Greetings and welcome to the tenable fourth quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Erin Carney, Vice President, Investor Relations. Please go ahead.

Thank you, Operator, and thank you all for joining us on today's conference call to discuss Tenable's fourth quarter and full year 2025 financial results. With me on the call today are Co-Chief Executive Officers Steve Vince and Mark Thurman and Chief Financial Officer Matt Brown. Prior to this call, we issued a press release announcing our financial results for the quarter. You can find the press release on our IR website at Tenable.com. We will make forward-looking statements during the course of this call, including statements relating to our guidance and expectations for the first quarter and full year 2026, growth and drivers in our business, changes in threat landscape in the security industry, particularly regarding AI security and the shift to preemptive security, our competitive position in the market, growth and customer demand for and adoption of our solutions, including Tenable One, our exposure management platform, planned innovation, including hygienic AI security and orchestration capabilities, research and development investments in Tenable One, changes in key financial metrics, and our future results of operations and financial position. These forward-looking statements involve risks and uncertainties, some of which are beyond our control, which could cause actual results to differ materially from those anticipated by these statements. You should not rely upon forward-looking statements as a prediction of future events. Forward-looking statements represent our beliefs and assumptions only as of today and should not be considered representative of our views as of any subsequent date, and we disclaim any obligation to update any forward-looking statements or outlook. For further discussion of the material risks and other important factors that could affect our actual results, please refer to those contained in our most recent annual report on Form 10-K and subsequent reports that we file at the SEC. In addition, all of the financial results we will discuss today are non-GAAP financial measures, with the exception of revenue. These non-GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their closest GAAP equivalents. Our press release includes GAAP to non-GAAP reconciliations for these measures. I'll now turn the call over to Steve.

Thanks, Erin. Before we get started, I want to welcome Vlad Krasunsky to Tenable as our new CTO. He'll be instrumental in advancing our AI strategy and driving innovation across our AI-powered platform, specifically advancing our agentic and remediation capabilities. Vlad comes with tremendous experience building and leading Microsoft's global multi-cloud security enterprise AI security, and exposure management businesses. With that, let's get into the quarter. In Q4, we exceeded all of our guided metrics with 11% year-over-year revenue growth and 24% operating margin. Penable One, our AI-powered exposure management platform, was 46% of new business this quarter. An exciting record for us. During the quarter, we added over 500 new enterprise platform customers, which was our best quarter in two years. Strong demand for preemptive security, along with the continued validation from major industry analyst firms, is driving larger deal sizes. These firms have recognized Tenable One as a leader in exposure management. Mark will speak more about this momentarily. Now, a key driver behind these wins is the complexity of the modern attack surface. AI is showing up in nearly every customer conversation. Organizations are moving quickly, but many still can't see where AI is running, what it touches, who can access it, or how it connects to the rest of the environment. This creates an invisible attack surface that most teams aren't equipped to manage. In response, many organizations have turned to AI-specific point products that focus on a narrow slice of the problem. But because they only see a part of the environment, they leave gaps across applications, identities, cloud workloads, and data, which is exactly where risk grows. This is why a platform approach is needed. And for Tenable, it's a natural extension of what we've always done and why we are demonstrating early customer momentum. Tenable One now continuously discovers AI across the entire organization, including internal and external, on-premises, and cloud, to deliver a complete risk-aware view of where AI operates, how it's connected, and where exposure is created. From there, the platform provides the insight and context that customers want to identify the governance controls required to reduce risk. By bringing AI into the same unified exposure management model that our platform customers already rely on, Tenable One delivers the clarity and consistency organizations need in a rapidly changing landscape. We are a platform-first company. Everything we do is about giving customers unified visibility, insight, and action in a way that scales with the complexity of the attack surface. Tenable One enables security leaders to reduce operational complexity, resulting in a comprehensive single source of truth for risk. As we expand our capabilities in the platform with more third-party integrations, we are also leaning in and investing in what comes next in preemptive security, including agentic AI security and the evolution of exposure management into advanced remediation. Our customers are increasingly asking us to go beyond identifying risk and help them reduce it in an automated, repeatable way. We believe remediation will be a major part of the next chapter in exposure management, and that Tenable is in a strong position to lead that shift into this expansive greenfield opportunity. As we enter this next phase, we see our advantages as fundamental to helping customers solve their biggest cybersecurity challenges. We have vast amounts of exposure data from over 15,000 enterprise platform customers through our open platform and continuous scanning and exposure analysis. This helps create competitive moat and will allow us to deliver data-driven scalability, autonomy, and transparency so our customers can reduce risk preemptively. We view our data's breadth, depth, and quality as unmatched given the expansive ecosystem of assets, environments, and signals it spans. This differentiation matters. The accuracy of any AI model or prioritization engine depends on the strength of its underlying data. And our data is built to give customers a level of precision and context that is difficult to replicate. And with emerging capabilities, we are positioning our solutions to turn that insight into action by automating the manual repetitive tasks that slow teams down, enabling faster and more efficient remediation. Our disciplined focus on expanding the platform and ensuring AI remains central to every innovation is driving stronger platform adoption and deeper customer engagement. We believe these priorities will be key drivers in the evolution of our growth trajectory as we move throughout 2026. And now I'd like to turn the call over to Mark to discuss how customers and the industry are responding to the shift to exposure management and how we are positioned to lead them through this change.

