Tenable Announces Second Quarter 2022 Financial Results

July 26, 2022 at 4:06 PM EDT

Added 540 new enterprise platform customers and 79 net new six-figure customers.
Revenue of $164.3 million, up 26% year-over-year.
Calculated current billings of $174.1 million, up 27% year-over-year.
GAAP loss from operations of $23.2 million; Non-GAAP income from operations of $12.2 million.
Net cash provided by operating activities of $30.5 million; Unlevered free cash flow of $29.1 million.

COLUMBIA, Md., July 26, 2022 (GLOBE NEWSWIRE) -- Tenable Holdings, Inc. ("Tenable") (Nasdaq: TENB), the Cyber Exposure Management company, today announced financial results for the quarter ended June 30, 2022.

"We are very pleased with results this quarter despite a difficult macro environment,” said Amit Yoran, Chairman and CEO of Tenable. “During the quarter, we saw strong customer demand through higher levels of new enterprise platform customer adds and an increasing number of net new six-figure customers. Our momentum in the first half of the year positions us well for continued success."

Second Quarter 2022 Financial Highlights

Revenue was $164.3 million, a 26% increase year-over-year.
Calculated current billings was $174.1 million, a 27% increase year-over-year.
GAAP loss from operations was $23.2 million, compared to a loss of $11.9 million in the second quarter of 2021.
Non-GAAP income from operations was $12.2 million, compared to $11.5 million in the second quarter of 2021.
GAAP net loss was $27.5 million, compared to a loss of $11.6 million in the second quarter of 2021.
GAAP net loss per share was $0.25, compared to a loss per share of $0.11 in the second quarter of 2021.
Non-GAAP net income was $6.0 million, compared to $10.2 million in the second quarter of 2021.
Non-GAAP diluted earnings per share was $0.05, compared to $0.09 in the second quarter of 2021.
Cash and cash equivalents and short-term investments were $510.9 million at June 30, 2022, compared to $512.3 million at December 31, 2021.
Net cash provided by operating activities was $30.5 million, compared to $16.5 million in the second quarter of 2021.
Unlevered free cash flow was $29.1 million, compared to $15.1 million in the second quarter of 2021.

Recent Business Highlights

Added 540 new enterprise platform customers and 79 net new six-figure customers.
Completed the acquisition of Bit Discovery and launched Tenable.asm, enabling customers to continuously map the entire internet and discover connections to an organization's internet-facing assets, whether internal or external to their networks.
Added Nessus^® Expert to our portfolio of trusted vulnerability assessment solutions, giving security consultants, pen testers and security practitioners extended external attack surface management capabilities and expanded visibility into cloud native environments.
Earned 2022 U.S. Great Place to Work Certification further validating that Tenable is an employer of choice among top talent.

Financial Outlook

For the third quarter of 2022, we currently expect:

Revenue in the range of $169.0 million to $171.0 million.
Non-GAAP income from operations in the range of $9.0 million to $10.0 million.
Non-GAAP net income in the range of $3.2 million to $4.2 million, assuming interest expense of $5.0 million and a provision for income taxes of $2.3 million.
Non-GAAP diluted earnings per share in the range of $0.03 to $0.04.
119.5 million diluted weighted average shares outstanding.

For the year ending December 31, 2022, we currently expect:

Calculated current billings in the range of $768.0 million to $776.0 million.
Revenue in the range of $673.0 million to $679.0 million.
Non-GAAP income from operations in the range of $45.0 million to $49.0 million.
Non-GAAP net income in the range of $19.7 million to $23.7 million, assuming interest expense of $17.9 million and a provision for income taxes of $7.6 million.
Non-GAAP diluted earnings per share in the range of $0.17 to $0.20.
119.0 million diluted weighted average shares outstanding.

Conference Call Information

Tenable will host a conference call today, July 26, 2022, at 4:30 p.m. Eastern Time to discuss its financial results. The conference call can be accessed at 877-407-9716 (U.S.) and 201-493-6779 (international). A live webcast of the event will be available on the Tenable Investor Relations website at https://investors.tenable.com. An archived replay of the live broadcast will be available on the Investor Relations page of the website following the call.

