分组1 - N-able reported quarterly earnings of $0.11 per share, exceeding the Zacks Consensus Estimate of $0.09 per share, but down from $0.14 per share a year ago, representing an earnings surprise of +22.22% [1] - The company achieved revenues of $131.25 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 4.17% and increasing from $119.45 million year-over-year [2] - N-able has consistently surpassed consensus EPS estimates over the last four quarters, indicating strong performance [2] 分组2 - The stock has underperformed, losing about 14.2% since the beginning of the year, while the S&P 500 has gained 7.9% [3] - The company's earnings outlook and revisions will be crucial for future stock performance, with current consensus EPS estimates at $0.09 for the coming quarter and $0.36 for the current fiscal year [4][7] - The Zacks Industry Rank places Technology Services in the top 38% of over 250 Zacks industries, suggesting a favorable industry outlook [8]

```markdown PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents N-able, Inc.'s unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, acquisitions, debt, and other financial information for the periods ended June 30, 2025, and December 31, 2024 [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20and%20December%2031%2C%202024) The consolidated balance sheets show N-able's financial position as of June 30, 2025, and December 31, 2024. Key changes include an increase in total assets and stockholders' equity, while total liabilities slightly decreased Key Financial Metrics | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------------------------------------------------------------------ | :----------------------------- | :------------------------------- | | Total Assets | $1,386,002 | $1,338,840 | | Total Liabilities | $576,585 | $579,550 | | Total Stockholders' Equity | $809,417 | $759,288 | | Cash and cash equivalents | $93,874 | $85,190 | | Goodwill | $1,023,226 | $977,010 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) The consolidated statements of operations reveal a shift from net income in 2024 to a net loss for both the three and six months ended June 30, 2025, despite an increase in subscription and other revenue. This decline in profitability was driven by higher costs and operating expenses Key Financial Metrics | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :------------------------------------------------------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Subscription and other revenue | $131,249 | $119,447 | | Net (loss) income | $(4,022) | $9,455 | | Basic (loss) income per share | $(0.02) | $0.05 | | Diluted (loss) income per share | $(0.02) | $0.05 | | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------------------------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Subscription and other revenue | $249,446 | $233,190 | | Net (loss) income | $(11,184) | $16,911 | | Basic (loss) income per share | $(0.06) | $0.09 | | Diluted (loss) income per share | $(0.06) | $0.09 | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) The consolidated statements of comprehensive income show a significant increase in comprehensive income for both the three and six months ended June 30, 2025, primarily due to positive foreign currency translation adjustments, despite the reported net loss Key Financial Metrics | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :------------------------------------------------------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Net (loss) income | $(4,022) | $9,455 | | Foreign currency translation adjustment | $37,307 | $(3,035) | | Comprehensive income | $33,285 | $6,420 | | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------------------------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net (loss) income | $(11,184) | $16,911 | | Foreign currency translation adjustment | $53,732 | $(13,430) | | Comprehensive income | $42,548 | $3,480 | [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) The consolidated statements of stockholders' equity detail changes in common stock, treasury stock, additional paid-in capital, accumulated other comprehensive income (loss), and retained earnings. Key movements include a net loss, significant foreign currency translation adjustments, and common stock repurchases in 2025 Key Financial Metrics | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------------------------------------------------------------------ | :----------------------------- | :------------------------------- | | Total Stockholders' Equity | $809,417 | $759,288 | | Metric | Three Months Ended June 30, 2025 (in thousands) | | :------------------------------------------------------------------------------------------------ | :---------------------------------------------- | | Net loss | $(4,022) | | Foreign currency translation adjustment | $37,307 | | Repurchase of common stock | $(10,000) | | Metric | Six Months Ended June 30, 2025 (in thousands) | | :------------------------------------------------------------------------------------------------ | :-------------------------------------------- | | Net loss | $(11,184) | | Foreign currency translation adjustment | $53,732 | | Repurchase of common stock | $(10,000) | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) The consolidated statements of cash flows show an increase in net cash provided by operating activities for the six months ended June 30, 2025, compared to 2024. However, net cash used in both investing and financing activities also increased, leading to an overall higher net increase in cash and cash equivalents Key Financial Metrics | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------------------------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net cash provided by operating activities | $43,864 | $31,462 | | Net cash used in investing activities | $(12,574) | $(10,272) | | Net cash used in financing activities | $(25,580) | $(16,881) | | Net increase in cash and cash equivalents | $8,678 | $4,461 | | Cash and cash equivalents, End of period | $93,874 | $157,509 | [Notes to the Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures supporting the consolidated financial statements, covering the company's business, significant accounting policies, recent acquisitions (Adlumin and Spinpanel), goodwill, relationships with its former parent (SolarWinds), fair value measurements, accrued liabilities, debt, earnings per share, income taxes, commitments, contingencies, and operating segments [1. Organization and Nature of Operations](index=12&type=section&id=1.