Operator: Our next question comes from the line of Stephen Schwartz with Wells Fargo.
Stephen Schwartz: Just one on Tenable One, it looks like you’re seeing strong adoption there, but how do those results compare to your internal expectations this quarter?
Amit Yoran: Tenable One was a source of upside in the quarter. So we beat CCB by a good margin. We’re seeing strong demand, added over 500 new customers, almost 600 new enterprise customers. We did 150 approximately net new six figure customers. So, Tenable One continues to be a major source of traction for us and one of the big reasons why we’re able to close large deals in the quarter. So, came in better than expected.
Operator: Our next question comes from the line Saket Kalia with Barclays.
Saket Kalia: Sorry in advance if some of these questions were asked. I was just trying to call late. Steve, maybe for you, just a little bit of a housekeeping question. Within the 12% to 14% CCB outlook for 2024, can you just remind us how much of that is from Ermetic versus organic?
Steve Vintz: Saket, our outlook for Ermetic has not changed for 2024. So I would refer listeners to our press release announcing the acquisition of Ermetic in September where we discuss it more formally. But specifically, with regard to CCB, we’re expecting Ermetic to contribute approximately 2 points of growth. And revenue, we expect Ermetic to contribute one point of growth. And we expect to be cash flow positive in the fourth quarter of this year as well.
Saket Kalia: Maybe for my follow-up for you, Amit. A lot of good stuff to talk about just in the broader platform. Just to just to go to sort of that foundational VM business. Can you just talk a little bit about the competitive backdrop there? I think the landscape here is well established. Every once in a while, you hear some noise from some of the endpoint guys, just kind of curious what you see if any changes at all.
Amit Yoran: I think on the competitive side, certainly from a VM perspective, there’s very little noise. It’s been remarkably consistent between ourselves, Qualys, Rapid. I think we’ve each invested in the VM market to different degrees. We continue to feel good about how we’re positioned competitively, continue to feel like we’re winning more than our fair share against both of those in the different market segments. Outside of VM, we’re obviously seeing Wiz and Palo Alto a lot more on the cloud side as we bring our new cloud security capability to market. Seeing them a lot in POVs, and excited about how that competition will play itself out.
Operator: Our next question comes from the line of Rudy Kessinger with D.A. Davidson.
Rudy Kessinger: I just want to be clear again. Some of us joined the call a bit late. I don’t know if this was addressed, but 400 basis points of improvement on sales and marketing spend next year. Just on this 5% risk, did you guys make cuts in sales and marketing? Did you reduce your sales capacity at all? Did you just split out kind of where the cuts were made?
Steve Vintz: Amit commented on it earlier, but this was really about mainstreaming some of our specialty products and making it part of our core selling motion. So it’s really, the focus areas for the changes we made in go-to-market are first on sales overlays and second is removing layers of management, if you will. So, overall, we think it creates a more cohesive go-to-market motion. It resulted in a 5% reduction in force, about $20 million of savings, a little more so on an annualized basis. And that’s pretty much the extent of it. Very little impact on quota capacity.
Amit Yoran: [indiscernible] specialty products are now highly competitive, if not best of breed. We feel like we’re winning in those markets, and they’re all integrated into the Tenable One platform. So to that end, they’re not really specialty products, they’re products that our core team needs to be able, and it’s proven that they’re able to sell. So we’ll continue to feed them with specialists, with SE specialists, and additional support, but these are now core sales motions for us.
Rudy Kessinger: I guess just as we think about the CCB guide, kind of low teens versus the mid-teens preliminary outlook you gave last quarter, this 5% risk, how did that kind of impact the outlook you’re giving today? And when you consider the positive things you guys are saying about the VM market, win rates, Tenable One, et cetera, investors will frequently ask, they’ll look at your growth rate, 10% to 12% ex-Ermetic, organic on CCB, and it’s not that much higher than some of your VM peers. And so, what would you say to those investors who would maybe call that into question as well?
Steve Vintz: In short, we had a good quarter. We delivered a 14% CCB growth and it was better than expected. If we look out in 2024, if you look at our guidance, our range calls for 12% to 14% growth. Keep in mind, we closed on the acquisition of Ermetic. So we expect Ermetic to add 2 points to CCB growth. So we’re trying to take a cautious outlook, but we’re also trying to reflect realities of our business. We think this is a really strong guide for the year. It comes with higher operating margins. It comes with strong free cash flow. And we continue to see good outperformance in some of these major areas of spend in cyber, such as cloud, identity and OT. So, we think the guidance is appropriate. And it certainly gives us the ability to execute well throughout the year and strike the right balance between growth and profitability.
Operator: Our next question comes from the line of Brian Colley with Stephens, Inc.
Brian Colley: Amit, you talked about how the new SEC reporting requirements could be a demand tailwind for the platform. I’m curious if you’re seeing that start to show up in the pipeline yet. And kind of when we should expect to see that maybe start to show up in the numbers here?
Amit Yoran: I don’t know we’re at the point where we can see specific pipeline that’s being driven by the SEC reporting requirements. But, certainly, the types of things the SEC are asking for, not so much on the beach side, but more on the risk management side, are absolutely the types of things that we can deliver from a technical perspective and that people would do more naturally turned to their VM program to help them identify and address. So we feel like it could be a potential tailwind for us, looking at 2024 and beyond.
Operator: Our next question comes from the line of Trevor Rambo with BTIG.
Trevor Rambo: This is Trevor on for Gray Powell with BTIG. Just a quick one. I know it’s early in the quarter, but how do you guys feel on visibility of your pipeline so far? And then, how’s your ability to call the business today versus around this time last year?
Amit Yoran: The visibility is strong, top of the funnel, in particular. So we continue to add new opportunities and we’re pleased with what we’re seeing. Obviously, when we give our guidance on the earnings call, we take everything into consideration, not just the results for the prior quarter, but also what we’re seeing in the current month leading up into the quarter. So, overall, we’re pleased with top of the funnel and we’ll expect to continue to expand our pipeline coverage and create opportunities with a more expansive CNAPP platform. I think we talked about that on the call. We expect our sellers to continue to drive pipeline and we expect growth from Ermetic to kind of ramp throughout the year as our sellers look to create opportunities and identify certainly needs within our customer base.
Operator: Thank you. And we have reached the end of the question-and-answer session. And this also concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.
