Earnings Call Transcript
Tenable Holdings, Inc. (TENB)
Earnings Call Transcript - TENB Q2 2023
Operator, Operator
Greetings. Welcome to the Tenable Second Quarter 2023 Earnings Conference Call. Please note, this conference is being recorded. At this time, I'll turn the conference over to Erin Karney, Vice President, Investor Relations. Ms. Karney, you may now begin.
Erin Karney, Vice President, Investor Relations
Thank you, operator, and thank you all for joining us on today's conference call to discuss Tenable's second quarter 2023 financial results. With me on the call today are Amit Yoran, our Chief Executive Officer; and Steve Vintz, our Chief Financial Officer. Prior to this call, we issued a press release announcing our financial results for the quarter. You can find the press release on the IR website at tenable.com. Before we begin, let me remind you that we will make forward-looking statements during the course of this call, including statements relating to our guidance and expectations for the third quarter and full year 2023, growth and drivers in our business, changes in the threat landscape in the security industry and our competitive position in the market; growth in our customer demand for and adoption of our solutions, including Tenable One, planned innovation and new products and services and our expectations regarding long-term profitability and free cash flow. 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 management's beliefs and assumptions only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. For a 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 with the SEC which are available on the SEC website at sec.gov. In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures are in addition to and not as latitude 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 earnings release that we issued today includes GAAP to non-GAAP reconciliations for these measures and is also available on the Investor Relations section of our website. I will now turn the call over to Amit.
Amit Yoran, CEO
Thank you, Erin. Today, I'll cover some context on our financial performance in the quarter, discuss the accelerating momentum we're seeing with our platform, including strong demand in cloud and also touch on some exciting product updates. Q2 surpassed expectations on every metric, outperforming on both the top and bottom lines. Our results for the quarter are a testament to the growing importance of exposure management and our ability to pivot in a difficult market. Tenable solutions are enabling customers to secure critical areas of their attack surface while doing more with less. This is incredibly relevant at a time when customers are focused on ROI. Our sellers executed incredibly well during the quarter by combining our strong business use case with our industry-leading technology. In Q2, we added 426 new enterprise customers and 63 net new six-figure customers signaling a return to our typical quarterly adds. The upside to our results was driven by demand for Tenable One, where we continue to exceed expectations with record levels of deals closing and strong pipeline generation. We also saw a high volume of large deals as customers look to reduce risk, consolidate spend and security tools for all the Tenable One. Our OT business also delivered strong results with notable traction in public sector. Last quarter, we highlighted our competitive differentiation, and we continue to experience a shorter time to win and very strong win rates. We believe this is a direct result of our strategy to broadly use cases for our technologies and enable our customers to discover and secure the proliferation of assets in an increasingly complex environment, including hybrid, multi-cloud, OT, identity and beyond. As we increase the Tenable One customer base, we continue to experience larger ASPs and adoption of more platform use cases, such as identity and cloud security. During the quarter, we saw Tenable One increase from a teens percentage of new bookings to over 20% and now comprises a low double-digit percentage of new and renewal business. We're also seeing increased Tenable One growth from our on-prem customers, driven by the need to expand coverage of their attack surface coupled with new advanced analytics provided by Tenable One. For all customers, securing the cloud is a critical objective. The speed and scale of cloud often leave environments with undetected and unremediated exposures such as misconfigurations, system vulnerabilities and excess privileges. In many cases, customers do not even know what assets they have and what access has been granted to those assets. With cloud security as part of Tenable One platform, we can bring greater context to a customer's overall preventive security program so that they can better understand risk and prioritize mitigating actions. Most organizations operate multi-cloud and hybrid environments. We can consistently enforce cloud security posture and compliance across their operating environments. With our unified platform, we're helping organizations better measure and communicate improvements in security posture, which has become a board-level issue. During the quarter, we announced our Identity Risk Score. Identity Risk Score uses mature AI and machine learning models to quantify risk. Using modern AI techniques with contextual exposure data, Tenable Solutions can quickly identify and prioritize identity and entitlement-related problems on-prem and in cloud environments. We believe cybersecurity and exposure management, in particular, are big data problems and that we are best suited to address them. Through our analytics and artificial