%20Organization%20and%20Nature%20of%20Operations) N-able, Inc. is a global provider of cloud-based security, data protection, and unified endpoint management software solutions for IT services providers, particularly Managed Service Providers (MSPs) serving small and medium-sized businesses (SMBs) and mid-market businesses. The company focuses on driving recurring revenue growth and profitability through its flexible technology platform and global presence - N-able, Inc. is a leading global provider of cloud-based security, data protection, and unified endpoint management software solutions for IT services providers, including MSPs[32](index=32&type=chunk) - The company's technology enables support for digital transformation and growth for SMBs and mid-market businesses (fewer than 2,500 employees)[32](index=32&type=chunk) - N-able drives strong recurring revenue growth and profitability through a multi-dimensional land and expand model and global presence[32](index=32&type=chunk) [2. Summary of Significant Accounting Policies](index=12&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines the basis of presentation for N-able's unaudited interim financial statements, emphasizing the use of management estimates in areas like goodwill valuation, contingent consideration, revenue recognition, and income taxes. It also details recently adopted accounting pronouncements, fair value measurement hierarchy, and specific policies for revenue, deferred revenue, contract assets, and capitalized commissions - Interim financial information is unaudited but reflects all normal adjustments necessary for a fair statement of results[33](index=33&type=chunk) - Significant accounting estimates include the valuation of goodwill, intangibles, long-lived assets, contingent consideration, revenue recognition, and income taxes[34](index=34&type=chunk) - Adopted ASU No. 2023-07, 'Segment Reporting,' as of December 31, 2024, which impacted disclosures but not materially the consolidated financial statements[36](index=36&type=chunk) - Subscription revenue for SaaS solutions is generally recognized ratably over the subscription term, while revenue from the license performance obligation of self-managed solutions is recognized at a point in time[134](index=134&type=chunk) Key Financial Metrics | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------------- | :----------------------------- | :------------------------------- | | Current contract assets | $15,979 | $12,780 | | Non-current contract assets | $3,400 | $3,700 | | Current capitalized commissions | $2,000 | $1,700 | | Non-current capitalized commissions | $2,300 | $2,000 | [3. Acquisitions](index=15&type=section&id=3.%20Acquisitions) This note details the acquisition of Adlumin, Inc. in November 2024, highlighting the cash and equity consideration, strategic rationale for enhancing security offerings, and the financial impact on goodwill, deferred, and contingent consideration liabilities. It also briefly mentions the Spinpanel B.V. acquisition from July 2022, for which no contingent consideration remains - On November 20, 2024, N-able acquired Adlumin, Inc., an enterprise-grade security operations platform provider, for **$98.7 million** in cash and up to **1,570,762 shares** of common stock[58](index=58&type=chunk) - The Adlumin acquisition is intended to build upon prior partnership, providing extended detection and response (XDR) capabilities and managed detection and response (MDR) services[59](index=59&type=chunk) Key Financial Metrics | Adlumin Acquisition (in thousands) | Amount | | :--------------------------------- | :----- | | Goodwill | $160,124 | | Identifiable intangible assets | $80,500 | | Deferred consideration (June 30, 2025) | $105,600 | | Contingent consideration (June 30, 2025) | $10,310 | - For the six months ended June 30, 2025, **$7.5 million** expense was recognized for deferred consideration and **$1.6 million** expense for contingent consideration related to Adlumin[64](index=64&type=chunk) - No remaining contingent consideration liability for the Spinpanel B.V. acquisition (July 1, 2022) as of June 30, 2025, and December 31, 2024[68](index=68&type=chunk) [4. Goodwill](index=19&type=section&id=4.%20Goodwill) This note summarizes the changes in goodwill for the six months ended June 30, 2025. Goodwill increased primarily due to foreign currency translation and other adjustments, partially offset by minor acquisition-related adjustments Key Financial Metrics | Metric | Amount (in thousands) | | :------------------------------------ | :-------------------- | | Balance as of December 31, 2024 | $977,010 | | Acquisitions | $(23) | | Foreign currency translation and other adjustments | $46,450 | | Balance as of June 30, 2025 | $1,023,226 | [5. Relationship with Parent and Related Entities](index=19&type=section&id=5.%20Relationship%20with%20Parent%20and%20Related%20Entities) This section details N-able's independence from SolarWinds following its July 2021 spin-off and outlines the various agreements governing their ongoing relationship. These include the Separation and Distribution Agreement, Tax Matters Agreement, Software OEM Agreements, Employee Matters Agreement, Intellectual Property Matters Agreement, Trademark License Agreement, Software Cross License Agreement, and a Sublease Agreement - N-able became an independent public company on July 19, 2021, following a pro-rata distribution of its common stock by SolarWinds[73](index=73&type=chunk) - All vested and unvested SolarWinds equity awards held by N-able employees were converted to N-able awards, resulting in incremental compensation expense[75](index=75&type=chunk) - The Separation and Distribution Agreement allocates legal matters and liabilities, with SolarWinds indemnifying N-able for cyberattack-related liabilities[79](index=79&type=chunk) Key Financial Metrics | Agreement | Revenue (in thousands) - Q2 2025 | Revenue (in thousands) - H1 2025 | | :---------------------- | :------------------------------- | :------------------------------- | | Software OEM Agreements | $500 | $1,000 | | Software Cross License Agreement | $0 | $0 | [6. Fair Value Measurements](index=21&type=section&id=6.%20Fair%20Value%20Measurements) This note describes N-able's application of fair value measurements for financial assets and liabilities, categorized into a three-tiered hierarchy. It specifically highlights the fair values of money market funds (Level 2) and contingent consideration liabilities (Level 3), noting changes in the latter due to payments and recognized losses - N-able applies a three-tiered fair value hierarchy: Level 1 (unadjusted quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[41](index=41&type=chunk) Key Financial Metrics | Asset/Liability | Fair Value as of June 30, 2025 (in thousands) | Fair Value as of December 31, 2024 (in thousands) | | :---------------------- | :-------------------------------------------- | :---------------------------------------------- | | Money market funds (Level 2) | $55,063 | $43,976 | | Contingent consideration (Level 3) | $10,310 | $14,050 | Key Financial Metrics | Changes in Level 3 Contingent Consideration (in thousands) | Six Months Ended June 30, 2025 | | :------------------------------------------------------- | :----------------------------- | | Beginning balance | $14,050 | | Payments | $(5,358) | | Net losses recognized | $1,618 | | Ending balance | $10,310 | [7. Accrued Liabilities and Other](index=22&type=section&id=7.