Operator: Our next question comes from the line of Andrew Nowinski with Wells Fargo. Please proceed with your question.
Justin Donati: Hi, this is Justin Donati on for Andrew. Thank you for taking our questions. So, congrats on a good quarter. When you were talking about the pipeline, you specifically spoke about strength with your enterprise customers. Just wondering if you’re seeing any difference in terms of buying behavior between your mid-market customers versus your enterprise customers? Thank you.
Amit Yoran: No, I think we saw strength pretty much across the board, including in the in the mid-market customers as well. If anything, on the enterprise side, maybe just slightly smaller in the net new lands but continued health in the number of new lands and the expands and certainly strength in the mid-market as well.
Justin Donati: Great. And then just as a quick follow-up. You talked about your continued investments in your go-to-market. Just wondering what your plans are for sales hires in the coming year. And if you’re expecting that to be more front-end loaded or you’re taking a slightly more conservative approach this year?
Steve Vintz: Well, first and foremost, we are planning to hire in 2023. And I think it’s fair to say, adding more quota capacity. Our expectation is that we’re going to add more quota capacity in 2023 than we did in 2022. We have a lot of confidence in our business. And investments are certainly a big part of that and obviously continue to double down on innovation and invest in product as well. We’ve been very active from a product perspective and bringing new products to market. We did talk a little bit about on the call the factors that kind of influenced the timing of those investments. First is hiring. We tend to front load are hiring early in the year. So, more of the hires will come online in the first half of the year and specifically with Q1.
We also have a number of industry and other events in the first half of the year, such as our annual sales kickoff, which will be live in-person event this year, RSA and many others. So, clearly making a lot of investments. We’re very pleased to be offering the guide in terms of operating margin and cash flow that we’re providing today, and we have a lot of confidence in our ability to continue to drive further margin leverage.
Justin Donati: I appreciate the color.
Operator: Our next question comes from the line of Mike Cikos with Needham & Company. Please proceed with your question.
Mike Cikos: Hi guys. Thanks for taking the questions here. I did want to touch on the customer behavior. I know you answered some earlier questions with respect to enterprise versus mid-market and obviously, the strong expansion we’ve spoken to. But for sales cycles, and that’s really what I’m driving out here with the customer behavior. Have they been relatively stable versus what we spoke about in Q3? Or have we seen any elongation in any way on that front? And maybe it would be helpful, too, if you could kind of pepper in any color when thinking about geographic theater.
Amit Yoran: Mike, great to hear from you. We have not seen any elongation or any significant change in the sales cycle since what we spoke about in Q3 of last year. And I think that allows our sales team to just have continued confidence in their adjusted sales processes and forecasting methodology. In terms of geos, I think last year, we called out some any peculiar behaviors and geos. At this point, I think we’re seeing fairly consistent performance across all major theaters in geos.
Mike Cikos: That’s great. And one more, if I could. But I did just want to ask about Q1, just given the fact that we’re almost halfway through it already. Can you provide any additional color for how customers have put together their cybersecurity budgets as we think about calendar 2023? Obviously, we’re all talking about the increased scrutiny here. But curious since cyber is perceived as being this more insulated sector, what are those customer conversations been like? And just a real quick housekeeping to tap on to the end of that. But Steve, I know you spoke about the annual sales kickoff in Q1 as being in person. Is there any way to quantify how much of an expense that item is are we talking about an incremental $2 million to $3 million? Or any color on both those fronts would be beneficial. Thank you.
Steve Vintz: Yes, I’ll provide a little bit of color here on both your questions and I think Amit will interject with maybe some color commentary on customer spending and budgets for 2023. First, with regard to — I think your question was like how does it look here out of the gate. We’re encouraged by what we saw in January. I’m very encouraged, but that’s reflected in our outlook today, and obviously, March will be determinative given typical monthly flow for us. The other thing I’ll say with regard to sales kickoff, the quantum of that investment is much larger than $2 million. We’re talking north of $5 million. So it’s a large discrete item. We’re very pleased to be doing a live in-person sales kickoff this year for the first time since the pandemic and our sales team is really excited about it as well as our — the rest of our company.
Obviously, it’s factored in our guidance and our guidance, we believe, is strong as a gate with regard to margins and cash flow and our expectation is that operating margins will improve throughout the year, consistent with what we’ve seen in prior years.
Amit Yoran: Yes, I think the only thing I would add to it is that the VM market remains very healthy. We see customers continuing to expand their VM coverage. And we’re also seeing great traction, especially with Tenable One around cloud security. We called out strength in our OT sales during the course of the quarter. So, customer budgets are there. I think to the extent that we can become a cost-effective vendor consolidation platform play for them. There’s a lot of interest, a lot of strategic dialogue around that. And I think customers are very excited about some of the newer analytics that we’ve introduced with Tenable One. So, we look forward to updating you during the course of the year, but I feel like Tenable One looks like it will continue to play a larger and larger factor throughout the year and going into next year.
Mike Cikos: That’s great to hear. Good to see the profitability guide and the reiterated unlevered free cash flow guide when we think about calendar 2024 as well. I’ll turn it over to my colleagues. Thank you.
Operator: Our next question comes from the line of Saket Kalia with Barclays. Please proceed with your question.
Saket Kalia: Okay. Great. Hey guys, thanks for taking my questions here. Amit, maybe just to start with you, and apologies if this has already been addressed. But I was wondering if you could just talk about how customers look at the ROI from a platform like Tenable One? It includes so much more kind of additional valuable product that lowers the risk profile, but I’m curious, when you talk to customers about Tenable One, how are they sort of thinking about ROI?
Amit Yoran: Hey Saket, great question. There’s a couple of obvious and a couple of nonobvious answers to it. I think the most obvious is just from a vendor consolidation cost reduction standpoint. So, if you’re using Tenable for VM, let’s say, a random example, you have 30,000 assets and now you want to look — also look at your cloud security requirements, your Active Directory requirements. If you’re going to a separate vendor, for those solutions, you’re spending — you need one through 10,000 on cloud assets and one through 8,000 on Active Directory in addition to the one through 30,000 on VMwares. If you’re consolidating your spend with Tenable and Tenable One, you can buy a volume discount, it’s one through 50,000 on Tenable One.
And so the — the leverage in budget and spend through vendor consolidation is very meaningful, which in today’s macro environment and what’s happening with Scrutineer budget, we think is compelling differentiation for us. The second is in the analytics. We simply are able to bring more analytics and unified analytics to the table than going to disparate vendors. So, for instance, building an asset inventory everywhere a particular piece of software exists across your environment — anywhere vulnerability exists across your environment, whether it’s on-prem, in cloud or other places, we think, is very compelling. Prioritizing what needs to be addressed, we think, can be a compelling differentiation. Looking at a top-top analytics to say, hey, what is the path what are the various paths of systems and vulnerabilities and users and permissions that could get me to this sensitive internal asset from my external attack surface from Internet-facing assets is a pretty compelling differentiator compared to buying individual and stove type solutions.
So, we think both from a value and analytics standpoint as well as a vendor and cost consolidation standpoint, the platform approach to understanding the exposure and risk just makes sense. And that’s why we’re seeing both the sales team and customers really gravitate toward it.
