Cybersecurity Firm Tenable Files For $100M IPO, Reveals Strength Of Channel Operations


Tenable Holdings on Friday filed to raise up to $100 million in an initial public offering and disclosed that channel partners account for more than 80 percent of the company's revenue.

The Columbia, Md.-based security and cyber risk vendor said it relies on a two-tier, indirect fulfillment model whereby the company sells products and services to solution providers through distribution, with Irvine, Calif.-based distributor Ingram Micro accounting for 45 percent of overall revenue in the company's most recent fiscal year, which ended Dec. 31.

"We believe there is a substantial opportunity for us to increase our international customer base by leveraging and expanding investment in our technology, direct sales force and channel partnerships around the world," Tenable said in its 153-page regulatory filing Friday with the U.S. Securities and Exchange Commission.

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Tenable plans to both expand its sales presence in the 20 countries where the company currently operates as well as enter new geographies through investments in direct and indirect sales channels, professional services and customer support, the company said. Tenable derived 31 percent of its revenue from customers outside the United States in 2017, according to the company.

The company declined to comment further on its S-1 filing. Tenable had previously hired investment bank Morgan Stanley to prepare for an IPO, Reuters reported in May.

Tenable was founded in 2002, and has raised $309.8 million in four rounds of funding, according to CrunchBase. The company employed 984 people as of Dec. 31, up from a headcount of 751 just a year earlier.

The company said in the S-1 filing that it plans to use the net proceeds from the IPO for working capital and other general corporate purposes, including increased investment in sales and marketing and accelerated international expansion. Tenable will be listed on the Nasdaq stock exchange under the ticker symbol "TENB."

"We plan to continue expanding our sales force and our third-party channel partner network of distributors and resellers both domestically and internationally," Tenable wrote in its S-1 filing. "We also plan to dedicate significant resources to sales and marketing programs, including through electronic marketing campaigns and trade event sponsorship and participation."

The company's share of business coming from the channel increase from 80 percent in the year ending Dec. 31, 2016, to 86 percent in the three months ending March 31, 2018. Tenable focuses on enterprise accounts, and in the Americas works with solution providers such as Blue Tech, CDW, Iron Bow, Optiv, and SHI, according to the company.

Tenable's sales strategy includes a direct-touch approach through its sales force as well as a low-touch approach transacted through the company's e-commerce website, with both types of sales fulfilled through channel partners. The company said its sales and customer success renewal teams collaborate closely with channel partners to prospect, manage and support Tenable's customers.

"Our partner ecosystem provides us with a number of advantages, including increased in-bound registered sales leads, broader geographic reach and greater deal velocity," Tenable wrote in its S-1 filing.

Tenable has experienced massive growth in recent years, according to its regulatory filing, with sales jumping to $187.7 million in its most recent fiscal year, up 50.9 percent from $124.4 million in 2016 and 100.9 percent from $93.5 million in 2015.

The company's net loss inched up to $41 million in 2017, some 10.3 percent more than its net loss of $37.2 million in 2016. Tenable also went from 3,100 to 4,400 enterprise customers over the course of 2017, which the company defines as clients with a current or SecurityCenter license for an annual amount of $5,000 or greater.

Entities affiliated with Insight Venture Partners own 35.3 percent of Tenable before the IPO, according to the S-1 filing, with entities affiliated with Accel holding 34.4 percent. Accel led Tenable's $50 million Series A round of funding in September 2012, while Insight Venture Partners spearheaded Tenable's $250 million Series B round in November 2015, according to CrunchBase.

Tenable is the fourth cybersecurity vendor looking to go public this year, with rising cloud security star Zscaler raising $192 million in a Nasdaq public offering in March and next-generation endpoint security vendor Carbon Black hauling in $152 billion in a Nasdaq public offering in May.

Meanwhile, fellow endpoint security vendor Avast raised $194.7 million in gross primary proceeds from the IPO on the London Stock Exchange in May.