Tenable Holdings, Inc. (TENB) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A reveal a positive outlook with strong financial metrics and optimistic guidance. The company is investing in AI and platform expansion, driving customer growth and engagement. Partnerships with Anthropic and OpenAI enhance technological capabilities. Although some concerns about growth rate convergence and AI-related urgency exist, the overall sentiment is positive, supported by revenue and income growth, share buybacks, and strategic investments.
Key Financial Performance
Revenue $262.1 million, representing growth of 9.6% year-over-year. The growth was underpinned by a solid foundation of renewal business, an increase in new business growth, and professional services driving upside to expectations.
Recurring Revenue 96% of total revenue for the quarter, consistent with the company's high percentage of recurring revenue.
New Enterprise Customers 406 new enterprise customers added in the quarter, an increase of 12.5% compared to Q1 in the prior year. Many of these customers came directly into Tenable One.
Net New 6-Figure Deals 43 net new 6-figure deals added in the quarter.
Net Dollar Expansion Rate 105%, indicating steady customer retention and expansion.
Non-GAAP Gross Margin 82.2% for the quarter, an increase from 81.9% in Q1 2025, reflecting steady improvement year-over-year.
Non-GAAP Income from Operations $61.9 million, or 23.6% of revenue, compared to $48.7 million in Q1 2025, an increase of 27.1%. The increase reflects operational efficiencies, including early signs of AI-driven productivity gains.
Non-GAAP Earnings Per Share $0.47 compared to $0.36 in Q1 2025, an increase of 30.6%. This reflects increased profitability and a decrease in diluted shares outstanding.
Unlevered Free Cash Flow $88.6 million, representing 33.8% of revenue and an all-time record for the company.
Share Repurchases 6.1 million shares repurchased for $130 million during the quarter, with $207.6 million remaining on the current share repurchase authorization.
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Operating Highlights
Tenable One adoption: Tenable One, an AI-powered exposure management platform, accounted for 41% of new business in Q1 2026, an 8-point increase from Q1 2025. The platform integrates AI infrastructure and apps, offering unified visibility and prioritized remediation.
Tenable Hexa AI: Introduced as a new Agentic engine, Hexa AI automates triage and executes multistack remediation workflows, transforming exposure intelligence into coordinated execution at scale.
OT Discovery: Newly announced OT discovery integrates directly into the Tenable One platform, eliminating the need for specialized hardware and agents to secure cyberphysical systems.
Market demand for exposure management: Growing urgency among customers to adopt exposure management platforms due to AI-driven vulnerability discovery and exploitation. Customers are moving away from siloed tools to unified platforms like Tenable One.
Customer wins: Secured significant deals, including a 7-figure transaction with a financial institution in the Middle East and 6-figure deals focused on AI and OT security.
Revenue growth: Achieved 10% year-over-year revenue growth in Q1 2026, with revenue reaching $262.1 million.
Operational efficiency: AI-driven operational efficiencies are minimizing headcount growth and increasing productivity, contributing to a 27.1% increase in non-GAAP operating income year-over-year.
AI-driven cybersecurity strategy: Engaging with frontier AI model providers like Anthropic to address AI-driven vulnerabilities and enhance exposure management capabilities.
Pricing strategy: Introduced new flexible pricing for Tenable One to simplify procurement and accelerate adoption.
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Risk or Challenges
AI-driven vulnerability discovery: The rapid advancement of AI models like Anthropic Mythos is leading to a proliferation of new vulnerabilities and attack paths, overloading operational workloads for defenders. This creates a window where adversaries hold a clear advantage in exploiting vulnerabilities at machine speed.
Operational scalability: Customers are realizing that their current remediation processes will not scale to meet the increased volume of vulnerabilities discovered by AI models, leading to potential inefficiencies and risks in addressing critical exposures.
Fragmented security workflows: Security teams are managing fragmented workloads across tools, teams, and systems, which creates challenges in coordinating and executing remediation efforts effectively.
AI-driven exploitation speed: AI is compressing the time from vulnerability discovery to exploitation, while traditional patch cycles are often too slow to keep up, increasing the risk of successful attacks.
OT (Operational Technology) security: The explosion of OT devices, particularly in AI data centers and critical infrastructure, presents challenges in securing these environments due to historically time-consuming deployments and lack of visibility.
Customer urgency and preparedness: Organizations are expressing concerns about their ability to prioritize and remediate exposures effectively in the face of AI-driven threats, highlighting a gap in readiness for the evolving cybersecurity landscape.
