tenb-20230930
000166028012/312023Q3FALSE00016602802023-01-012023-09-3000016602802023-11-03xbrli:shares00016602802023-09-30iso4217:USD00016602802022-12-31iso4217:USDxbrli:shares00016602802023-07-012023-09-3000016602802022-07-012022-09-3000016602802022-01-012022-09-300001660280us-gaap:CommonStockMember2023-06-300001660280us-gaap:AdditionalPaidInCapitalMember2023-06-300001660280us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300001660280us-gaap:RetainedEarningsMember2023-06-3000016602802023-06-300001660280us-gaap:CommonStockMember2023-07-012023-09-300001660280us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300001660280us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300001660280us-gaap:RetainedEarningsMember2023-07-012023-09-300001660280us-gaap:CommonStockMember2023-09-300001660280us-gaap:AdditionalPaidInCapitalMember2023-09-300001660280us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300001660280us-gaap:RetainedEarningsMember2023-09-300001660280us-gaap:CommonStockMember2022-12-310001660280us-gaap:AdditionalPaidInCapitalMember2022-12-310001660280us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001660280us-gaap:RetainedEarningsMember2022-12-310001660280us-gaap:CommonStockMember2023-01-012023-09-300001660280us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-300001660280us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-09-300001660280us-gaap:RetainedEarningsMember2023-01-012023-09-300001660280us-gaap:CommonStockMember2022-06-300001660280us-gaap:AdditionalPaidInCapitalMember2022-06-300001660280us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001660280us-gaap:RetainedEarningsMember2022-06-3000016602802022-06-300001660280us-gaap:CommonStockMember2022-07-012022-09-300001660280us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001660280us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001660280us-gaap:RetainedEarningsMember2022-07-012022-09-300001660280us-gaap:CommonStockMember2022-09-300001660280us-gaap:AdditionalPaidInCapitalMember2022-09-300001660280us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300001660280us-gaap:RetainedEarningsMember2022-09-3000016602802022-09-300001660280us-gaap:CommonStockMember2021-12-310001660280us-gaap:AdditionalPaidInCapitalMember2021-12-310001660280us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001660280us-gaap:RetainedEarningsMember2021-12-3100016602802021-12-310001660280us-gaap:CommonStockMember2022-01-012022-09-300001660280us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-300001660280us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-09-300001660280us-gaap:RetainedEarningsMember2022-01-012022-09-300001660280us-gaap:SubscriptionAndCirculationMember2023-07-012023-09-300001660280us-gaap:SubscriptionAndCirculationMember2022-07-012022-09-300001660280us-gaap:SubscriptionAndCirculationMember2023-01-012023-09-300001660280us-gaap:SubscriptionAndCirculationMember2022-01-012022-09-300001660280us-gaap:LicenseAndMaintenanceMember2023-07-012023-09-300001660280us-gaap:LicenseAndMaintenanceMember2022-07-012022-09-300001660280us-gaap:LicenseAndMaintenanceMember2023-01-012023-09-300001660280us-gaap:LicenseAndMaintenanceMember2022-01-012022-09-300001660280us-gaap:ServiceOtherMember2023-07-012023-09-300001660280us-gaap:ServiceOtherMember2022-07-012022-09-300001660280us-gaap:ServiceOtherMember2023-01-012023-09-300001660280us-gaap:ServiceOtherMember2022-01-012022-09-300001660280us-gaap:SalesChannelThroughIntermediaryMemberus-gaap:SalesRevenueNetMembertenb:SalesMethodRiskMember2023-07-012023-09-30xbrli:pure0001660280us-gaap:SalesChannelThroughIntermediaryMemberus-gaap:SalesRevenueNetMembertenb:SalesMethodRiskMember2023-01-012023-09-300001660280us-gaap:SalesChannelThroughIntermediaryMemberus-gaap:SalesRevenueNetMembertenb:SalesMethodRiskMember2022-01-012022-09-300001660280us-gaap:SalesChannelThroughIntermediaryMemberus-gaap:SalesRevenueNetMembertenb:SalesMethodRiskMember2022-07-012022-09-300001660280us-gaap:SalesRevenueNetMembertenb:OneDistributorMemberus-gaap:CustomerConcentrationRiskMember2023-01-012023-09-300001660280us-gaap:SalesRevenueNetMembertenb:OneDistributorMemberus-gaap:CustomerConcentrationRiskMember2023-07-012023-09-300001660280us-gaap:SalesRevenueNetMembertenb:OneDistributorMemberus-gaap:CustomerConcentrationRiskMember2022-07-012022-09-300001660280us-gaap:SalesRevenueNetMembertenb:OneDistributorMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-09-300001660280us-gaap:AccountsReceivableMembertenb:OneDistributorMemberus-gaap:CustomerConcentrationRiskMember2023-01-012023-09-300001660280us-gaap:AccountsReceivableMembertenb:OneDistributorMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-12-3100016602802023-10-012023-09-3000016602802024-10-012023-09-300001660280us-gaap:MoneyMarketFundsMember2023-09-300001660280us-gaap:CashEquivalentsMember2023-09-300001660280us-gaap:CommercialPaperMember2023-09-300001660280us-gaap:CorporateBondSecuritiesMember2023-09-300001660280us-gaap:AssetBackedSecuritiesMember2023-09-300001660280us-gaap:CertificatesOfDepositMember2023-09-300001660280tenb:YankeeBondMember2023-09-300001660280us-gaap:USTreasuryAndGovernmentMember2023-09-300001660280us-gaap:MoneyMarketFundsMember2022-12-310001660280us-gaap:CashEquivalentsMember2022-12-310001660280us-gaap:CommercialPaperMember2022-12-310001660280us-gaap:CorporateBondSecuritiesMember2022-12-310001660280us-gaap:AssetBackedSecuritiesMember2022-12-310001660280us-gaap:CertificatesOfDepositMember2022-12-310001660280tenb:SupranationalBondsMember2022-12-310001660280us-gaap:USTreasuryAndGovernmentMember2022-12-310001660280tenb:CollateralForLettersOfCreditMember2023-09-300001660280tenb:CollateralForLettersOfCreditMember2022-12-310001660280us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2023-09-300001660280us-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMember2023-09-300001660280us-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMember2023-09-300001660280us-gaap:FairValueInputsLevel1Member2023-09-300001660280us-gaap:FairValueInputsLevel2Member2023-09-300001660280us-gaap:FairValueInputsLevel3Member2023-09-300001660280us-gaap:FairValueInputsLevel1Memberus-gaap:CommercialPaperMember2023-09-300001660280us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMember2023-09-300001660280us-gaap:FairValueInputsLevel3Memberus-gaap:CommercialPaperMember2023-09-300001660280us-gaap:CommercialPaperMember2023-09-300001660280us-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMember2023-09-300001660280us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2023-09-300001660280us-gaap:FairValueInputsLevel3Memberus-gaap:CorporateDebtSecuritiesMember2023-09-300001660280us-gaap:CorporateDebtSecuritiesMember2023-09-300001660280us-gaap:FairValueInputsLevel1Memberus-gaap:AssetBackedSecuritiesMember2023-09-300001660280us-gaap:FairValueInputsLevel2Memberus-gaap:AssetBackedSecuritiesMember2023-09-300001660280us-gaap:FairValueInputsLevel3Memberus-gaap:AssetBackedSecuritiesMember2023-09-300001660280us-gaap:FairValueInputsLevel1Memberus-gaap:CertificatesOfDepositMember2023-09-300001660280us-gaap:FairValueInputsLevel2Memberus-gaap:CertificatesOfDepositMember2023-09-300001660280us-gaap:FairValueInputsLevel3Memberus-gaap:CertificatesOfDepositMember2023-09-300001660280us-gaap:FairValueInputsLevel1Membertenb:YankeeBondMember2023-09-300001660280us-gaap:FairValueInputsLevel2Membertenb:YankeeBondMember2023-09-300001660280us-gaap:FairValueInputsLevel3Membertenb:YankeeBondMember2023-09-300001660280us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2023-09-300001660280us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMember2023-09-300001660280us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMember2023-09-300001660280us-gaap:USTreasurySecuritiesMember2023-09-300001660280us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2022-12-310001660280us-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMember2022-12-310001660280us-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMember2022-12-310001660280us-gaap:FairValueInputsLevel1Member2022-12-310001660280us-gaap:FairValueInputsLevel2Member2022-12-310001660280us-gaap:FairValueInputsLevel3Member2022-12-310001660280us-gaap:FairValueInputsLevel1Memberus-gaap:CommercialPaperMember2022-12-310