Tenable Announces Second Quarter 2024 Financial Results

Source: Nasdaq GlobeNewswire / 31 Jul 2024 15:05:05 America/Chicago

Revenue of $221.2 million, up 13% year-over-year.
Calculated current billings of $221.1 million, up 10% year-over-year.
GAAP operating margin of (4)%; Non-GAAP operating margin of 19%.
Net cash provided by operating activities of $31.4 million; Unlevered free cash flow of $36.5 million.

COLUMBIA, Md., July 31, 2024 (GLOBE NEWSWIRE) -- Tenable Holdings, Inc. ("Tenable") (Nasdaq: TENB), the Exposure Management company, today announced financial results for the quarter ended June 30, 2024.

"We delivered better-than-expected revenue, operating income and unlevered cash flow in Q2," said Amit Yoran, Chairman and CEO of Tenable. "Despite lower-than-expected CCB, we saw tremendous momentum in our newer products, specifically Tenable Cloud Security and Tenable One. As we have expanded our offerings, Tenable has become a trusted source of truth for understanding and managing exposure and risk."

Second Quarter 2024 Financial Highlights

Revenue was $221.2 million, a 13% increase year-over-year.
Calculated current billings was $221.1 million, a 10% increase year-over-year.
GAAP loss from operations was $8.8 million, compared to $10.7 million in the second quarter of 2023.
Non-GAAP income from operations was $42.8 million, compared to $30.2 million in the second quarter of 2023.
GAAP net loss was $14.6 million, compared to $16.0 million in the second quarter of 2023.
GAAP net loss per share was $0.12, compared to $0.14 in the second quarter of 2023.
Non-GAAP net income was $38.2 million, compared to $26.3 million in the second quarter of 2023.
Non-GAAP diluted earnings per share was $0.31, compared to $0.22 in the second quarter of 2023.
Cash and cash equivalents and short-term investments were $487.0 million at June 30, 2024, compared to $474.0 million at December 31, 2023.
Net cash provided by operating activities was $31.4 million, compared to $30.2 million in the second quarter of 2023.
Unlevered free cash flow was $36.5 million, compared to $39.8 million in the second quarter of 2023.
Repurchased 0.6 million shares of our common stock for $25.0 million.

Recent Business Highlights

Added 408 new enterprise platform customers and 76 net new six-figure customers.
Acquired Eureka Security, a provider of data security posture management (DSPM) for cloud environments, to provide a holistic view of an organization’s cloud data security footprint, to fight policy drift and misconfigurations, and to continuously improve their security posture over time.
Formed a strategic alliance with Deloitte to enable customers to harness the power of proactive security and remove noise by delivering a unified view of their attack surfaces for both cloud and on-prem.
Expanded availability of Tenable Cloud Security and Tenable Vulnerability Management to Amazon Web Services in Abu Dhabi.
Recognized as an AI 100 company by CRN.

Financial Outlook

For the third quarter of 2024, we currently expect:

Revenue in the range of $222.0 million to $224.0 million.
Non-GAAP income from operations in the range of $42.0 million to $44.0 million.
Non-GAAP net income in the range of $35.0 million to $37.0 million, assuming interest expense of $8.3 million, interest income of $5.7 million and a provision for income taxes of $3.8 million.
Non-GAAP diluted earnings per share in the range of $0.28 to $0.30.
123.0 million diluted weighted average shares outstanding.

For the year ending December 31, 2024, we currently expect:

Calculated current billings in the range of $957.0 million to $967.0 million.
Revenue in the range of $889.0 million to $895.0 million.
Non-GAAP income from operations in the range of $167.0 million to $171.0 million.
Non-GAAP net income in the range of $143.0 million to $147.0 million, assuming interest expense of $32.7 million, interest income of $23.5 million and a provision for income taxes of $12.8 million.
Non-GAAP diluted earnings per share in the range of $1.16 to $1.19.
123.5 million diluted weighted average shares outstanding.
Unlevered free cash flow in the range of $225.0 million to $235.0 million.

Conference Call Information

Tenable will host a conference call on July 31, 2024 at 4:30 p.m. Eastern Time to discuss its financial results. The conference call can be accessed at 877-407-9716 (U.S.) and 201-493-6779 (international). A live webcast of the event will be available on the Tenable Investor Relations website at https://investors.tenable.com. An archived replay of the live broadcast will be available on the Investor Relations page of the website following the call.

