TENB

• Strategic Positioning in AI-Powered Exposure Management

  • Management believes that in the AI/agentic security era, leading exposure management platforms require three core capabilities: holistic visibility across all enterprise exposures (including both CVE vulnerabilities and non-CVE risks such as misconfigurations and compromised identities, which account for over 60% of breach entry points), context-driven prioritization of high-risk exposures, and deterministic, secure orchestration of remediation actions with human oversight.
  • Tenable One integrates the Tenable Harness, a secure scaffolding around AI models that ensures safe, accurate operation with full audit trails, paired with Hexa AI, the company's agentic orchestration engine that executes continuous multi-step security tasks and remediation across the exposure management lifecycle. The combination moves exposure management from periodic manual analysis to always-on autonomous defense.
  • The company extended its AI Exposure coverage to include Gemini, alongside existing support for Claude, ChatGPT, Copilot, major MCP deployments, and AI-native development tools, giving customers full visibility into AI usage and associated risk across their organizations.
  • Tenable has deep strategic partnerships with leading frontier AI labs (Entropic via Project Glasswing and OpenAI via the Daybreak program), providing early access to non-public models, joint research, and advance insight into evolving attack surface dynamics. Testing via these partnerships confirmed that while frontier AI accelerates vulnerability discovery, outputs require context and validation to identify actual exploitable exposure, which aligns with Tenable's integrated platform strategy.

• Commercial Execution and Customer Adoption

  • New pricing and packaging for Tenable One (introduced earlier in 2026, with tiered Tenable One Foundation and Tenable One Advanced offerings) has streamlined customer adoption, with greater-than-anticipated uptake of the higher-tier Tenable One Advanced offering driving higher average deal sizes.
  • Tenable One hit a record 50% of new business in Q2 2026, with strong competitive displacement and install base expansion. Notable Q2 wins include a six-figure Tenable One Advanced deal with a global manufacturing firm replacing a legacy vendor, a seven-figure three-year expansion with an existing leading financial services customer, and a competitive displacement win at a large European postal service that builds regional partnership momentum.
  • Early Hexa AI adoption metrics are strong: hundreds of Tenable One customers use the platform, over 80% of users who open Hexa submit prompts, nearly half use it to take actionable remediation steps, and average users engage with six separate Tenable One tools, driving increased platform penetration and operational efficiency for security teams.

• Operational and Strategic Milestones

  • Tenable One achieved FedRAMP High authorization during the quarter, expanding the company's addressable opportunity in the U.S. federal market and reinforcing platform trust for mission-critical customers.
  • Gartner named Tenable a front-runner in AI-powered exposure assessment in its Q2 2026 report, validating the company's market position and strategy.
  • The company's share repurchase program remains a core capital allocation priority: Tenable repurchased 5.2 million shares for $100 million in Q2 2026, with $108 million remaining in authorization as of quarter-end. Year-to-date 2026, the company has repurchased 11.4 million shares for ~$230 million at an average price of $20.23, bringing diluted weighted average shares outstanding to their lowest level since Q4 2020.
  • The company plans to increase sales hiring in the second half of 2026, adding more capacity than it has in the prior two years, driven by high sales productivity and strong quota achievement, while balancing growth investment with profitability targets.

• All guidance for full year 2026 was raised across all financial metrics, reflecting stronger-than-expected business momentum in the first half of the year. Management expects this momentum to continue into the second half.
• Q3 2026 guidance: Revenue is expected in the range of $270 to $273 million, representing 7.6% year-over-year growth at the midpoint. Non-GAAP operating income is expected between $66 and $69 million (24.9% of revenue at the midpoint). Non-GAAP net income is guided to $58 to $61 million, 15.8% year-over-year growth at the midpoint. Non-GAAP EPS is expected between $0.49 and $0.52 per share, 20.2% year-over-year growth at the midpoint.
• Full year 2026 guidance: Revenue is raised to a range of $1.075 to $1.081 billion, representing 7.9% year-over-year growth at the midpoint (a $5 million increase at the midpoint from prior guidance). Non-GAAP operating income is raised to $258 to $264 billion, 24.2% of revenue at the midpoint, a 230 basis point year-over-year increase. Non-GAAP net income is raised to $228 to $234 million, 18.8% year-over-year growth at the midpoint. Non-GAAP EPS is raised to $1.95 to $2.00 per share, 24.2% year-over-year growth at the midpoint. Unlevered free cash flow guidance is raised to a range of $289 to $295 million, 27.1% of revenue at the midpoint.
• Management expects 2026 current billings to come in $8 to $10 million above the start-of-year outlook, with the majority of this upside landing in the second half of 2026. Management expects the net dollar expansion rate to hold steady at 106% for the remainder of 2026, and this expectation is baked into the published guidance.