Thanks, Steve. We spoke last quarter about being recognized as a leader in the exposure management category by IDC and in the unified vulnerability management category by Forrester, two of the industry's top analyst firms. In Q4, we were named a leader in the 2025 Gartner-Madra Quadrant for exposure assessment platforms. We were also named as the current company to beat in the 2025 Gartner AI vendor race. Tenable is the company to beat for AI-powered exposure assessment reporting. Tenable was also one of two vendors recognized as a customer choice alongside with Wiz and the 2025 Gartner Peer Insights, voice of the customer for cloud-native application protection platform report. Taken together, this recognition reinforces what we are hearing from customers and partners every day. Tenable One is emerging as the essential foundation for exposure management, helping customers turn fragmented security data into a unified, actionable roadmap for risk reduction. Let me share a few examples of customer wins in Q4 and how they are using Tenable One as their environments grow more complex and their needs evolve. First, let's talk about expansion momentum. A large global enterprise significantly expanded its Tenable One deployment after consolidating and simplifying multiple VM technologies. They selected Tenable because our platform gave them deeper, more accurate visibility and reduced operational overhead compared to their previous tools. They also chose Tenable One for third-party risk management, following a highly competitive and rigorous evaluation, including multiple large platform players. This win reinforces two important trends we are seeing in real time. Customers want to consolidate fragmented tools, and they increasingly view Tenable One as the strategic platform that can address multiple exposure-related use cases to a single, unified platform approach. Second, we are seeing strong demand driven by rapid adoption of AI. We closed our first seven-figure deal driven by AI exposure in the quarter. A major telecommunications provider selected Tenable One to gain visibility into how AI was being deployed and used throughout the organization. They had no unified way to understand which agents were being used, what data was being shared, or how AI-driven activity was expanding their attack surface. Their teams were trying to address AI exposure in silos, which left significant blind spots. Tenable One AI exposure closed that gap by giving them end-to-end visibility across their entire AI environment. With Tenable One, they can see which AI apps are being used and by which users, what data is being shared by those users, and how these elements combine to create potential exposure paths. They chose Tenable because our platform delivers a complete connected view of AI activity instead of a series of isolated findings. Third, we are seeing momentum in the public sector. A large higher education consortium selected Tenable to lead a multi-phase exposure management initiative, spanning more than 20 campuses as part of a statewide cybersecurity modernization effort. The program focuses on reducing systemic risk across institutions with varied levels of maturity, while establishing consistent visibility, prioritization, and remediation practices. This was a highly strategic win because the customer required a unified platform that could support a diverse environment, integrate with existing tools, and scale across dozens of institutions. Tenable One met those requirements and demonstrated the ability to drive measurable risk reduction in the early phases of the project. As a result, the customer consolidated on Tenable and eliminated competitive solutions to standardize on Tenable One. Additional phases covering the remaining campuses are expected as the program expands. While these all represent clear examples of where Tenable differentiates itself from the competition, there is one other key point here. We view these customer wins as representing early steps and a much larger opportunity. Customers are not buying Tenable for a single use case. We are seeing that they are investing in Tenable One as a long-term platform to address exposures across multiple domains in their environments. This reflects a broader shift for platform consolidation. And Tenable One is becoming the system our customers standardize on as they replace fragmented point solutions. With that, I'll turn the call back over to Matt to dive deeper into the results for the quarter.