About Tenable

Tenable^® is the Exposure Management company. Approximately 44,000 organizations around the globe rely on Tenable to understand and reduce cyber risk. As the creator of Nessus^®, Tenable extended its expertise in vulnerabilities to deliver the world’s first platform to see and secure any digital asset on any computing platform. Tenable customers include approximately 65 percent of the Fortune 500, approximately 50 percent of the Global 2000, and large government agencies. Learn more at tenable.com.

Contact Information

Investor Relations
investors@tenable.com

Media Relations
tenablepr@tenable.com

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release other than statements of historical fact, including statements regarding our future results of operations and financial position, business strategy and plans and objectives for future operations, are forward-looking statements and represent our views as of the date of this press release. The words “anticipate,” "believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of assumptions and risks and uncertainties, many of which involve factors or circumstances that are beyond our control that could affect our financial results. These risks and uncertainties are detailed in the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023 as well as other filings that we make from time to time with the SEC, which are available on the SEC's website at sec.gov. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated or implied in any forward-looking statements. Except as required by law, we are under no obligation to update these forward-looking statements subsequent to the date of this press release, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented to enhance the overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important metrics used by management for financial and operational decision-making. We include these non-GAAP financial measures to present our financial performance using a management view and because we believe that these measures provide an additional comparison of our core financial performance over multiple periods with other companies in our industry.

Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the financial tables accompanying this press release.

Calculated Current Billings: We define calculated current billings, a non-GAAP financial measure, as total revenue recognized in a period plus the change in current deferred revenue in the corresponding period. We believe that calculated current billings is a key metric to measure our periodic performance. Given that most of our customers pay in advance (including multi-year contracts), but we generally recognize the related revenue ratably over time, we use calculated current billings to measure and monitor our ability to provide our business with the working capital generated by upfront payments from our customers. We believe that calculated current billings, which excludes deferred revenue for periods beyond twelve months in a customer’s contractual term, more closely correlates with annual contract value and that the variability in total billings, depending on the timing of large multi-year contracts and the preference for annual billing versus multi-year upfront billing, may distort growth in one period over another.

Free Cash Flow and Unlevered Free Cash Flow: We define free cash flow, a non-GAAP financial measure, as net cash provided by operating activities less purchases of property and equipment and capitalized software development costs. We believe free cash flow is an important liquidity measure of the cash that is available (if any), after purchases of property and equipment and capitalized software development costs, for investment in our business and to make acquisitions. We believe that free cash flow is useful as a liquidity measure because it measures our ability to generate or use cash. We define unlevered free cash flow as free cash flow plus cash paid for interest and other financing costs. We believe unlevered free cash flow is useful as a liquidity measure as it measures the cash that is available to invest in our business and meet our current debt obligations and future financing needs. However, given our debt obligations, non-cancelable commitments and other contractual obligations, unlevered free cash flow does not represent residual cash flow available for discretionary expenses.

Non-GAAP Income from Operations and Non-GAAP Operating Margin: We define these non-GAAP financial measures as their respective GAAP measures, excluding the effect of stock-based compensation, acquisition-related expenses, restructuring expenses, costs related to the intra-entity asset transfers resulting from the internal restructuring of legal entities, and amortization of acquired intangible assets. Acquisition-related expenses include transaction and integration expenses, as well as costs related to the intercompany transfer of acquired intellectual property. Restructuring expenses include non-ordinary course severance, employee related benefits, and other charges. We believe that the exclusion of these expenses provides for a useful comparison of our operating results to prior periods and to our peer companies, which commonly exclude restructuring expenses.

Non-GAAP Net Income and Non-GAAP Earnings Per Share: We define non-GAAP net income as GAAP net loss, excluding the effect of stock-based compensation, acquisition-related expenses, restructuring expenses and amortization of acquired intangible assets, including the applicable tax impacts. In addition, we exclude the tax impact and related costs of intra-entity asset transfers resulting from the internal restructuring of legal entities as well as deferred income tax benefits recognized in connection with acquisitions. We use non-GAAP net income to calculate non-GAAP earnings per share.

Non-GAAP Gross Profit and Non-GAAP Gross Margin: We define non-GAAP gross profit as GAAP gross profit, excluding the effect of stock-based compensation and amortization of acquired intangible assets. Non-GAAP gross margin is defined as non-GAAP gross profit as a percentage of revenue.