intelligence, we're helping security teams quickly identify issues and prioritize remediation across the modern attack surface. We've recently expanded Tenable One to allow customers to ingest vulnerability and misconfiguration data from their other security tools. This, combined with our expansive coverage across the attack surface and vulnerabilities, misconfigurations and identities allows us to deliver deeper analytics and more insights into customer risk. In short, we believe that our data lake is the largest repository of contextual exposure data in the world. This data repository helps to power mature and next-gen AI technologies for exposure management. Stay tuned for further announcements and demos at Black Hat. In addition to Tenable One, we saw strength in both the public sector and OT. Cybersecurity is increasingly a focal point for public policy including systems operational directives for operational technology, presidential decision directives and Defense Authorization Act, all of which mandate improvements in cybersecurity for OT. As customers in the public sector and broader cyber industry face more rules and regulations, they frequently mature their risk management practices. We have both market-leading products in this area and a deep understanding of both OT and IT converged environments. This combination is necessary as CISOs are increasingly becoming critical to the OT security purchasing process. This year, we plan to integrate OT into Tenable One, another milestone for our platform that will further enrich the data and differentiate our offering. We're incredibly excited about our performance, where we are today and where we are going. We have industry-leading technologies unified in a differentiated platform; we're seeing demand at the top end of the funnel, particularly in cloud and identity; and we're achieving tech validation wins at a faster rate. We're doing all of this with our balanced growth strategy and continuing to invest for growth and expanding margins. I'm particularly proud of our ability to successfully navigate the ongoing uncertainty in the macro environment. We had a great quarter, and we are confident in our strategy and in our ability to execute. I will now turn the call over to Steve for further commentary on our financial results and outlook.
Steve Vintz, CFO
Thanks, Amit. Overall, we are very pleased with our execution this quarter, highlighted by better-than-expected CCB, revenue and earnings attributed to continued traction with our exposure management platform. I will provide more commentary momentarily. But first, please note that all financial results we discuss today are non-GAAP measures with the exception of revenue. As Erin mentioned, at the start of this call, GAAP to non-GAAP reconciliations may be found in our earnings release issued earlier today. Now on to our results for the quarter. Calculated current billings, defined as the change in current deferred revenue plus revenue recognized in the quarter grew 15% year-over-year to $200.2 million. A few things to note with regard to our strong results for the quarter. First, we saw stabilization in banking and financial services, as well as tech and telecom sectors in comparison to Q1. We attribute our success this quarter to a return to a more predictable selling environment, including increased visibility with large deals, which benefited from a continued focus on lead qualification and the ability to navigate a more rigorous contract approval process. Second, Tenable One continues to gain momentum and is creating tailwinds with customers seeking to consolidate vendor spend and more broadly understand risk across their attack surface. And just to put matters in perspective, Tenable One grew to over 20% of total new enterprise sales and is helping us inflect ASPs and achieve tech validation wins faster. It's also worth noting that we recently integrated Tenable One with Security Center, which allows our on-premise customers to access enhanced capabilities and analytics in Tenable One through a flexible hybrid deployment model. This created some tailwinds in the quarter and we believe represents a sizable opportunity for us going forward to upsell our exposure analytics and identity and cloud security solutions to Security Center customers. And third, CCB also reflects better-than-expected early renewals, most notably from our Q3 renewal base. This timing of billings contributed approximately $2 million of upside in the quarter. And as I have mentioned in the past, CCB is a close but not perfect proxy of sales, and it's influenced by a number of other factors such as deal timing, including renewals. In summary, CCB was stronger than expected. Consequently, we are raising the midpoint of our CCB outlook for the full year today by $3 million, which is the portion of the beat we attribute to our outperformance in the quarter. In terms of key financial metrics, we continue to take and win share as reflected by our 426 new enterprise platform customers we added in the quarter. Large deals were also strong as we added 63 net new six-figure customers in Q2. Our dollar-based net expansion rate was 111% in the quarter compared to 113% last quarter. As a reminder, the expansion rate is calculated on an LTM basis and reflects improvement during Q2 in comparison to what we experienced during Q1. Revenue was $195 million, which represents 19% year-over-year growth. Revenue in the quarter exceeded the midpoint of our guidance range by $5 million. Our percentage of recurring revenue remains high at 95% this quarter, which is consistent with prior periods. I'll now turn to expenses where we continue