Mixed Earnings Signals Will Shape Cybersecurity Opportunity Over The Coming Year

Key Takeaways

• Demand for Tenable's unified risk management solutions is rising due to digital transformation, regulatory pressures, and the need for holistic risk visibility across IT and cloud environments.
  
• AI-driven innovation, strategic acquisitions, and expanding global reach are fueling larger deals, stronger margins, and sustained customer and revenue growth.
  
• Reliance on government contracts, intensifying competition, rising expenses, and innovation risks threaten Tenable's revenue growth, margins, and market position.

Catalysts

Provides cyber exposure management solutions in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan.

• The accelerating shift towards digital transformation and cloud adoption is expanding organizations' attack surfaces, driving sustained demand for Tenable's unified exposure management platform-this is expected to grow total addressable market and provide strong long-term revenue tailwinds.
  
• Heightened regulatory scrutiny, such as evolving data privacy and cybersecurity compliance standards, is forcing enterprises (including smaller organizations) to prioritize vulnerability management and unified risk platforms-supporting higher renewal rates, longer contract durations, and increased recurring revenue visibility.
  
• The convergence of IT, cloud, and OT environments requires organizations to obtain holistic risk visibility; Tenable's ability to consolidate multiple asset types (VM, cloud, identity, OT, AI security) in a single platform is resulting in larger deal sizes and growing enterprise adoption, directly impacting top-line growth and average selling prices.
  
• Continuing investments in AI-driven analytics, automation, and proprietary vulnerability research have resulted in differentiated product capabilities and analyst endorsements, strengthening Tenable's pricing power and reinforcing gross margin expansion over time.
  
• Strategic acquisitions (such as Apex for AI security), deeper go-to-market channel enablement, and increased international pipeline have produced robust net new customer growth, multi-year commitments, and a growing backlog (RPO), supporting visibility and long-term earnings scalability.

Tenable Holdings Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Tenable Holdings's revenue will grow by 8.8% annually over the next 3 years.
• Analysts assume that profit margins will increase from -4.7% today to 2.8% in 3 years time.
• Analysts expect earnings to reach $33.8 million (and earnings per share of $0.44) by about September 2028, up from $-45.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $66.8 million in earnings, and the most bearish expecting $-55.4 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 188.6x on those 2028 earnings, up from -82.8x today. This future PE is greater than the current PE for the US Software industry at 36.6x.
• Analysts expect the number of shares outstanding to grow by 0.8% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.74%, as per the Simply Wall St company report.

Tenable Holdings Future Earnings Per Share Growth

Risks

• Tenable's heavy reliance on growth in U.S. Federal and public sector contracts exposes it to earnings volatility, especially as deal cycles lengthen and scrutiny and reviews increase, which may negatively impact net revenue and expansion rates if spending slows or contracts are lost.
  
• The shift towards bundled, platform-centric cybersecurity offerings by large, well-capitalized competitors-especially hyperscalers and established cybersecurity vendors-raises the risk of margin compression and market share loss as standalone vulnerability management becomes increasingly commoditized, thereby pressuring long-term revenue growth and operating margins.
  
• Tenable's strategy involves a rising proportion of long-term, multi-year customer commitments and platform consolidation, but if the renewal base weakens or customer expansion slows amid budget constraints or increased competition, it may limit net dollar expansion rates, impede topline growth, and increase reliance on new logo generation.
  
• Continued investments in AI, new product integrations, and recent acquisitions (such as Apex and Vulcan) are driving R&D and operating expenses higher; if monetization of these innovations lags, the result may be flat or declining gross margins and lower net earnings despite revenue growth.
  
• As the cybersecurity market rapidly adopts AI-driven security and automation, there's the risk that Tenable's innovation pace could lag that of competitors or that next-generation embedded security features from cloud providers will reduce demand for specialized solutions, potentially shrinking the addressable market and impacting long-term revenue and margin sustainability.

Valuation

• The analysts have a consensus price target of $39.95 for Tenable Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $45.0, and the most bearish reporting a price target of just $32.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.2 billion, earnings will come to $33.8 million, and it would be trading on a PE ratio of 188.6x, assuming you use a discount rate of 8.7%.
• Given the current share price of $30.75, the analyst price target of $39.95 is 23.0% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.