About Tenable

Tenable^® is the Cyber Exposure Management company. Approximately 40,000 organizations around the globe rely on Tenable to understand and reduce cyber risk. As the creator of Nessus^®, Tenable extended its expertise in vulnerabilities to deliver the world’s first platform to see and secure any digital asset on any computing platform. Tenable customers include approximately 60 percent of the Fortune 500, approximately 40 percent of the Global 2000, and large government agencies. Learn more at tenable.com.

Contact Information

Investor Relations
investors@tenable.com

Media Relations
tenablepr@tenable.com

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release other than statements of historical fact, including statements regarding our future results of operations and financial position, business strategy and plans and objectives for future operations, are forward-looking statements and represent our views as of the date of this press release. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of assumptions and risks and uncertainties, many of which involve factors or circumstances that are beyond our control that could affect our financial results. These risks and uncertainties are detailed in the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2021, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 and other filings that we make from time to time with the SEC, which are available on the SEC's website at sec.gov. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated or implied in any forward-looking statements. Except as required by law, we are under no obligation to update these forward-looking statements subsequent to the date of this press release, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.

Non-GAAP Financial Measures and Other Key Metrics

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented to enhance the overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important metrics used by management for financial and operational decision-making. We include these non-GAAP financial measures to present our financial performance using a management view and because we believe that these measures provide an additional comparison of our core financial performance over multiple periods with other companies in our industry.

Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the financial tables accompanying this press release.

Calculated Current Billings: We define calculated current billings, a non-GAAP financial measure, as total revenue recognized in a period plus the change in current deferred revenue in the corresponding period. We believe that calculated current billings is a key metric to measure our periodic performance. Given that most of our customers pay in advance (including multi-year contracts), but we generally recognize 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. 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 and that the 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.

Free Cash Flow and Unlevered Free Cash Flow: We define free cash flow, a non-GAAP financial measure, as net cash provided by operating activities less purchases of property and equipment, which includes capitalized internal use software. We believe free cash flow is an important liquidity measure of the cash (if any) that is available, after purchases of property and equipment, for investment in our business and to make acquisitions. We believe that free cash flow is useful as a liquidity measure because it measures our ability to generate or use cash. We define unlevered free cash flow as free cash flow plus cash paid for interest and other financing costs. We believe unlevered free cash flow is useful as a liquidity measure as it measures the cash that is available to invest in our business and meet our current and future financing needs, however, given our debt obligations, unlevered free cash flow does not represent residual cash flow available for discretionary expenses.

Non-GAAP Income from Operations and Non-GAAP Operating Margin: We define these non-GAAP financial measures as their respective GAAP measures, excluding the effect of stock-based compensation, acquisition-related expenses, costs related to the intra-entity asset transfers resulting from the internal restructuring of legal entities and amortization of acquired intangible assets. Acquisition-related expenses include transaction expenses and costs related to the intercompany transfer of acquired intellectual property.

Non-GAAP Net Income and Non-GAAP Earnings Per Share: We define non-GAAP net income as GAAP net loss, excluding the effect of stock-based compensation, acquisition-related expenses and amortization of acquired intangible assets, including the applicable tax impacts. In addition, we exclude the tax impact and related costs of intra-entity asset transfers resulting from the internal restructuring of legal entities as well as deferred income tax benefits recognized in connection with acquisitions. We use non-GAAP net income to calculate non-GAAP earnings per share.

Non-GAAP Gross Profit and Non-GAAP Gross Margin: We define non-GAAP gross profit as GAAP gross profit, excluding the effect of stock-based compensation and amortization of acquired intangible assets. Non-GAAP gross margin is defined as non-GAAP gross profit as a percentage of revenue.

Non-GAAP Sales and Marketing Expense, Non-GAAP Research and Development Expense and Non-GAAP General and Administrative Expense: We define these non-GAAP measures as their respective GAAP measures, excluding stock-based compensation, acquisition-related expenses and costs related to intra-entity asset transfers resulting from the internal restructuring of legal entities.

TENABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except per share data)		2022			2021			2022			2021
Revenue	$	164,341		$	130,259		$	323,709		$	253,448
Cost of revenue⁽¹⁾		36,037			26,425			70,967			48,498
Gross profit		128,304			103,834			252,742			204,950
Operating expenses:
Sales and marketing⁽¹⁾		88,426			65,678			169,996			124,313
Research and development⁽¹⁾		36,228			28,201			70,518			55,039
General and administrative⁽¹⁾		26,870			21,836			52,996			43,281
Total operating expenses		151,524			115,715			293,510			222,633
Loss from operations		(23,220	)		(11,881	)		(40,768	)		(17,683	)
Interest expense, net		(2,895	)		(42	)		(6,221	)		(70	)
Other expense, net		(1,863	)		(471	)		(2,807	)		(537	)
Loss before income taxes		(27,978	)		(12,394	)		(49,796	)		(18,290	)
(Benefit) provision for income taxes		(479	)		(756	)		2,209			1,096
Net loss	$	(27,499	)	$	(11,638	)	$	(52,005	)	$	(19,386	)

Net loss per share, basic and diluted	$	(0.25	)	$	(0.11	)	$	(0.47	)	$	(0.18	)
Weighted-average shares used to compute net loss per share, basic and diluted		111,041			105,869			110,287			105,203

_______________

⁽¹⁾ Includes stock-based compensation as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021
Cost of revenue	$	2,114	$	1,202	$	3,627	$	2,139
Sales and marketing		12,766		7,577		22,831		13,873
Research and development		8,077		5,176		14,540		9,332
General and administrative		8,956		6,514		16,313		12,077
Total stock-based compensation	$	31,913	$	20,469	$	57,311	$	37,421

TENABLE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS

	June 30, 2022			December 31, 2021
(in thousands, except per share data)	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	267,859		$	278,000
Short-term investments		243,047			234,292
Accounts receivable (net of allowance for doubtful accounts of $467 and $524 at June 30, 2022 and December 31, 2021, respectively)		109,354			136,601
Deferred commissions		40,670			40,311
Prepaid expenses and other current assets		49,444			60,234
Total current assets		710,374			749,438
Property and equipment, net		43,372			36,833
Deferred commissions (net of current portion)		59,330			59,638
Operating lease right-of-use assets		36,906			38,530
Acquired intangible assets, net		81,536			71,536
Goodwill		316,787			261,614
Other assets		26,737			31,230
Total assets	$	1,275,042		$	1,248,819

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	16,882		$	16,254
Accrued compensation		41,199			54,051
Deferred revenue		415,378			407,498
Operating lease liabilities		5,014			2,320
Other current liabilities		4,592			3,759
Total current liabilities		483,065			483,882
Deferred revenue (net of current portion)		132,677			123,387
Term loan, net of issuance costs (net of current portion)		363,404			364,728
Operating lease liabilities (net of current portion)		52,158			55,046
Other liabilities		6,213			6,463
Total liabilities		1,037,517			1,033,506

Stockholders’ equity:
Common stock (par value: $0.01; 500,000 shares authorized; 111,574 and 108,929 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively)		1,116			1,089
Additional paid-in capital		944,799			869,059
Accumulated other comprehensive loss		(1,856	)		(306	)
Accumulated deficit		(706,534	)		(654,529	)
Total stockholders’ equity		237,525			215,313
Total liabilities and stockholders’ equity	$	1,275,042		$	1,248,819

TENABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

	Six Months Ended June 30,
(in thousands)		2022			2021
Cash flows from operating activities:
Net loss	$	(52,005	)	$	(19,386	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		10,141			6,807
Stock-based compensation		57,311			37,421
Other		665			(268	)
Changes in operating assets and liabilities:
Accounts receivable		27,664			18,985
Prepaid expenses and other assets		16,765			5,077
Accounts payable, accrued expenses and accrued compensation		(14,250	)		985
Deferred revenue		16,075			6,665
Other current and noncurrent liabilities		1,014			(1,126	)
Net cash provided by operating activities		63,380			55,160

Cash flows from investing activities:
Purchases of property and equipment		(9,563	)		(2,595	)
Purchases of short-term investments		(119,619	)		(87,624	)
Sales and maturities of short-term investments		108,858			76,000
Business combinations, net of cash acquired		(66,993	)		(98,489	)
Net cash used in investing activities		(87,317	)		(112,708	)