%20Accrued%20Liabilities%20and%20Other) This note provides a breakdown of accrued and other current liabilities, showing a decrease in total accrued liabilities from December 31, 2024, to June 30, 2025, with notable reductions in payroll-related accruals and value-added/other taxes Key Financial Metrics | Accrued Liability | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------ | :----------------------------- | :------------------------------- | | Total accrued liabilities and other | $44,911 | $51,057 | | Payroll-related accruals | $21,864 | $24,541 | | Value-added and other tax | $6,950 | $9,314 | | Accrued royalties | $1,574 | $3,809 | [8. Debt](index=22&type=section&id=8.%20Debt) This note details N-able's Credit Agreement, comprising a $60.0 million revolving credit facility and a $350.0 million term loan facility. It outlines outstanding debt amounts, effective interest rates, quarterly repayment obligations, and confirms the company's compliance with all debt covenants as of June 30, 2025 - The Credit Agreement provides **$410.0 million** in first lien secured credit facilities, consisting of a **$60.0 million** revolving credit facility and a **$350.0 million** term loan facility[94](index=94&type=chunk) Key Financial Metrics | Debt Component | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Term loan facility (principal) | $336,875 | $338,625 | | Effective Rate (Term Loan) | 7.34% | 7.53% | | Total debt, net | $332,139 | $333,106 | | Long-term debt, net of current portion | $328,639 | $329,606 | - The Term Loan requires quarterly repayments of **0.25%** of the original principal amount, with a final maturity date of July 18, 2028[99](index=99&type=chunk) - N-able was in compliance with all covenants of the Credit Agreement as of June 30, 2025, and December 31, 2024[101](index=101&type=chunk) [9. Earnings Per Share](index=24&type=section&id=9.%20Earnings%20Per%20Share) This note reconciles the basic and diluted earnings per share calculations for the three and six months ended June 30, 2025, and 2024. Due to a net loss in 2025, the dilutive impact of employee equity awards was not applicable as it would have been anti-dilutive Key Financial Metrics | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Basic (loss) income per share | $(0.02) | $0.05 | | Diluted (loss) income per share | $(0.02) | $0.05 | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Basic (loss) income per share | $(0.06) | $0.09 | | Diluted (loss) income per share | $(0.06) | $0.09 | - The dilutive impact of employee equity awards was not applicable for the three and six months ended June 30, 2025, as the effect would have been anti-dilutive due to the net loss[104](index=104&type=chunk) [10. Income Taxes](index=25&type=section&id=10.%20Income%20Taxes) This note details N-able's income tax expense and effective tax rates, which significantly increased in 2025 due to unbenefited losses in the United States. It also mentions the recent 'One Big Beautiful Bill Act' (OBBBA) and the OECD's Pillar Two global minimum tax rules, neither of which are expected to have a material impact on the company in 2025 Key Financial Metrics | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :---------------------- | :---------------------------------------------- | :---------------------------------------------- | | Income tax expense | $5,200 | $6,060 | | Effective tax rate | 441.4% | 39.1% | | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :---------------------- | :-------------------------------------------- | :-------------------------------------------- | | Income tax expense | $8,500 | $11,759 | | Effective tax rate | (316.7)% | 41.0% | - The increase in effective tax rate for both periods in 2025 was primarily due to an increase in the amount of unbenefited loss in the United States[107](index=107&type=chunk) - The 'One Big Beautiful Bill Act' (OBBBA) was signed into law on July 4, 2025, with provisions affecting R&D capitalization, bonus depreciation, and interest limitation; N-able does not anticipate a material overall impact[108](index=108&type=chunk) - N-able does not expect to be subject to the OECD Pillar Two global minimum tax rules in 2025 as it has not exceeded the **€750 million** revenue threshold[110](index=110&type=chunk) [11. Commitment and Contingencies](index=25&type=section&id=11.%20Commitment%20and%20Contingencies) This note addresses N-able's legal proceedings and commitments arising from acquisitions. Management believes that the resolution of any pending legal claims will not have a material adverse impact on the company's financial statements. It also confirms no remaining contingent consideration for a prior asset acquisition and refers to other notes for details on Adlumin and Spinpanel acquisition liabilities - Management believes the resolution of any pending legal claims is not expected to have a material adverse impact on N-able's Consolidated Financial Statements, cash flows, or financial position[112](index=112&type=chunk) - There is no remaining contingent consideration liability related to the December 14, 2022, acquisition of certain assets as of June 30, 2025, and December 31, 2024[115](index=115&type=chunk) - Further details regarding deferred and contingent consideration liabilities related to the Adlumin and Spinpanel acquisitions are provided in Note 3. Acquisitions and Note 6. Fair Value Measurements[116](index=116&type=chunk) [12. Operating Segments and Geographic Information](index=26&type=section&id=12.%20Operating%20Segments%20and%20Geographic%20Information) N-able operates as a single operating and reportable segment, with its Chief Executive Officer managing the business based on consolidated net (loss) income. The note also provides a breakdown of revenue and long-lived assets by geographic area, highlighting the United States and United Kingdom as significant contributors to revenue - N-able operates as a single operating and reportable segment, with the Chief Executive Officer (CODM) managing the business based on consolidated net (loss) income[117](index=117&type=chunk)[118](index=118&type=chunk) Key Financial Metrics | Geographic Area | Three Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | | :---------------------- | :---------------------------------------------- | :-------------------------------------------- | | United States | $64,555 | $125,064 | | United Kingdom | $13,592 | $25,424 | | All other international | $53,102 | $98,958 | | Total revenue | $131,249 | $249,446 | Key Financial Metrics | Geographic Area | June 30, 2025 (in thousands) | | :---------------------- | :----------------------------- | | United States | $11,545 | | Switzerland | $13,746 | | United Kingdom | $3,688 | | All other international | $7,795 | | Total long-lived assets, net | $36,774 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a comprehensive analysis of N-able's financial condition and operational results, covering revenue, profitability, cash flows, and key drivers for changes in performance. It includes detailed comparisons for the three and six months ended June 30, 2025, versus 2024, and discusses non-GAAP financial measures, liquidity, and critical accounting policies [Overview](index=28&type=section&id=Overview) N-able, Inc. is a leading global provider of cloud-based