Tenable Holdings (TENB) risk factors, FY2024 10-K

Other

1. 01Selected Risks Affecting Our Business

Risks Related to Our Business and Industry

1. 02We have a history of losses and may not achieve or maintain profitability in the future
2. 03We face intense competition. If we do not continue to innovate and offer solutions that address the dynamic cybersecurity landscape, we may not remain competitive
3. 04We may not be able to sustain our revenue growth rate in the future
4. 05We may be unable to rapidly and efficiently adjust our cost structure in response to significant revenue declines, which could adversely affect our operating results
5. 06We recognize substantially all of our revenue ratably over the term of our subscriptions and, to a lesser extent, perpetual licenses ratably over an expected period of benefit and, as a result, downturns in sales may not be immediately reflected in our operating results
6. 07We may not be able to continue scaling our business quickly enough to meet our customers’ growing needs
7. 08If our enterprise platform offerings do not interoperate with our customers’ network and security infrastructure, including remote devices, or with third-party products, websites or services, our results of operations may be harmed
8. 09In the ordinary course of our business, we collect, store, use, transmit, disclose or otherwise process proprietary, confidential, and sensitive information, including personal data, intellectual property, and trade secrets
9. 10As a result of any of the risks associated with our SaaS business, we may experience material adverse consequences. We may also be subject to liability claims for damages related to errors or defects in our solutions
10. 11Our future quarterly results of operations are likely to fluctuate significantly due to a wide range of factors, which makes our future results difficult to predict
11. 12We must maintain and enhance our brand
12. 13We rely on third parties to maintain and operate certain elements of our network infrastructure
13. 14Organizations may be reluctant to purchase our enterprise platform offerings that are cloud-based due to the actual or perceived vulnerability of cloud solutions
14. 15Our sales cycle is long and unpredictable
15. 16We rely on our third-party channel partner network of distributors and resellers to generate a substantial amount of our revenue
16. 17A portion of our revenue is generated from subscriptions and perpetual licenses sold to domestic governmental entities, foreign governmental entities and other heavily regulated organizations, which are subject to a number of challenges and risks
17. 18Our pricing model subjects us to various challenges that could make it difficult for us to derive expected value from our customers and we may need to reduce our prices or change our pricing model to remain competitive
18. 19If our enterprise platform offerings do not achieve sufficient market acceptance, our results of operations and competitive position will suffer
19. 20Further, we may make enhancements to our offerings that our customers do not like, find useful or agree with. We may also discontinue certain features, begin to charge for certain features that are currently free or increase fees for any of our features or usage of our offerings
20. 21Our strategy of offering and deploying our solutions in the cloud, on-premises environments or using a hybrid approach causes us to incur increased expenses and may pose challenges to our business
21. 22Our customers’ increased usage of our cloud-based offerings requires us to continually improve our computer network and infrastructure to avoid service interruptions or slower system performance
22. 23A component of our growth strategy is dependent on our continued international expansion, which adds complexity to our operations
23. 24We rely on the performance of highly skilled personnel, including senior management and our engineering, professional services, sales and technology professionals, and our ability to increase our customer base will depend to a significant extent on our ability to expand our sales and marketing operations
24. 25We must offer high-quality support
25. 26Our growth depends in part on the success of our strategic relationships with third parties
26. 27Recent and future acquisitions could disrupt our business and adversely affect our business operations and financial results
27. 28We are subject to risks associated with our investments in private companies, including partial or complete loss of invested capital, and significant changes in the fair value of this portfolio could adversely impact our financial results
28. 29We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all
29. 30If we do not generate sufficient cash flows, we may be unable to service all of our indebtedness
30. 31Covenants under our Credit Agreement may restrict our business and operations in many ways, and if we do not effectively manage our covenants, our financial conditions and results of operations could be adversely affected
31. 32If we are unable to successfully manage the limitations and decreased flexibility on our business due to our significant debt obligations, we may not be able to capitalize on strategic opportunities or grow our business to the extent we would be able to without these limitations
32. 33Our variable rate debt subjects us to interest rate risk that could cause our debt service obligations to increase significantly
33. 34with these disclosure requirements could lead to regulatory investigations, litigation, reputational harm, and other adverse business consequences
34. 35Unstable market and economic conditions may have material adverse consequences on our business, financial condition and share price
35. 36Catastrophic events may disrupt our business
36. 37Furthermore, our research and development teams for Tenable OT Security and for Tenable Cloud Security are primarily located in Tel Aviv, Israel. Recent and ongoing hostilities in the region may have a material impact on our ability to deliver on our product roadmaps for these solutions

Risks Related to Government Regulation, Data Collection and Intellectual Property

1. 38Our business could be adversely affected if our employees cannot obtain and maintain required security clearances or we cannot establish and maintain a required facility security clearance
2. 39Any failure to protect our proprietary technology and intellectual property rights could substantially harm our business and operating results
3. 40We may be subject to intellectual property rights claims by third parties, which are extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies
4. 41Portions of our solutions utilize open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business

Risks Related to An Investment in Our Common Stock

1. 42Our stock price may be volatile, and the value of our common stock may decline
2. 43If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our stock price and trading volume could decline
3. 44Future sales of substantial amounts of our common stock in the public markets by us or our stockholders, or the perception such sales might occur, could reduce the price that our common stock might otherwise attain
4. 45We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock
5. 46We cannot guarantee that our share repurchase program will be fully consummated or that it will enhance stockholder value, and any share repurchases we make could affect the price of our common stock
6. 47Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove members of our Board of Directors and our current management and could negatively impact the market price of our common stock
7. 48These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a certain period of time

General Risks

1. 49We are subject to anti-corruption laws, anti-bribery and similar laws with respect to our domestic and international operations, and non-compliance with such laws can subject us to criminal and/or civil liability and materially harm our business and reputation
2. 50We are subject to governmental export and import controls and economic and trade sanctions that could impair our ability to conduct business in international markets and subject us to liability if we are not in compliance with applicable laws and regulations
3. 51Changes to and uncertainties in the interpretation and application of tax laws and regulations could materially affect our tax obligations and effective tax rate
4. 52Our operating results may be negatively affected if we are required to pay additional taxes, including sales and use tax, value added tax, or other transaction taxes, and we could be subject to liability with respect to all or a portion of past or future sales
5. 53Our ability to use net operating losses to offset future taxable income may be subject to certain limitations
6. 54We are obligated to maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our common stock