Cash flows from financing activities:
Payments on term loan		(1,875	)		—
Proceeds from stock issued in connection with the employee stock purchase plan		8,882			8,046
Proceeds from the exercise of stock options		8,676			8,704
Other financing activities		566			(5	)
Net cash provided by financing activities		16,249			16,745
Effect of exchange rate changes on cash and cash equivalents and restricted cash		(2,471	)		(1,463	)
Net decrease in cash and cash equivalents and restricted cash		(10,159	)		(42,266	)
Cash and cash equivalents and restricted cash at beginning of period		278,271			178,463
Cash and cash equivalents and restricted cash at end of period	$	268,112		$	136,197

TENABLE HOLDINGS, INC.
REVENUE COMPONENTS AND RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(unaudited)

Revenue	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)		2022		2021		2022		2021
Subscription revenue	$	146,806	$	114,167	$	289,493	$	221,569
Perpetual license and maintenance revenue		12,683		12,567		25,556		24,972
Professional services and other revenue		4,852		3,525		8,660		6,907
Revenue⁽¹⁾	$	164,341	$	130,259	$	323,709	$	253,448

_______________

⁽¹⁾ Recurring revenue, which includes revenue from subscription arrangements for software (both revenue recognized ratably over the subscription term and upon delivery) and cloud-based solutions and maintenance associated with perpetual licenses, represented 95% of revenue in the three and six months ended June 30, 2022 and 94% of revenue in the three and six months ended June 30, 2021.

Calculated Current Billings	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)		2022			2021			2022			2021
Revenue	$	164,341		$	130,259		$	323,709		$	253,448
Add: Deferred revenue (current), end of period		415,378			334,106			415,378			334,106
Less: Deferred revenue (current), beginning of period⁽¹⁾		(405,594	)		(327,569	)		(408,443	)		(331,275	)
Calculated current billings	$	174,125		$	136,796		$	330,644		$	256,279

_______________

⁽¹⁾ Deferred revenue (current), beginning of period for the three and six months ended June 30, 2022 includes $0.8 million and $0.9 million, respectively, related to acquired deferred revenue. Deferred revenue (current), beginning of period for the three and six months ended June 30, 2021 includes $2.5 million related to acquired deferred revenue.

Free Cash Flow and Unlevered Free Cash Flow	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)		2022			2021			2022			2021
Net cash provided by operating activities	$	30,518		$	16,535		$	63,380		$	55,160
Purchases of property and equipment		(4,752	)		(1,534	)		(9,563	)		(2,595	)
Free cash flow⁽¹⁾		25,766			15,001			53,817			52,565
Cash paid for interest and other financing costs		3,315			79			7,366			150
Unlevered free cash flow⁽¹⁾	$	29,081		$	15,080		$	61,183		$	52,715

_______________

⁽¹⁾ Free cash flow and unlevered free cash flow for the periods presented were impacted by:

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)		2022			2021			2022			2021
Employee stock purchase plan activity	$	4.3		$	3.1		$	0.3		$	(1.9	)
Acquisition-related expenses		(2.5	)		(1.6	)		(3.2	)		(3.3	)
Costs related to intra-entity asset transfers		—			—			(0.8	)		—
Tax payment on intra-entity asset transfers		—			—			(2.7	)		(2.8	)

Free cash flow and unlevered free cash flow for the three months ended June 30, 2022 and 2021 and the six months ended June 30, 2022 and 2021 were benefited by approximately $2 million, $5 million, $8 million and $10 million, respectively, as a result of the accelerated timing of payments for insurance, professional fees and rent in prior quarters.

Non-GAAP Income from Operations and Non-GAAP Operating Margin	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)		2022			2021			2022			2021
Loss from operations	$	(23,220	)	$	(11,881	)	$	(40,768	)	$	(17,683	)
Stock-based compensation		31,913			20,469			57,311			37,421
Acquisition-related expenses		713			1,542			2,054			3,700
Costs related to intra-entity asset transfers		—			—			838			—
Amortization of acquired intangible assets		2,785			1,404			5,212			1,983
Non-GAAP income from operations	$	12,191		$	11,534		$	24,647		$	25,421
Operating margin		(14	)%		(9	)%		(13	)%		(7	)%
Non-GAAP operating margin		7	%		9	%		8	%		10	%