to demonstrate good cost control and operating leverage. I'll start with gross margin, which was 81% this quarter, up from 79% last quarter. We are pleased to see our gross margin expand over the prior quarter, primarily due to the scalability of our public cloud infrastructure. Looking ahead to the second half of the year, we expect gross margins to be modestly lower as we absorb the initial costs related to the upcoming introduction of new exposure management functionality such as cyber asset management and AI-powered analytics. Sales and marketing expense was $81.4 million, which was down from $82.8 million last quarter. Sales and marketing expense as a percentage of revenue was 42% compared to 44% last quarter. Sales and marketing expense decreased sequentially, primarily due to the timing of our sales kickoff conference in Q1 and offset by incremental investments in demand generation programs and higher wages and commission expense. R&D expense was $28.1 million, which was down from $29.3 million last quarter. R&D expense as a percentage of revenue was 14% this quarter compared to 16% last quarter. R&D expense decreased sequentially primarily due to lower personnel costs, namely payroll taxes related to RSU vestings and benefits increased by capitalized software development costs related to innovations in our unified exposure management platform, and efficiency in our public cloud development environment. G&A expense was $17.8 million, which was down slightly from $18.8 million last quarter. G&A expense as a percentage of revenue was 9% this quarter compared to 10% last quarter, reflecting a greater focus on cost containment and efficiencies as we scale our business. Income from operations was $30.2 million, which was significantly better than expected as we exceeded the midpoint of our guidance range by $9.7 million. Operating margin for the quarter was 15%, which was 470 basis points better than the midpoint of our guidance. The strong beat in earnings this quarter allows us to raise our outlook for the full year and reinvest a portion of the upside in go-to-market and product development in the second half of the year to better position us for future growth and success. It's also worth noting that our operating margin improved over the same period last year by approximately 800 basis points, of which 400 basis points of improvement is related to sales and marketing. All of this resulted in EPS of $0.22, which was approximately $0.09 better than the midpoint of our guided range. Now let's turn to the balance sheet. We finished the quarter with $645.5 million in cash and short-term investments. Accounts receivable was $154.4 million, and total deferred revenue was $650.2 million, including $495.2 million of current deferred revenue, which gives us a lot of visibility into revenue over the next 12 months. We generated approximately $40 million of unlevered free cash flow during the quarter, which exceeded our expectations and reflects the seasonal pattern of billings year-over-year. We generated approximately $40 million of unlevered free cash flow during the quarter, which exceeded our expectations and reflects the seasonal pattern of billings during the year. Year-to-date, unlevered free cash flow was $84 million, which puts us well within reach to achieve our annual unlevered free cash flow target for the full year, which we are raising today with 95% recurring revenue, high gross margins, and high renewal rates, we feel confident that we can continue to expand our operating margin and free cash flow margin over the ensuing years. With the results of the quarter behind us, I'd like to discuss our outlook for the third quarter and full year 2023. For the third quarter, we currently expect revenue to be in the range of $197 million to $199 million. Non-GAAP income from operations to be in the range of $26 million to $27 million. Non-GAAP net income to be in the range of $22 million to $23 million, assuming interest expense of $8.1 million, interest income of $6.5 million and a provision for income taxes of $2.4 million. Non-GAAP diluted earnings per share to be in the range of $0.18 to $0.19, assuming 122.5 million fully diluted weighted average shares outstanding. For the full year, we currently expect calculated current billings to be in the range of $879 million to $887 million, revenue to be in the range of $783 million to $791 million, non-GAAP income from operations to be in the range of $96 million to $100 million, non-GAAP net income to be in the range of $79 million to $83 million, assuming interest expense of $31.5 million, interest income of $25 million and a provision for income taxes of $8.6 million. Non-GAAP diluted earnings per share to be in the range of $0.65 to $0.69 while assuming 121 million fully diluted weighted average shares outstanding and unlevered free cash flow to be in the range of $180 million to $185 million. We're very pleased to be raising our full year outlook for top line growth and profitability. We believe our outperformance in Q2 and upward revision to our guidance today reflects the balanced growth approach that we've been taking. Therefore, we're raising our outlook for CCB revenue and earnings for the full year. Specifically, we are raising op income guidance by $5 million for the full year, while also increasing our investment in go-to-market and product in the second half of the year to better position us for success in 2024. The takeaway here is even in a dynamic environment, we have been able to expand our operating margin as we scale our business by leveraging our market leadership, sizable customer base and broad exposure management platform.
