Tenable Holdings, Inc. (TENB) Q1 2021 Earnings Call Transcript

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Tenable Holdings, Inc. (TENB 2.00%)
Q1 2021 Earnings Call
Apr 27, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Tenable First Quarter Earnings Conference Call. [Operator Instructions] A brief question-and-answer session will follow the formal presentation. [Operator Instructions]

It is now my pleasure to introduce your host Erin Karney. Thank you, Erin. You may begin.

Erin Karney -- Senior Director, Investor Relations

Thank you, operator, and thank you all for joining us on today's conference call to discuss Tenable's first quarter 2021 financial results. With me on the call today are Amit Yoran, Tenable's Chief Executive Officer and Steve Vintz, Chief Financial Officer. Prior to this call, we issued a press release announcing our financial results for the quarter. You can find the press release on the IR website at tenable.com.

Before we begin, let me remind you that we will make forward-looking statements during the course of this call, including statements relating to Tenable's guidance and expectations for the second quarter and full year 2021, growth and drivers in Tenable's business, changes in the threat landscape in the security industry and our competitive position in the market, growth in our customer demand for and adoption of our solutions, the potential benefits of the acquisition of Alsid, planned innovation and new products and services, Tenable's expectations regarding long-term profitability and the impact of COVID-19 on our business and on the global economy. These forward-looking statements involve risks and uncertainties, some of which are beyond our control, which could cause actual results to differ materially from those anticipated by these statements. You should not rely upon forward-looking statements as a prediction of future events. Forward-looking statements represent our management's beliefs and assumptions only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. For further discussion of the material risks and other important factors that could affect our actual results, please refer to those contained in our most recent Annual Report on Form 10-K and subsequent reports that we file at the SEC, which are available on the SEC website at sec.gov.

In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their closest GAAP equivalents. Our earnings release that we issued today includes GAAP to non-GAAP reconciliations for these measures and is also available on the Investor Relations section of our website. Before I turn the call over to Amit, I want to quickly bring to your attention the Corporate Social Responsibility Report we recently published to support our environmental, social and governance initiatives. The report can be found on our Investor Relations website with the direction of our Board of Directors, executive leadership and other relevant parties we pulled internal and external sources to do a deep dive into our ESG practices. We are very excited about the results and encourage you to take a look at the published report.

I'll now turn the call over to Amit.

Amit Yoran -- Chairman and Chief Executive Officer

Thank you, Erin, and thank you all for joining us today. First, I want to say that we're very pleased to announce the closing of our acquisition of Alsid, and welcome the Alsid team to Tenable. We'll talk more about Alsid after a quick review of the quarter. Today I'll highlight our strong Q1 results, the rising importance of cyber exposure and our holistic approach to our portfolio, including Tenable.ep and our new active directory solution, Tenable.ad, and new partnerships we've added that we think further validate our market leadership and strengthen our ability to assist customers with rapid remediation.

With that, let me first touch on our Q1 results. We are off to a great start for the year, as reflected in our compelling Q1 results. Our calculated current billings and revenue each grew 20% year-over-year, driven in part by recent cyber incidents, the acceleration of shift to cloud, and growing cross-sell opportunities. We also had strong free cash flow in the quarter, saw an expansion of our non-GAAP operating margin, and had an 8.8 [Phonetic] beat in EPS. Steve will discuss the quarter in greater detail, but we feel these results put us on a solid footing to have a very successful year and are a reflection of the growing demand for our solutions and our attractive business model.

Recent high profile breaches have highlighted the need for comprehensive vulnerability management and an understanding of where exposure exists to enable attack disruption and facilitate informed instant response. VM and Cyber Exposure play a central role in providing broad visibility into the attack surface. What Tenable offers the continuous dynamic monitoring of assets and user permissions along with the means to prioritize remediation based on risk is more important than ever. Key highlights from the quarter are continued traction in cloud and cross sell, including contribution from Tenable.io and the launch of Tenable.ep. Tenable.ep is a new go-to-market motion across our platform of products that includes Tenable.io, Lumin, Web App security and container security. In addition, with the closing of Alsid, we have simultaneously launched Tenable.ad, a solution designed to audit and monitor Active Directory security and disrupt identity as an attack path in both advanced persistent threats and common hacks. Our customers recognize that as the attach surface continues to expand, holistic approach to cyber exposure is the most effective way to measure, prioritize and manage risk. I'd like now to talk about Tenable.ep. Given the momentum of our solutions, we're looking for new ways to deliver more leverage to our customers and make it easier for them to benefit from the full suite of our capabilities. In Q1, we announced Tenable.ep, enabling customers to use more of Tenable's capabilities in combination as a unified platform. EP enables our customers to effectively assess the modern attack surface by combining VM, Web App, Container and Lumin in a unified platform, and allows customers to dynamically allocate licenses across all asset types, according to their needs and modify as their environment changes. This gives customers flexibility to take a holistic rather than piecemeal approach to assessing exposure and then prioritize the results through Lumin to obtain recommended actions based on risk. Tenable.ep was made available for sale in late February, and I'm very happy to say that we're seeing really good adoption and interest from our customers.