security, data protection, and unified endpoint management software solutions for IT services providers, including MSPs, serving SMBs and mid-market businesses. The company became an independent public entity in July 2021 after spinning off from SolarWinds - N-able, Inc. is a leading global provider of cloud-based security, data protection, and unified endpoint management software solutions for IT services providers, including MSPs[124](index=124&type=chunk) - The company's technology supports digital transformation and growth for small and medium-sized businesses (SMBs) and mid-market businesses (fewer than 2,500 employees)[124](index=124&type=chunk) - N-able became an independent public company on July 19, 2021, following a spin-off from SolarWinds Corporation[125](index=125&type=chunk) [Second Quarter Financial Highlights](index=28&type=section&id=Second%20Quarter%20Financial%20Highlights) N-able's second quarter highlights show revenue growth driven by demand and the Adlumin acquisition, with Annual Recurring Revenue (ARR) increasing by 14.5%. However, profitability declined significantly, resulting in a net loss, primarily due to increased operating expenses and amortization. Cash flows from operations also saw a slight decrease Key Financial Metrics | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change (%) | | :---------------------- | :-------------------- | :-------------------- | :--------- | | Total Revenue | $131.2 | $119.4 | 9.9% | | Operating Income | $10.1 | $22.0 | -54.09% | | Net (Loss) Income | $(4.0) | $9.5 | -142.11% | | Adjusted EBITDA | $41.6 | $46.8 | -11.11% | | Cash Flows from Operations | $24.2 | $27.3 | -11.36% | Key Financial Metrics | ARR Metric | June 30, 2025 (in millions) | June 30, 2024 (in millions) | Change (%) | | :------------------------------------ | :-------------------------- | :-------------------------- | :--------- | | Total Annual Recurring Revenue (ARR) | $513.7 | $448.8 | 14.5% | | Customers with ARR > $50,000 | 2,540 | 2,194 | 15.8% | | % of Total ARR from >$50,000 Customers | ~60% | ~56% | 4 ppts | | Dollar-based Net Revenue Retention Rate (TTM) | 102% | 108% | -6 ppts | [Revenue](index=28&type=section&id=Revenue) Total revenue for the three months ended June 30, 2025, increased by 9.9% to $131.2 million, primarily influenced by the Long-Term Contract Initiative, which shifts revenue recognition for long-term subscriptions to a point-in-time basis Key Financial Metrics | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | | :---------------------- | :---------------------------------------------- | :---------------------------------------------- | | Total Revenue | $131.2 | $119.4 | - The Long-Term Contract Initiative results in an increase in point-in-time subscription revenue due to Topic 606 recognition for long-term committed contracts[127](index=127&type=chunk) [Annual Recurring Revenue](index=28&type=section&id=Annual%20Recurring%20Revenue) Annual Recurring Revenue (ARR) grew by 14.5% year-over-year to $513.7 million as of June 30, 2025, driven by steady demand for solutions and the Adlumin acquisition. The number of customers with ARR over $50,000 increased by 15.8%, now representing approximately 60% of total ARR Key Financial Metrics | Metric | June 30, 2025 (in millions) | June 30, 2024 (in millions) | | :------------------------------------ | :-------------------------- | :-------------------------- | | Total Annual Recurring Revenue (ARR) | $513.7 | $448.8 | | Customers with ARR over $50,000 | 2,540 | 2,194 | | % of Total ARR from >$50,000 Customers | ~60% | ~56% | - The increase in ARR was primarily due to steady demand for N-able's solutions and the impact of the November 20, 2024, acquisition of Adlumin[128](index=128&type=chunk) [Profitability](index=29&type=section&id=Profitability) Operating income decreased by 54% and net income shifted to a net loss for the three months ended June 30, 2025, compared to 2024. This decline was primarily due to increased sales and marketing, cost of revenue, R&D, amortization of acquired technologies, and interest expense. Adjusted EBITDA also decreased by 11.1% Key Financial Metrics | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | | :---------------------- | :---------------------------------------------- | :---------------------------------------------- | | Operating income | $10.1 | $22.0 | | Net (loss) income | $(4.0) | $9.5 | | Adjusted EBITDA | $41.6 | $46.8 | - The decrease in net income was primarily due to increases in sales and marketing expense, cost of revenue, research and development expense, amortization of acquired technologies, other (expense) income, amortization of acquired intangibles, interest expense, and general and administrative expense[131](index=131&type=chunk) [Cash Flow](index=29&type=section&id=Cash%20Flow) Cash flows from operations for the three months ended June 30, 2025, decreased slightly to $24.2 million from $27.3 million in the prior year, impacted by cash payments for interest and income taxes Key Financial Metrics | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | | :------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Cash flows from operations | $24.2 | $27.3 | | Cash payments for interest | $6.3 | $7.3 | | Cash payments for income taxes | $3.7 | $4.2 | [Components of Our Results of Operations](index=29&type=section&id=Components%20of%20Our%20Results%20of%20Operations) This section details the composition of N-able's financial results, including revenue streams (subscription and other), cost of revenue (hosting, personnel, amortization of acquired technologies), and operating expenses (sales & marketing, R&D, G&A, amortization of acquired intangibles). It highlights personnel costs as a significant component and anticipates continued growth in operating expenses - Revenue consists of subscription revenue (SaaS and self-managed solutions) and other revenue (maintenance services and professional services)[134](index=134&type=chunk) - Cost of revenue includes public cloud infrastructure, hosting fees, overhead, royalties, personnel costs for technical support, and amortization of acquired technologies (Spinpanel and Adlumin)[133](index=133&type=chunk)[135](index=135&type=chunk) - Operating expenses comprise sales and marketing, research and development, general and administrative, and amortization of acquired intangibles, with personnel costs being the most significant component[136](index=136&type=chunk) Key Financial Metrics | Metric | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :---------------------- | :------------ | :---------------- | :------------ | | Total Employees | 1,882 | 1,773 | 1,623 | - Stock-based compensation expense is expected to continue to increase during 2025 due to new equity awards[136](index=136&type=chunk) [Revenue](index=29&type=section&id=Revenue) N-able's revenue is primarily derived from subscription sales of SaaS solutions (recognized ratably) and self-managed solutions (license recognized at point-in-time, support ratably). Other revenue comes from maintenance services and professional services - Subscription revenue is primarily