Non-GAAP Net Income and Non-GAAP Earnings Per Share	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except for per share amounts)		2022			2021			2022			2021
Net loss	$	(27,499	)	$	(11,638	)	$	(52,005	)	$	(19,386	)
Stock-based compensation		31,913			20,469			57,311			37,421
Tax impact of stock-based compensation⁽¹⁾		188			(480	)		1,254			(484	)
Acquisition-related expenses⁽²⁾		713			1,542			2,054			3,700
Costs related to intra-entity asset transfers⁽³⁾		—			—			838			—
Amortization of acquired intangible assets⁽⁴⁾		2,785			1,404			5,212			1,983
Tax impact of acquisitions⁽⁵⁾		(2,907	)		(1,137	)		(3,349	)		(1,137	)
Tax impact of intra-entity asset transfers⁽⁶⁾		770			—			1,613			2,808
Non-GAAP net income	$	5,963		$	10,160		$	12,928		$	24,905

Net loss per share, diluted	$	(0.25	)	$	(0.11	)	$	(0.47	)	$	(0.18	)
Stock-based compensation		0.29			0.19			0.52			0.36
Tax impact of stock-based compensation⁽¹⁾		—			—			0.01			—
Acquisition-related expenses⁽²⁾		0.01			0.02			0.02			0.03
Costs related to intra-entity asset transfers⁽³⁾		—			—			0.01			—
Amortization of acquired intangible assets⁽⁴⁾		0.02			0.01			0.05			0.02
Tax impact of acquisitions⁽⁵⁾		(0.03	)		(0.01	)		(0.03	)		(0.01	)
Tax impact of intra-entity asset transfers⁽⁶⁾		0.01			—			0.01			0.02
Adjustment to diluted earnings per share⁽⁷⁾		—			(0.01	)		(0.01	)		(0.02	)
Non-GAAP earnings per share, diluted	$	0.05		$	0.09		$	0.11		$	0.22

Weighted-average shares used to compute GAAP net loss per share, diluted		111,041			105,869			110,287			105,203

Weighted-average shares used to compute non-GAAP earnings per share, diluted		118,057			113,869			117,610			113,905

_______________

(1)        The tax impact of stock-based compensation is based on the tax treatment for the applicable tax jurisdictions.
(2)        The tax impact of acquisition-related expenses is not material.
(3)        The costs related to the intra-entity asset transfer resulted from our internal restructuring of Cymptom.
(4)        The tax impact of the amortization of acquired intangible assets is included in the tax impact of acquisitions.
(5)        The tax impact of acquisitions is related to the deferred tax benefits of the Alsid acquisition.
(6)        The tax impact of the intra-entity asset transfers are related to current tax payments based on the applicable Israeli tax rates resulting from our internal restructuring of Cymptom in the three and six months ended June 30, 2022 and Indegy in the six months ended June 30, 2021.
(7)        An adjustment to reconcile GAAP net loss per share, which excludes potentially dilutive shares, to non-GAAP earnings per share, which includes potentially dilutive shares.

Non-GAAP Gross Profit and Non-GAAP Gross Margin	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)		2022			2021			2022			2021
Gross profit	$	128,304		$	103,834		$	252,742		$	204,950
Stock-based compensation		2,114			1,202			3,627			2,139
Amortization of acquired intangible assets		2,785			1,404			5,212			1,983
Non-GAAP gross profit	$	133,203		$	106,440		$	261,581		$	209,072
Gross margin		78	%		80	%		78	%		81	%
Non-GAAP gross margin		81	%		82	%		81	%		82	%

Non-GAAP Sales and Marketing Expense	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)		2022			2021			2022			2021
Sales and marketing expense	$	88,426		$	65,678		$	169,996		$	124,313
Less: Stock-based compensation		12,766			7,577			22,831			13,873
Less: Acquisition-related expenses		15			—			15			—
Non-GAAP sales and marketing expense	$	75,645		$	58,101		$	147,150		$	110,440
Non-GAAP sales and marketing expense as % of revenue		46	%		45	%		45	%		44	%

Non-GAAP Research and Development Expense	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)		2022			2021			2022			2021
Research and development expense	$	36,228		$	28,201		$	70,518		$	55,039
Less: Stock-based compensation		8,077			5,176			14,540			9,332
Less: Acquisition-related expenses		46			—			46			—
Non-GAAP research and development expense	$	28,105		$	23,025		$	55,932		$	45,707
Non-GAAP research and development expense as % of revenue		17	%		18	%		17	%		18	%