001660280us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMember2022-12-310001660280us-gaap:FairValueInputsLevel3Memberus-gaap:CommercialPaperMember2022-12-310001660280us-gaap:CommercialPaperMember2022-12-310001660280us-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMember2022-12-310001660280us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2022-12-310001660280us-gaap:FairValueInputsLevel3Memberus-gaap:CorporateDebtSecuritiesMember2022-12-310001660280us-gaap:CorporateDebtSecuritiesMember2022-12-310001660280us-gaap:FairValueInputsLevel1Memberus-gaap:AssetBackedSecuritiesMember2022-12-310001660280us-gaap:FairValueInputsLevel2Memberus-gaap:AssetBackedSecuritiesMember2022-12-310001660280us-gaap:FairValueInputsLevel3Memberus-gaap:AssetBackedSecuritiesMember2022-12-310001660280us-gaap:FairValueInputsLevel1Memberus-gaap:CertificatesOfDepositMember2022-12-310001660280us-gaap:FairValueInputsLevel2Memberus-gaap:CertificatesOfDepositMember2022-12-310001660280us-gaap:FairValueInputsLevel3Memberus-gaap:CertificatesOfDepositMember2022-12-310001660280us-gaap:FairValueInputsLevel1Membertenb:SupranationalBondsMember2022-12-310001660280us-gaap:FairValueInputsLevel2Membertenb:SupranationalBondsMember2022-12-310001660280us-gaap:FairValueInputsLevel3Membertenb:SupranationalBondsMember2022-12-310001660280us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2022-12-310001660280us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMember2022-12-310001660280us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMember2022-12-310001660280us-gaap:USTreasurySecuritiesMember2022-12-310001660280us-gaap:ComputerEquipmentMember2023-09-300001660280us-gaap:ComputerEquipmentMember2022-12-310001660280us-gaap:SoftwareDevelopmentMember2023-09-300001660280us-gaap:SoftwareDevelopmentMember2022-12-310001660280us-gaap:FurnitureAndFixturesMember2023-09-300001660280us-gaap:FurnitureAndFixturesMember2022-12-310001660280us-gaap:LeaseholdsAndLeaseholdImprovementsMember2023-09-300001660280us-gaap:LeaseholdsAndLeaseholdImprovementsMember2022-12-310001660280us-gaap:TechnologyBasedIntangibleAssetsMember2023-09-300001660280us-gaap:TechnologyBasedIntangibleAssetsMember2022-12-310001660280us-gaap:TradeNamesMember2023-09-300001660280us-gaap:TradeNamesMember2022-12-310001660280us-gaap:SecuredDebtMember2021-07-310001660280us-gaap:RevolvingCreditFacilityMember2021-07-310001660280us-gaap:SecuredDebtMember2023-09-300001660280us-gaap:SecuredDebtMembertenb:SecuredOvernightFinancingRateMember2023-06-012023-06-010001660280us-gaap:SecuredDebtMembertenb:CreditAgreementMember2023-09-300001660280tenb:SecuredOvernightFinancingRateMembersrt:MinimumMemberus-gaap:RevolvingCreditFacilityMember2023-06-012023-06-010001660280tenb:SecuredOvernightFinancingRateMembersrt:MaximumMemberus-gaap:RevolvingCreditFacilityMember2023-06-012023-06-010001660280srt:MinimumMemberus-gaap:RevolvingCreditFacilityMembertenb:CreditAgreementMember2021-07-012021-07-310001660280srt:MaximumMemberus-gaap:RevolvingCreditFacilityMembertenb:CreditAgreementMember2021-07-012021-07-310001660280us-gaap:LetterOfCreditMember2021-07-310001660280us-gaap:RevolvingCreditFacilityMember2023-09-3000016602802021-07-310001660280tenb:EquityIncentivePlan2018Member2023-01-012023-01-310001660280tenb:EquityIncentivePlan2018Member2023-09-300001660280us-gaap:CostOfSalesMember2023-07-012023-09-300001660280us-gaap:CostOfSalesMember2022-07-012022-09-300001660280us-gaap:CostOfSalesMember2023-01-012023-09-300001660280us-gaap:CostOfSalesMember2022-01-012022-09-300001660280us-gaap:SellingAndMarketingExpenseMember2023-07-012023-09-300001660280us-gaap:SellingAndMarketingExpenseMember2022-07-012022-09-300001660280us-gaap:SellingAndMarketingExpenseMember2023-01-012023-09-300001660280us-gaap:SellingAndMarketingExpenseMember2022-01-012022-09-300001660280us-gaap:ResearchAndDevelopmentExpenseMember2023-07-012023-09-300001660280us-gaap:ResearchAndDevelopmentExpenseMember2022-07-012022-09-300001660280us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-09-300001660280us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-09-300001660280us-gaap:GeneralAndAdministrativeExpenseMember2023-07-012023-09-300001660280us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300001660280us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-09-300001660280us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-300001660280us-gaap:RestrictedStockUnitsRSUMember2023-09-300001660280us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001660280us-gaap:PerformanceSharesMember2023-09-300001660280us-gaap:PerformanceSharesMember2023-01-012023-09-300001660280us-gaap:EmployeeStockMember2023-09-300001660280us-gaap:EmployeeStockMember2023-01-012023-09-300001660280us-gaap:RestrictedStockUnitsRSUMember2022-12-310001660280us-gaap:PerformanceSharesMember2022-12-3100016602802022-01-012022-12-310001660280us-gaap:EmployeeStockMember2023-01-012023-01-310001660280srt:MinimumMemberus-gaap:EmployeeStockMember2023-01-012023-09-300001660280srt:MaximumMemberus-gaap:EmployeeStockMember2023-01-012023-09-300001660280srt:MinimumMemberus-gaap:EmployeeStockMember2022-01-012022-09-300001660280srt:MaximumMemberus-gaap:EmployeeStockMember2022-01-012022-09-300001660280us-gaap:EmployeeStockMember2022-01-012022-09-300001660280tenb:AlsidSASMember2023-01-012023-09-300001660280country:IL2022-01-012022-09-300001660280tenb:AlsidSASMember2022-01-012022-09-300001660280us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001660280us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001660280us-gaap:EmployeeStockOptionMember2023-01-012023-09-300001660280us-gaap:EmployeeStockOptionMember2022-01-012022-09-300001660280us-gaap:EmployeeStockMember2023-01-012023-09-300001660280us-gaap:EmployeeStockMember2022-01-012022-09-300001660280us-gaap:PerformanceSharesMember2023-01-012023-09-300001660280us-gaap:PerformanceSharesMember2022-01-012022-09-30tenb:segment0001660280srt:AmericasMember2023-07-012023-09-300001660280srt:AmericasMember2022-07-012022-09-300001660280srt:AmericasMember2023-01-012023-09-300001660280srt:AmericasMember2022-01-012022-09-300001660280us-gaap:EMEAMember2023-07-012023-09-300001660280us-gaap:EMEAMember2022-07-012022-09-300001660280us-gaap:EMEAMember2023-01-012023-09-300001660280us-gaap:EMEAMember2022-01-012022-09-300001660280srt:AsiaPacificMember2023-07-012023-09-300001660280srt:AsiaPacificMember2022-07-012022-09-300001660280srt:AsiaPacificMember2023-01-012023-09-300001660280srt:AsiaPacificMember2022-01-012022-09-300001660280us-gaap:SalesRevenueNetMembercountry:USus-gaap:GeographicConcentrationRiskMember2023-01-012023-09-300001660280us-gaap:SalesRevenueNetMembercountry:USus-gaap:GeographicConcentrationRiskMember2023-07-012023-09-300001660280us-gaap:SalesRevenueNetMembercountry:USus-gaap:GeographicConcentrationRiskMember2022-01-012022-09-300001660280us-gaap:SalesRevenueNetMembercountry:USus-gaap:GeographicConcentrationRiskMember2022-07-012022-09-300001660280country:US2023-09-300001660280country:US2022-12-310001660280us-gaap:NonUsMember2023-09-300001660280us-gaap:NonUsMember2022-12-310001660280us-gaap:SubsequentEventMembertenb:ErmeticLtdMember2023-10-012023-10-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-Q
__________________
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 2023
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _____ to _____
Commission file number 001-38600
__________________
TENABLE HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
__________________
Delaware 47-5580846
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
6100 Merriweather Drive, Columbia, Maryland 21044
(Address of principal executive offices, including zip code)
(410) 872-0555
(Registrant’s telephone number, including area code)
__________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareTENBThe Nasdaq Stock Market LLC
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes         No     
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes       No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filer  
Emerging growth company Smaller reporting company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes         No   
The number of shares of the Registrant's common stock outstanding as of November 3, 2023 was 116,934,931.