A great example of this is a competitive takeaway with a global customer. This customer had been actively seeking a combination of Tenable.io, Container, and Web App security to improve visibility. In addition, we were able to show the value of Lumin which became the key differentiator from a technology perspective. EP provided the unified platform they needed for both the short and long term. The result was a six-figure Tenable.ep win. We are enthusiastic about the meaningful early wins and the growing pipeline we are seeing with EP. In addition to momentum in Tenable.io and expansions for frictionless assessment, we expect Tenable.ep to advance our role in securing our customers cloud deployments.

Now onto our very exciting acquisition of Alsid. We are thrilled to announce the closing of Alsid, and simultaneously launched Tenable.ad, a new Active Directory security solution. This solution is designed to secure Active Directory environments and disrupt adversary attack paths. AD environments are incredibly complex, and our top concern for many of the CSOs we speak with. Tenable.ad provides insights into the weaknesses in Active Directory deployments and identifies misconfigurations that can be used to elevate permissions and create persistent access. AD is the basis for managing user permissions across on-prem and hybrid cloud deployments. It is foundational to the security of cloud workloads, security of remote work and adopting zero trust architectures. We are excited to expand our cyber exposure solution and advance our cross-sell opportunities to include this capability.

In summary, we see strong momentum and extend use cases for our broader platform of products. Recent events such as the security breaches in water facilities in Florida and Kansas, highlight the need for proper cyber risk management, especially in the operational technology sector. This has been further emphasized by the recent presidential executive order on understanding vulnerabilities and securing bulk power systems. As part of the critical infrastructure supporting the global pandemic, a large multinational medical device manufacturer required visibility into their production assets to better understand and manage the risk. Partnering with a global advisory, Tenable offer a unique differentiator across both IT and OT. I remain excited about the opportunity to help enterprises understand and manage their OT risk.

Across our portfolio of products, our platform enables customers to take a holistic continuous approach to managing risk. Our offerings deliver differentiated solutions designed to answer the fundamental questions of how exposed am I, how at risk am I, and what should I do about it. Now, at Tenable we talk a lot about the importance of being best-of-breed. This approach in differentiate capabilities, help us forge stronger partnerships and an expansive ecosystem. We had two particularly exciting partnership solidified during the first quarter. We're excited about our new partnership with IBM where we're a preferred partner for fully integrated vulnerability insights native within IBM SIEM. IBM chose Tenable as the preferred partner due to our technology leadership, including covering more vulnerabilities and provided both on-prem and cloud-based offerings, ease of transition and our market leadership. We also announced our new partnership with HCL BigFix, a leading endpoint management platform making it easier for our customers to automate remediation using infrastructure platforms, they've already selected.

In summary, we're off to a great start for the year and we're excited about our outlook. Our portfolio, creates a compelling way to measure and manage risk. We believe foundational drivers like digital transformation, the shift to cloud and zero trust, will continue to fuel long-term success in our business. I will now turn the call over to Steve.

Steve Vintz -- Chief Financial Officer

Thanks, Amit. As Amit mentioned earlier, we're very pleased with our results for the first quarter highlighted by attractive top line growth, a sizable beat in non-GAAP EPS and exceptional free cash flow, which is a testament to the inherent operating leverage in our recurring revenue model. I'll discuss our results for the quarter momentarily. But first, please note that all financial results, we will discuss today are on a non-GAAP financial measure basis, with the exception of revenue. As Erin mentioned at the start of this call, GAAP to non-GAAP reconciliations may be found in our earnings release issued earlier today, which is posted on our website.

Now onto our results. Revenue for the quarter was $123.2 million, which represents 20% year-over-year growth. Revenue in the quarter exceeded the midpoint of our guided range by approximately $4 million. 9Our percentage of recurring revenue remained high at 94%, which is primarily the result of our annual prepaid subscription model. Revenue in the quarter was aided by strong demand for both new and renewal business. In terms of new business, we added 331 new enterprise platform customers, which is up from the 319 we added in Q1 of last year. Of particular note, this is the first quarter since the start of the pandemic in which new enterprise platform adds were up on a year-over-year basis. In terms of large deals, we added 29 net new six-figure customers in the quarter, which is also up year-over-year. This brings the total number of customer spending in excess of $100,000 annually to 866, a 30% increase year-over-year.

This demand is also reflected in our calculated current billings. CCB, defined as the change in deferred revenue plus revenue recognized in the quarter, grew 20% year-over-year to $119.5 million. As Amit highlighted earlier, we attribute the strength in the topline to the growing importance of cyber exposure, further accentuated by recent SolarWind and Microsoft attacks. Cyber exposure is also a key component of digital transformation which continues to be a top priority for many organizations. While some of our customers took a measured pace of investment last year, as a result of the pandemic, we are starting to see early indications of a stronger spending environment attributed to pent-up demand. Some early indications of this demand surfaced in Q1 in our middle market business, where sales cycles tend to be much shorter compared to those in the large enterprise market. The good news here is that enterprise performance was strong in the first quarter and has healthy pipeline and activity levels that could potentially further benefit from this trend. It's also worth noting that we're seeing an accelerated adoption of Tenable.io and associated add-on modules that is positively impacting our cross-sell efforts, which will be further rated by the launch of Tenable.ep, which commands a notably higher selling price versus our core VM offering. This also positively impacted our net dollar renewal rate.

