Company: Tenable Holdings, Inc.
Symbol: TENB
Description: They are the first and only provider of solutions for a new category of cybersecurity that we call Cyber Exposure.
Trade Date: 7/26
Shares: 9.2 million
Price Range: $17.00-$19.00
Underwriter(s): Morgan Stanley, J.P. Morgan, Allen & Company, Deutsche Bank Securities
Co-Manager(s): Stifel, William Blair, BTIG
Terms Added: 7-16-18
Business: Cyber Exposure is a discipline for managing and measuring cybersecurity risk in the digital era. They are building on their deep technology expertise in the traditional vulnerability assessment and management market and expanding that market to include modern attack surfaces and provide analytics that translate vulnerability data into business insight.
Digital transformation is driving radical change. As organizations modernize their IT infrastructure and adopt cloud or hybrid cloud architectures that are no longer housed in the confines of their corporate networks, they have less visibility and control over the security of these assets. Organizations are also increasingly implementing modern solutions, such as Internet of Things, or IoT, devices and application containers, to enable the rapid development and deployment of new products, services and business models, as well as to drive operational efficiencies. Further, safety-critical Operational Technology, or OT, such as Industrial Control Systems, are now network-connected and need to be secured from cybersecurity threats. This digital transformation increases IT complexity and cybersecurity risk as attack surfaces expand. They refer to an organization’s inability to see the breadth of the modern attack surface and analyze the level of cyber exposure as the Cyber Exposure Gap.
While other functions in an organization, such as finance and operations, have a system to help them manage and measure risk, to date, cybersecurity risk has not been adequately measured and understood. Their platform is built to be the Cyber Exposure Command Center for an organization’s Chief Information Security Officer, or CISO. Their platform provides the CISO with unified visibility into the organization’s state of security and enables security teams to prioritize and focus remediation efforts. Their platform also translates vulnerability data into actionable business metrics and insights that boards of directors and executives can understand and use to make strategic decisions. They believe their Cyber Exposure solutions are transforming how security is managed and measured and will help organizations more rapidly embrace digital transformation.
Financials: They have experienced rapid growth in recent periods. Their enterprise platform offerings are primarily sold on an annual prepaid subscription basis. In 2016 and 2017, their total revenue was $124.4 million and $187.7 million, respectively, representing a year-over-year growth rate of 51%. In the three months ended March 31, 2017 and 2018, their total revenue was $40.5 million and $59.1 million, respectively, representing a year-over-year growth rate of 46%. In both 2016 and 2017, their recurring revenue, which includes revenue from subscription arrangements for software and cloud-based solutions and maintenance associated with perpetual licenses, represented 86% of their total revenue. In the three months ended March 31, 2017 and 2018, their recurring revenue represented 85% and 89%, respectively, of their total revenue. Their net loss was $37.2 million, $41.0 million and $15.9 million in 2016, 2017 and the three months ended March 31, 2018, respectively. Their net cash (used in) provided by operating activities was $(2.8) million, $(6.3) million and $0.5 million in 2016, 2017 and the three months ended March 31, 2018, respectively, and their free cash flow, a non-GAAP measure, was $(8.6) million, $(9.0) million and $(1.1) million, respectively, for those periods.
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