from SaaS solutions (hosted and managed by N-able) and self-managed solutions (hosted by customers)[134](index=134&type=chunk) - SaaS subscription revenue is generally recognized ratably over the subscription term, while self-managed solutions' license revenue is recognized at a point in time upon delivery[134](index=134&type=chunk) - Other revenue consists primarily of maintenance services for historical perpetual licenses and professional services[134](index=134&type=chunk) [Cost of Revenue](index=29&type=section&id=Cost%20of%20Revenue) Cost of revenue includes public cloud infrastructure, hosting fees, allocated overhead, royalty fees, and personnel costs for technical support and the security operations center. It also encompasses amortization of acquired technologies from the Spinpanel and Adlumin acquisitions - Cost of revenue consists of public cloud infrastructure and hosting fees, an allocation of overhead costs, royalty fees, and personnel costs for technical support and the security operations center[133](index=133&type=chunk) - Amortization of acquired technologies from the July 1, 2022, acquisition of Spinpanel B.V. and the November 20, 2024, acquisition of Adlumin, Inc. is included in cost of revenue[135](index=135&type=chunk) [Operating Expenses](index=30&type=section&id=Operating%20Expenses) Operating expenses are categorized into sales and marketing, research and development, general and administrative, and amortization of acquired intangibles. Personnel costs, including stock-based compensation, are the largest component, and the company anticipates continued growth in these areas to support business expansion and new product development - Operating expenses consist of sales and marketing, research and development, general and administrative expenses, and amortization of acquired intangibles[136](index=136&type=chunk) - Personnel costs, including salaries, bonuses, stock-based compensation, and related employer-paid payroll taxes, are the most significant component of operating expenses[136](index=136&type=chunk) - N-able expects to continue growing its sales and marketing, research and development, and general and administrative organizations over time to drive customer acquisition, product innovation, and business support[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) - Amortization of acquired intangibles primarily relates to the Spinpanel and Adlumin acquisitions[140](index=140&type=chunk) [Other Expense, Net](index=30&type=section&id=Other%20Expense%2C%20Net) Other expense, net, primarily comprises interest expense from the Credit Agreement and the Adlumin deferred consideration liability, along with losses from foreign currency exchange rate changes. These are partially offset by gains from foreign currency and income from money market funds and recoverable taxes - Other expense, net, primarily consists of interest expense related to the Credit Agreement and the Adlumin deferred consideration liability[141](index=141&type=chunk) - It also includes losses from changes in foreign currency exchange rates, partially offset by gains from foreign currency, dividend income from money market funds, and interest income on recoverable taxes[141](index=141&type=chunk) [Foreign Currency](index=30&type=section&id=Foreign%20Currency) As a global company, N-able is exposed to foreign currency exchange rate fluctuations, which impact the reported amounts of assets, liabilities, revenue, operating expenses, and cash flows of its foreign subsidiaries upon translation into U.S. dollars - N-able faces exposure to adverse movements in foreign currency exchange rates due to its global operations[142](index=142&type=chunk) - Fluctuations in foreign currencies impact the reported amounts of total assets, liabilities, revenue, operating expenses, and cash flows for foreign subsidiaries upon translation into U.S. dollars[142](index=142&type=chunk) [Income Tax Expense](index=30&type=section&id=Income%20Tax%20Expense) Income tax expense is influenced by domestic and foreign corporate income taxes related to subscription sales. The effective tax rate is subject to various factors, including changes in tax laws, regulations, valuation allowances, and the allocation of income globally - Income tax expense consists of domestic and foreign corporate income taxes related to the sale of subscriptions[143](index=143&type=chunk) - The effective tax rate is affected by factors such as changes in tax laws, regulations, rates, new interpretations, valuation allowances, uncertain tax positions, stock-based compensation, and shifts in global income allocation[143](index=143&type=chunk) [Comparison of the Three Months Ended June 30, 2025 and 2024](index=31&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) For the three months ended June 30, 2025, N-able experienced a 9.9% increase in total revenue, primarily from subscription growth. However, total cost of revenue surged by 49.7% due to the Adlumin acquisition and higher hosting fees, and total operating expenses rose by 18.0%. These increases, along with higher interest expense and negative other income, led to a significant decline in net income and a substantial increase in the effective tax rate Key Financial Metrics | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change ($) | Change (%) | | :------------------------------------ | :--------------------- | :--------------------- | :--------- | :--------- | | Total Revenue | $131,249 | $119,447 | $11,802 | 9.9% | | Total Cost of Revenue | $28,697 | $19,164 | $9,533 | 49.7% | | Total Operating Expenses | $92,430 | $78,304 | $14,126 | 18.0% | | Interest Expense, Net | $(8,090) | $(7,606) | $(484) | 6.4% | | Other (Expense) Income, Net | $(854) | $1,142 | $(1,996) | -174.8% | | Income Tax Expense | $5,200 | $6,060 | $(860) | -14.2% | | Effective Tax Rate | 441.4% | 39.1% | 402.3 ppts | | - Subscription revenue increased by **10.6%**, driven by growth in data protection, security, and unified endpoint management solutions, including revenue from the Adlumin business[145](index=145&type=chunk) - The dollar-based net revenue retention rate decreased to **102%** for the trailing twelve-month period ended June 30, 2025, from **108%** in the prior year, reflecting pricing/packaging changes and the Long-Term Contract Initiative[146](index=146&type=chunk) [Revenue](index=31&type=section&id=Revenue) Total revenue increased by 9.9% to $131.2 million for Q2 2025, primarily driven by a 10.6% increase in subscription revenue from data protection, security, and unified endpoint management solutions, including the Adlumin acquisition. Other revenue, however, decreased by 32.4% Key Financial Metrics | Revenue Type | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change ($) | Change (%) | | :---------------------- | :--------------------- | :--------------------- | :--------- | :--------- | | Subscription revenue | $129,874 | $117,413 | $12,461 | 10.6% | | Other revenue | $1,375 | $2,034 | $(659) | -32.4% | | Total revenue | $131,249 | $119,447 | $11,802 | 9.9% | - The annual dollar-based net revenue retention rate for subscription products