I'll now turn to operating expenses, which include incremental investments, offset in part by continued efficiencies in our business. I'll start with gross margin, which was 83% this quarter and 84% last quarter. Our gross margin continues to be very healthy and reflects increased investment in our public cloud infrastructure to support a broader set of predictive analytics and a more expansive data link. As a reminder, we plan to continue to make incremental cloud investments throughout the year including Alsid related costs. As such, we expect our gross margin for the full year 2021 to moderate by approximately 100 basis points, reflecting higher cloud adoption.

Sales and marketing expense for the quarter was $52.3 million which is up from $50.8 million last quarter. Sales and marketing increased sequentially, primarily due to incremental investment in demand generation activities. And sales headcount-related costs, including an increased number of quota-carrying sales reps. This quarter represents the second consecutive quarter of increased sales and marketing investment, which we attribute to the increasing confidence in our business and a broader base of demand with the pandemic starting to abate.

Despite the higher levels of investment, sales and marketing expense as a percentage of revenue was approximately 42% or 50 basis points better than last quarter. R&D expense for the quarter was $22.7 million, which is up from %20.4 million last quarter. As a percent of revenue. R&D expense was 18% compared to 17% last quarter. Given our best of breed approach innovation remains a top priority and we plan to continue to invest throughout the year. G&A expense was $13.7 million compared to $12.5 million last quarter. As a percent of revenue, G&A expense was 11% this quarter, which is flat compared to last quarter. Income from operations was $13.9 million in Q1 compared to $15.4 million last quarter. Operating margin was positive 11% for Q1 compared to positive 13% last quarter.

I'd also like to provide some commentary regarding the tax provision. As a reminder, our Q1 outlook provided in February, assumed a non-GAAP tax provision of $1.5 million. However, discrete benefits recognized in the quarter in foreign jurisdictions that were previously not contemplated, actually swung us to a non-GAAP tax benefit of approximately $1 million. Now all of this resulted in significant EPS upside for the first quarter as our non-GAAP earnings per share was $0.13, which was $0.08 better than the midpoint of our guided range. The beat was a combination of better than expected top-line results, good cost management despite the incremental investments in our business and discrete tax items I just mentioned.

Now let's turn to the balance sheet. We finished the quarter with $340 million in cash and cash equivalents and short-term investments. An increase of approximately $48 million compared to last quarter. Total deferred revenue at March 31, 2021 was approximately $429 million, giving us a lot of visibility into revenue headed into Q2 and the remainder of the year. Turning to cash flow, we generated $37.6 million of a positive free cash flow in the quarter, which compares quite favorably to free cash flow of $3.9 million in Q1 last year. Over the last 12 months, we've generated approximately $78 million of positive free cash flow. With high recurring revenue, high gross margins and high renewal rates, we feel confident that we can continue to generate attractive levels of free cash flow, while continuing to invest in the business. That said, Q1 does tend to have higher collections given the seasonally strong bookings in Q4. So free cash flow is expected to moderate in Q2. Plus, we will have the acquisition related cost and the incremental opex associated with Alsid. This is all expected to result in modestly positive free cash flow in Q2 with higher levels in the second half of the year.

With the results of the quarter behind us, I'd like to discuss our outlook for the second quarter and full year 2021. While our assumption is that the health crisis will continue to create some uncertainty, our strong start to the year gives us greater confidence in the business environment now versus last quarter. I'd also like to provide some commentary on Alsid, which closed yesterday. When we announced the acquisition in February, we indicated that Alsid would add one point of incremental CCB and revenue growth and $15 million to $20 million of incremental opex for the remainder of the year. Our outlook for Alsid today has not changed. In Q2, Alsid is expected to have minimal CCB in revenue impact given sales cycles and the writedown of the acquired deferred revenue, while operating expenses will include two months of activity.

With that said I will review the outlook for Q2 and the full-year 2021. For the second quarter, we currently expect revenue to be in the range of $124 million to $126 million, non-GAAP income from operations to be in the range of $7 million to $8 million, non-GAAP net income to be in the range of $5 million to $6 million, assuming a provision for income taxes of $1.5 million. Non-GAAP diluted earnings per share to be in the range of $0.04 to $0.05 assuming 114.5 million fully diluted weighted average shares outstanding. And for the full year, we currently expect calculated current billings to be in the range of $575 million to $585 million, revenue to be in the range of $520 million to $524 million, non-GAAP income from operations to be in the range of $34 million to $38 million, and non-GAAP net income to be in the range of $28 million to $32 million, assuming a provision for income taxes of $3.5 million, non-GAAP diluted earnings per share to be in the range of $0.24 to $0.28 assuming 115.5 million fully diluted weighted average shares outstanding. As a matter of clarity, the guidance we are providing today reflects not only the expected contribution from Alsid, but also our Q1 beat and $1 million improvement in revenue and a $0.02 raise in EPS for Tenable on a stand-alone basis.

In summary, we're pleased with the results of the quarter, which gives us increasing confidence that we remain well positioned to deliver compelling growth and profitability over the long term. And now, I'll turn the call back to Amit for some closing comments.