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Guidance & Outlook
Revenue Guidance: For Q2 2026, revenue is expected to be in the range of $263 million to $266 million, representing a year-over-year increase of 7.0% at the midpoint. For full year 2026, revenue guidance has been raised to $1.068 billion to $1.078 billion, representing a year-over-year increase of 7.4% at the midpoint.
Non-GAAP Operating Income: For Q2 2026, non-GAAP income from operations is expected to be in the range of $61 million to $64 million, or 23.6% of revenue at the midpoint. For full year 2026, guidance for non-GAAP operating income has been raised to $252 million to $262 million, or 24.0% of revenue at the midpoint, representing a year-over-year increase of 210 basis points.
Non-GAAP Net Income: For Q2 2026, non-GAAP net income is expected to be in the range of $53 million to $56 million, representing a year-over-year increase of 31.5% at the midpoint. For full year 2026, guidance for non-GAAP net income has been raised to $222 million to $232 million, representing a year-over-year increase of 16.8% at the midpoint.
Non-GAAP Earnings Per Share: For Q2 2026, non-GAAP earnings per share is expected to be in the range of $0.46 to $0.48, representing a year-over-year increase of 38.2% at the midpoint. For full year 2026, guidance for non-GAAP earnings per share has been raised to $1.90 to $1.98, representing a year-over-year increase of 22.0% at the midpoint.
AI-Driven Operational Efficiencies: The company expects to continue realizing operational efficiencies driven by AI, which is minimizing headcount growth and increasing productivity. This trend is expected to persist throughout 2026.
Tenable One Platform Growth: Tenable One is expected to continue driving growth, with increasing adoption due to its ability to manage risk across the attack surface, including AI. The platform accounted for 41% of new business in Q1 2026, and this momentum is expected to continue.
Market Trends and AI Impact: The company anticipates a significant increase in vulnerabilities due to AI-driven discovery and exploitation. This is expected to drive demand for exposure management platforms like Tenable One and Hexa AI, which focus on prioritization and automated remediation.
Flexible Pricing Model: The introduction of a new flexible pricing model for Tenable One is expected to accelerate adoption and create a clear path to broader platform deployments over time.
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Shareholder Return Plan
Share Repurchase Program: During the first quarter, we repurchased 6.1 million shares for $130 million and have $207.6 million remaining on our current share repurchase authorization as of the end of the quarter. We continue to believe that our current share price trades at a discount relative to our true value and that utilizing our strong balance sheet and cash flow generation to more aggressively repurchase shares is an effective use of capital. We are realizing the benefit of these share repurchases as our weighted average diluted shares outstanding in Q1 decreased 5% year-over-year and is now the lowest it has been in more than 3 years.
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Key Q&A
Q:How do you think about frontier models longer term in the exposure management space?
A:AI is a massive opportunity for Tenable. The company is partnering with frontier model companies like Anthropic and OpenAI to help customers reduce risk at machine speed. AI enables Tenable by providing valuable insights to customers, allowing them to take action deterministically to reduce risk. The data collected by Tenable over two decades is unique and cannot be replicated by general models. AI is central to Tenable's operations, augmenting human operators and providing critical context for exposure management.
Q:Are you getting meaningful incremental budget in security software due to AI-related allocations?
A:Yes, there is an increase in security budgets due to AI-related allocations. Boards and CEOs are recognizing the urgency of exposure management, leading to a healthy spending environment and acceleration of security projects. Tenable is seeing discretionary spending being pulled into Tenable One deals, and this trend is expected to become more mainstream over time.
Q:What are your intentions regarding sales capacity and marketing growth?
A:Tenable is focused on accelerating growth and has added incremental sales capacity, particularly in faster-growing regions. The company is also leveraging AI technology to improve seller productivity by removing manual processes and returning time to sellers for customer-facing activities. The new CRO, Dino DiMarino, is already making an impact, and the company is evaluating further capacity additions based on pipeline growth.
Q:How do you think about the impact of introducing Hexa AI on operational efficiencies and gross margin?
A:Hexa AI automates complex workflows and leverages exposure data to take action, reducing manual tasks and improving efficiency. While cloud costs are a significant expenditure, Tenable is optimizing these costs and leaning into AI spend for better trade-offs. The impact on gross margin is expected to be minimal, with efficiencies showing up more in G&A and sales and marketing.