Thanks, Mark. We're very encouraged by the strong fourth quarter, exceeding the high end of the range on every metric we guided to for the quarter and the year. It was an outstanding finish to the year, and I'm so proud of the entire team for their execution. Revenue for the quarter was $260.5 million, representing growth of 10.5% year-over-year and driving growth of 11.0% year-over-year on a full-year basis. The year-over-year growth in revenue for the quarter, as well as outperformance relative to guidance, was underpinned by a solid foundation of renewal business and an increase in our new and expansion growth rates driven by tenable one adoption our percentage of recurring revenue remained high at 96% for the year we're continuing to see increasing momentum in tenable one with an all-time high of 46% of new and expansion business coming from the platform as preemptive security takes center stage customers are turning to our platform as their solution of choice to manage risk across their attack surface including AI we added 502 new customers in the quarter many of which came directly into tenable one the strength and tenable one drove calculated current billings or CCB ahead of expectations to 327.8 million in the fourth quarter a year-over-year increase of 8.5%. Full-year 2025 CCB landed at $1.049 billion, growing 8.2% year-over-year, while short-term remaining purchase obligations, or CRPO, grew 13.3%. Changes in upfront billing patterns and increasing contract durations are causing the growth rates in CCB and CRPO to diverge, which we expect to persist in the midterm. Net dollar expansion rate came in ahead of expectations at 106%. Non-GAAP gross margin was 82.7% for the quarter, an increase from 81.7% in Q4 2024. Full-year 2025 non-GAAP gross margin was 82.1% compared to 81.4% in the prior year. We're encouraged by our ability to slowly but steadily increase non-GAAP gross margin year over year, both on a quarter and full-year basis. Non-GAAP income from operations for the quarter with $63.7 million, or 24.4% of revenue. On a full-year basis, non-GAAP income from operations grew to $219.0 million, or 21.9% of revenue, compared to $184.1 million, or 20.5% of revenue in the prior year. I'm especially proud of our ability to steadily increase margins in 2025, growing operating margin 140 basis points compared to 2024, in a year in which we absorbed two acquisitions and invested significantly in product innovation, as demonstrated by the year-over-year increase in research and development expenses. We expect to continue our strong track record of delivering margin expansion while balancing for growth, having expanded our non-GAAP operating margin by 680 basis points since the end of 2023. Non-GAAP earnings per share for the quarter was $0.48, compared to $0.41 in Q4 2024, an increase of 17.1%. Non-GAAP earnings per share for the year was $1.59, compared to $1.29 in 2024. an increase of 23.3%. The increase in Q4 and full-year EPS reflects the increase in profitability combined with a decrease in diluted shares outstanding. Turning to the balance sheet, cash and short-term investments totaled $402.2 million. We generated $87.5 million in unlevered free cash flow during the quarter compared to $85.7 million in Q4 2024, bringing our full-year 2025 unlevered free cash flow to $277.0 million, a year-over-year increase of 16.5%, and now represents 27.7% of revenue. During the fourth quarter, we repurchased 2.3 million shares for $62.5 million. And through the end of 2025, we have repurchased a total of 10.6 million shares for $362.4 million since November 2023. Today, I'm happy to announce that we recommended, and the Board approved, a $150 million increase to our share repurchase authorization, increasing our current total authorization to $338 million as of year-end and enabling us to accelerate repurchases under the program. We believe that our current share price trades at a discount relative to our true value and that utilizing our strong balance sheet and cash flow generation to more aggressively repurchase shares is an effective use of capital. Turning to the financial outlook for Q1 and full-year 2026, we have discussed over the past several quarters that CCB and RPO growth rates are diverging due to changes in upfront billings patterns and increasing contract durations. The increasing mix of larger strategic multi-year transactions is a desired outcome of our platform strategy and is driving an increase in overall contract duration. At the same time, the shift to annual installment billings based on customer demand and away from 100% upfront payments on multi-year transactions is reducing overall billings durations compared to prior periods. and causing a negative distortion to CCB that we believe fails to accurately represent the growth of our business. In addition to the distortion dynamic that impacts what we disclose externally, internally, management is no longer using CCB as a component to monitor the performance of the business. Consequently, CCB is no longer a key financial metric for us, and we will not be providing a specific guidance range for CCB in 2026 and forward. Having said that, while we will not guide to a specific CCB range in 2026, we expect full year 2026 CCB will be in line with current consensus expectations despite the anticipated billings duration headwinds. The momentum we experienced in Tenable One in the second half of 2025 and growing opportunity in AI exposure gives us confidence heading into 2026. For Q1, we expect revenue to be in the range of $257 to $260 million, representing a year-over-year increase of 8.1% at the midpoint. For full year 2026, we expect revenue to be in the range of $1.065 to $1.075 billion, exceeding the $1 billion milestone for the first time and representing a year-over-year increase of 7.1% at the midpoint. We expect non-GAAP income from operations for the first quarter to be in the range of $53 to $56 million, or 21.1% of revenue at the midpoint. For full year 2026, we expect non-GAAP operating income to be in the range of $245 to $255 million, or 23.4% of revenue at the midpoint, representing a year-over-year increase of 150 basis points. At the end of Q4, we began an effort to realign departments across the company, stripping out redundant roles and reinvesting into innovation in the Tenable One platform and AI security. As a result of these efforts, we incurred $3.1 million of structuring expenses in Q4 and expect to incur approximately $5 million more in the first half of the year, all of which is expected to be paid in 2026. We expect non-GAAP net income for the first quarter to be in the range of $46 to $49 million, representing a year-over-year increase of 7.2% at the midpoint. For full year 2026, we expect non-GAAP net income in the range of $214 to $224 million, representing a year-over-year increase of 12.7% at the midpoint. We expect non-GAAP earnings per share for the first quarter to be in the range of $0.39 to $0.42 per share, representing a year-over-year increase of 12.5% at the midpoint. For full year 2026, we expect non-GAAP earnings per share in the range of $1.81 to $1.90 per share, representing a year-over-year increase of 16.7% at the midpoint. And finally, we expect unlevered free cash flow for the year to be in the range of $285 to $295 million, or 27.1% of revenue at the midpoint. While we're pleased unlevered free cash flow continues to grow year over year, it's worth noting that our 2026 forecast is being impacted by an estimated 24 million, or approximately 220 basis points of margin, due to the reduction in upfront multi-year billings and cash restructuring charges that I spoke about before. Looking ahead to 2027 and beyond, we expect billing durations to normalize, and unlevered free cash flow as a percentage of revenue will grow generally in line with growth in non-GAAP operating margin. In closing, we'd like to thank the entire Tenable team and our customers and partners for a great result. It's amazing to see the traction we're getting in Tenable One and our customers' excitement around our AI exposure management capabilities. We believe the second half of 2025 was important validation and that 2026 is setting the foundation for returning to accelerating growth, which is our number one priority. With that, we are happy to open up the call for questions. Operator?