Amit Yoran -- Chairman and Chief Executive Officer

Thanks, Steve. As I stated earlier in the call, recent security events and digital transformation have raised the profile of cyber exposure. These events prove that we can't rely on strong perimeter defenses and of higher the need for assessing risk across the entire enterprise. Our message has been very consistent. For Tenable, our core strength in understanding cyber risk has driven our success. It's aided in our natural expansion across the surface of attack into approving a security posture for cloud and OT deployments. Our strengthening platform of capabilities positions us for long-term success as our customers shift from hybrid and cloud environments. We hope to see many of you virtually at the JP Morgan, Needham and William Blair conferences in the coming weeks. We now like to open the call up for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Brian Essex with Goldman Sachs. Please proceed with your question.

Brian Essex -- Goldman Sachs -- Analyst

Hi, good afternoon, and thank you for taking the question, and congrats on some nice results. Amit, I was wondering if maybe you could start with a little bit of color, I think Steve pointed to in his prepared remarks, strong momentum and expanding use cases in some pent-up demand. Where exactly are you seeing that? And maybe the outlook as -- particularly with regard to change in velocity of the sales cycle, and how things might change given a return to office of some of your enterprise customers.

Amit Yoran -- Chairman and Chief Executive Officer

Thanks, Brian. We're seeing demand, I'd say, primarily as a result of digital transformation, right? So we've seen earlier in the pandemic, the whole shift to work from home, we've seen acceleration of of cloud adoption and the recognition that this is the new operating environment. And so, as part of that security teams now trying to get up to speed, trying to get their arms around what the risk associated with operating in these environments look like. That's resulted in, I think that and just the broader increased healthier spend environment result in some of the acceleration that we're seeing, and believe that it also accounts for the strong -- over the last couple of quarters, the increasing strength of some of the cross-sell that we're seeing across product lines where it's not just the traditional VM, or even risk basically and then really embracing -- leveraging our technology set to really understand exposure and risk.

Brian Essex -- Goldman Sachs -- Analyst

Got it. Maybe can you point to the sales cycles, how they might be changing and it looks like sales and marketing was quite a bit more efficient than we had anticipated in the quarter. Where did that greater efficiency come from, in spite of perhaps incremental sales head adds?

Steve Vintz -- Chief Financial Officer

Hey, Brian, this is Steve. Yeah, a couple of things I mention there. First and foremost, we're delighted with the results in the first quarter. We grew CCB by 20% as well as revenue and deliver size will beat EPS, and had record levels of free cash flow. In terms of demand, we did see, as Amit commented earlier, strengths across the board, both domestically and abroad, in a large market as well as the mid-market where we called out that that was an area about performance. We previously disclosed that the mid-market represents about 25% of our total sales, and as a reminder, we have a very compelling go-to market model where we have a product and assets that have brought adoption and use across the mid market as well as large and ubiquitous nature of message has created a cost-effective one ramp for us. In Q1, we saw some really good pull through in the mid-market from the flywheel effect of NASA's channel and MSP [Phonetic] also played a role and contributed. Sales cycles are more modest in the mid-market versus that in the large, and so some of the things that we're seeing here out of the gate in Q1 have boded well, not only for the mid-market, but we also think it's encouraging potentially for other larger deals down the road. So, pleased with the performance not only in the mid-but also large in Q1 and there are some really early signs that demand will potentially remain healthy throughout the year, which has given us the confidence to to raise our outlook for both CCB and revenue for the full year today.

Brian Essex -- Goldman Sachs -- Analyst

All right. Helpful color. Thank you so much.

Operator

Thank you. Our next question comes from Sterling Auty with JPMorgan. Please proceed with your question.

Sterling Auty -- JPMorgan -- Analyst

Yeah, thanks. Hi guys. So it's very clear that the tone has changed dramatically since last quarter and you've highlighted a number of factors to it. Including your answers to Brian. But maybe can you just kind of rank order, what you think the biggest differences are from what we were talking about just a quarter ago, in terms of the pent-up demand and all the other reasons? Just what are having the biggest influences in the change?

Amit Yoran -- Chairman and Chief Executive Officer

Hey, Sterling, great to hear from you. I would just characterize it slightly differently. Say we definitely had a a fairly bullish tone even going into the year saying, hey, there's a lot of potential, here. We have a lot of indicators that it could be a very strong year. But we're still in the midst of a global pandemic with lots of uncertainty, political climate and a lot of selling off the year. And so we're very pleased that the quarter played out as it did. We did see continued strength building throughout the quarter, driven primarily by I won't call, digital transformation, but really customers operating in this new environment, where they've got a more complex set of technologies to deal with, where we recognize that they've got to not only embrace VM to have the agility to respond to high profile incidents, but also start getting their arms around the published infrastructure, the web applications, the DevOps environments and ultimately, that over the last couple of quarters has started accounting for what we're seeing in terms of stronger costs of new products. And ultimately we believe will continue to accelerate with the foundations that we're laying with Tenable.ep.

Sterling Auty -- JPMorgan -- Analyst

That makes sense. And then one quick follow-up. You mentioned that EP, the pricing and -- has potential for larger deals. Any sense even with some of the couple of early wins that you had, how much different should we think about the average deal size and revenue run rate from customers on EP versus your traditional deals?

Amit Yoran -- Chairman and Chief Executive Officer

Yeah, so...go ahead, Steve.