Amit Yoran, CEO
Thanks, Steve. In summary, Q2 was very successful. We delivered better-than-expected growth, a sizable beat in earnings, and we believe we are well positioned for success in the second half of the year with tailwinds from Tenable One. We have a ton of opportunity ahead of us and look forward to updating you throughout the year. We hope to see many of you at the upcoming Piper conference. Now I'd like to open the call up for questions.
Operator, Operator
Thank you. Our first question comes from Brian Essex with JPMorgan. Please go ahead with your question.
Brian Essex, Analyst
Hi. Good afternoon. Thanks for taking the questions. And congrats on a much better quarter this quarter. I guess, Amit, you pointed to your pipeline, better pipeline growth and better execution this quarter and accelerated tech wins. I guess if you were to compare it to last quarter. Maybe could you highlight what you're seeing in terms of approval to close rate? And maybe frame out some of the measures that you took to improve the performance in the back end of that sales cycle?
Amit Yoran, CEO
Yes, listen, obviously, we're pleased with the results. We saw what I would characterize as a return to normalcy in many senses of the word. We said last quarter, demand was strong. We saw a lot of deals entering the pipeline. We saw deals moving through, but we saw, especially at the end of the quarter, and we're back-end loaded in our quarters as many enterprise software companies are. There was a significant disruption in the market, regional banking crisis and a number of other factors. This quarter, we saw a return to normalcy in terms of the number of net new customer adds that we've been able to add to our enterprise platforms in terms of the resumption of significant six-figure deals and being able to transact business. We continue to maintain a very close eye on the sales process, including much tighter engagement with the finance teams within the buyer. So targeting conversations with CFOs earlier in the process and making sure we've got line of sight into those conversations.
Brian Essex, Analyst
Got it. That's helpful. And if I could just follow up on the federal. I think you noted some traction there. And as we enter the third quarter, any sense on initiatives that were maybe kicked off or emphasized last year and how traction with those initiatives are tracking this year? And that will do it for me.
Amit Yoran, CEO
Yes. Obviously, in the federal space, the engagement, the sales cycles are much longer the planning process for customers is significantly longer. So a lot of the activity that we're seeing is a result of groundwork that has been laid last year and over previous years and periods. So in the federal space, we're really pleased. We saw very strong demand. We outperformed plan in both Q2 and the first half of the year. And we feel like we've got significant pipeline and the opportunity to outperform in federal here going into big federal Q3, we're also seeing a significant traction in state and local governments. Many of those programs, both funded by federal grant dollars and federal programs as well as kind of drafting off a lot of the technology choices, which the U.S. federal government has made. So we saw really good strength in state and local and are optimistic that that will continue going forward.
Andrew Nowinski, Analyst
Great. Thank you. And congrats on a nice quarter. So, I mean, we saw a lot of your interviews at the end of the quarter regarding the MOVEit vulnerability and the reports out this week, I think, talking about how 400-plus companies were impacted by that vulnerability. And I know it was only discovered in the last two weeks of the quarter, but did you see an impact to your calculated billings in Q2 from that, similar to what you saw from Log4j.
