Summary
- Tenable reported a strong Q4 earnings with revenue and EPS above expectations.
- Management provided 2020 revenue growth of 23-24%, which was slightly above consensus, through investors likely expected a bigger initial guidance range.
- Valuation remains attractive at ~5.7x 2020 revenue and only ~4.5x 2021 revenue, below a peer group with similar growth rates.
Tenable (TENB) reported a strong Q3 with revenue well above consensus expectations and management's previous guidance. While operating margins were a little soft, EPS came in ahead of expectations given the strong revenue growth. Also, billings growth of 28% remained very strong.
Management also provided Q1 revenue guidance that was slightly above expectations, though non-GAAP operating margin was lower than expected, which was partially why the stock traded down ~4% over the following days after earnings. Management provided 2020 revenue and EPS guidance that as slightly ahead of expectations.
When looking at 2020, the revenue multiple of ~5.7x remains below their closest competitor, Qualys (QLYS), even though revenue growth remains pretty close. I believe the divergence comes with TENB's operating margins expecting to be -8% during 2020, with investors likely expecting more than the initial guidance.
TENB offers cloud-based vulnerability management services which help protect an enterprise's assets, such as network containers and web applications. Essentially, the company provides solutions for enterprises to manage and measure cybersecurity risk, specifically focusing on vulnerability assessment and management market. The company looks to quantify how much damage would be caused by a security breach - information that is very valuable to enterprises as security breaches continue to make headlines on a weekly basis.