Steve Vintz -- Chief Financial Officer

I'd just comment that -- and maybe you can provide further context, but just in terms of the pricing, there is a notable uplift with EP. It's very much an enterprise solution. And so EP is priced at a premium relative to core VM as well as core VM plus Lumin. And it includes a broader set of capabilities to address risk holistically across the enterprise, includes VM, Lumin, Container and VAS and out of the gate, we're very pleased with our progress, activity levels and interest remains very high. And we think this is certainly going to be helpful in our efforts to sell our very broad product suite into the enterprise in a more effective way.

Sterling Auty -- JPMorgan -- Analyst

Great, thank you.

Steve Vintz -- Chief Financial Officer

There's definitely a 60% uplift relative to what we see with core VM, to answer your question.

Sterling Auty -- JPMorgan -- Analyst

Perfect, thank you.

Operator

Thank you. Our next question comes from Hamza Fodderwala with Morgan Stanley. Please proceed with your question.

Hamza Fodderwala -- Morgan Stanley -- Analyst

Hey, guys. My first question for you, you mentioned some pretty strong momentum with Tenable.io. Was wondering if you could give some color on some of the early momentum with the frictionless assessment, since you announced that for AWS? How has that been trending and what do you see as some of the, perhaps the whitespace opportunity here versus some of the traditional VM spend that you've seen in the past?

Amit Yoran -- Chairman and Chief Executive Officer

Yeah, I think we're very encouraged by what I would characterize as early wins and strong interest. Frictionless really plays well as a complement to how people think about securing their cloud workloads. So in many cloud environments, you have various similar [Phonetic] assets, you have things that may last hours, days, weeks, but you don't manage those types of systems the same way as you do your long-term pieces of infrastructure. So in a lot of these environments it doesn't make sense to deploy agents and this kind of frictionless approach is really the best way to get a much deeper understanding of what you've got and the level of exposure. So we think it fits really hand in glove with what we're doing with respect to the Container Security product, the Web App Scanning and the surge of cloud native connectors. So in some parts of the environment, it makes sense to deploy agents, in other parts frictionless is providing a very quick zero touch way to understand exposure risk. And so we've had a number of early wins and momentum continues to build with that product, and we're up -- we're quite enthusiastic about where it could go over time.

Hamza Fodderwala -- Morgan Stanley -- Analyst

Yeah, just a brief follow-up on that for Steve. I guess as you guys focus on an expanding number of assets within your existing enterprise base. I'm wondering what are the dollar retention rates been looking like in Q1, relative to what you've seen in the past? I think it's been 110% plus. Any change there?

Steve Vintz -- Chief Financial Officer

Yeah. Crossed all the strong quarter and drove our net dollar renewal rate higher, something that I commented on earlier. This comes on the heels of a very strong cross-sell effort in Q4, and Lumin and OT and a lot of our products are really a big part of the story here. We're not only selling those on a stand-alone basis, but we're also -- as part of our core VM offering, but also part of the broader exposure platform that we discussed earlier. So out of the gate we're pleased with the levels of cross-sell. Cross sell's not -- it comes to us not only in the way of product, but also greater asset coverage. And we did talk about performance in the mid-market and we've talked about the flywheel effect of Nessus, and a lot of that was not only upsell from Nessus into the enterprise platform, but also our efforts in the mid-market. We're also aided by broader asset coverage. So both appear to be moving in the right direction for us, out of the gate in Q1 and we're off to a good start.

Hamza Fodderwala -- Morgan Stanley -- Analyst

Okay, thank you.

Operator

Thank you. Our next question comes from Daniel Ives with Wedbush Securities. Please proceed with your question.

Daniel Ives -- Wedbush Securities -- Analyst

Yeah, thanks. So can you just walk through your view on the federal side, especially given everything we've seen there in your exposure.? What are you seeing from a pipeline perspective, and just view of deals going in to the next few quarters.

Amit Yoran -- Chairman and Chief Executive Officer

Yeah, thanks, Dan. As you know we have an exceptionally strong position in the federal market. It's always been a very healthy part of our business. And we see very positive signs with respect to the overall federal approach to cyber. We've seen a presidential executive order recently that called out assessing vulnerabilities and securing bulk power. And we've seen an increase in funding for not only IT modernization, which obviously tumbled to play a role in, but also funding specifically for CISA, where the CDM program and Tenable's a significant participant, a significant component of the CDM program funding there. So we're encouraged by what we see. Nothing I think in the federal space moves extremely fast but we have a strong install base. We have strategic relationships where we're providing a vital function, and believe that they will continue to be strong opportunities for us to to grow in the federal space, in the coming periods.

Daniel Ives -- Wedbush Securities -- Analyst

Great. And then -- so just -- when you talk about Lumin, obviously -- I think we've seen in the last few quarters that it's just become more and more of a driver. Does that change even who you're selling into with an organization? Is it that much of a door opener now that it's really starting to hedged high?

Amit Yoran -- Chairman and Chief Executive Officer

Yeah, absolutely. Where as you know, if you rewind a couple of years back, it was largely Tenable delivering superior vulnerability management experience. So better coverage, better accuracy, better outcomes for customers. And we embarked on this, hey, it's not just provided better data, it's doing better analytics. So working with prioritizing vulnerabilities, and then -- and then ultimately -- and we embedded that into the core products, so that customers would start understanding that Tenable can be a strategic partner in their programs, not just delivering insightful tactical information. With Lumin, we really up-levelled the conversation to be able to start talking with enterprises about not just exposure but about risk. About how they're hygiene compares to peer group, about how mature their program looks relative to their peer group, and all the things that start getting at questions of standards of care and negligence. And ultimately, those are CSO, but those are also Audit and Risk Committee, CEO, Risk Officer types of questions. And so it's really enabled us to have much more strategic conversations with our customers, and we think also natural pre-positioning to what we're starting to do now with EP, which is really expand this -- the visibility into those types of insights beyond just traditional infrastructure and really across a much larger swath of their capture.