TENABLE HOLDINGS, INC.
TABLE OF CONTENTS
Page
 

Where You Can Find More Information
Investors and others should note that we may announce material business and financial information to our investors using our investor relations website (https://investors.tenable.com), our filings with the Securities and Exchange Commission (SEC), our website, webcasts, press releases, and conference calls. We use these mediums, including our website, to communicate with investors and the general public about our company, our products, and other issues, and for complying with our disclosure obligations under Regulation FD. It is possible that the information that we make available on our website may be deemed to be material information. We therefore encourage investors and others interested in our company to review the information that we make available on our website, in addition to following our SEC filings, our webcasts, press releases, and conference calls. The information we post through these channels is not a part of this Quarterly Report on Form 10-Q. These channels be may updated from time to time on our investor relations website.
2

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.        Financial Statements
TENABLE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
September 30, 2023December 31, 2022
(in thousands, except per share data)(unaudited)
Assets
Current assets:
Cash and cash equivalents$445,316 $300,866 
Short-term investments
247,658 266,569 
Accounts receivable (net of allowance for doubtful accounts of $225 and $1,400 at September 30, 2023 and December 31, 2022, respectively)
179,432 187,341 
Deferred commissions46,132 44,270 
Prepaid expenses and other current assets52,529 58,121 
Total current assets 971,067 857,167 
Property and equipment, net 44,076 46,726 
Deferred commissions (net of current portion)65,412 67,238 
Operating lease right-of-use assets35,989 38,495 
Acquired intangible assets, net66,169 75,376 
Goodwill316,520 316,520 
Other assets 25,213 38,008 
Total assets $1,524,446 $1,439,530 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses$26,880 $18,722 
Accrued compensation44,850 52,620 
Deferred revenue518,372 502,115 
Operating lease liabilities5,655 5,821 
Other current liabilities4,986 4,882 
Total current liabilities 600,743 584,160 
Deferred revenue (net of current portion) 163,086 162,487 
Term loan, net of issuance costs (net of current portion)359,941 361,970 
Operating lease liabilities (net of current portion)49,382 52,611 
Other liabilities 7,621 7,436 
Total liabilities 1,180,773 1,168,664 
Stockholders’ equity:
Common stock (par value: $0.01; 500,000 shares authorized; 116,470 and 113,056 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively)
1,165 1,131 
Additional paid-in capital1,146,435 1,017,837 
Accumulated other comprehensive loss(540)(1,351)
Accumulated deficit(803,387)(746,751)
Total stockholders’ equity343,673 270,866 
Total liabilities and stockholders’ equity$1,524,446 $1,439,530 
The accompanying notes are an integral part of these consolidated financial statements.
3

Table of Contents
TENABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)2023202220232022
Revenue$201,529 $174,851 $585,404 $498,560 
Cost of revenue45,754 38,582 134,774 109,549 
Gross profit155,775 136,269 450,630 389,011 
Operating expenses:
Sales and marketing94,759 88,123 289,750 258,119 
Research and development37,052 36,131 113,080 106,649 
General and administrative31,877 24,973 85,614 77,969 
Total operating expenses163,688 149,227 488,444 442,737 
Loss from operations(7,913)(12,958)(37,814)(53,726)
Interest income7,662 1,803 19,323 2,746 
Interest expense(8,119)(5,082)(23,208)(12,246)
Other expense, net(6,502)(2,073)(7,993)(4,880)
Loss before income taxes(14,872)(18,310)(49,692)(68,106)
Provision for income taxes693 420 6,944 2,629 
Net loss$(15,565)$(18,730)$(56,636)$(70,735)
Net loss per share, basic and diluted
$(0.13)$(0.17)$(0.49)$(0.64)
Weighted-average shares used to compute net loss per share, basic and diluted
115,954 111,937 114,967 110,843 
The accompanying notes are an integral part of these consolidated financial statements.
4

Table of Contents
TENABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Net loss$(15,565)$(18,730)$(56,636)$(70,735)
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on available-for-sale securities, net161 (13)811 (1,563)
Other comprehensive income (loss)161 (13)811 (1,563)
Comprehensive loss$(15,404)$(18,743)$(55,825)$(72,298)
The accompanying notes are an integral part of these consolidated financial statements.