Non-GAAP Sales and Marketing Expense, Non-GAAP Research and Development Expense and Non-GAAP General and Administrative Expense: We define these non-GAAP measures as their respective GAAP measures, excluding stock-based compensation, acquisition-related expenses and costs related to intra-entity asset transfers resulting from the internal restructuring of legal entities.

TENABLE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except per share data)		2024			2023			2024			2023
Revenue	$	221,241		$	195,036		$	437,202		$	383,875
Cost of revenue⁽¹⁾		48,798			43,514			97,730			89,020
Gross profit		172,443			151,522			339,472			294,855
Operating expenses:
Sales and marketing⁽¹⁾		101,129			97,800			200,954			194,991
Research and development⁽¹⁾		45,149			37,845			88,876			76,028
General and administrative⁽¹⁾		30,302			26,622			61,320			53,737
Restructuring		4,681			—			6,070			—
Total operating expenses		181,261			162,267			357,220			324,756
Loss from operations		(8,818	)		(10,745	)		(17,748	)		(29,901	)
Interest income		5,974			6,566			11,598			11,661
Interest expense		(8,073	)		(7,750	)		(16,185	)		(15,089	)
Other income (expense), net		93			(944	)		(1,217	)		(1,491	)
Loss before income taxes		(10,824	)		(12,873	)		(23,552	)		(34,820	)
Provision for income taxes		3,748			3,101			5,406			6,251
Net loss	$	(14,572	)	$	(15,974	)	$	(28,958	)	$	(41,071	)

Net loss per share, basic and diluted	$	(0.12	)	$	(0.14	)	$	(0.25	)	$	(0.36	)
Weighted-average shares used to compute net loss per share, basic and diluted		118,681			115,131			118,111			114,465

_______________

⁽¹⁾ Includes stock-based compensation as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cost of revenue	$	3,288	$	2,906	$	6,270	$	5,531
Sales and marketing		16,276		16,423		31,576		30,817
Research and development		11,799		9,764		22,960		18,629
General and administrative		10,035		8,767		20,311		17,000
Total stock-based compensation	$	41,398	$	37,860	$	81,117	$	71,977

TENABLE HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS

	June 30, 2024			December 31, 2023
(in thousands, except per share data)	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	233,467		$	237,132
Short-term investments		253,536			236,840
Accounts receivable (net of allowance for doubtful accounts of $456 and $470 at June 30, 2024 and December 31, 2023, respectively)		179,612			220,060
Deferred commissions		49,388			49,559
Prepaid expenses and other current assets		58,886			61,882
Total current assets		774,889			805,473
Property and equipment, net		41,448			45,436
Deferred commissions (net of current portion)		66,141			72,394
Operating lease right-of-use assets		33,315			34,835
Acquired intangible assets, net		104,488			107,017
Goodwill		541,292			518,539
Other assets		14,776			23,177
Total assets	$	1,576,349		$	1,606,871

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	19,543		$	16,941
Accrued compensation		44,119			66,492
Deferred revenue		562,587			580,779
Operating lease liabilities		6,161			5,971
Other current liabilities		5,832			5,655
Total current liabilities		638,242			675,838
Deferred revenue (net of current portion)		163,211			169,718
Term loan, net of issuance costs (net of current portion)		357,969			359,281
Operating lease liabilities (net of current portion)		45,315			48,058
Other liabilities		8,051			7,632
Total liabilities		1,212,788			1,260,527

Stockholders’ equity:
Common stock (par value: $0.01; 500,000 shares authorized; 120,461 and 117,504 shares issued at June 30, 2024 and December 31, 2023, respectively)		1,205			1,175
Additional paid-in capital		1,281,545			1,185,100
Treasury stock (at cost: 1,471 and 356 shares at June 30, 2024 and December 31, 2023, respectively)		(64,925	)		(14,934	)
Accumulated other comprehensive (loss) income		(271	)		38
Accumulated deficit		(853,993	)		(825,035	)
Total stockholders’ equity		363,561			346,344
Total liabilities and stockholders’ equity	$	1,576,349		$	1,606,871