We'll now be conducting a question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question is from Rob Owens with Piper Sandler.

Good afternoon, everyone, and thanks for taking my question. So great stuff on the deal sizes moving up, the success with Tenable One, the successes you're seeing from an exposure management standpoint. But hoping you could square that a little bit with what you saw in the large customer cohort and the net additions of $100,000 ACV customers as it was lower than we've seen in the past.

Hey, Rob. This is Steve. I would say two things. Number one, new business was strong for us. As you saw, we added 500 new customers, and the value of those lands are more sizable now than they have been in the past. Second thing is that expansion was good for us in the quarter. I want to make that very clear. Where we saw strength is within the cohort of customers that were our large customers. So our largest customers that have adopted Tenable One, who are using Tenable One, expand it within the quarter. So we're very pleased to see the ability to land and transact new business at higher price points with the platform, but also, more importantly, expand the relationships with our largest customers. And that's really the tale to take this quarter.

Great. When you talk about some of the success you're seeing in terms of AI exposure, and I think you mentioned your first seven-figure deal on that front, Just help us understand where customers are in this journey at this point. Is it a tip of spear type of item for you or something that's being followed on? And while it's conversational, how much activity are you actually seeing out of the customer base right now to move?

Yeah, so it is literally coming up in every single conversation, right? There isn't a conversation that you have with the CISO where AI and AI security and how to protect their organizations does not come up. So it is unbelievably prevalent. We see it everywhere. When you look at some of the opportunities that we're going after, obviously we commented we closed our first seven-figure deal, which was outstanding. And when you look at some of the use cases, there's some constant themes that are coming up where I think we're uniquely positioned to excel, right? when you look at some of the things that are coming up from the CISO around looking at and discovering AI across the entire enterprise and the company, looking for shadow AI and the AI attack surface and the public services being used from an AI perspective, then how do they protect the AI workloads and the agents from misconfigurations and non-human identities, those type of things, and then the governance issues that are arising in regard to deploying and using AI. So these are constant themes that we're seeing, and we are seeing pipeline build, and we're seeing it come up in all of our conversations.

So I think this will be quite a bit of tailwind

for us moving forward.

Great. Thank you for the color.

Our next question is from Saket Kalia with Barclays.

Okay, great. Hey, guys, thanks for taking my questions here. Nice quarter. Thank you. Steve and Mark, maybe just to start with you, I mean, Tenable One is clearly doing very well, and that really expands vulnerability management into exposure. And so maybe the question around that is, what additional modules within Tenable One are customers adopting most as you look at that growing Tenable One base? And maybe relatedly, how is that broader offering impacting your competitive win rates, if at all?

Sure. Yes. Good question, Sackett. I would say a couple of things. First and foremost, as you saw this quarter, mix of new business inflected higher. 46% of our total new sales came from the platform. Customers clearly want a platform. They clearly want to be able to assess risk holistically. And it really comes down to three things. One, I would say visibility. Two is insights, and three is action. And so one of the big areas of value for the platform is our ability to help customers understand their entire digital footprint, whether it's assets, systems, devices, workloads that are either, you know, in the cloud, on your network, on the factory floor. And so consequently, we have most customers who are using the platform are using us for traditional VM, plus web app, plus cloud security, which continues to grow at a very nice rate. And then more recently, as Mark called out, securing the AI attack surface, which is a big blind spot for our customers. And then more importantly, it's the ability to correlate all that data to deliver insights and help customers orchestrate remediation to reduce risk. And I think the takeaway here going forward, there'll be less emphasis on individual modules and individual products. And the emphasis for us is really selling the platform, selling it in a more cohesive way, and making sure that we're giving customers access to all of the capabilities within the platform to continue to drive higher levels of utilization and continue to inflect selling prices higher.

