimates of $0.05 (21.3% beat)
  • Revenue guidance for Q2 2022 is $163 million at the midpoint, above analyst estimates of $160.6 million
  • The company lifted revenue guidance for the full year, from $666 million to $676 million at the midpoint, a 1.5% increase
  • Free cash flow of $28 million, up 46.2% from previous quarter
  • Gross Margin (GAAP): 78%, down from 82% same quarter last year

"We delivered outstanding results in the first quarter highlighted by accelerating top line growth, strong profitability and continued investment in innovation and new product capabilities," said Amit Yoran, Chairman and CEO 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 $123.1 million, to $159.3 million.

Tenable Total Revenue

This quarter, Tenable's quarterly revenue was once again up a very solid 29.3% year on year. Quarter on quarter the revenue increased by $10.3 million in Q1, which was in line with Q4 2021. This steady quarter-on-quarter growth shows the company is able to maintain its steady growth trajectory.

Guidance for the next quarter indicates Tenable is expecting revenue to grow 25.1% year on year to $163 million, improving on the 21.5% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 21.1% over the next twelve months.

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 150% since the IPO last 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 78% in Q1.

Tenable Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.78 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 Q1 Results

With a market capitalization of $6.38 billion Tenable is among smaller companies, but its more than $526.1 million in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.

It was good to see Tenable outperform Wall St’s revenue expectations this quarter. And we were also glad to see good revenue growth. On the other hand, there was a deterioration in gross margin. Overall, this quarter's results seemed pretty positive and shareholders can feel optimistic. But investors might have been expecting more and the company is slightly down 0.9% on the results and currently trades at $55.02 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.