Tenable does not break out results into multiple distinct product segments in this call. Overall company-wide Q2 2026 results are as follows: Total revenue was $268.5 million, an 8.6% year-over-year increase. Recurring revenue accounted for 95% of total revenue for the quarter. Tenable One contributed 50% of all new business in the quarter, up from 41% in the prior quarter and 40% in Q2 2025. Net dollar expansion rate was 106%, up 1 percentage point quarter-over-quarter, marking the first acceleration in over four years. Non-GAAP gross margin was 81.4%, within the historical 81-82% range. Non-GAAP operating income was $66.2 million (24.7% of revenue), a 38.8% year-over-year increase. Non-GAAP earnings per share was 51 cents, up from 34 cents year-over-year. Unlevered free cash flow for the quarter was $45.3 million, up from $44.3 million year-over-year. The company added 381 new enterprise customers and 32 net new six-figure accounts in the quarter.

• Forward-looking statements (including all guidance and strategic expectations) are inherently subject to risks and uncertainties that could cause actual results to differ materially from projected outcomes. Key risks are outlined in the company's most recent Form 10-K and subsequent SEC filings, including potential volatility in net dollar expansion rates, slower-than-expected conversion of a strengthened sales pipeline to recognized revenue, competitive pressures from large platform vendors and new market entrants including LLM providers expanding upstream into exposure management, and faster-than-expected shifts in the AI-driven threat landscape that could require unplanned investment. The company disclaims any obligation to update forward-looking statements after the date of this call.
• AI-driven threat acceleration compresses the mean time to exploit for vulnerabilities from an average of 30 days to 1.6 days, while average patch application times remain above 30 days, creating a risk imbalance that organizations need to address, though management notes this dynamic is driving increased demand for Tenable's platform.

Q: Have we hit the low watermark for net dollar expansion rate, and what are you seeing in new customer demand post the Mythos AI frontier developments? / A: Management confirmed the 1 percentage point quarter-over-quarter increase to 106% in Q2 was the first acceleration in over four years, and expects the rate to hold steady at 106% for the rest of the year, with this expectation baked into guidance. Mythos and related frontier AI developments have created a clear tailwind for demand, with a significant uptick in competitive displacement as customers move from legacy vulnerability management to full exposure management. New pricing and packaging streamlined adoption, with higher-than-expected uptake of the higher-priced Advanced tier, and strong expansion within the existing install base. (312 characters)

Q: What is the adoption split between Tenable One Foundation and Advanced, and when will current business momentum translate to faster revenue growth? / A: In Q2, new business adoption of Advanced outpaced Foundation by a 2-to-1 ratio, driven by higher demand for Advanced capabilities including cloud security, attack path analysis, and more Hexa AI tokens for agentic workflows. Management notes stabilizing top-line growth is the first step to acceleration, and Q2 saw very strong pipeline, competitive win rates, and expansion growth. The full year revenue guidance midpoint was raised by $5 million, and 2026 current billings are now expected to be $8 to $10 million above start-of-year targets, with most of this upside coming in the second half. (398 characters)

Q: What is unique about Tenable's AI harness, and do you face competition from LLM providers moving upstream into your market? / A: Management argues the core moat for Tenable is not the AI model itself, but the layers around the model. Above the model, the harness provides the context, trust, and security controls required to run AI agents safely and deterministically in customer environments. Below the model, Tenable has one of the largest proprietary sensor data fabrics in cybersecurity, with decades of accumulated exposure data and deep embedded deployment behind customer firewalls that cannot be easily replicated by LLM providers. This differentiation is driving the record 50% Tenable One new business share. (387 characters)

Q: How has customer demand and pipeline conversion progressed amid elevated AI-driven threat concerns? / A: AI threat developments have created significant urgency among CISOs, driven by board and CEO pressure to proactively manage exposure ahead of expected increases in vulnerability volume. This is accelerating the pace of consolidation projects, as customers move away from fragmented tools to unified platforms rather than increasing total cybersecurity budgets. Tenable saw strong expansion in Q2, with existing customers increasing asset coverage across on-prem, OT, cloud, and other asset types, which aligns with the record new business share for Tenable One. (319 characters)

Q: What are your thoughts on Microsoft's new vulnerability management product announcement, and how does this impact your competitive position? / A: Management remains confident in its competitive position, noting that CISOs increasingly prioritize best-of-breed exposure management amid heightened threat concerns and state-sponsored attacks. Tenable has a significant competitive advantage in coverage depth and accuracy, finding far more vulnerabilities than bundled free offerings from large platform vendors, with broader CISA KEV coverage and integrated full attack path analysis that competitors cannot match. Tenable recorded one of its strongest competitive displacement quarters in Q2 2026, including against large platform players. (321 characters)