was approximately **102%** for the trailing twelve-month period ended June 30, 2025, down from **108%** in 2024, reflecting pricing/packaging changes and the Long-Term Contract Initiative[146](index=146&type=chunk) [Cost of Revenue](index=31&type=section&id=Cost%20of%20Revenue) Total cost of revenue increased significantly by 49.7% to $28.7 million for Q2 2025. This was primarily driven by a $3.8 million increase in amortization of acquired technologies related to Adlumin, a $3.2 million increase in public cloud infrastructure and hosting fees, and a $1.4 million increase in personnel costs Key Financial Metrics | Cost of Revenue Type | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change ($) | Change (%) | | :------------------------------------ | :--------------------- | :--------------------- | :--------- | :--------- | | Cost of revenue | $24,468 | $18,706 | $5,762 | 30.8% | | Amortization of acquired technologies | $4,229 | $458 | $3,771 | 823.3% | | Total cost of revenue | $28,697 | $19,164 | $9,533 | 49.7% | - The increase was primarily due to amortization of acquired technologies related to the Adlumin acquisition, increased public cloud infrastructure and hosting fees, and higher personnel costs[148](index=148&type=chunk)[149](index=149&type=chunk) [Operating Expenses](index=32&type=section&id=Operating%20Expenses) Total operating expenses increased by 18.0% to $92.4 million for Q2 2025. This was mainly due to a $9.5 million increase in sales and marketing (personnel, transaction costs, travel), a $3.9 million increase in research and development (personnel, contract services), a $0.2 million increase in general and administrative, and a $0.5 million increase in amortization of acquired intangibles from Adlumin Key Financial Metrics | Operating Expense Type | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change ($) | Change (%) | | :------------------------------------ | :--------------------- | :--------------------- | :--------- | :--------- | | Sales and marketing | $42,362 | $32,850 | $9,512 | 29.0% | | Research and development | $26,336 | $22,391 | $3,945 | 17.6% | | General and administrative | $23,229 | $23,048 | $181 | 0.8% | | Amortization of acquired intangibles | $503 | $15 | $488 | 3253.3% | | Total operating expenses | $92,430 | $78,304 | $14,126 | 18.0% | - Sales and marketing increase driven by personnel costs (**$5.8 million**, including stock-based compensation), transaction-related costs (**$1.4 million**), and travel/event costs (**$1.2 million**)[150](index=150&type=chunk) - Research and development increase driven by personnel costs (**$3.7 million**, including stock-based compensation) and contract services costs (**$0.6 million**)[151](index=151&type=chunk) [Interest Expense, Net](index=32&type=section&id=Interest%20Expense%2C%20Net) Net interest expense increased by $0.5 million (6.4%) to $(8.1) million for Q2 2025. This was primarily due to a $1.4 million increase in expense related to the Adlumin deferred consideration liability, partially offset by a $1.0 million decrease in interest expense from lower interest rates and outstanding borrowings under the Credit Agreement Key Financial Metrics | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change ($) | Change (%) | | :---------------------- | :--------------------- | :--------------------- | :--------- | :--------- | | Interest expense, net | $(8,090) | $(7,606) | $(484) | 6.4% | - Increase primarily due to a **$1.4 million** increase in expense related to the Adlumin deferred consideration liability[155](index=155&type=chunk) - Partially offset by a **$1.0 million** decrease in interest expense due to lower interest rates and outstanding borrowings under the Credit Agreement[155](index=155&type=chunk) [Other (Expense) Income, Net](index=33&type=section&id=Other%20%28Expense%29%20Income%2C%20Net) Other (expense) income, net, decreased by $2.0 million (174.8%) for Q2 2025, shifting from income to expense. This was mainly due to a $1.2 million decrease in the impact of foreign currency exchange rates and a $0.9 million decrease in dividend income from money market funds Key Financial Metrics | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change ($) | Change (%) | | :---------------------- | :--------------------- | :--------------------- | :--------- | :--------- | | Other (expense) income, net | $(854) | $1,142 | $(1,996) | -174.8% | - Primarily due to a **$1.2 million** decrease in the impact of changes in foreign currency exchange rates and a **$0.9 million** decrease in dividend income from money market fund financial assets[156](index=156&type=chunk) [Income Tax Expense](index=33&type=section&id=Income%20Tax%20Expense) Income tax expense decreased by $0.9 million for Q2 2025, but the effective tax rate significantly increased to 441.4% from 39.1% in the prior year. This substantial increase was primarily due to a higher amount of unbenefited loss in the United States Key Financial Metrics | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change ($) | Change (%) | | :---------------------- | :--------------------- | :--------------------- | :--------- | :--------- | | Income tax expense | $5,200 | $6,060 | $(860) | -14.2% | | Effective tax rate | 441.4% | 39.1% | 402.3 ppts | | - The increase in the effective tax rate was primarily due to an increase in the amount of the unbenefited loss in the United States[157](index=157&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=33&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) For the six months ended June 30, 2025, N-able reported a 7.0% increase in total revenue, driven by subscription growth. However, total cost of revenue surged by 50.5% due to the Adlumin acquisition and higher hosting fees, and total operating expenses increased by 18.2%. These factors, combined with a decrease in other income, resulted in a net loss for the period and a significantly negative effective tax rate Key Financial Metrics | Metric | H1 2025 (in thousands) | H1 2024 (in thousands) | Change ($) | Change (%) | | :------------------------------------ | :--------------------- | :--------------------- | :--------- | :--------- | | Total Revenue | $249,446 | $233,196 | $16,250 | 7.0% | | Total Cost of Revenue | $56,375 | $37,461 | $18,914 | 50.5% | | Total Operating Expenses | $181,125 | $153,265 | $27,860 | 18.2% | | Interest Expense, Net | $(15,161) | $(15,227) | $66 | -0.4% | | Other Income, Net | $531 | $1,427 | $(896) | -62.8% | | Income Tax Expense | $8,500 | $11,759 | $(3,259) | -27.7% | | Effective Tax Rate | (316.7)% | 41.0% | -357.7 ppts | | - Subscription revenue increased by **7.8%**, driven by growth in data protection, security, and remote monitoring and management solutions, inclusive of the impact from long-term committed contracts[161](index=161&type=chunk) - The dollar-based net revenue retention rate decreased to **102%** for the trailing twelve-month period ended June 30, 2025, from **108%** in the prior year, reflecting pricing/packaging changes and the Long-Term Contract Initiative[162](index=162&type=chunk) [Revenue](index=33&type=section&id=Revenue) Total