5

Table of Contents
TENABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
Common StockAccumulated Deficit
(in thousands)SharesAmount
Balance at June 30, 2023
115,529 $1,156 $1,101,928 $(701)$(787,822)$314,561 
Exercise of stock options
123 1 883 — — 884 
Vesting of restricted stock units611 6 (6)— —  
Vesting of performance stock units13 — — — —  
Issuance of common stock under employee stock purchase plan194 2 6,308 — — 6,310 
Stock-based compensation— — 37,322 — — 37,322 
Other comprehensive income— — — 161 — 161 
Net loss— — — — (15,565)(15,565)
Balance at September 30, 2023116,470 $1,165 $1,146,435 $(540)$(803,387)$343,673 
Balance at December 31, 2022113,056 $1,131 $1,017,837 $(1,351)$(746,751)$270,866 
Exercise of stock options289 3 2,418 — — 2,421 
Vesting of restricted stock units2,541 25 (25)— —  
Vesting of performance stock units78 1 (1)— —  
Issuance of common stock under employee stock purchase plan506 5 16,219 — — 16,224 
Stock-based compensation— — 109,987 — — 109,987 
Other comprehensive income— — — 811 — 811 
Net loss— — — — (56,636)(56,636)
Balance at September 30, 2023116,470 $1,165 $1,146,435 $(540)$(803,387)$343,673 
Balance at June 30, 2022
111,574 $1,116 $944,799 $(1,856)$(706,534)$237,525 
Exercise of stock options
158 2 1,977 — — 1,979 
Vesting of restricted stock units482 4 (4)— —  
Issuance of common stock under employee stock purchase plan187 2 5,907 — — 5,909 
Stock-based compensation— — 33,185 — — 33,185 
Other comprehensive loss— — — (13)— (13)
Net loss— — — — (18,730)(18,730)
Balance at September 30, 2022112,401 $1,124 $985,864 $(1,869)$(725,264)$259,855 
Balance at December 31, 2021108,929 $1,089 $869,059 $(306)$(654,529)$215,313 
Exercise of stock options1,090 11 10,644 — — 10,655 
Vesting of restricted stock units1,939 19 (19)— —  
Issuance of common stock under employee stock purchase plan443 5 14,786 — — 14,791 
Stock-based compensation— — 91,394 — — 91,394 
Other comprehensive loss— — — (1,563)— (1,563)
Net loss— — — — (70,735)(70,735)
Balance at September 30, 2022112,401 $1,124 $985,864 $(1,869)$(725,264)$259,855 
The accompanying notes are an integral part of these consolidated financial statements.
6

Table of Contents
TENABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
(in thousands)20232022
Cash flows from operating activities:
Net loss$(56,636)$(70,735)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization18,900 15,911 
Stock-based compensation108,812 89,954 
Other1,838 2,102 
Changes in operating assets and liabilities:
Accounts receivable9,084 (10,727)
Prepaid expenses and other assets17,524 20,355 
Accounts payable, accrued expenses and accrued compensation447 (8,829)
Deferred revenue16,856 61,731 
Other current and noncurrent liabilities(5,475)(529)
Net cash provided by operating activities111,350 99,233 
Cash flows from investing activities:
Purchases of property and equipment(1,299)(5,132)
Capitalized software development costs(4,707)(8,778)
Purchases of short-term investments(217,239)(190,440)
Sales and maturities of short-term investments242,864 163,340 
Business combinations, net of cash acquired (66,993)
Net cash provided by (used in) investing activities19,619 (108,003)
Cash flows from financing activities:
Payments on term loan(2,813)(2,813)
Proceeds from loan agreement424 572 
Proceeds from stock issued in connection with the employee stock purchase plan16,224 14,791 
Proceeds from the exercise of stock options2,421 10,655 
Other financing activities(213)(10)
Net cash provided by financing activities16,043 23,195 
Effect of exchange rate changes on cash and cash equivalents and restricted cash(2,562)(4,276)
Net increase in cash and cash equivalents and restricted cash144,450 10,149 
Cash and cash equivalents and restricted cash at beginning of period300,866 278,271 
Cash and cash equivalents and restricted cash at end of period$445,316 $288,420 
Supplemental disclosure of cash flow information:
Cash paid for interest$26,786 $10,619 
Cash paid for income taxes, net of refunds6,166 7,630 
Supplemental cash flow information related to leases:
Cash payments for operating leases
$6,797 $3,641 
The accompanying notes are an integral part of these consolidated financial statements.
7

Table of Contents
TENABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Business and Summary of Significant Accounting Policies
Business Description
Tenable Holdings, Inc. (the “Company,” “we,” "us," or “our”) is a provider of exposure management solutions, which is an effective discipline for managing, measuring and comparing cybersecurity risk in today's complex IT environments. Our solutions provide broad visibility into security issues such as vulnerabilities, misconfigurations, internal and regulatory compliance violations and other indicators of the state of an organization’s security across IT infrastructure and applications, cloud environments, Active Directory and industrial internet of things and operational technology environments.
Basis of Presentation
The accompanying consolidated financial statements include the accounts of Tenable Holdings, Inc. and our wholly owned subsidiaries and have been prepared in conformity with United States generally accepted accounting principles (“GAAP”) for interim financial information. All intercompany accounts and transactions have been eliminated in consolidation.
The consolidated statements are unaudited and should be read in conjunction with the consolidated financial statements and related notes included in our 2022 Annual Report on Form 10-K ("10-K") filed with the Securities and Exchange Commission on February 24, 2023. The consolidated financial statements have been prepared on a basis consistent with the audited annual consolidated financial statements included in the 10-K and, in the opinion of management, include all adjustments of a normal recurring nature necessary to fairly state our financial position, our results of operations, and cash flows.
The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the operating results expected for the year ending December 31, 2023 or any other future period.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates include, but are not limited to, the determination of the estimated economic life of perpetual licenses for revenue recognition, the estimated period of benefit for deferred commissions, the useful lives of long-lived assets, the fair value of acquired intangible assets, the valuation of stock-based compensation, the incremental borrowing rate for operating leases, and the valuation of deferred tax assets and investments. We base these estimates on historical experience and on various other assumptions that we believe to be reasonable. Actual results could differ significantly from these estimates.
Significant Accounting Policies
Our significant accounting policies are described in our 10-K. During the nine months ended September 30, 2023, there were no material changes to our significant accounting policies from those described in our 10-K.
8

Table of Contents
2. Revenue
Disaggregation of Revenue
The following table presents a summary of revenue:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Subscription revenue$183,268 $156,764 $531,133 $446,257 
Perpetual license and maintenance revenue12,200 12,658 36,535 38,214 
Professional services and other revenue6,061 5,429 17,736 14,089 
Revenue$201,529 $174,851 $585,404 $498,560 
Concentrations
We sell and market our products and services through our field sales force that works closely with our channel partners, which includes a network of distributors and resellers, in developing sales opportunities. We use a two-tiered channel model whereby we sell our products and services to our distributors, which in turn sell to resellers, which then sell to end-users. We derived 93% of revenue through our channel network in the three and nine months ended September 30, 2023 and 92% of revenue through our channel network in the three and nine months ended September 30, 2022. One of our distributors accounted for 36% of revenue in the three and nine months ended September 30, 2023 and 38% of revenue in the three and nine months ended September 30, 2022. That same distributor accounted for 37% and 36% of accounts receivable at September 30, 2023 and December 31, 2022, respectively.
Contract Balances
We generally bill our customers in advance and accounts receivable are recorded when we have the right to invoice the customer. Contract liabilities consist of deferred revenue and include customer billings and payments received in advance of performance under the contract. In the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2023 and 2022, we recognized revenue of $185.9 million, $156.3 million, $430.8 million and $350.6 million, respectively, that was included in the deferred revenue balance at the beginning of each of the respective periods.
Remaining Performance Obligations
At September 30, 2023, the future estimated revenue related to unsatisfied performance obligations was $697.2 million, of which $528.4 million is expected to be recognized as revenue over the next twelve months, and the remainder is expected to be recognized over the four years thereafter.
Deferred Commissions
The following summarizes the activity of deferred incremental costs of obtaining a contract:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Beginning balance$109,582 $100,000 $111,508 $99,949 
Capitalization of contract acquisition costs14,527 12,837 36,819 35,240 
Amortization of deferred contract acquisition costs(12,565)(11,561)(36,783)(33,913)
Ending balance$111,544 $101,276 $111,544 $101,276 
9