Daniel Ives -- Wedbush Securities -- Analyst

Awesome, thanks.

Operator

Thank you. Our next question comes from Jonathan Ho with William Blair. Please proceed with your question.

Jonathan Ho -- William Blair & Company -- Analyst

Hi, good afternoon, and congrats on the strong quarter. I just wanted to start out with some of your comments around recent breaches and how it's just may be translating into either deal activity or pipeline.

Amit Yoran -- Chairman and Chief Executive Officer

Sorry, I think you said...

Steve Vintz -- Chief Financial Officer

This is Steve, I'll jump in here and... Look, it's -- we are very encouraged with what we're seeing out of the gate. Internally, we're seeing some clear indications that some of our customers are leaning into digital transformation this year with greater focus and investment. We do believe this has been further accentuated by high-profile sophisticated attacks in a more complex threat environment. So, and we're all -- as a result there are some early signs that there's some pent-up demand for certain segments of our customers. So for example, last year when the pandemic first surfaced, there were investments in digital transformation, but perhaps first on connectivity and collaboration and all the essential things to communicate, and work from home there. As the pandemic has played out and started to abate, we're seeing a lot of our customers bring a renewed focus into digital transformation and resuming some of those activities that perhaps were put on hold or perhaps were temporarily paused. So again, this one quarter it's out of the gate, there are some encouraging signs here and we think that demand dynamics in Q1 are healthy and it sends us up potentially for a good 2021.

Jonathan Ho -- William Blair & Company -- Analyst

Got it. And then just relative to the Tenable.ad product. Can you talk about how this may be fits within the portfolio, and does Tenable.ad also help you to sell your existing products as well?

Amit Yoran -- Chairman and Chief Executive Officer

Yeah, so Tenable.ad definitely fits into the existing vision, right? If you go back and rewind the message, and what we're trying to deliver to our customers, is helping them understand what their attack surface looks like and where and how that attack surface is exposed, but ultimately for the purpose of helping them identify the level of risk and which actions they can take to most efficiently reduce risk. As the attack surface Active Directory has become one of the primary targets for adversaries, whether they're sophisticated attackers or foreign intelligence services, as we've seen recently or something much lower scale. And ultimately that's because once you gain access, you want to escalate your privilege level, you want to get -- to be able to move laterally within the organization. You won't be able to establish persistence and so Active Directory, which is extremely difficult to secure well in the enterprise, has become a go-to target for adversaries.

So being able to assess, to audit in incredibly detailed way, a sophisticated Active Directory deployment to help identify where the exposures are, how they can be tightened down is absolutely critical, and also be able to provide ongoing monitoring as new high-risk activities are identified, things that might be indicators of an attack to the creation of privileged accounts or new trust relationships and so on and so forth. So there's -- it's definitely a -- an integral part of the strategy and a natural leverage point where you can look and see not only which systems are exposed, but a system that has exposures that has vulnerabilities that is also a system that a domain administrator -- system administrator comes in from could be prioritized, could be a higher, a shorter attack path, if you will. And so those are the types of insights that we can help our customers with. And we're really excited. There is a significant need and real shortage of capability to help enterprises secure and we're excited about the opportunity.

Jonathan Ho -- William Blair & Company -- Analyst

Thank you.

Operator

Thank you. Our next question comes from Andrew Nowinski with DA Davidson. Please proceed with your question.

Andrew Nowinski -- DA Davidson Companies -- Analyst

All right, thanks. Congrats on a nice quarter. So I've got a -- just a question on competition, and then a follow-up. So we did notice an uptick in Rapid7 displacements this quarter in our channel survey, which seems to align with your comments on the performance of the mid-market business. So I'm wondering if you could just give us any more color on that competitive landscape. And if you're seeing any sort of shift in win rates in the -- with regard to the competition?

Amit Yoran -- Chairman and Chief Executive Officer

Well, as you pointed out, we called out a strong performance -- our strong performance in the commercial market. We didn't see any notable change. We believe we've always competed favorably with both Rapid7 and Qualys and continue to do so. So there was no real notable change if you will, but we did see an uptick in the -- in sales in the commercial market this quarter, and part of it, I think, in part due to SolarWinds response and recognition of need which in -- and perhaps underspending during the pandemic.

Andrew Nowinski -- DA Davidson Companies -- Analyst

Okay, got it. And then maybe a question for Steve. You had very consistent or very -- yeah, very consistent growth in your current quarter billings and it was very consistent with revenue growth. I would say, if you look ahead to Q2, Q3 and Q4, you've got relatively easy comps for the remainder of the year. So what are you factoring into your guidance for the full year, that implies that CCB growth will not remain at or above this 20% level you just generated in Q1?