Got it. Got it. Very helpful. Maybe for my follow-up for you, Matt, listen, it was very clear on the call. I mean, the billings duration dynamics definitely help explain why we're no longer going to be talking about CCB, but it also sounds like the growth here in fiscal 26 on CCB shouldn't be that impacted. Can you just unpack that a little bit? I mean, is the headwind from billings duration maybe smaller, or is there just faster underlying growth in the business that enables you to sort of endorse consensus? And maybe just philosophically, what is, you know, is it going to be revenue that's going to be really the basis that we should be judging the health of the business or anything on that on sort of new metrics that you think are going to be better reflective of the dynamics that are happening?

Yeah, thanks for the question, Socket. So really, we saw a really strong finish to 2025, which gives us quite a bit of confidence heading into 2026. we are still seeing a Billings Duration headwind to CCB, but we did feel like it was important to at least give that qualitative direction around where our expectations are for CCB in 2026. Beyond that, though, you can just tell from our guide, we're feeling very good about where revenue is coming in, op income, and despite the fact that we also see billing duration headwinds in free cash flow, we're also able to put up a pretty good free cash flow number for the guide as well. So generally feeling very positive, and it goes back to a lot of what we've discussed already, which is our confidence in the platform. We're seeing where that's working, that strategy is paying off, and the opportunities that we're

continuing to see in AI. And despite that headwind, The one comment I would add there is that despite that headwind, we're seeing strength. If you look at the strength in our business, so I think the guide reflects the strength and the underlying momentum of the business despite the change that Matt mentioned. So really pleased with the results for the quarter. Really pleased to be giving the guide today and demonstrate the increasing confidence and our ability to execute and deliver greater value to customers.

Good stuff. Thanks, guys. Thank you.

our next question is from brian essex with jp more hi good afternoon everyone thank you for

taking the question um i appreciate all the commentary on the quality of the data across

the platform um or maybe for for either steve or mark if you could maybe pull on that thread a little bit you know as the investors become concerned about the potential for disruption

um outside of the depth of visibility that you noted with robin socket Could you maybe help us better understand where some of the deeper data differentiation lies, how that resonates with customers, and then also maybe how you might competitively see larger platform vendors that are innovating into the exposure management space, particularly as we see demand, you know, on the AI side?

Sure. First and foremost, let me say that AI is a massive opportunity for us,

and I want to be very clear about that. I think Mark and I are convicted in that. It makes us more relevant. It makes us more important, and more importantly, it makes exposure management more critical for our customers. Mark highlighted this earlier, but we're starting to see incremental AI budget dollars flow our way to help customers secure their use of AI. But it all starts with our data. The breadth and depth of the data we've collected over two-plus decades, we believe is absolutely unparalleled. We talked about this earlier on the call. The data that we collect is unique. It's based on deep domain expertise and things like trusted access and years of continuous scanning, telemetry, and exposure analysis. And this is something that either general models or other companies can't replicate. And moreover, it's really about applying AI to leverage this data to deliver insights in a way that allow us to solve the exposure gap. And for that, AI is at the center of what we're doing. It's not only going to augment human operators, but it's going to give us critical context and knowledge to help our customers develop a deeper understanding about their risk. And more importantly, it will allow us to drive actionability and orchestrated remediation to reduce risk in the world of AI speed and scale. So this data is going to allow us to continue to create a bunch of agented workflows to get the job done in the right way. And so we're well-positioned here, and it's a force multiplier in what we can do.

And the last thing I would say here would be,

I think it's just to connect the dots, is it's really about the brand, the trust customers have in us, the size of our customer base, the ability to leverage the data to reduce risk. It's all of these things.

Great. Super helpful. And maybe if I could do one quick follow-up for Matt. Conservatism in the guide, I mean, 1Q at the midpoint implies a sequential decline, which seems eerily similar to 1Q this year. You have the same philosophy. Should we think about the setup this year the same way as, you know, you have coming into 2025?

Yeah, I think, look, we're pretty happy with the guide, certainly relative to the expectations that we're already on there. You know, I think we're ahead across the board on our guided metrics. I expect seasonality will be pretty similar to what we've seen in the past, so I would expect that to be consistent. But, you know, we're very happy about the opportunity that we've seen, not just exiting the year, but also as we look ahead to pipeline and the deals that we have in front of us, we're feeling good about the year.