Table of Contents
3. Cash Equivalents and Short-Term Investments
The following tables summarize the amortized cost, unrealized gain and loss and estimated fair value of cash equivalents and short-term investments:

September 30, 2023
(in thousands)Amortized CostUnrealized GainUnrealized LossEstimated Fair Value
Cash equivalents
Money market funds$103,979 $— $— $103,979 
Total cash equivalents$103,979 $— $— $103,979 
Short-term investments
Commercial paper$86,244 $ $(32)$86,212 
Corporate bonds54,769  (264)54,505 
Asset backed securities16,410  (52)16,358 
Certificates of deposit10,000   10,000 
Yankee bonds6,893  (59)6,834 
U.S. Treasury and agency obligations73,882 11 (144)73,749 
Total short-term investments$248,198 $11 $(551)$247,658 
December 31, 2022
(in thousands)Amortized CostUnrealized GainUnrealized LossEstimated Fair Value
Cash equivalents
Money market funds$201,476 $— $— $201,476 
Total cash equivalents$201,476 $— $— $201,476 
Short-term investments
Commercial paper$144,093 $2 $(377)$143,718 
Corporate bonds37,778  (194)37,584 
Asset backed securities19,723 11 (161)19,573 
Certificates of deposit10,000   10,000 
Supranational bonds4,017  (67)3,950 
U.S. Treasury and agency obligations52,309  (565)51,744 
Total short-term investments$267,920 $13 $(1,364)$266,569 
We considered the extent to which any unrealized losses on our short-term investments were driven by credit risk and other factors, including market risk, and if it is more-likely-than-not that we would have to sell the security before the recovery of the amortized cost basis. At September 30, 2023 and December 31, 2022, our unrealized losses were due to rising market interest rates compared to when the investments were initiated. We do not believe any unrealized losses represent credit losses, and it is unlikely we would sell the investments before we would recover their amortized cost basis.
10

Table of Contents
The contractual maturities of our short-term investments are as follows:
September 30, 2023December 31, 2022
(in thousands)Amortized CostEstimated Fair ValueAmortized CostEstimated Fair Value
Due within one year$232,140 $231,721 $243,430 $242,129 
Due between one and two years16,058 15,937 24,490 24,440 
Total short-term investments$248,198 $247,658 $267,920 $266,569 
At September 30, 2023 and December 31, 2022, cash and cash equivalents included $5.8 million of restricted cash primarily related to collateral for our outstanding letters of credit.
4. Fair Value Measurements
We measure certain financial instruments at fair value using a fair value hierarchy. In the hierarchy, assets are classified based on the lowest level inputs used in valuation into the following categories:
Level 1 — Quoted prices in active markets for identical assets and liabilities;
Level 2 — Observable inputs including quoted market prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in inactive markets, or inputs that are corroborated by observable market data; and
Level 3 — Unobservable inputs.
The following tables summarize assets that are measured at fair value on a recurring basis:
September 30, 2023
(in thousands)Level 1Level 2Level 3Total
Cash equivalents
Money market funds$103,979 $ $ $103,979 
Total cash equivalents$103,979 $ $ $103,979 
Short-term investments
Commercial paper$ $86,212 $ $86,212 
Corporate bonds 54,505  54,505 
Asset backed securities 16,358  16,358 
Certificates of deposit 10,000  10,000 
Yankee bonds 6,834  6,834 
U.S. Treasury and agency obligations 73,749  73,749 
Total short-term investments$ $247,658 $ $247,658 
11

Table of Contents
December 31, 2022
(in thousands)Level 1Level 2Level 3Total
Cash equivalents
Money market funds$201,476 $ $ $201,476 
Total cash equivalents$201,476 $ $ $201,476 
Short-term investments
Commercial paper$ $143,718 $ $143,718 
Corporate bonds 37,584  37,584 
Asset backed securities 19,573  19,573 
Certificates of deposit 10,000  10,000 
Supranational bonds 3,950  3,950 
U.S. Treasury and agency obligations 51,744  51,744 
Total short-term investments$ $266,569 $ $266,569 
At September 30, 2023 and December 31, 2022, we had $10.0 million and $15.0 million, respectively, of non-marketable simple agreements for future equity ("SAFE") investments with privately held companies, which are included in other assets on our consolidated balance sheets. We record our SAFE investments at cost, less any impairment, plus or minus observable price changes for similar investments of the same issuer. During the three months ended September 30, 2023, we identified impairment indicators for one of our SAFE investments and determined our investment was impaired, resulting in an impairment loss of $5.0 million that was recorded in other expense, net on our consolidated statement of operations.
We did not have any liabilities measured and recorded at fair value on a recurring basis at September 30, 2023 and December 31, 2022.
5. Property and Equipment, Net
Property and equipment, net consisted of the following:
(in thousands)
September 30, 2023December 31, 2022
Computer software and equipment
$22,247$22,424
Internally developed software29,36223,479
Furniture and fixtures
5,9495,940
Leasehold improvements
28,53228,214
Total
86,09080,057
Less: accumulated depreciation and amortization
(42,014)(33,331)
Property and equipment, net
$44,076$46,726
Depreciation and amortization related to property and equipment was $3.2 million, $2.7 million, $9.7 million and $7.6 million in the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2023 and 2022, respectively.
6. Goodwill and Intangible Assets
At September 30, 2023 and December 31, 2022, our goodwill balance was $316.5 million.
12

Table of Contents
Acquired intangible assets subject to amortization are as follows:
September 30, 2023December 31, 2022
(in thousands)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Acquired technology$97,037 $(30,868)$66,169 $97,037 $(21,738)$75,299 
Trade name490 (490) 490 (413)77 
$97,527 $(31,358)$66,169 $97,527 $(22,151)$75,376 
Amortization of acquired intangible assets was $3.0 million, $3.1 million, $9.2 million and $8.3 million in the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2023 and 2022, respectively. At September 30, 2023, our acquired intangible assets are expected to be amortized over an estimated remaining weighted average period of 6.0 years.
At September 30, 2023, estimated future amortization of acquired intangible assets is as follows:
(in thousands)
Year ending December 31,
2023(1)
$3,044 
202412,175 
202512,175 
202611,990 
20279,960 
Thereafter
16,825 
Total
$66,169 
_______________
(1)    Represents the three months ending December 31, 2023.
7. Leases
We have operating leases for office facilities. The components of lease expense were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)
2023202220232022
Operating lease cost
$1,900 $1,977 $5,690 $5,564 
Rent expense for short-term leases in the three and nine months ended September 30, 2023 and 2022 was not material.
Supplemental information related to leases was as follows:
September 30, 2023December 31, 2022
Operating leases
Weighted average remaining lease term
7.6 years8.2 years
Weighted average discount rate
5.6%5.6%
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)
2023202220232022
ROU assets obtained in exchange for lease obligations
Operating leases
$ $3,863 $1,234 $4,256 
13