Steve Vintz -- Chief Financial Officer

Hi. I think it's hard to comment beyond the guidance that we've currently gave. But what I will say is if you look at revenue, we're flowing through a beat in Q1, we're flowing to a raise and obviously the contribution from Alsid. So the midpoint of our previously provided range on a full year basis was like $512 million, today it's like $522 million, again, it's a midpoint, that's over a $10 million raise. And while we don't go -- guide the CCB on a quarter-to-quarter basis, if you look at the full year, it's a similar story. Midpoint of the guided range was $570 million. Today the midpoint is $580 million, reflects beat and a raise in Q1 and then -- relative to our expectations, and then obviously the contribution from Alsid. So pleased to see both revenue and CCB growth growing at 20%. It's really in the year. We're encouraged with what we see and activity levels remain healthy and our expectations and confidence in the business continues to grow as a result.

Andrew Nowinski -- DA Davidson Companies -- Analyst

Okay, fair enough, thanks.

Operator

[Operator Instructions] Our next question comes from Saket Kalia with Barclays. Please proceed with your question.

Saket Kalia -- Barclays -- Analyst

Okay, great. Hey guys, thanks for taking my questions and for having me on the call here. Amit, maybe first for you. Maybe just little bit of a different angle. I was wondering if you could talk a little bit about some of the partnerships you announced this quarter, particularly with BigFix. And I'm wondering how do you feel that that partnership could help Tenable competitively? And do you feel like -- especially BigFix is a presence in the endpoint management space. Do you feel like customers were pulling you that way in terms of working with an endpoint tool? Or just talk a little bit about what drove that and how you feel like it helps Tenable competitively.

Amit Yoran -- Chairman and Chief Executive Officer

Yeah, I think it's a great question. Is a natural progression for us. We've -- our focus has always been on providing the visibility and the accuracy. And then with broader asset types and improved analytics, so that it's not just visibility and accuracy. But it's helping people to prioritize what these exposures mean them from a risk perspective and what are the actions they can take to be most impactful. So the natural progression for the -- from there is to help them take those actions. And so from our perspective, we remain laser focused on being a best-of-breed provider. And as part of that working well in the enterprise means through open APIs and open integrations, working with other best-of-breed technologies and other technologies which enterprises have already deployed to accomplish their systems management function. And so in the enterprise BigFix is a tried and true and preferred systems management tool, and so integrating and automating that workflow with BigFix can help make our customers' lives easier, and it aligns with what we've been doing with SCCM and other configuration management technologies. So we think it's a natural progression and definitely can help drive value for our customers.

Saket Kalia -- Barclays -- Analyst

Got it. Very helpful. Steve, maybe for my follow-up for you. And you've touched on Lumin a couple of times in the prepared comments and Q&A, but I was wondering if you could just dig in a little bit more, whether that's through the lens of an attach rate or just any sense of size in terms of CCB contribution. Anything you could talk about Lumin and how it's become a bigger part of the business, potentially.

Steve Vintz -- Chief Financial Officer

Yes. Attach rates continue to grow with Lumin. Obviously there's seasonal patterns to our business, but our expectation directionally over the course of time is that Lumin attach rates -- and I want to be careful about my comments because Lumin is a big part of value prop for our exposure platform EP, and probably going forward a lot of what we sell in Lumin will come more likely through the exposure platform. But we expect attach rates continue to climb. We don't provide disclosures for individual products, we have a lot, everything from OT to Lumin to VAS and containers, but we do talk about cross-sell more broadly. Strong in Q4, off to a really good start in Q1, ticked up the net dollar renewal rate and on LTM basis in Q1. And Lumin's a big part of the offering here. So happy to continue to provide more updates on our cross-sell efforts and the momentum of that around exposure platform throughout the rest of the year.

Saket Kalia -- Barclays -- Analyst

Very helpful. Thanks guys.

Operator

Thank you. Our next question comes from Joshua Tilton with Berenberg Capital Markets. Please proceed with your question.

Joshua Tilton -- Berenberg Capital Markets -- Analyst

Yeah, hi guys, thanks for taking my question. For my first one, I kind of just wanted to touch on the billings guidance from a different perspective. So you mentioned that in Q1, you started to signs of a better demand environment relative to last year. If this continues throughout the year, how much of this improving demand environment is baked into the full-year guidance?

Steve Vintz -- Chief Financial Officer

Hi, Josh, this is Steve. So I want to be clear and a revenue is probably the best way to see this. We guided to $510 million to $515 million on the last call. Our guidance today is $520 -- $524 million at the high end of the guided range, that's 19% and even at the midpoint. What -- the revenue reflects as well as the higher CCB guide, because they're both similar. Reflects the beat in Q1, the reflects the raise and reflects the contribution from Alsid. I think it's fair to say that the raise is probably more modest relative to the beat, but it certainly is a raise and reflects our increasing confidence in the business, reflects the incremental contribution from Alsid, and obviously the beat in the first quarter out of the gate.

Joshua Tilton -- Berenberg Capital Markets -- Analyst

And if I could just follow up, real quick. When I think about it from a customer perspective, what is the benefit of adopting EP versus adopting these offerings as a stand-alone solution? Is there a pricing benefit or is it like an integration single pane of glass type benefit? Any color there would be helpful. Thanks.