Amit Yoran, CEO
Yes. I would say it's probably not quite as energetic as what we saw from Log4j, which I think the impact to financial performance and to procurement was just very notable. What we did see was increased engagement with customers leveraging products. And I think this is probably more typical of a high-profile vulnerability and just points to why there's strong demand environment. There are obviously compliance and regulatory drivers for managing risk, managing and understanding cyber exposures and vulnerabilities in particular. I think beyond that, strong engagement from security operations, recognizing that when issues like MOVEit manifest themselves, they have to really understand what's happening in their environment, what it means from a risk perspective on where they need to prioritize mitigating actions. So I'd say this is probably more - we didn't see the same type of procurement impact, but more just part of the rationale behind why we see broadly strong demand.
Andrew Nowinski, Analyst
Okay. Very good. Thank you for that. And then just maybe a quick follow-up. You talked about - I think you mentioned in your prepared remarks, your SC installed base or on-prem installed base could be converting up to the Tenable One platform. I'm just wondering if you could quantify for us or give us some parameters around how big that SC installed base might be? Thank you.
Amit Yoran, CEO
Steve, I don't know if you want to start talking about the size of the SC installed base.
Steve Vintz, CFO
Well, we have 40,000-plus customers, and that includes a sizable SC customer base and we would quantify it as a several hundred million dollar opportunity to sell Tenable One, the expansionary functionality, whether it's identity, cloud security or even the more expansive analytics back into our SC customer base. And SC customers, usually, they have a choice, right, either on-prem or cloud and overwhelmingly our SC customers want to - have an eye on-premise environment and one of the few companies in our space that can address the needs of customers who want both on-prem and also want additional capabilities in the cloud. So Tenable One certainly has been a catalyst to help us better serve the needs of our on-premise customers.
Amit Yoran, CEO
Yes. I guess I would just add to that, slightly saying we only released the ability for SC customers to leverage Tenable One just a short period, shortly before the end of the quarter. So really sales teams and customers with, I think, what I would characterize as pent-up demand and excitement for the convergence and the ability to operate in a hybrid mode. So keep their SC deployment but start leveraging the enhanced analytics and the capabilities of Tenable One to the point where it did have a little bit of a lift on what we saw with one. And as you saw and heard on the call, as a percentage of new sales, Tenable One has now gone from what was mid-teens growth to now over 20%.
Rob Owens, Analyst
Great. Thanks for taking my questions. Amit, obviously, a lot of optimism around the OT opportunity. And maybe you could just highlight for us what you're seeing, what competition looks like and the sense of urgency from the buyer.
Amit Yoran, CEO
Yes. I'm extremely bullish about our OT business. We don't talk about it every quarter. I think we're now at the point where I believe we have market-leading technology. I think we can go toe-to-toe and win more than our fair share of competitive but that's against even the notable names in the space. And I think in this market being a more sizable company, being public, having the growth, having this ability provides customers extra assurance. On the technology side, we're seeing that start to play itself out in terms of larger lands, larger OT transactions in terms of seeing more consistency in follow-on procurements once they get past initial deployments. I believe there is significant opportunity and upside for us in the OT business and expect to hear more over the coming quarters.
Rob Owens, Analyst
Great. I want to sneak one in for Steve real quick. On the $2 million in early renewal, a little unusual in this environment given everyone's kind of clutching dollars. So help us understand where customers incented to do this? You talked about getting back to more normalcy. Is there typically a few million dollars in early renewals? And how are you thinking about that moving forward?
Steve Vintz, CFO
Sure, Rob. Good question. And just to clarify, consensus CCB growth coming into the quarter was 12%, and we're reporting 15% today. So we're very pleased with the quarter. It's a $5 million better than expectations. We did quantify, we did say approximately $2 million of the beat is due to timing, specifically billing related to early renewals. As we said in the past, CCB is a close, but not perfect proxy of the underlying sales of the business and it's influenced by a number of factors such as deal timing, including early renewals. This quarter, we saw a higher-than-expected percentage of renewals that came in early. We didn't do anything structural or structurally different. We just saw a couple of large deals early Q3 renewals come in early in the quarter. That gives us good backlog and visibility, obviously, as we head into the second half of the year. Part of the reason why we guide to CCB on a full year basis and not quarterly is that there can be natural fluctuations like this. We're pleased to be raising our full year CCB outlook, and this will modestly impact CCB growth in the third quarter.