TENABLE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	Six Months Ended June 30,
(in thousands)		2024			2023
Cash flows from operating activities:
Net loss	$	(28,958	)	$	(41,071	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		15,864			12,624
Stock-based compensation		81,117			71,977
Net accretion of discounts and amortization of premiums on short-term investments		(4,378	)		(3,595	)
Amortization of debt issuance costs		662			618
Restructuring		4,528			—
Other		2,184			182
Changes in operating assets and liabilities:
Accounts receivable		40,462			33,997
Prepaid expenses and other assets		18,105			12,649
Accounts payable, accrued expenses and accrued compensation		(20,162	)		(1,276	)
Deferred revenue		(24,807	)		(14,408	)
Other current and noncurrent liabilities		(2,867	)		(2,758	)
Net cash provided by operating activities		81,750			68,939

Cash flows from investing activities:
Purchases of property and equipment		(1,191	)		(1,098	)
Capitalized software development costs		(4,767	)		(2,813	)
Purchases of short-term investments		(160,405	)		(147,434	)
Sales and maturities of short-term investments		147,778			148,760
Proceeds from other investments		3,512			—
Purchases of other investments		(250	)		—
Business combinations, net of cash acquired		(29,162	)		—
Net cash used in investing activities		(44,485	)		(2,585	)

Cash flows from financing activities:
Payments on term loan		(1,875	)		(1,875	)
Proceeds from loan agreement		—			424
Proceeds from stock issued in connection with the employee stock purchase plan		9,878			9,914
Proceeds from the exercise of stock options		4,135			1,537
Purchase of treasury stock		(49,991	)		—
Other financing activities		—			(129	)
Net cash (used in) provided by financing activities		(37,853	)		9,871
Effect of exchange rate changes on cash and cash equivalents and restricted cash		(3,077	)		(1,032	)
Net (decrease) increase in cash and cash equivalents and restricted cash		(3,665	)		75,193
Cash and cash equivalents and restricted cash at beginning of period		237,132			300,866
Cash and cash equivalents and restricted cash at end of period	$	233,467		$	376,059

TENABLE HOLDINGS, INC. REVENUE COMPONENTS AND RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (unaudited)

Revenue	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
Subscription revenue	$	202,538	$	176,767	$	400,173	$	347,865
Perpetual license and maintenance revenue		12,016		12,154		24,172		24,335
Professional services and other revenue		6,687		6,115		12,857		11,675
Revenue⁽¹⁾	$	221,241	$	195,036	$	437,202	$	383,875

_______________

⁽¹⁾ Recurring revenue, which includes revenue from subscription arrangements for software (both recognized ratably over the subscription term and upon delivery) and cloud-based solutions and maintenance associated with perpetual licenses, represented 96% of revenue in the three and six months ended June 30, 2024 and 95% of revenue in the three and six months ended June 30, 2023.

Calculated Current Billings	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)		2024			2023			2024			2023
Revenue	$	221,241		$	195,036		$	437,202		$	383,875
Deferred revenue (current), end of period		562,587			495,199			562,587			495,199
Deferred revenue (current), beginning of period⁽¹⁾		(562,683	)		(490,076	)		(580,887	)		(502,115	)
Calculated current billings	$	221,145		$	200,159		$	418,902		$	376,959

^{________________}
⁽¹⁾ Deferred revenue (current), beginning of period for the three and six months ended June 30, 2024 includes $0.1 million related to acquired deferred revenue.

Remaining Performance Obligations	June 30,
(in thousands)	2024		2023
Remaining performance obligations, short-term	$	572,015	$	503,960
Remaining performance obligations, long-term		175,526		158,713
Remaining performance obligations	$	747,541	$	662,673

Free Cash Flow and Unlevered Free Cash Flow	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)		2024			2023			2024			2023
Net cash provided by operating activities	$	31,424		$	30,193		$	81,750		$	68,939
Purchases of property and equipment		(526	)		(711	)		(1,191	)		(1,098	)
Capitalized software development costs		(2,235	)		(1,790	)		(4,767	)		(2,813	)
Free cash flow⁽¹⁾		28,663			27,692			75,792			65,028
Cash paid for interest and other financing costs		7,839			12,123			15,450			18,943
Unlevered free cash flow⁽¹⁾	$	36,502		$	39,815		$	91,242		$	83,971

________________

⁽¹⁾Free cash flow and unlevered free cash flow for the periods presented were impacted by:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)		2024			2023			2024			2023
Employee stock purchase plan activity	$	3,702		$	4,419		$	(2,630	)	$	(271	)
Acquisition-related expenses		(197	)		(21	)		(663	)		(259	)
Restructuring		(1,597	)		—			(5,419	)		—