Q:Can you comment on the convergence of CCB and CRPO growth rates?
A:The convergence of CCB and CRPO growth rates is influenced by seasonality and normalization of contract duration noise. While the delta between these metrics may fluctuate, the company is confident in its billings and commitment levels, which support the raised revenue guidance for the full year.
Q:Do customers have enough knowledge of AI-related risks to speed up decision-making processes?
A:While there is still a need for education and evangelizing, customers are becoming more knowledgeable about AI-related risks. Tenable is conducting webinars and customer calls to provide guidance, and conversations are shifting from education to deployment strategies for exposure management. This is seen as a tailwind for growth.
Q:How do you balance platform expansion opportunities with new customer growth?
A:Tenable saw strong new customer growth in Q1, adding over 400 customers. Expansion opportunities remain significant, with 41% of new business coming into the Tenable One platform, an 8 percentage point increase year-over-year. The company is focused on driving higher selling prices and better engagement through platform expansion.
Q:How is Hexa AI positioned as a system of action, not just insight?
A:Hexa AI automates workflows and takes action to reduce risk, moving at machine speed. It reduces manual tasks and enables prebuilt or custom agents to patch, change configurations, or apply compensating controls. Hexa is designed to provide the fewest actions with the biggest impact, helping customers reduce risk deterministically.
Q:How is Hexa AI packaged and priced?
A:Hexa AI is available in foundational and advanced packages, with greater tokenized access in the advanced model. It is expected to drive higher ASPs and better engagement, solving exposure management problems effectively.
Q:How are you partnering with Anthropic and OpenAI?
A:Tenable is partnering with Anthropic and OpenAI to embed their technology into Tenable's products, such as building Claude into Hexa. These partnerships involve joint research and access to nonpublic models, empowering Tenable to leverage sophisticated AI models to fight AI with AI.
Q:How does the new flex-style pricing model impact customer expansion?
A:The new flex-style pricing model simplifies procurement and budgeting, allowing customers to easily expand asset types within a single license model. This removes friction and is expected to drive expansion within the customer base.
Q:How does the buyback factor into capital allocation?
A:Tenable accelerated its share buyback program, repurchasing 6.1 million shares for $130 million in Q1. The company believes the stock is undervalued and views buybacks as a good use of capital. It maintains capacity for opportunistic M&A and organic investments.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the convergence of CCB and CRPO growth rates, stating that the delta will fluctuate due to seasonality and normalization of contract duration noise. Additionally, they did not provide detailed metrics or timelines for how AI-related urgency will translate into short-term bookings growth.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI model
AI threat
AI vulnerability
Hexa AI
Hexa exposure
Industry
Investor Day
OT discovery
Tenable Hexa
advantage
announcement
context
defender
discovery exploitation
exposure intelligence
flaw
friction
frontier AI
infrastructure
layer
life cycle
machine speed
model Mythos
model vulnerability
organization environment
path
pricing
remediation workflow
signal
software
source code
stage life
urgency exposure
volume
vulnerability discovery
vulnerability machine
world vulnerability
TENB Transcript
Tenable Holdings, Inc. (TENB) Presents at J.P. Morgan 54th Annual Global Technology, Media and Communications Conference Transcript
Neutral5-19
Tenable Holdings, Inc. (TENB) Q1 2026 Earnings Call Transcript
Positive4-30
The earnings call summary and Q&A reveal a positive outlook with strong financial metrics and optimistic guidance. The company is investing in AI and platform expansion, driving customer growth and engagement. Partnerships with Anthropic and OpenAI enhance technological capabilities. Although some concerns about growth rate convergence and AI-related urgency exist, the overall sentiment is positive, supported by revenue and income growth, share buybacks, and strategic investments.
Tenable Holdings, Inc. (TENB) Presents at Morgan Stanley Technology, Media & Telecom Conference 2026 Transcript
Neutral3-3
Tenable Holdings, Inc. (TENB) Q4 2025 Earnings Call Transcript
Positive2-4
The earnings call summary and Q&A indicate strong financial performance, with increased revenue, EPS, and gross margins. The company's strategic focus on AI-driven innovations and preemptive security approaches shows promise, as evidenced by new customer additions and a significant 7-figure deal in AI exposure management. Despite some concerns about growth deceleration, the raised guidance and share repurchase plan are positive signals. The overall sentiment is positive, with a likelihood of stock price increase in the short term.
TENB Report
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