All right, super helpful. Great to see the consistency, so thank you.

Thank you.

Our next question is from Joseph Gallo with Jeffries.

hey guys thanks for the question um there is a lot of strength in pro services the past two quarters can you just speak to that and you know how we should think about that in the context of

guidance you bet love comment on that the reason you're starting to see that uh pick up and it is a unique model that we have here at tenable because we do 100 of our business through partners and resellers so our partners and resellers they also drive a significant significant part of their business through services. But as we now are deploying a platform at scale, you see these deployments where they're going through and rolling out multiple different asset types. And so we're able to go in there, and as we're doing larger transactions, larger deals, we're able to go in there with our professional services organization and help them on this exposure management journey. When it was just core-based VM way back in the day, there wasn't this massive demand for professional services. But now as you deploy a platform, they want to do it. They want to deploy it quickly. They want to make sure that they get all of the different asset types deployed over time, and they want to get it done to drive their utilization rates as high as possible, utilizing all their licenses. So we expect that to continue, but we also expect our partner community and the GSI community to be able to drive significant services on the exposure management platform, Tenable One.

Awesome. That's really helpful. And then maybe just as a quick follow-up. So it was a really strong quarter, and you guys have spoken to prudence, it seems like, in the guidance. But I just want to square away, you just grew 11%. You're guiding to 7%. So the exit rate may be below that.

Like, is that just a straight math equation between the baton handoff between VM and exposure management? And, like, at what point can we see exposure management be material enough to kind of offset that and stabilize growth?

Yeah, underneath that, what we're seeing is strength and significantly higher growth rates within Tenable One, which is exactly what we want to see. Today, though, Tenable 1 represents about a third of our overall business. As that overall percentage continues to climb and continues to grow faster than non-Tenable 1, we expect that that overall growth rate then inflacts higher, stabilizes, and then inflacts higher. The good thing is we're seeing signs of that now. So we're seeing increased rates of adoption in Tenable 1. That's exactly what we want to see. we're seeing increased growth rates within new and expansion, which is also exactly what we want to see. So, the early signs are there, and that gives us confidence.

Great to hear. Nice job, guys. Thank you. Our next question is from Mike

Sikos with Needham. Thanks for taking the questions, guys, and I'll echo the congratulations here. Appreciate the commentary on the shifting patterns here to annual installment billings. Matt, I guess first question for you, but my concern is you had cited the $24 million headwind to unlevered free cash flow this year from both billings and restructuring. And the concern is that folks are still going to calculate CCB and then try to triangulate off of that $24 million to derive some sort of figure. Can you point us in the right direction for why that is or is not what we should be doing when thinking about normalize CCB adjusting for these different billing patterns, please. Sure.

So, first off, we thought it was important to at least provide some qualitative direction around our expectations for CCB for 2026, which is why we pointed out in my prepared remarks that we expected CCB to be in line with current consensus this expectation. So that was important for us. Underneath that, though, we know that that's despite some of the Billings headwinds. And so I think what I would point to is, yes, there is going to be this impact, but we're also providing other metrics that should be helpful. So we talk about percentage of new and expansion business in Tenable One. We talk about additional new customers. We talk about our net expansion rate, and obviously we're talking guide to revenue. The types of things that I would be looking at and that we are looking at are things like the net expansion rate. I think that's important. That came in ahead of expectations at 106%. Actually expected that to drop down to 105 in Q4, but we exceeded expectations and it landed at 106. I think that percentage very likely could bounce down to 105, but I expect that to stabilize in the middle of the year. And I think that's a very good first sign that things overall are stabilizing. So I think there's a lot there to look at. As you point out, CCB, not only, of course, do we provide that qualitative direction, CCB is going to be readily available for everyone to calculate when you're looking at our financial statements. So, that is going to be something that folks can continue to look at if they so choose. But we tried our best to quantify the impact, and that headwind is embedded into our expectations for 2026. Thanks for that, Matt.

And just as a follow-up, I want to make sure I heard correctly. This probably goes back to Joe's question on the shape or what's implied for the D-cell through 26. But if I heard you correctly, so it sounds like the guide is underwriting a net expansion rate of 105 in the back half of the year. So first, did I hear that correctly? And then secondly, just given that Tenable One today is about a third of the business, at what scale does Tenable One need to be before we can actually see an inflection point? Yeah. So actually, I think it underwrites a net

expansion rate of 105 in the first half of the year. My expectation is that that rate stabilizes and could, in fact, reflect higher. And that really, at that point, demonstrates the stability in our overall growth rate, at which point a tenable one continues to drive things higher. And in particular, as we see greater opportunities within exposure management, AI is just one example. But we're beginning to see the signs of accelerated growth beyond.

