Tenable (NASDAQ:TENB) Surprises With Q4 Sales But Full Year Guidance Underwhelms

Petr Huřťák /
2023/02/07 4:13 pm EST

Cybersecurity software maker Tenable (NASDAQ:TENB) beat analyst expectations in Q4 FY2022 quarter, with revenue up 23.9% year on year to $184.6 million. However, guidance for the next quarter was less impressive, coming in at $187 million at the midpoint, being 2.04% below analyst estimates. Tenable made a GAAP loss of $21.5 million, down on its loss of $11 million, in the same quarter last year.

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Tenable (TENB) Q4 FY2022 Highlights:

  • Revenue: $184.6 million vs analyst estimates of $181.4 million (1.79% beat)
  • EPS (non-GAAP): $0.12 vs analyst estimates of $0.07 ($0.05 beat)
  • Revenue guidance for Q1 2023 is $187 million at the midpoint, below analyst estimates of $190.9 million
  • Management's revenue guidance for upcoming financial year 2023 is $805 million at the midpoint, missing analyst estimates by 1.33% and predicting 17.8% growth (vs 26.4% in FY2022)
  • Free cash flow of $26.7 million, down 15.3% from previous quarter
  • Gross Margin (GAAP): 75.5%, down from 79.3% same quarter last year

“We are very pleased with our Q4 results as we exceeded our expectations on the top and bottom line,” 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 two years, growing from quarterly revenue of $118.1 million in Q4 FY2020, to $184.6 million.

Tenable Total Revenue

This quarter, Tenable's quarterly revenue was once again up a very solid 23.9% year on year. Quarter on quarter the revenue increased by $9.78 million in Q4, which was in line with Q3 2022. 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 17.3% year on year to $187 million, slowing down from the 29.4% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $805 million at the midpoint, growing 17.8% compared to 26.3% increase in FY2022.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.


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 75.5% in Q4.

Tenable Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.75 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 $4.81 billion Tenable is among smaller companies, but its more than $567.4 million in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.

Tenable topped analysts’ revenue expectations this quarter, even if just narrowly. And we were also glad to see good revenue growth. On the other hand, it was unfortunate to see that Tenable's revenue guidance for the full year missed analysts' expectations and the revenue guidance for the next quarter missed analysts' expectations. Overall, it seems to us that this was a complicated quarter for Tenable. The company is up 5% on the results and currently trades at $45.59 per share.

Tenable may have had a tough quarter, but does that actually create an opportunity to invest 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.