Table of Contents
Maturities of operating lease liabilities at September 30, 2023 were as follows:
(in thousands)
Year ending December 31,
2023(1)
$1,890 
20248,934 
20259,476 
20268,821 
20278,359 
Thereafter
30,790 
Total lease payments
68,270 
Less: Imputed interest
(13,233)
Total
$55,037 
_______________
(1)    Represents the three months ending December 31, 2023.
8. Debt
Credit Agreement
In July 2021, we entered into a credit agreement ("Credit Agreement") which is comprised of:
a $375.0 million senior secured term loan facility ("Term Loan"); and
a $50.0 million senior secured revolving credit facility ("Revolving Credit Facility").
The table below summarizes the carrying value of the Term Loan:
(in thousands)September 30, 2023
Term loan$368,438 
Less: Unamortized debt discount and issuance costs(5,807)
Term loan, net of issuance costs362,631 
Less: Term loan, net, current (1)
(2,690)
Term loan, net of issuance costs (net of current portion)$359,941 
_______________
(1)    Term loan, net current is included in other current liabilities on our consolidated balance sheets.
On June 1, 2023, we began using the Secured Overnight Financing Rate ("SOFR") instead of LIBOR. The Term Loan bears interest at a rate of 2.75% per annum over SOFR, subject to a 0.50% floor, plus a credit spread adjustment depending on the interest period. The Term Loan is being amortized at 1% per annum in equal quarterly installments until the final payment of $350.6 million on the July 7, 2028 maturity date.
Our Term Loan is recorded at its carrying value. At September 30, 2023, the fair value of our Term Loan was approximately $367.5 million. In the fair value hierarchy, our Term Loan is classified as Level 2 as it is traded in less active markets.
14

Table of Contents
The maturities of the Term Loan at September 30, 2023 were as follows:
(in thousands)
Year ending December 31,
2023(1)
$938 
20243,750 
20253,750 
20263,750 
20273,750 
Thereafter
352,500 
Total
$368,438 
_______________
(1)    Represents the three months ending December 31, 2023.
We may be subject to mandatory Term Loan prepayments related to the excess cash flow provisions. These prepayments would only be required if our first lien net leverage ratio (as defined in our Credit Agreement) exceeds 3.5 at the end of each year. At September 30, 2023, our first lien net leverage ratio was 1.21.
The Revolving Credit Facility bears interest at a rate, depending on first lien net leverage, ranging from 2.00% to 2.50% over SOFR and matures on July 7, 2026. Additionally, we pay a commitment fee during the term ranging from 0.25% to 0.375% per annum of the average daily undrawn portion of the revolving commitments based on the first lien net leverage ratio. The Revolving Credit Facility contains a $15.0 million letter of credit sublimit. At September 30, 2023, we had $0.2 million of standby letters of credit outstanding under our Revolving Credit Facility related to one of our operating leases. At September 30, 2023, we were in compliance with the covenants under the Credit Agreement.
9. Commitments and Contingencies
Commitments
In July 2021, we entered into a contract with Amazon Web Services, Inc. ("AWS") for cloud services from August 2021 through July 2024. Under the terms of the contract, we committed to spend $43.7 million, $46.8 million and $50.1 million in contract years one, two and three, respectively, for a total of $140.6 million. If we do not meet the minimum purchase obligation during any of those years, we will be required to pay the difference. We met our commitments for both the first and second years of our contract with AWS, and as of September 30, 2023, we have spent $12.9 million of our third year commitment.
Letters of Credit
At September 30, 2023, we had $5.7 million of standby letters of credit related to our grant agreements with the State of Maryland and our operating leases.
10. Stock-Based Compensation
Under the evergreen provision in our 2018 Equity Incentive Plan, in January 2023 we reserved an additional 5.7 million shares of our common stock. At September 30, 2023, there were 24.0 million shares available for grant.
15

Table of Contents
Stock-based compensation expense included in the consolidated statements of operations was as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)
2023202220232022
Cost of revenue
$3,011$2,341$8,542$5,968
Sales and marketing
15,80513,58946,62236,420
Research and development
9,2428,75427,87123,294
General and administrative
8,7777,95925,77724,272
Total stock-based compensation expense
$36,835$32,643$108,812$89,954
At September 30, 2023, the unrecognized stock-based compensation expense related to unvested restricted stock units ("RSUs") was $282.4 million, which is expected to be recognized over an estimated remaining weighted average period of 2.6 years.
At September 30, 2023, the unrecognized stock-based compensation expense related to unvested performance stock units ("PSUs") was $7.4 million, which is expected to be recognized over an estimated remaining weighted average period of 3.1 years.
At September 30, 2023, the unrecognized stock-based compensation expense related to our 2018 Employee Stock Purchase Plan ("2018 ESPP") was $7.4 million, which is expected to be recognized over an estimated weighted average period of 0.6 years.
RSUs and PSUs
A summary of our RSU and PSU activity is presented below:
RSUsPSUs
(in thousands, except for per share data)
Number
of Shares
Weighted
Average
Grant Date Fair Value
Number
of Shares
Weighted
Average
Grant Date Fair Value
Unvested balance at December 31, 20226,894$43.26 196$44.97 
Granted
3,491 43.19 188 43.24 
Performance adjustment(1)
  12 44.97 
Vested
(2,541)41.86 (78)44.97 
Forfeited
(501)45.16   
Unvested balance at September 30, 20237,34343.58 31843.95 
_______________
(1)    Represents adjustments due to the achievement of predefined financial performance targets.
16

Table of Contents
Stock Options
A summary of our stock option activity is presented below:
(in thousands, except for exercise prices and years)
Number
of Shares
Weighted
Average
Exercise Price
Weighted-Average Remaining Contractual Term (in years)
Aggregate Intrinsic Value
Outstanding at December 31, 20225,485$8.96 4.5$160,135
Granted
 
Exercised
(289)8.38 10,265
Forfeited/canceled
 
Outstanding and exercisable at September 30, 20235,1968.99 3.7186,092
2018 Employee Stock Purchase Plan
Under the evergreen provision in our 2018 ESPP, in January 2023 we reserved an additional 1.7 million shares of our common stock. At September 30, 2023, there were 8.7 million shares reserved for issuance under our 2018 ESPP.
In the nine months ended September 30, 2023, employees purchased 506,390 shares of our common stock at a weighted average price of $32.04 per share, resulting in $16.2 million of cash proceeds. At September 30, 2023, there was $4.3 million of employee contributions to the 2018 ESPP included in accrued compensation.
The fair value of the 2018 ESPP purchase rights was estimated on the offering or modification dates using a Black-Scholes option-pricing model and the following assumptions:
Nine Months Ended September 30,
20232022
Expected term (in years)
0.52.0
0.52.0
Expected volatility
46.9% — 58.1%
42.8% — 61.0%
Risk-free interest rate
4.8% — 5.4%
0.1% — 3.4%
Expected dividend yield
11. Income Taxes
In the nine months ended September 30, 2023, the provision for income taxes included $4.3 million of income taxes in foreign jurisdictions in which we conduct business and $2.8 million of discrete items primarily related to withholding taxes on sales to customers, partially offset by $0.2 million of deferred tax benefits related to the Alsid acquisition.
In the nine months ended September 30, 2022, the provision for income taxes included $3.1 million of income taxes in foreign jurisdictions in which we conduct business, $2.1 million of current expense from the restructuring of our research and development operations in Israel, partially offset by $1.8 million of deferred tax benefits related to the Alsid acquisition. Additionally, the provision included $1.7 million of discrete items primarily related to withholding taxes on sales to customers, which was more than offset by a benefit of $2.5 million from partially releasing the valuation allowance associated with the Bit Discovery acquisition.
17