Non-GAAP General and Administrative Expense	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)		2022			2021			2022			2021
General and administrative expense	$	26,870		$	21,836		$	52,996		$	43,281
Less: Stock-based compensation		8,956			6,514			16,313			12,077
Less: Acquisition-related expenses		652			1,542			1,993			3,700
Less: Costs related to intra-entity asset transfer		—			—			838			—
Non-GAAP general and administrative expense	$	17,262		$	13,780		$	33,852		$	27,504
Non-GAAP general and administrative expense as % of revenue		11	%		11	%		10	%		11	%

The following adjustments to reconcile forecasted non-GAAP income from operations, non-GAAP net income and non-GAAP earnings per share are subject to a number of uncertainties and assumptions, each of which are inherently difficult to forecast. As a result, actual adjustments and GAAP results may differ materially.

Forecasted Non-GAAP Income from Operations	Three Months Ending September 30, 2022						Year Ending December 31, 2022
(in millions)	Low			High			Low			High
Forecasted loss from operations	$	(26.3	)	$	(25.3	)	$	(90.9	)	$	(86.9	)
Forecasted stock-based compensation		31.8			31.8			121.2			121.2
Forecasted acquisition-related expenses		0.4			0.4			2.5			2.5
Forecasted costs related to intra-entity asset transfers		—			—			0.8			0.8
Forecasted amortization of acquired intangible assets		3.1			3.1			11.4			11.4
Forecasted non-GAAP income from operations	$	9.0		$	10.0		$	45.0		$	49.0

Forecasted Non-GAAP Net Income and Non-GAAP Earnings Per Share	Three Months Ending September 30, 2022						Year Ending December 31, 2022
(in millions, except per share data)	Low			High			Low			High
Forecasted net loss⁽¹⁾	$	(32.2	)	$	(31.2	)	$	(117.0	)	$	(113.0	)
Forecasted stock-based compensation		31.8			31.8			121.2			121.2
Forecasted tax impact of stock-based compensation		(0.1	)		(0.1	)		1.9			1.9
Forecasted acquisition-related expenses		0.4			0.4			2.5			2.5
Forecasted costs related to intra-entity asset transfers		—			—			0.8			0.8
Forecasted amortization of acquired intangible assets		3.1			3.1			11.4			11.4
Forecasted tax impact of acquisitions		(0.3	)		(0.3	)		(4.0	)		(4.0	)
Forecasted tax impact of intra-entity asset transfers		0.5			0.5			2.9			2.9
Forecasted non-GAAP net income	$	3.2		$	4.2		$	19.7		$	23.7

Forecasted net loss per share, diluted⁽¹⁾	$	(0.29	)	$	(0.28	)	$	(1.05	)	$	(1.01	)
Forecasted stock-based compensation		0.29			0.29			1.09			1.09
Forecasted tax impact of stock-based compensation		—			—			0.02			0.02
Forecasted acquisition-related expenses		—			—			0.02			0.02
Forecasted costs related to intra-entity asset transfers		—			—			0.01			0.01
Forecasted amortization of acquired intangible assets		0.03			0.03			0.10			0.10
Forecasted tax impact of acquisitions		—			—			(0.04	)		(0.04	)
Forecasted tax impact of intra-entity asset transfers		—			—			0.03			0.03
Adjustment to diluted earnings per share⁽²⁾		—			—			(0.01	)		(0.02	)
Forecasted non-GAAP earnings per share, diluted	$	0.03		$	0.04		$	0.17		$	0.20

Forecasted weighted-average shares used to compute net loss per share, diluted		112.0			112.0			111.5			111.5
Forecasted weighted-average shares used to compute non-GAAP earnings per share, diluted		119.5			119.5			119.0			119.0

_______________

(1) The forecasted GAAP net loss assumes income tax expense of $2.4 million and $8.4 million in the three months ending September 30, 2022 and the year ending December 31, 2022, respectively.

(2) Adjustment to reconcile GAAP net loss per share, which excludes potentially dilutive shares, to non-GAAP earnings per share, which includes potentially dilutive shares.

News Release

Tenable Announces Second Quarter 2022 Financial Results