Non-GAAP Income from Operations and Non-GAAP Operating Margin	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)		2024			2023			2024			2023
Loss from operations	$	(8,818	)	$	(10,745	)	$	(17,748	)	$	(29,901	)
Stock-based compensation		41,398			37,860			81,117			71,977
Acquisition-related expenses		763			30			924			130
Restructuring		4,681			—			6,070			—
Amortization of acquired intangible assets		4,760			3,073			9,429			6,153
Non-GAAP income from operations	$	42,784		$	30,218		$	79,792		$	48,359
Operating margin	(4		)%	(6		)%	(4		)%	(8		)%
Non-GAAP operating margin		19	%		15	%		18	%		13	%

Non-GAAP Net Income and Non-GAAP Earnings Per Share	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except per share data)		2024			2023			2024			2023
Net loss	$	(14,572	)	$	(15,974	)	$	(28,958	)	$	(41,071	)
Stock-based compensation		41,398			37,860			81,117			71,977
Tax impact of stock-based compensation⁽¹⁾		1,175			1,336			98			2,253
Acquisition-related expenses⁽²⁾		763			30			924			130
Restructuring⁽²⁾		4,681			—			6,070			—
Amortization of acquired intangible assets⁽³⁾		4,760			3,073			9,429			6,153
Tax impact of acquisitions		(43	)		(59	)		(78	)		(113	)
Non-GAAP net income	$	38,162		$	26,266		$	68,602		$	39,329

Net loss per share, diluted	$	(0.12	)	$	(0.14	)	$	(0.25	)	$	(0.36	)
Stock-based compensation		0.35			0.33			0.69			0.63
Tax impact of stock-based compensation⁽¹⁾		0.01			0.01			—			0.02
Acquisition-related expenses⁽²⁾		—			—			0.01			—
Restructuring⁽²⁾		0.04			—			0.05			—
Amortization of acquired intangible assets⁽³⁾		0.04			0.03			0.08			0.05
Tax impact of acquisitions		—			—			—			—
Adjustment to diluted earnings per share⁽⁴⁾		(0.01	)		(0.01	)		(0.02	)		(0.01	)
Non-GAAP earnings per share, diluted	$	0.31		$	0.22		$	0.56		$	0.33

Weighted-average shares used to compute GAAP net loss per share, diluted		118,681			115,131			118,111			114,465

Weighted-average shares used to compute non-GAAP earnings per share, diluted		123,056			120,057			123,161			119,665

________________

(1) The tax impact of stock-based compensation is based on the tax treatment for the applicable tax jurisdictions.
(2) The tax impact of acquisition-related expenses and restructuring are not material.
(3) The tax impact of the amortization of acquired intangible assets is included in the tax impact of acquisitions.
(4) An adjustment to reconcile GAAP net loss per share, which excludes potentially dilutive shares, to non-GAAP earnings per share, which includes potentially dilutive shares.

Non-GAAP Gross Profit and Non-GAAP Gross Margin	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)		2024			2023			2024			2023
Gross profit	$	172,443		$	151,522		$	339,472		$	294,855
Stock-based compensation		3,288			2,906			6,270			5,531
Amortization of acquired intangible assets		4,760			3,073			9,429			6,153
Non-GAAP gross profit	$	180,491		$	157,501		$	355,171		$	306,539
Gross margin		78	%		78	%		78	%		77	%
Non-GAAP gross margin		82	%		81	%		81	%		80	%

Non-GAAP Sales and Marketing Expense	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)		2024			2023			2024			2023
Sales and marketing expense	$	101,129		$	97,800		$	200,954		$	194,991
Less: Stock-based compensation		16,276			16,423			31,576			30,817
Less: Acquisition-related expenses		49			—			49			—
Non-GAAP sales and marketing expense	$	84,804		$	81,377		$	169,329		$	164,174
Non-GAAP sales and marketing expense % of revenue		38	%		42	%		39	%		43	%

Non-GAAP Research and Development Expense	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)		2024			2023			2024			2023
Research and development expense	$	45,149		$	37,845		$	88,876		$	76,028
Less: Stock-based compensation		11,799			9,764			22,960			18,629
Less: Acquisition-related expenses		—			—			(20	)		—
Non-GAAP research and development expense	$	33,350		$	28,081		$	65,936		$	57,399
Non-GAAP research and development expense % of revenue		15	%		14	%		15	%		15	%