Saket Kalia, Analyst
Okay. Great. Hi guys, thanks for taking my questions here. Amit maybe just to start with you, great to see that higher mix of Tenable One. I think we said 20% plus of new business. That's a nice increase from prior quarters. Maybe the question is what modules within Tenable One? Or maybe what asset coverage, are you finding customers are opting for most outside of maybe what I'll call traditional VM?
Amit Yoran, CEO
Yes. I think outside of traditional - so first of all, thank you for the compliment. We're extremely excited. And we believe that, again, we're still in the early innings, September 1 and believe that there's significant opportunity to continue to advance the percentage of transactions and customers that operate on that platform, especially as we continue to innovate and release new product, new capability, new analytic methods on it and happy to chat more about that. In terms of asset types, we also continue to see a diversity of new asset types. So, I think in prior periods, and historically have been very VM centric. I think in particular, we saw a lot of demand around cloud, in particular, with cloud assets coming online and people looking at us as a best-of-breed ability to assess our vulnerability and cloud environments with the same type of consistency and rigor as they're accustomed to in their on-prem model.
Steve Vintz, CFO
Yes. And this is Steve. Sak, the only thing I'll add there is that as a reminder, the ASPs are notably higher with Tenable One than they are with selling stand-alone VM 70% higher. So we're continuing to get good traction and good uplift. And it's also inflecting large deals higher. Today, we're reporting 63 net new six-figure customers. That's up almost 3x from what we reported sequentially in Q1 and because we're covering more areas of the attack surface and helping customers better understand the risk. We're quickly evolving to become a platform-first company. And obviously, results today are certainly an indication of that.
Jonathan Ho, Analyst
Hi, good afternoon. Just wanted to maybe start out with some of your comments around the AI-powered solutions. Can you help us understand what some of these AI applications will look like sort of the value proposition and maybe how this translates into a revenue opportunity?
Amit Yoran, CEO
Yes. I'd like to start off every conversation with AI by talking first about the demand environment. I think we see significant opportunities for AI to be leveraged by threat actors and acceleration of weaponization of vulnerabilities and increased activity, which I think will translate directly into strong market demand for more cybersecurity products, including and in particular, the ability to identify where you have vulnerabilities, where you have exposures and to address them in a timely fashion. From a Tenable use of AI perspective, I'd say there's two main categories that we would bucket them into. The first is leveraging AI to make the product smarter. We have, for instance, and we've used - we've talked about AI a number of times in terms of understanding which vulnerabilities can be exploited, in terms of understanding the criticality of assets in terms of helping us determine the prioritization of vulnerabilities and what to work on. We've now expanded the use of that AI to also help from an identity risk perspective. So obviously, we've been doing a lot of work in the identity space, Active Directory, Azure AD and other identity stores to be able to look at that, look at the privilege level, look at the access types and make determinations about risks that particular identities post. We think as you're looking at overall enterprise risk, it's incredibly important to understand the data, the vulnerabilities and how high and privileged access accounts engage with systems, which may have exposures. In the second category of the use of AI, we're also making - we're using generative AIs to make the products smarter and more usable for customers. So for instance, when we highlight a particular issue of particular exposure, we can provide a lot of research right at the customer's fingertips to understand what it means, what it means in their environments, how they should go about remediating it and really condense their workflow and enhance their experience. I think all - both of those methods are ones which we expect to monetize.
Matthew Saltzman, Analyst
Hi team, thanks for taking the questions. Just first question on a clarification around the ASP uplift. So you mentioned that you're still seeing the upper 70% ASP uplift on Tenable One sales. I'm curious if that applies to only net new business demand or if that also applies to renewal? And then I have a question about the renewal piece after?
Steve Vintz, CFO
It applies to both just as a matter of clarification.
