Steve Vintz: Sure. First, in terms of Q2, as I mentioned, this is the first time we’re providing any commentary around the quarter. So, the guide we think we’re giving in Q2 is strong. It’s reflective of the execution and the outperformance in Q1 as well as our revised outlook for the year. And I would say there’s — in terms of the spending environment, I think there’s a confluence of factors that are impacting that, number one, we’re continuing to see strength in the mid-market. Number two, we talked about public sector that will be a source of tailwind for us. during the course of the year, specifically as we head into the Fed’s fiscal year end in September. And certainly, cloud security, where we’re building pipeline opportunities.
So, overall, if you look at the guide that we’re giving $217 million to $219 million for revenue, the high end, it’s in line with the consensus. We think we’re set up well for success, not only in the current quarter, but also for the rest of the year.
Mike Cikos: Got it. Thank you for that Steve. And if I could just shift over to Jason for a second, really on the product here. We saw that Tenable One had released AI-assisted attack path analysis, and I know that, that is a part of your higher-tier SKU, if you will, it’s Tenable One enterprise, right? So should we think about Tenable’s strategy with the Gen AI capabilities is really helping drive an up tiering, if you will, towards those higher SKU packages?
Jason Merrick: That was a great question. So, I think, first, fundamentally, we have to — as a Tenable what we are doing with an AI, it’s important to understand that to be competitive and AI organizations have to have proprietary information, information that they in the industry have that differentiates across the competitive landscape. At Tenable, we’re the market leader in vulnerability management. We’ve been doing this for over 20 years. So, we have a ton of rich information, knowing more about threat and bone data and cyber than any other organization. The second piece is we have the ability to leverage insights from our 40,000-plus customers and bringing that in as part of our model train and giving us the ability to then put this throughout the product.
So, the first place that we put it into was attack at analytics and providing the AI function there and again, that is part of our top-tier Tenable One offering. So, we’ve got organizations today, for instance, a large shipping manufacturer. The exposure management team is leveraging the attack path analytics enabled with AI to actually help drive prioritization and visualization of how the systems are actually connected. And that’s just one example, but we’re seeing that across the board. Our plan is also take the AI function in capability and embed it across the entire portfolio. So, it’s not just the top tier Tenable One analytic components, we’re going to be bringing this into — we’re going to be bringing this into our identity exposure capability.
We’re going to be bringing this into all of our service-delivered solutions. And we’re super excited about that capability because it’s going to help organizations with explainability, drive prioritization, and drive analytics.
Mike Cikos: Understood. Thank you for that. I appreciate the time guys.
Operator: Thank you. Next question comes from the line of Patrick Colville with Scotiabank. Please go ahead.
Patrick Colville: Hey thank you so much. Great to be on the call and also great to be a part of Tenable story. Steve, let me ask you a question. I want to ask about the competitive environment in call vulnerability management. I mean you’ve got one competitor who over the last couple of quarters and this year is really stepping on the gas in terms of investment. You’ve got another payer that’s going through quite a deep restructuring. I guess what are you seeing in terms of competitive dynamics in vulnerability management, and how are these impacting Tenable if at all?
Steve Vintz: Well, I would say the market and competitive dynamics there are very favorable for us in VM. VM was a source of upside for us in the quarter. Our close rates and our win rates remain very high. We believe differentiation is very apparent. Investing in this market is not a recent phenomenon for us. It’s something we’ve been doing over the course of the years. And we have been investing — we recognize the importance of the VM market. And we believe that success there translates to opportunity elsewhere. So, we are, we believe, a clear and unequivocal leader. We have the largest customer base. Now, in terms of device coverage, most expensive in terms of device coverage, you can see that we’re adding 400 new customers a quarter.
And yes, a good number of those are coming from Tenable One. But within Tenable One, we’re having success selling VM there and addressing the VM use case, but a good number of those customers are also coming from our core VM offerings such as security center or I/O. So, for us, VM is an incredibly important market. It’s one we’re going to continue to invest in. We are continuing to differentiate and we’re continuing to displace incumbent vendors. As we mentioned earlier, our largest opportunity — our largest deal in the quarter was a seven-figure opportunity, where we displaced the current VM incumbent, and there’s many stories like that all within those 410 customers that we announced this quarter. So, overall, we incredibly bullish on VM going forward.