And I think that's really the important point here, which is we have confidence in our ability. We feel like we have the right strategy, our confidence in our ability to execute as we've demonstrated here, not only just this quarter, but over the last few quarters, where we're demonstrating good, stable growth with traction in the platform. And that is all a pre-position to drive and grow higher. And so the investments we're making around the platform, the investments we're making in AI, helping our customers secure the AI attack surface, the investments we're making in the ability to monetize, leverage the data, to deliver insights, to orchestrate remediation, we're confident in our ability to drive growth higher. And that's, you know, Mark and I are focused on that and the opportunity is right in front of us, and we're confident in our ability to do that.

Thank you, guys.

Our next question is from Jonathan Ho with William.

Hi. Good afternoon. Could you maybe talk a little bit about, especially the broader adoption of Tenable one, maybe what the pricing uplift looks like, but also potentially how asset and coverage rates increase over

time as well. Thank you. Yeah, I can speak to that. This is Matt. So the great thing about the platform is we see an opportunity where customers today, standalone VM customers today, moving to the platform to do full exposure management can see an uplift as much 80% uplift when moving to the platform. But even customers that want to do standalone VM today but want to move to the platform to do VM within the platform, they're seeing an increased set of capabilities within the platform, and they get an uplift as well. So regardless of where you're at in your exposure management journey, moving to the platform ends up being a net positive for the customer and ends up being a net uplift for us in terms of ASP. So that's why it's important when we move customers to the platform. The thing that gets us just incredibly optimistic there is, yes, you get an uplift when they move to the platform, but these are also just the customers that we want. You have customers that are turning less, they're expanding more, the deals are larger in size, they're more strategic. So this is a strategy that we're all in on and is working for us. And I think from our perspective, the best part is that we've got a pretty good on-ramp here to the platform. And with roughly two-thirds of our business not on the platform, it represents an opportunity that we're very excited about.

Got it. And then just quickly as a follow-up, when it comes to agentic AI, we seem to be seeing a lot of interest. not just in sort of visibility, but also the governance side of AI. Can you talk a little bit about how your Kim and CNAP products sort of play a role in governance, why it's important, and maybe what you're seeing customers invest in early on? Yeah, well, governance is all very important, regardless of what domain, whether it's network, cloud, or even AI applications and agentic capabilities. And I think you mentioned on the cloud side, our CNAP offering covers broad cloud risks across configs, identities, and workloads, while cloud VM, as we call it, zeroes in on extending traditional VM into those environments. And this also has specific gaps, ensuring workloads, like virtual machines and container images are monitored continuously and prioritized with context. So, look, the problem we're helping solve is really about helping customers discover all of their assets across multi-domains. It's about correlating a lot of this data to deliver insights. And then it's also really about the transparency and the governance behind it so we can enforce AI security policies, enforce broader security policies to ensure, you know, there's the right use and deployment of this technology.

Our next question is from Shaul Eyal with TD Cowan.

Thank you. Good afternoon, everybody. Congrats on the performance and initial 2026 outlook. Steve, I know it's early days, but lots of consolidation in the exposure management arena. Do you see TANIBIL benefiting from customers revisiting prior relations. And maybe as my follow-up, how would you characterize the current pricing environment? Have you seen increasing ASPs lately during the quarter, maybe even during January? Thank you. Yes, and I want to make sure the connection is clear. So, prioritization certainly is a big challenge for a lot of customers. talking to a lot of CISOs, what we hear time and time again is that they're overwhelmed with alerts and they're starved for insights. And so there's a need to be able to correlate all that data across domains, whether it's network, cloud, OT, identities, all that's really important. And our goal here is to help customers prioritize and identify the riskiest exposures on their most critical assets to have a lot of access and entitlements. And we do that in a very visualized way that customers can consume. And that all points towards remediation. So you can't take action without delivering insights, and you can't deliver insights to customers and correlate data without having the visibility, without having 20 years plus of exposure analysis and ingesting data from others. So all of it's really important. It's all of it interconnected, it, and that's why we're having success selling the platform in a very integrated way. Any of you, the ESPs during the quarter, maybe during January?

Yeah, so Mark here, yeah, no, they were strong. I mean, you could see from our margin perspective, very, very strong quarter. We're not seeing any pricing pressure. The beautiful thing that Matt already highlighted is when you are selling Tenable One, the platform, obviously you're getting an uplift for that. You're getting incremental capability. You're getting incremental coverage. And so when you look at it from a competitive standpoint, when you're driving and selling Tenable One, it is really about this consolidation play. And so when you're able to go in and consolidate multiple other pools into the platform and get a higher asset count into Tenable One, it allows you to get very, very good pricing. And so we feel very confident there. We're not seeing any pricing pressure with new logo or with our install base.

Thank you so much.

Our next question is from Patrick Colville with Scotiabank.