Mike Cikos, Analyst
Hi guys. Thanks for taking the questions here. Just wanted to cycle back to the pipeline generation, just because I know we've mentioned it a couple of times on this call. I believe last quarter, the company discussed how with a record quarter for the company as far as pipeline generation. So the question that I have here, first, was 2Q also a record quarter as far as that pipeline generation? And then building on that, can you help us think about these initiatives that you have in place? What is it the company is doing specifically to help build out that pipeline today versus what it was doing maybe a year ago to help ensure that, that pipeline is growing at this healthy pace that you guys are talking to today?
Steve Vintz, CFO
Yes Mike, this is Steve. So yes, so Q2 is up sequentially in comparison to Q1. So demand generation continues to remain strong. More importantly, right, as the company grows, you would expect pipeline to continue to grow with it. So - and while pipeline is growing and we see strong demand. It's exceeding our expectations overall in aggregate. So I think that will remain clear about that. And seeing the expectations of the plan that we developed at the beginning of the year. It's a confluence of a number of factors. Number one, distribution is really important. We've built an expansive network of distributors and partners over the years. A low percentage of inbound opportunities came from the channel. Today, it's well over 40%. The channel is really working for us, opening doors. The security market is very fragmented, and we have a great relationship with many of our channel partners. Also, we're investing a lot in go-to-market. We're in more countries. We transact sales in 160 countries. We have feet on the street in 35, so distribution matters in the market, especially in cyber. And then obviously, we continue to get great success doing a number of events and create inbound opportunities. Overall, we're pleased with the demand that we're seeing. There's a lot of opportunity in front of us. We'll be focused on executing against those opportunities and conversion rates remain healthy. It's taking longer to close some of those opportunities in a market like this, as we've discussed before, but overall, we're really pleased with what we're seeing with the pipeline.
Rudy Kessinger, Analyst
Hi guys, thanks for taking my questions. Steve, you're taking the revenue guidance - look, as I see you guys take numbers up, I mean you're taking the revenue guidance for the full year by $7 million. You're only taking up current calculated billings by $3 million for the year. Just help explain that there. Did you close deals earlier in the quarter than you expected, and therefore, you got more revenue recognition? Or why aren't you taking up CCB more for the year?
Steve Vintz, CFO
Yes. With regard to CCB, I think we talked about that. We beat by $5 million, right? We grew 15% relative to the $12 million in terms of what the consensus was. And some of that was timing. Some of that was outperformance, clearly, which we're reflecting in our outlook for the year for CCB, but we said about $2 million of that is timing. And timing specifically in the way of early renewals. As we said in the past, CCB is a close but not perfect proxy of the underlying sales of the business and is influenced by a number of factors. So overall rate in outlook for both. We have a lot of confidence in our ability to execute. And I think it reflects just better execution and improved visibility in the business.
Roger Boyd, Analyst
Great. Thanks for taking the question. Just on the customer addition side, I think you added 426 new enterprise customers kind of consistent with 1Q on a year-over-year basis and generally a good result in the environment. Would just appreciate any additional color on the mix of when you're seeing. If you think about additions coming from brownfield replacements versus full opportunities as customers kind of move from treating VM as a compliance service or a DIY approach. Just have any color on that mix of greenfield, brownfield. Thanks.
Amit Yoran, CEO
Yes, I think we're still - we're seeing fairly consistent results to what we've seen in previous periods in terms of ballpark, call it, 25% to 30% of our new enterprise larger logos coming to us from what we characterize as greenfield. So either do it yourself approaches or annual relying on annual assessments from an auditor or security consultancy, which obviously isn't a practical or defensible approach to security in this environment. We continue to see significant competitive win rates. Those remain exceptionally healthy. I think our sales team would tell you, if we're going into VM opportunities, their hours to lose and a lot of the engagement with customers is showing them what the power capability of the platform is and trying to educate them on that and deliver higher lands with expand opportunity as they cross over to new and modern asset types. As I said earlier, significant traction now with cloud security.
Operator, Operator
Thank you. At this time, we have reached the end of our question-and-answer session. And this will also conclude today's conference. You may disconnect your lines at this time, and we do thank you for your participation.