revenue increased by 7.0% to $249.4 million for H1 2025, primarily driven by a 7.8% increase in subscription revenue from data protection, security, and remote monitoring and management solutions, including the impact of long-term committed contracts. Other revenue decreased by 36.2% Key Financial Metrics | Revenue Type | H1 2025 (in thousands) | H1 2024 (in thousands) | Change ($) | Change (%) | | :---------------------- | :--------------------- | :--------------------- | :--------- | :--------- | | Subscription Revenue | $246,723 | $228,930 | $17,793 | 7.8% | | Other revenue | $2,723 | $4,266 | $(1,543) | -36.2% | | Total subscription and other revenue | $249,446 | $233,196 | $16,250 | 7.0% | - The annual dollar-based net revenue retention rate for subscription products was approximately **102%** for the trailing twelve-month period ended June 30, 2025, down from **108%** in 2024[162](index=162&type=chunk) [Cost of Revenue](index=34&type=section&id=Cost%20of%20Revenue) Total cost of revenue increased significantly by 50.5% to $56.4 million for H1 2025. This was primarily due to a $7.5 million increase in amortization of acquired technologies related to Adlumin, a $6.7 million increase in public cloud infrastructure and hosting fees, and a $2.3 million increase in personnel costs Key Financial Metrics | Cost of Revenue Type | H1 2025 (in thousands) | H1 2024 (in thousands) | Change ($) | Change (%) | | :------------------------------------ | :--------------------- | :--------------------- | :--------- | :--------- | | Cost of revenue | $47,979 | $36,542 | $11,437 | 31.3% | | Amortization of acquired technologies | $8,396 | $919 | $7,477 | 813.6% | | Total cost of revenue | $56,375 | $37,461 | $18,914 | 50.5% | - The increase was primarily due to amortization of acquired technologies related to the Adlumin acquisition, increased public cloud infrastructure and hosting fees, and higher personnel costs[164](index=164&type=chunk) [Operating Expenses](index=34&type=section&id=Operating%20Expenses) Total operating expenses increased by 18.2% to $181.1 million for H1 2025. This was mainly due to a $14.1 million increase in sales and marketing (personnel, transaction costs, travel), a $5.7 million increase in research and development (personnel, subscriptions), a $7.0 million increase in general and administrative (transaction costs, professional fees), and a $1.0 million increase in amortization of acquired intangibles from Adlumin Key Financial Metrics | Operating Expense Type | H1 2025 (in thousands) | H1 2024 (in thousands) | Change ($) | Change (%) | | :------------------------------------ | :--------------------- | :--------------------- | :--------- | :--------- | | Sales and marketing | $82,766 | $68,666 | $14,100 | 20.5% | | Research and development | $50,220 | $44,473 | $5,747 | 12.9% | | General and administrative | $47,137 | $40,097 | $7,040 | 17.6% | | Amortization of acquired intangibles | $1,002 | $29 | $973 | 3355.2% | | Total operating expenses | $181,125 | $153,265 | $27,860 | 18.2% | - Sales and marketing increase driven by personnel costs (**$9.7 million**, including stock-based compensation) and transaction-related costs (**$2.3 million**)[165](index=165&type=chunk) - Research and development increase driven by personnel costs (**$7.3 million**, including stock-based compensation) and subscription costs (**$1.0 million**)[167](index=167&type=chunk) [Interest Expense, Net](index=35&type=section&id=Interest%20Expense%2C%20Net) Net interest expense decreased slightly by $0.1 million (0.4%) to $(15.2) million for H1 2025. This was due to a $1.9 million decrease in interest expense from lower interest rates on the Credit Agreement and a $1.0 million increase in interest income on recoverable taxes, largely offset by a $2.8 million increase in expense related to the Adlumin deferred consideration liability Key Financial Metrics | Metric | H1 2025 (in thousands) | H1 2024 (in thousands) | Change ($) | Change (%) | | :---------------------- | :--------------------- | :--------------------- | :--------- | :--------- | | Interest expense, net | $(15,161) | $(15,227) | $66 | -0.4% | - Decrease due to a **$1.9 million** decrease in interest expense from lower interest rates and outstanding borrowings under the Credit Agreement and a **$1.0 million** increase in interest income on recoverable taxes[170](index=170&type=chunk) - Offset by a **$2.8 million** increase in expense related to the Adlumin deferred consideration liability[170](index=170&type=chunk) [Other Income, Net](index=35&type=section&id=Other%20Income%2C%20Net) Other income, net, decreased by $0.9 million (62.8%) to $0.5 million for H1 2025. This was primarily due to a $1.7 million decrease in dividend income from money market funds, partially offset by a $0.9 million increase in the impact of foreign currency exchange rates Key Financial Metrics | Metric | H1 2025 (in thousands) | H1 2024 (in thousands) | Change ($) | Change (%) | | :---------------------- | :--------------------- | :--------------------- | :--------- | :--------- | | Other income, net | $531 | $1,427 | $(896) | -62.8% | - Primarily due to a **$1.7 million** decrease in dividend income from money market fund financial assets, partially offset by a **$0.9 million** increase in the impact of changes in foreign currency exchange rates[171](index=171&type=chunk) [Income Tax Expense](index=35&type=section&id=Income%20Tax%20Expense) Income tax expense decreased by $3.3 million for H1 2025, but the effective tax rate significantly increased to (316.7)% from 41.0% in the prior year. This substantial increase was primarily due to a higher amount of unbenefited loss in the United States Key Financial Metrics | Metric | H1 2025 (in thousands) | H1 2024 (in thousands) | Change ($) | Change (%) | | :---------------------- | :--------------------- | :--------------------- | :--------- | :--------- | | Income tax expense | $8,500 | $11,759 | $(3,259) | -27.7% | | Effective tax rate | (316.7)% | 41.0% | -357.7 ppts | | - The increase in the effective tax rate was primarily due to an increase in the amount of the unbenefited loss in the United States[173](index=173&type=chunk) [Non-GAAP Financial Measures](index=36&type=section&id=Non-GAAP%20Financial%20Measures) N-able utilizes non-GAAP financial measures, such as non-GAAP operating income and Adjusted EBITDA, to provide a clearer understanding of its core operating performance. These measures exclude specific items like stock-based compensation, amortization of acquired intangibles, and transaction-related costs, which management believes are not indicative of ongoing business operations - Non-GAAP financial measures are used to clarify and enhance understanding of N-able's performance, excluding items management does not consider part of core operating results[175](index=175&type=chunk) - Exclusions include stock-based compensation and related employer-paid payroll taxes, amortization of acquired technologies and intangible assets, transaction related costs, spin-off costs, and restructuring costs and other[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk) - Non-GAAP