Tenable Holdings (NASDAQ:TENB) Seems To Use Debt Quite Sensibly

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We can see that Tenable Holdings, Inc. (NASDAQ:TENB) does use debt in its business. But is this debt a concern to shareholders?

Our free stock report includes 1 warning sign investors should be aware of before investing in Tenable Holdings. Read for free now.

What Risk Does Debt Bring?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Tenable Holdings's Net Debt?

The chart below, which you can click on for greater detail, shows that Tenable Holdings had US$358.6m in debt in March 2025; about the same as the year before. But it also has US$460.3m in cash to offset that, meaning it has US$101.6m net cash.

A Look At Tenable Holdings' Liabilities

Zooming in on the latest balance sheet data, we can see that Tenable Holdings had liabilities of US$715.0m due within 12 months and liabilities of US$595.4m due beyond that. On the other hand, it had cash of US$460.3m and US$167.8m worth of receivables due within a year. So its liabilities total US$682.3m more than the combination of its cash and short-term receivables.

Since publicly traded Tenable Holdings shares are worth a total of US$3.91b, it seems unlikely that this level of liabilities would be a major threat. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. Despite its noteworthy liabilities, Tenable Holdings boasts net cash, so it's fair to say it does not have a heavy debt load!

See our latest analysis for Tenable Holdings

We also note that Tenable Holdings improved its EBIT from a last year's loss to a positive US$10m. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Tenable Holdings can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. While Tenable Holdings has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. Happily for any shareholders, Tenable Holdings actually produced more free cash flow than EBIT over the last year. There's nothing better than incoming cash when it comes to staying in your lenders' good graces.

Summing Up

Although Tenable Holdings's balance sheet isn't particularly strong, due to the total liabilities, it is clearly positive to see that it has net cash of US$101.6m. And it impressed us with free cash flow of US$240m, being 2,390% of its EBIT. So we are not troubled with Tenable Holdings's debt use. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. These risks can be hard to spot. Every company has them, and we've spotted 1 warning sign for Tenable Holdings you should know about.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.