Amit Yoran -- Chairman and Chief Executive Officer

Yeah. In its simplest form, there is pricing benefit, there's license benefit in that you can allocate license, the license are valuable between products and platform. So, as you're environment changes, it becomes easy to scale up, scale down, shift asset types from here to there, and increasingly, also the analytics in the platform itself. So as I called out examples earlier, leveraging the insight of identity, we're looking at exposures, systems and items like that, we're identifying Web App services on a host when assessing the host and then being able to kick off and automate a web app -- web application security assessment, is it a application specific security assessment in addition to assessing the host. So there is natural points of leverage between the products that, we'll be taking advantage of in the Tenable.ep platform.

Joshua Tilton -- Berenberg Capital Markets -- Analyst

Thanks, guys, congrats on the quarter.

Steve Vintz -- Chief Financial Officer

Thank you.

Amit Yoran -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Brad Reback with Stifel. Please proceed with your question.

Brad Reback -- Stifel Nicolaus -- Analyst

Great, thanks very much. Given the 60% price uplift with Tenable.ep, can you give us a sense of what type of tailwind we should get net dollar expansion rate as the product gains momentum?

Steve Vintz -- Chief Financial Officer

Hi, Brad. I think it's difficult to predict the impact it will have on net dollar expansion rate. And one of the reasons why is because, first, we don't optimize the business for a single metric. Pipelines can vary from quarter-to-quarter as the mix between new opportunities and upsell opportunities can vary. We do believe though that EP is going to be a far more compelling way for us to sell the broader product suite into a larger customer base that continues to struggle with understanding the risk in a heightened threat environment in a zero trust environment. So for us, it's a natural evolution of our product strategy and go to market. Keep in mind, years ago, we had a handful of customer spending in excess of $100,000, we've made tremendous progress over the years. Today we have over 800, that's up 30% year-over-year. So we're doing more enterprise deals, more larger deals. And the way we go to market and sell that and -- as part of a broader offering, we think is really important in EPS that your first step out of the gate you expect us to continue to -- of all of our thinking and our efforts there, because we've made good progress over the years and we -- I think our best days are still ahead, given the innovation that we brought to market over the past couple of quarters and couple of years on the product side.

Brad Reback -- Stifel Nicolaus -- Analyst

Great, thanks very much.

Operator

Thank you. Our last question comes from Gray Powell with BTIG. Please proceed with your question.

Gray Powell -- BTIG -- Analyst

Okay, great. Congratulations on the quarter, and thanks for taking the question. So, yeah. I'll be quick. I know you don't want to give an exact number, but I just would be curious. Roughly speaking, what's the mix of new business that's being driven by Tenable.io versus SC? And then I think you hinted at it, or I think you said it in the prepared remarks, but how should we think about the net expansion rates for customers on IO versus SC? And just ballpark, how much of upside is there for customers that are on IO?

Steve Vintz -- Chief Financial Officer

Well, in terms of mix of business, also as a reminder, we launched Tenable.io in 2017. And we said in the year following, our expectation is that IO would represent a majority of our new enterprise sales. I think it's very fair to say that we're pleased with the progress we've made over that time. Certainly a pandemic and the shift to home has created heightened demand for cloud and greater demand for IO. And so in Q1, we saw a record level of new business coming from IO. And that's no surprise just given some of the secular trends and things that we're seeing play out in the market. So IO is doing well and is exceeding our expectations. It's a pre-position to selling other products that we've talked about specifically in EP with regard to VAS and Container Security and of course Lumin. But SC is a very important part of what we do and if you look at most customers computer environments, they're not 100% on-prem, they're not 100% on cloud, they're hybrid and we're one of the few companies and only companies in the VM space that addresses both the cloud and on-prem and both traditional and modern assets.

So, both are really important to us and both come-- have the ability for us to pull through other products in connection with it. And with regard to cross-sell and net dollar expansion rate, as we mentioned here last year, it did moderate a little bit because of the pandemic, but what we're seeing in Q4 and even in Q1 is very encouraging, as it continues to see an uptick in the right direction and we're very pleased with our cross-sell efforts. It will be continued area of focus for us, but not to go unnoticed here is our ability to add new customers, right? And so we added a lot of new customers this quarter, a lot of larger deals, that's really important. So going forward, both are going to be important, both levers. And if you go to market model in the install base to do it both transact new business and my new customers as well as sell more into the account base. And we're super excited about here, having posted here yesterday and now seeing here today, it's going to be important part of what we do and it will be another way for us to drive deeper penetration into our enterprise customers.

Gray Powell -- BTIG -- Analyst

Got it. Okay, thank you very much.

Operator

[Operator Closing Remarks]

Duration: 60 minutes

Call participants:

Erin Karney -- Senior Director, Investor Relations

Amit Yoran -- Chairman and Chief Executive Officer

Steve Vintz -- Chief Financial Officer

Brian Essex -- Goldman Sachs -- Analyst

Sterling Auty -- JPMorgan -- Analyst

Hamza Fodderwala -- Morgan Stanley -- Analyst

Daniel Ives -- Wedbush Securities -- Analyst

Jonathan Ho -- William Blair & Company -- Analyst

Andrew Nowinski -- DA Davidson Companies -- Analyst

Saket Kalia -- Barclays -- Analyst

Joshua Tilton -- Berenberg Capital Markets -- Analyst

Brad Reback -- Stifel Nicolaus -- Analyst

Gray Powell -- BTIG -- Analyst

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