Cloud computing is a generational technology that is changing the face of business globally. It helps companies shift their operations online to increase efficiency and serve more customers than ever before. But it comes with challenges.
Delving into the digital world leaves corporations vulnerable to an ever-expanding attack surface. In other words, malicious actors can strike from anywhere on the planet because the internet is completely borderless.
As a result, the cybersecurity industry continues to grow in both value and importance. It's playing a crucial role in protecting corporations and governments, and Tenable (TENB -1.35%) leads the pack in more ways than one.
Wall Street is overwhelmingly bullish on Tenable stock, but that's not the only reason to buy it now.
Tenable specializes in proactive cybersecurity, and it's a recognized leader
Before the cloud revolution, cybersecurity was far simpler. It was tasked with protecting assets that were mostly stored locally on premise, and the majority of an organization's important files weren't accessible by internet.
But now the reverse is true. Plus, companies rely increasingly on cloud-based applications to connect teams globally and to also allow employees to work remotely. Traditional cybersecurity software that simply blocks attackers, therefore, is no longer sufficient. This environment calls for a proactive approach, and Tenable provides the solution for 40,000 customers, including 60% of the Fortune 500 companies.
Tenable's Nessus is the industry's No. 1 threat detection and vulnerability-management platform by adoption, accuracy, and coverage. It protects against over 74,000 common vulnerabilities and exposures, more than any of its competitors.
But while Nessus is a broad platform, Tenable has also developed a portfolio of industry-specific solutions whether a business operates in financial services or manufacturing, and everything in between. The company's new Tenable One platform amalgamates five of its most successful products, including vulnerability management and cloud security, to deliver the ultimate all-in-one solution.
More large organizations are flocking to Tenable
Tenable segments its customer base into two main groups: those spending at least $100,000 per year and then the rest. The former is important to watch because it's the most lucrative; cybersecurity software scales really well, which means one customer spending $100,000 requires fewer resources to manage than 100 customers spending $1,000 each. Thus, it's more profitable.
In 2022, Tenable grew its six-figure customer base by 31% year over year to 1,440. That was an acceleration from the 30% growth it delivered in 2021, and it puts an exclamation point on the soaring demand for advanced, proactive cybersecurity tools among larger organizations.
Tenable's revenue came in at $683.2 million for 2022, up 26% year over year. That was comfortably above the company's guidance of $676 million (at the midpoint) from the beginning of the year.
Tenable made a $92 million net loss overall as it continued to invest in growth. But it was actually profitable on a non-GAAP basis after stripping out non-cash expenses like its $120 million worth of stock-based compensation.
In any case, the company is on a firm financial footing. It has over $560 million in cash, equivalents, and short-term investments on its balance sheet, so even at its generally accepted accounting principles (GAAP) loss rate for 2022, it has several years of runway ahead.
Wall Street is overwhelmingly bullish on Tenable stock
Tenable tends to fly under the radar. The Wall Street Journal tracks just 13 analysts covering its stock, but the sentiment among them is clear. Of the group, nine have given Tenable stock the highest possible buy rating; one is in the overweight (bullish) camp; and three recommend holding.
Not a single analyst recommends selling.
But this company might just be getting started because it estimates its addressable market could be worth $25 billion by 2025. That's not all; global consulting firm PwC surveys top CEOs each year, and in the 2023 edition, those corporate leaders were asked how they planned to mitigate geopolitical risks. Increasing their investment in cybersecurity was the top answer.
Tenable stock has already jumped 19% this year, and it's only February. The signs point to Wall Street being on the money in this case, especially given the long-term opportunity in this industry.
But it's not too late for investors to buy in; Tenable stock is still down 28% from its all-time high amid the broader sell-off in the tech sector, so there's still an opportunity to jump in at a discount.