Table of Contents
12. Net Loss Per Share
The following table sets forth the computation of basic and diluted net loss per share:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)2023202220232022
Net loss$(15,565)$(18,730)$(56,636)$(70,735)
Weighted-average shares used to compute net loss per share, basic and diluted115,954 111,937 114,967 110,843 
Net loss per share, basic and diluted
$(0.13)$(0.17)$(0.49)$(0.64)
The following potentially dilutive securities have been excluded from the diluted per share calculations because they would have been antidilutive:
September 30,
(in thousands)20232022
RSUs7,343 7,515 
Stock options5,196 5,569 
Shares to be issued under the 2018 ESPP128 58 
PSUs130  
Total12,797 13,142 
13. Geographic Information
We operate as one operating segment. Our Chief Executive Officer, who is our chief operating decision maker, reviews financial information on a consolidated basis for purposes of making operating decisions, allocating resources and evaluating financial performance.
Revenue by region, based on the address of the end user as specified in our subscription, license or service agreements, was as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
The Americas$127,016 $111,227 $368,510 $315,706 
Europe, Middle East and Africa51,397 44,117 150,437 128,779 
Asia Pacific23,116 19,507 66,457 54,075 
Revenue$201,529 $174,851 $585,404 $498,560 
Customers located in the United States accounted for 55% of revenue in the three and nine months ended September 30, 2023 and 57% of revenue in the three and nine months ended September 30, 2022. No other country accounted for 10% or more of revenue in the periods presented.
Our property and equipment, net by geographic area is summarized as follows:
(in thousands)September 30, 2023December 31, 2022
United States$38,610 $39,843 
International5,466 6,883 
Property and equipment, net$44,076 $46,726 
18

Table of Contents
14. Subsequent Events
In October 2023, we acquired Ermetic Ltd. ("Ermetic"). Ermetic is an innovative cloud-native application protection platform company and a leading provider of cloud infrastructure entitlement management. This acquisition will add capabilities to our Tenable One Exposure Management Platform and Tenable Cloud Security solution to deliver contextual risk visibility, prioritization and remediation across infrastructure and identities, both on-premises and in the cloud. We acquired Ermetic for a total purchase price of approximately $244 million, subject to customary purchase price adjustments.
19

Table of Contents
Item 2.        Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (1) our consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, or this Form 10-Q, and (2) our consolidated financial statements, related notes 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, 2022, or the 10-K, filed with the Securities and Exchange Commission on February 24, 2023. This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would” or the negative or plural of these words or similar expressions or variations. Such forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors,” set forth in Part I, Item IA of the 10-K, in Part II, Item 1A of this Form 10-Q and in our other filings with the SEC. You should not rely upon forward-looking statements as predictions of future events. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
Overview
We are a leading provider of exposure management solutions. Exposure management is an effective discipline for managing, measuring and comparing cybersecurity risk in today's complex IT environments.
Our Tenable One Exposure Management Platform, or Tenable One, unifies a variety of data sources into a single exposure view to help organizations gain visibility, prioritize efforts and communicate cyber risks. Building on our existing products, Tenable One is designed to take advantage of the integrations that already exist with our partners and form the foundation of an exposure management program, alongside the other tools, such as endpoint detection and response and firewalls, and required business processes.
With Tenable One, organizations can translate technical data about assets, vulnerabilities and threats into clear business insights and actionable intelligence for security executives and practitioners. The platform combines broad, industry-leading vulnerability coverage in the industry, spanning IT assets, cloud resources, containers, web apps and identity systems. Tenable One builds on the speed and breadth of vulnerability coverage from Tenable Research and adds aggregated exposure view analytics, guidance on mitigating attack pathways and a centralized asset inventory.
Tenable One incorporates Tenable Vulnerability Management, Tenable Web App Scanning, Tenable Lumin, Tenable Cloud Security, Tenable Identity Exposure, Tenable Attack Surface Management and Tenable Security Center. All of these products are also offered as standalone solutions, alongside Tenable OT Security and Tenable Nessus.
Our platform offerings are primarily sold on a subscription basis with a one-year term. Our subscription terms are generally not longer than three years. These offerings are typically prepaid in advance. To a lesser extent, we recognize revenue ratably from perpetual licenses and from the related ongoing maintenance.
We sell and market our products and services through our field sales force that works closely with our channel partners, which includes a network of distributors and resellers, in developing sales opportunities. We use a two-tiered channel model whereby we sell our enterprise platform offerings to our distributors, which in turn sell to our resellers, which then sell to end users, which we call customers.
Revenue in the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2023 and 2022 was $201.5 million, $174.9 million, $585.4 million and $498.6 million, respectively, representing year-over-year growth of 15% and 17% in the quarterly and year-to-date periods, respectively. Our 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
20

Table of Contents
revenue in the three and nine months ended September 30, 2023 and 2022. Our net loss in the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2023 and 2022 was $15.6 million, $18.7 million, $56.6 million and $70.7 million, respectively, as we continue to invest in our business and market opportunity. Our cash flows from operating activities was $42.4 million, $35.9 million, $111.4 million and $99.2 million in the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2023 and 2022, respectively.
Financial Highlights
Below are our key financial results:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)2023202220232022
Revenue$201,529 $174,851 $585,404 $498,560 
Loss from operations(7,913)(12,958)(37,814)(53,726)
Net loss(15,565)(18,730)(56,636)(70,735)
Net loss per share, basic and diluted
(0.13)(0.17)(0.49)(0.64)
Net cash provided by operating activities42,411 35,853 111,350 99,233 
Purchases of property and equipment(201)(1,896)(1,299)(5,132)
Capitalized software development costs(1,894)(2,451)(4,707)(8,778)
Key Operating and Financial Metrics
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use and monitor the following operating and financial metrics, which include non-GAAP financial measures, to understand and evaluate our core operating and financial performance.
Calculated Current Billings
We use the non-GAAP measure of calculated current billings, which we believe is a key metric to measure our periodic performance. Given that most of our customers pay in advance, we typically recognize a majority of 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.
Calculated current billings consists of revenue recognized in a period plus the change in current deferred revenue in the corresponding period. 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. 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.
Calculated current billings may vary from period-to-period for a number of reasons, and therefore has a number of limitations as a quarter-to-quarter or year-over-year comparative measure. Calculated current billings in any one period may be impacted by the timing and amount of new sales transactions, the timing and amount of renewal transactions, including early renewals, the mix of the amount of subscriptions and perpetual licenses, the timing of billing professional services, as well as the timing and amount of multi-year prepaid contracts, all of which could favorably or unfavorably impact quarter-to-quarter and year-over-year comparisons. For example, an increasing number of large sales transactions, for which the timing has and will continue to vary, may occur in quarters subsequent to or in advance of those that we anticipate. Additionally, our calculation of calculated current billings may be different from other companies that report similar financial measures. Because of these and other limitations, you should consider calculated current billings along with revenue and our other GAAP financial results.
21