Thank you for taking my question. I guess one for Matt, I just want to circle back to the guidance because lots of exciting innovation, success, but the guidance is strong. But if I look at RPO or short-term RPO, it was 13.3% in 4Q, whereas 2026 guidance is for 7%. It's just like a big gap between the two. So why is short-term RPO not a good indicator of forward revenue, given there's such a big gap between the two?

Yeah, I just want to make sure you're clear on this. So, we don't guide CRPO. So, that 2026 number that you mentioned is not an RPO number. So, CRPO did come in at more than 13% for 2025. One of the things that we talked about with CRPO is that that number continues to be driven higher in part due to contract durations becoming longer. And that contract duration is increasing as a result of us entering into more larger strategic transactions many times in the cases of a 10-1 transaction. And so it's a desired outcome. It's what we want to see. We want to see our contract durations going up, but it does have a byproduct effect of increasing CRPO and actually distorting that number a bit. You can see there was tremendous growth in long-term RPO as well. So, yeah, 2026, we don't guide to CRPO, and actually for similar reasons as to why we're no longer guiding to CCB. Both of those metrics are somewhat distorted.

Okay, very clear. um and just focusing on another metric that you do guide to non-gap operating uh i guess margin right um i'm calculating here 23.5 for for 2026 um which is a really i'm calculating it correctly it's a really healthy increase of about one and a half points year on year i guess can you just Talk through, if I'm right in my calculations, the puts and takes there, and it seems like Tenable is really continuing this effort to improve profitability.

Yeah, that's right. So the guide for 2026 at the midpoint is 23.4%. And what I love about that number is, yes, you're right, it's an increase of about 150 basis points year on year. It is also while we are investing significantly in product development, in particular in the platform and around innovations in AI in particular. So this is something that we expect to be able to continue to drive higher. We've taken an approach where we're balancing growth and profitability, and our expectation is that we'll be able to grow in 2026 by about 150 basis points while meeting all of our investment goals as well.

Crystal, thank you so much.

Thank you.

Our next question is from Rudy Kessinger with DA David.

Hey, Greg, thanks for taking my questions, and congrats on the quarter and solid guidance here. Just one for me, what are the federal assumptions? Like, you know, the government's still a bit volatile, if you know, with almost shutdown this past week.

So what are the assumptions there relative to last year and just overall on a growth standpoint?

Yeah, so the expectations embedded within the guide for federal is that federal will perform more or less in line, actually, with the rest of the So we're not expecting outsized growth, and we're not expecting any particular headwinds from Fed. So, again, just in line with overall company growth.

Yeah, no, I think it's very, very accurate feedback. And, you know, we're happy, very happy with our performance in the federal space in Q4. So, finally seeing some stability there. And we're expecting the same thing in 2026. And from a state, local, SLED perspective, very, very strong also. So, it seems like things are getting back to normal there, which is great to see.

Our next question is from Abhishek Murley with Morgan Stanley.

This is Abhishek Murli on behalf of Amita Marshall. Thanks for taking the questions, and congrats on a really strong end of the year.

I guess, to start off, could you kind of walk us through whether you embedded government shutdown into guidance, and then kind of what you ended up seeing for the quarter in terms of the federal dynamics given the tougher backdrop?

Yeah, so no, a federal government shutdown is not embedded within the guide per se, but we saw minimal impact of that in 2025 and don't expect to see any significant impact on that one way or the other. As I mentioned, Fed, our expectations for Fed in 2026 are very much in line with our expectations on growth on the rest of the business.

And then Steve, just one clarification. This is Steve. So Mark talked about some of the strength in Fed in the fourth quarter, right? Other quarters were not as favorable just given a confluence of different events in U.S. federal this past year. And that's what's reflected in our outlook

for the full year for 2020.

Got it.

And then to follow up, unlike more of a budgetary perspective, do you see exposure management getting lumped into AI spend in budgets? And then can you kind of walk us through some of the dynamics you're seeing of where it's being allocated in cybersecurity budgets more broadly?

Yeah, no, it's being added to. So when you take a look at the exposure management, when you look at like RFPs and you look at opportunities right now, you know, you are starting to see AI being added to it. And as we highlighted in one of the big customer wins, you know, sometimes it can be for significant budget dollars. So when you're now competing from an exposure management perspective, and we are seeing an increase in RFPs and pipeline build around exposure management opportunities for Tenable One, AI is now becoming a critical part of that decision criteria. And so you're seeing that budget from an AI perspective be added into exposure management. And A, it's a great differentiator for us, so it gives us a great competitive foothold, and it's also one of the more pressing areas that CISOs are really driving us to and having conversations with us about.

Thank you. There are no further questions at this time. This does conclude today's conference. We thank you again for your participation. You may now disconnect your lines.