Jason Merrick: And I also want to add that we are also investing in innovation in VM. So, we’re not resting on our laurels. We’re going to be adding new capabilities that are really, truly focused on the VM practitioner that is going to create some — a lot of excitement for our customers.
Patrick Colville: Terrific. Thank you.
Operator: Thank you. Next question comes from the line of Gary Powell with BTIG. Please go ahead.
Gray Powell: Okay, great. Thank you for taking the questions. Yes, I was just hoping to dig in on some of the disclosures. The stats you gave on Tenable One at 26% and then broader exposure management solutions, that 50% of new sales was really helpful. Is there anything you can do to give us like a sense as to what stand-alone cloud security contributed? Or was the bigger contribution of that incremental more like on the OT and like some of the other products in there?
Steve Vintz: We do not disclose bookings or CCB by product and what I will say is, look, Tenable One is nearly half of the, we said 26%. So, nearly half of the 50% of our new sales is coming from exposure management solutions. Exposure management solutions is either selling the platform stand-alone or selling individual products such as cloud security or OT, individually to address a specific use case and so we’re having success only both. What we did say, though, with regard to cloud securities, expect greater contribution in the second half of the year related to the acquisition of Ermetic as we look to begin — start building pipeline opportunities and closing deals in the second half of the year regarding our more expansive CNAPP offering.
So, overall, I would say we’re seeing good growth in cloud security specifically. Obviously, you continue to see good growth with Tenable One, and we expect both cloud security in Tenable One to be challenge for us during the course of the year.
Gray Powell: All right. That’s directionally helpful. Thank you.
Operator: Thank you. Next question comes from the line of Shaul Eyal with TD Cowen. Please go ahead.
Shaul Eyal: Thank you. Good afternoon everybody. Congrats on the results. Great to hear Amit is doing much better. My question also on new logos. Leaving aside that sizable displacement that you had and you just announced and discussed, were mostly — or the 410 logos, were they mostly displacement or were they mostly greenfield?
Steve Vintz: That’s a good question. What we said is on average or what we have said in this quarter was no different. It’s about a third of all of our new logos are greenfield opportunities. And these are customers, specifically, I’ll say within VM customers that have had no enterprise-wide VM solution. They could be using a systems integrator, they could be using an MSSP and outsourcing VM. So, there’s for us, lots of untapped opportunity not only within VM, but certainly elsewhere as we look to invest in some of the biggest markets in all of cyber, such as cloud, identity, and OT. So, about a third of our opportunities are greenfield, which means consequently, some of these are displacements. And again, we continue to have a very high win rate. against incumbents. And there’s no change in the competitive dynamics, certainly within VM.
Shaul Eyal: Thank you.
Operator: Thank you. Next question comes from the line of Rudy Kissinger with D.A. Davidson. Please go ahead.
Andres Miranda: Hey, this is Andres Miranda on for Rudy. First of all, congrats on the numbers. I just have a quick question for you guys. Could you quantify the hermetic contribution to revenue and CCB in Q1? Or any other data points that we can use for the model?
Steve Vintz: Well, Ermetic contributed minimally in Q1, and that’s expected, right? We closed on Ermetic in Q4. We’re hard at work integrating the product. We’re in market selling to a more expansive CNAPP offering, and we expect greater come the second half of the year. And our outlook for Ermetic specifically, has not changed since our last call. We said we expect 2 points of incremental CCB growth because of Ermetic and that has not changed this quarter.
Andres Miranda: Great. Thank you. And — what — just a quick one. What percent of your sales came from the overlay teams in the past years? If you could maybe give us some color there? And are you seeing any sales reps selling the entire portfolio successfully since the past rates that you announced?
Steve Vintz: Yes. Well, we’re seeing most, if not all, of our sales rep selling combined offering. So, we’re leading with Tenable One. Number one is a use case that resonates with customers. It obviously helps customers understand their risk more broadly across the attack surface and at least the higher selling prices for us and some of our highest close rates in the company are coming through Tenable One. Also half of all of our new logo six-figure lands are Tenable One, so we’re getting great traction with Tenable One, transacting larger deals and having success selling into our customers. In terms of the overlays, it’s something that we talked about on the last call, which is look, over the course of the years, we have broadened the product portfolio and evolve from having a singular focus on VM, which we continue to do very well, and we continue to be the market leader, but also addressing adjacent markets such as Web App security, cloud security, OT, identity security, ASM, so we broadened the product portfolio, we have brought new products to market, and our reps have had success selling those.