Non-GAAP General and Administrative Expense	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)		2024			2023			2024			2023
General and administrative expense	$	30,302		$	26,622		$	61,320		$	53,737
Less: Stock-based compensation		10,035			8,767			20,311			17,000
Less: Acquisition-related expenses		714			30			895			130
Non-GAAP general and administrative expense	$	19,553		$	17,825		$	40,114		$	36,607
Non-GAAP general and administrative expense % of revenue		9	%		9	%		9	%		10	%

The following adjustments to reconcile forecasted non-GAAP income from operations, non-GAAP net income, non-GAAP earnings per share, free cash flow and unlevered free cash flow are subject to a number of uncertainties and assumptions, each of which are inherently difficult to forecast. As a result, actual adjustments and GAAP results may differ materially.

Forecasted Non-GAAP Income from Operations	Three Months Ending September 30, 2024						Year Ending December 31, 2024
(in millions)	Low			High			Low			High
Forecasted loss from operations	$	(5.6	)	$	(3.6	)	$	(25.1	)	$	(21.1	)
Forecasted stock-based compensation		41.6			41.6			164.6			164.6
Forecasted acquisition-related expenses		1.0			1.0			1.9			1.9
Forecasted restructuring		—			—			6.1			6.1
Forecasted amortization of acquired intangible assets		5.0			5.0			19.5			19.5
Forecasted non-GAAP income from operations	$	42.0		$	44.0		$	167.0		$	171.0

Forecasted Non-GAAP Net Income and Non-GAAP Earnings Per Share	Three Months Ending September 30, 2024						Year Ending December 31, 2024
(in millions, except per share data)	Low			High			Low			High
Forecasted net loss⁽¹⁾	$	(14.6	)	$	(12.6	)	$	(52.6	)	$	(48.6	)
Forecasted stock-based compensation		41.6			41.6			164.6			164.6
Forecasted tax impact of stock-based compensation		2.0			2.0			3.7			3.7
Forecasted acquisition-related expenses		1.0			1.0			1.9			1.9
Forecasted restructuring		—			—			6.1			6.1
Forecasted amortization of acquired intangible assets		5.0			5.0			19.5			19.5
Forecasted tax impact of acquisitions		—			—			(0.2	)		(0.2	)
Forecasted non-GAAP net income	$	35.0		$	37.0		$	143.0		$	147.0

Forecasted net loss per share, diluted⁽¹⁾	$	(0.12	)	$	(0.11	)	$	(0.44	)	$	(0.41	)
Forecasted stock-based compensation		0.35			0.35			1.38			1.38
Forecasted tax impact of stock-based compensation		0.02			0.02			0.03			0.03
Forecasted acquisition-related expenses		0.01			0.01			0.02			0.02
Forecasted restructuring		—			—			0.05			0.05
Forecasted amortization of acquired intangible assets		0.04			0.04			0.16			0.16
Forecasted tax impact of acquisitions		—			—			—			—
Adjustment to diluted earnings per share⁽²⁾		(0.02	)		(0.01	)		(0.04	)		(0.04	)
Forecasted non-GAAP earnings per share, diluted	$	0.28		$	0.30		$	1.16		$	1.19

Forecasted weighted-average shares used to compute GAAP net loss per share, diluted		119.0			119.0			119.0			119.0
Forecasted weighted-average shares used to compute non-GAAP earnings per share, diluted		123.0			123.0			123.5			123.5

________________
(1) The forecasted GAAP net loss assumes income tax expense of $5.8 million and $16.3 million in the three months ending September 30, 2024 and year ending December 31, 2024, respectively.

(2) Adjustment to reconcile GAAP net loss per share, which excludes potentially dilutive shares, to non-GAAP earnings per share, which includes potentially dilutive shares.

Forecasted Free Cash Flow and Unlevered Free Cash Flow	Year Ending December 31, 2024
(in millions)	Low			High
Forecasted net cash provided by operating activities	$	206.2		$	216.2
Forecasted purchases of property and equipment		(6.0	)		(6.0	)
Forecasted capitalized software development costs		(6.5	)		(6.5	)
Forecasted free cash flow		193.7			203.7
Forecasted cash paid for interest and other financing costs		31.3			31.3
Forecasted unlevered free cash flow	$	225.0		$	235.0

Tenable Announces Second Quarter 2024 Financial Results

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