TENB Q2 Deep Dive: Platform Adoption and Federal Uncertainty Shape Results

Cybersecurity software maker Tenable (NASDAQ:TENB) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 11.8% year on year to $247.3 million. Guidance for next quarter’s revenue was better than expected at $247 million at the midpoint, 1.3% above analysts’ estimates. Its non-GAAP profit of $0.34 per share was 12.3% above analysts’ consensus estimates.

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StockStory’s Take

Tenable’s second quarter saw revenue and adjusted earnings surpass Wall Street expectations, but the stock traded down following the report. Management attributed the quarter’s performance to increased adoption of its Tenable One exposure management platform, which now accounts for a significant share of new sales. CEO Stephen Vintz pointed to strong growth in new customer wins and noted that “momentum we’re experiencing with our platform is a reflection of the importance our customers are placing on preemptive security.” However, cautious commentary regarding the federal sector and moderation in net retention rates signaled ongoing headwinds in parts of the business.

Looking ahead, Tenable’s guidance is built on continued traction for Tenable One, expansion into AI security, and improved visibility in its public sector renewal base. Management expects investments in automation, AI-driven remediation, and integration of recent acquisitions like Apex Security to drive growth, while cautioning that deal cycles—especially in the federal market—may remain extended. Co-CEO Mark Thurmond emphasized that “as organizations modernize with cloud, AI and hybrid IT/OT environments, they're turning to us to unify and simplify their security strategy,” highlighting platform consolidation as a key growth lever.

Key Insights from Management’s Remarks

Management attributed growth to Tenable One platform adoption, expansion in AI security capabilities, and sector-specific momentum, while noting cautious optimism in public sector renewals.

• Tenable One platform adoption: The shift to platform-based exposure management led to higher deal sizes and a growing share of sales from Tenable One, reflecting a customer preference for unified risk management across asset types.
• AI security expansion: The acquisition of Apex Security expanded Tenable’s AI Aware and AI SPM offerings, positioning the company to address emerging risks associated with artificial intelligence and broaden its appeal to enterprises concerned about AI-related vulnerabilities.
• Public sector dynamics: Although federal spending remains under scrutiny, management noted improved visibility and confidence in the renewal base, though expansion opportunities still face elongated deal cycles and heightened review.
• Operational technology (OT) and hybrid demand: Sectors such as data centers, manufacturing, and entertainment drove OT-related wins, with customers consolidating IT and OT security needs under the Tenable One platform for comprehensive coverage.
• Competitive landscape and analyst validation: Tenable cited recent industry recognition from Forrester and IDC as evidence of its leadership in unified vulnerability management and noted that such validation is helping to drive new customer wins and channel engagement.

Drivers of Future Performance

Tenable’s outlook centers on platform expansion, investment in AI security, and improved public sector renewal visibility, amid ongoing deal cycle uncertainties.

• Platform-driven revenue growth: Management expects continued adoption of Tenable One and exposure management solutions to increase average deal size and deepen long-term customer commitments, particularly as organizations seek unified visibility and remediation capabilities.
• AI and automation as differentiators: The integration of Apex Security and further development of AI-powered features are expected to enhance differentiation, drive new use cases, and address customer needs in securing rapidly evolving AI environments, supporting both top-line growth and operational efficiency.
• Federal and commercial sector risks: While improved federal renewal visibility supports the outlook, management remains cautious about elongated deal cycles and constrained expansion in the public sector. Additionally, commercial sector demand and competitive dynamics, especially in cloud and hybrid environments, will continue to influence growth rates.

Catalysts in Upcoming Quarters

In the quarters ahead, the StockStory team will be monitoring (1) the pace of Tenable One platform adoption across both new and existing customers, (2) further integration and monetization of AI security features following the Apex acquisition, and (3) stabilization in federal sector renewals and expansion opportunities. We will also track sector-specific growth in OT and cloud segments as key indicators of strategic execution.

Tenable currently trades at $29.60, down from $32.24 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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