Initially, when you do that, it requires the use of some specialist reps and overlay reps, but what we have recognized is that we have had success selling those products in our own right and those products become more mainstream, we’ve become less reliant on overlay reps. Again, specialists are going to be really important here, and we continue to have those. But I think what you’re seeing today in terms of the efficiency of our spend in sales and marketing really reflects the sales organization’s ability to sell the broader exposure platform.
Andres Miranda: Okay. Thank you.
Operator: Thank you. Next question comes from the line of Shyam Patil with Susquehanna. Please go ahead.
Unidentified Analyst: Hey, this is Aaron on for Shyam. Thank you for taking our question. Jason, maybe this one is for you on the product side. You gave that helpful answer a few minutes ago on the generated AI offerings and roadmap. Just as we think about the generative AI roadmap, what do you see as kind of the low-hanging fruit in terms of things you can add on in the near-term versus what’s more of a longer term objective and opportunity? thank you.
Jason Merrick: Yes, absolutely. Great question. So, from a product perspective, I think there’s a couple of pieces that we will go when we will leverage our AI capabilities. First and foremost, is being able to pull together information and enrich it that helps a security practitioner understands the risk of an asset. So, this is a term that you’re going to hear us use a lot more called toxic combination. The ability to pull together not just the asset information, but combine this and enrich it with identity data. So, I can now pull together that I’ve got an individual with elevated credentials, that has access to this critical system and being able to expose that. AI gives you the ability to pull together all of this information very quickly.
And so there’s an explainability component within this. So, instead of a practitioner going through a kind of mining for all of this information because we collect a significant amount of data for our customers, providing that quickly is an easy, what I would call, low-hanging fruit. We’re also going to be enabling an AI Chatbot capability. So think of it as a tenable expert at your fingertips. So the ability to do generative AI questions where you can say, hey, what are my top threats? What is my CEO vulnerable to? And being able to get context of that information. I think that even from a business standpoint, AI can help organizations find blind spots, areas that they’re not scanning areas that they need of improvement. So, I think that with our AI capabilities, while they’re going to help with prioritization explainability, it can also drive business outcomes.
You’ve got a grouping of cloud services that are not being scanned, or you’ve got a grouping of assets that just came up in a sub domain in our tax service management product brought that up. So, being able to highlight those business cases for organizations, I think, are super powerful. And again, I think that we’ve got a phenomenal opportunity with the Tenable data that is going to make our LLM powerful and really important across the product portfolio.
Unidentified Analyst: Very helpful. Thank you.
Operator: Thank you. The next question comes from the line of Patrick O’Neill with Wolfe Research. Please go ahead.
Patrick O’Neill: Hey, thanks for taking my question. This is Patrick on for Josh. Just was hoping to get a little more color on the 109% NRR. Is there anything to call out on expansion generally being worse or gross retention being worse outside of the Finserv tech and telecom names that you called out? Thanks.
Steve Vintz: Hi, this is Steve. No, retention was really this quarter. This is the moderation, the expansion rate is really a function of the mix of business. And in Q1, it was skewed towards new. Specifically, we added 410 new Tenable One platform customers, lots of new six-figure logo lands. And within those cohort of new customers, we grew year-over-year ACV by 30% from newly acquired customers. So, certainly a strong quarter for us for new business. That’s a very good thing for us, and that had an impact on our expansion rate.
Patrick O’Neill: And then one quick follow-up, if you don’t mind. How should we think about that number going forward and sort of what’s baked into the guidance? I know you don’t explicitly guide to that or measure the business to one metric, but sort of what’s baked into the guidance around that full year NRR? Thanks.
Steve Vintz: Sure. So, in terms of our outlook for the year, our outlook does reflect higher growth in the second half of the year for reasons I just described. And that would mean that we would see improvement in at least one, if not more, of the three key KPIs that we provide. Again, we provide number of large customers. We provide new enterprise platform customers. We also disclosed the expansion rate. And we would need to see at least one — specifically one, should I say, improvement in one of those metrics. It can come from any one of us.
Patrick O’Neill: Perfect. Appreciate it.
Operator: Thank you. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