Table of Contents
The following table presents a reconciliation of revenue, the most directly comparable financial measure calculated in accordance with GAAP, to calculated current billings:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Revenue$201,529 $174,851 $585,404 $498,560 
Deferred revenue (current), end of period518,372 447,863 518,372 447,863 
Deferred revenue (current), beginning of period(1)
(495,199)(415,378)(502,115)(408,443)
Calculated current billings$224,702 $207,336 $601,661 $537,980 
_______________
(1)    Deferred revenue (current), beginning of period for the nine months ended September 30, 2022 includes $0.9 million related to acquired deferred revenue.
Free Cash Flow
We use the non-GAAP measure of free cash flow, which we define as GAAP net cash flows from operating activities reduced by purchases of property and equipment and capitalized software development costs. We believe free cash flow is an important liquidity measure of the cash (if any) that is available, after purchases of property and equipment and capitalized software development costs, 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.
Our use of free cash flow has limitations as an analytical tool and you should not consider it in isolation or as a substitute for an analysis of our results under GAAP. First, free cash flow is not a substitute for net cash flows from operating activities. Second, other companies may calculate free cash flow or similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of free cash flow as a tool for comparison. Additionally, the utility of free cash flow is further limited as it does not reflect our future contractual commitments and does not represent the total increase or decrease in our cash balance for a given period. Because of these and other limitations, you should consider free cash flow along with net cash provided by operating activities and our other GAAP financial measures.
The following table presents a reconciliation of net cash provided by operating activities, the most directly comparable financial measure calculated in accordance with GAAP, to free cash flow:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Net cash provided by operating activities$42,411 $35,853 $111,350 $99,233 
Purchases of property and equipment(201)(1,896)(1,299)(5,132)
Capitalized software development costs(1)
(1,894)(2,451)(4,707)(8,778)
Free cash flow(2)
$40,316 $31,506 $105,344 $85,323 
_______________
(1)    Capitalized software development costs were previously included in purchases of property and equipment.
(2)    Free cash flow for the periods presented was impacted by:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Cash paid for interest and other financing costs$(7,843)$(3,253)$(26,786)$(10,619)
Employee stock purchase plan activity(2,236)(4,845)(2,507)(4,538)
Acquisition-related expenses(571)(398)(830)(2,395)
Costs related to intra-entity asset transfers— — — (838)
Tax payment on intra-entity asset transfers— — — (2,697)
22

Table of Contents
Free cash flow for the nine months ended September 30, 2022 was benefited by approximately $8 million from prepayments of software subscription costs, insurance and rent in prior quarters.
Customer Metrics
We believe that our customer base provides a significant opportunity to expand sales of our enterprise platform offerings. The following tables summarize key components of our customer base:
Three Months Ended September 30,
20232022Change (%)
Number of new enterprise platform customers added in period(1)
386508(24)%
_______________
(1)    We define an enterprise platform customer as a customer that has licensed Tenable One, Tenable Vulnerability Management, Tenable Cloud Security, Tenable Identity Exposure, Tenable OT Security or Tenable Security Center for an annual amount of $5,000 or greater. New enterprise platform customers represent new customer logos during the periods presented and do not include customer conversions from Tenable Nessus Expert to enterprise platforms.
September 30,
20232022Change (%)
Number of customers with $100,000 and greater in annual contract value at end of period
1,5651,28022%
Dollar-Based Net Expansion Rate
Our dollar-based net expansion rate reflects both our customer retention and ability to drive additional sales to our existing customers. Our dollar-based net expansion rate has historically fluctuated and is expected to continue to fluctuate on a quarterly basis as a result of a number of factors, including existing customers' satisfaction with our solutions, existing customer retention, the pricing of our solutions, the availability of competing solutions and the pricing thereof, and the timing of customer renewals. In addition, our sales pipeline opportunities vary from quarter to quarter between new customers and expansion from existing customers, and we do not prioritize one over the other to maximize the dollar-based net expansion rate.
Our dollar-based net expansion rate is evaluated on a last twelve months, or LTM, basis, and is calculated as follows:
Denominator: To calculate our dollar-based net expansion rate as of the end of a reporting period, we first determine the annual recurring revenue, or ARR, from all active subscriptions (both revenue recognized ratably over the subscription term and upon delivery) and maintenance from perpetual licenses as of the last day of the same reporting period in the prior year. This represents recurring payments that we expect to receive in the next 12-month period from the cohort of customers that existed on the last day of the same reporting period in the prior year.
Numerator: We measure the ARR for that same cohort of customers representing all subscriptions and maintenance from perpetual licenses based on customer orders as of the end of the reporting period.
We calculate dollar-based net expansion rate by dividing the numerator by the denominator.
The following table presents our dollar-based net expansion rate:
September 30,
(in thousands)20232022
Dollar-based net expansion rate111 %118 %
23

Table of Contents
Non-GAAP Income from Operations and Non-GAAP Operating Margin
We use non-GAAP income from operations along with non-GAAP operating margin as key indicators of our financial performance. We define these non-GAAP financial measures as their respective GAAP measures, excluding the effects 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 and integration expenses, as well as costs related to the intercompany transfer of acquired intellectual property.
We believe that these non-GAAP financial measures provide useful information about our core operating results over multiple periods. There are a number of limitations related to the use of the non-GAAP financial measures as compared to GAAP loss from operations and operating margin, including that non-GAAP income from operations and non-GAAP operating margin exclude stock-based compensation expense, which has been, and will continue to be, a significant recurring expense in our business and an important part of our compensation strategy.
The following table presents a reconciliation of loss from operations, the most directly comparable financial measure calculated in accordance with GAAP, to non-GAAP income from operations, and operating margin, the most directly comparable financial measure calculated in accordance with GAAP, to non-GAAP operating margin:
Three Months Ended September 30,Nine Months Ended September 30,
(dollars in thousands)2023202220232022
Loss from operations$(7,913)$(12,958)$(37,814)$(53,726)
Stock-based compensation36,835 32,643 108,812 89,954 
Acquisition-related expenses4,598 322 4,728 2,376 
Costs related to intra-entity asset transfers(1)
— — — 838 
Amortization of acquired intangible assets3,055 3,080 9,208 8,292 
Non-GAAP income from operations$36,575 $23,087 $84,934 $47,734 
Operating margin(4)%(7)%(6)%(11)%
Non-GAAP operating margin18 %13 %15 %10 %
________________
(1)    The costs related to the intra-entity asset transfers resulted from our internal restructuring of Cymptom.
Non-GAAP Net Income and Non-GAAP Earnings Per Share
We use non-GAAP net income, which excludes stock-based compensation, acquisition-related expenses and amortization of acquired intangible assets, as well as the related tax impacts, and 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, to calculate non-GAAP earnings per share. We believe that these non-GAAP measures provide important information because they facilitate comparisons of our core operating results over multiple periods.
24

Table of Contents
The following table presents a reconciliation of net loss and net loss per share, the most comparable financial measures calculated in accordance with GAAP, to non-GAAP net income and non-GAAP earnings per share:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except for per share amounts)2023202220232022
Net loss