$Tenable Holdings Inc.(TENB)$TENB reported Q2 2022 financial result on July 26 after market closed. The next day, the stock price dropped off the cliff. Reading through the press release and earnings call transcript, I do not find the reason it should be punished so harsh.
In the article “Tenable (TENB) Beats Q2 Earnings and Revenue Estimates” posted on Yahoo finance by Zacks Equity Research:
Tenable (TENB) came out with quarterly earnings of $0.05 per share, beating the Zacks Consensus Estimate of $0.01 per share. This compares to earnings of $0.09 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of 400%. A quarter ago, it was expected that this cybersecurity software company would post earnings of $0.05 per share when it actually produced earnings of $0.06, delivering a surprise of 20%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times.
Certainly, either on GAAP or non-GAAP basic, Q2 2022 result was not better than Q2 2021. Operating expenses was increasing, so as the stock-based compensation. Total stock-based compensation as a percentage of revenue increased 3.5% from Q1 2022, not too much. Furthermore, the management said: “gross margin, which was 81% this quarter and essentially flat compared to last quarter.” Sales and marketing expense (exclude stock-based compensation) as a percentage of revenue was 46% in Q2 compared to 45% in Q1. The increase in operating expense also due to the acquisition of Bit Discovery, a leader in external attack surface management.
TENB had strong demand in Q2 although international business in most regions did not grow as fast as expected. In Q2 2022, added 540 new enterprise platform customers and 79 net new 6-figure customers, compared to 459 new enterprise platform customers and 17 net new 6-figure customers in Q1 2022. The dollar-based net expansion rate is well above 110% threshold. TENB has reported positive free cash flow (FCF) since Q1 2020. The latest FCF margin is 15.6%.
Management maintained the full year revenue guidance given in range 673mil to 679mil. At current share price of $38, P/S ratio is about 6.7, considered fairly-valued compared to its history P/S ratio. However, I think $Qualys(QLYS)$ is a better choice.
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