financial measures have limitations and should not be considered in isolation from, or as a substitute for, their most comparable GAAP measures[176](index=176&type=chunk) [Non-GAAP Operating Income and Non-GAAP Operating Margin](index=36&type=section&id=Non-GAAP%20Operating%20Income%20and%20Non-GAAP%20Operating%20Margin) Non-GAAP operating income and margin, which exclude items like stock-based compensation and amortization of acquired intangibles, both decreased for the three and six months ended June 30, 2025, compared to the prior year, indicating a decline in core operating profitability Key Financial Metrics | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | H1 2025 (in thousands) | H1 2024 (in thousands) | | :------------------------------------ | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Non-GAAP operating income | $33,972 | $39,794 | $59,262 | $73,008 | | Non-GAAP operating margin | 25.9% | 33.3% | 23.8% | 31.3% | [Adjusted EBITDA and Adjusted EBITDA Margin](index=37&type=section&id=Adjusted%20EBITDA%20and%20Adjusted%20EBITDA%20Margin) Adjusted EBITDA and Adjusted EBITDA margin, which exclude various non-cash and non-recurring items from net income/loss, both decreased for the three and six months ended June 30, 2025, compared to 2024, reflecting a reduction in underlying operational earnings Key Financial Metrics | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | H1 2025 (in thousands) | H1 2024 (in thousands) | | :------------------------------------ | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Adjusted EBITDA | $41,627 | $46,812 | $73,270 | $86,451 | | Adjusted EBITDA margin | 31.7% | 39.2% | 29.4% | 37.1% | [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) N-able's cash and cash equivalents stood at $93.9 million as of June 30, 2025. The company relies primarily on cash from operating activities for funding and believes its current liquidity is sufficient for the next twelve months. It also initiated a $75.0 million share repurchase program, having repurchased $10.0 million during Q2 2025 - Cash and cash equivalents were **$93.9 million** as of June 30, 2025[187](index=187&type=chunk) - N-able believes its existing cash and cash equivalents and cash flows from operating activities will be sufficient to fund operations and capital expenditures for at least the next twelve months[188](index=188&type=chunk) - The company has a Credit Agreement providing **$410.0 million** in facilities, with total borrowings of **$332.1 million** as of June 30, 2025[189](index=189&type=chunk) - A share repurchase program was approved on March 11, 2025, authorizing up to **$75.0 million**; **$10.0 million** of common stock was repurchased during the three months ended June 30, 2025[190](index=190&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk) [Summary of Cash Flows](index=39&type=section&id=Summary%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities increased, while net cash used in both investing and financing activities also increased, resulting in a higher net increase in cash and cash equivalents compared to the prior year Key Financial Metrics | Cash Flow Activity | H1 2025 (in thousands) | H1 2024 (in thousands) | | :------------------------------------ | :--------------------- | :--------------------- | | Net cash provided by operating activities | $43,864 | $31,462 | | Net cash used in investing activities | $(12,574) | $(10,272) | | Net cash used in financing activities | $(25,580) | $(16,881) | | Net increase in cash and cash equivalents | $8,678 | $4,461 | [Operating Activities](index=39&type=section&id=Operating%20Activities) Cash provided by operating activities increased for the six months ended June 30, 2025, primarily due to an increase in non-cash items within net income and a net cash inflow from changes in operating assets and liabilities, despite a decrease in net income - Cash provided by operating activities increased primarily due to an increase in non-cash items within net income and a net cash inflow from changes in operating assets and liabilities[196](index=196&type=chunk) - The net cash inflow from changes in operating assets and liabilities was mainly due to decreases in recoverable taxes, current contract assets, and income taxes receivable[196](index=196&type=chunk) [Investing Activities](index=39&type=section&id=Investing%20Activities) Net cash used in investing activities increased for the six months ended June 30, 2025, mainly due to higher capitalized research and development costs for internal-use software and increased capital expenditures for domestic and international office locations, partially offset by an increase in the return of deposits in escrow - Net cash used in investing activities increased primarily due to an increase in capitalized research and development costs related to internal-use software and an increase in capital expenditures[198](index=198&type=chunk) - This increase was partially offset by an increase in the return of deposits in escrow[198](index=198&type=chunk) [Financing Activities](index=39&type=section&id=Financing%20Activities) Net cash used in financing activities increased for the six months ended June 30, 2025, primarily due to increased common stock repurchases and higher deferred acquisition payments. This was partially offset by a decrease in tax withholding obligations related to restricted stock and increased proceeds from the employee stock purchase plan - Net cash used in financing activities increased primarily due to an increase in repurchases of common stock and an increase in deferred acquisition payments[200](index=200&type=chunk) - This was partially offset by a decrease in payments of tax withholding obligations related to restricted stock and an increase in proceeds from the issuance of common stock under the Employee Stock Purchase Plan[200](index=200&type=chunk) [Contractual Obligations and Commitments](index=40&type=section&id=Contractual%20Obligations%20and%20Commitments) N-able reports no material changes in its contractual obligations and commitments as of June 30, 2025, compared to those disclosed in its 2024 Annual Report - There have been no material changes in N-able's contractual obligations and commitments as of June 30, 2025, from those disclosed in its 2024 Annual Report[201](index=201&type=chunk) [Critical Accounting Policies and Estimates](index=40&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) N-able's financial statements rely on significant management judgments and estimates, particularly in the valuation of goodwill, intangibles, long-lived assets, contingent consideration, revenue recognition, and income taxes. The company confirms no material changes to these critical accounting policies and estimates since its 2024 Annual Report - Critical accounting policies require significant management judgment and estimates, affecting reported amounts of assets, liabilities, revenue, costs, and expenses[202](index=202&type=chunk)[203](index=203&type=chunk) - Key areas of significant judgment include the valuation of goodwill, intangibles, long-lived assets, contingent consideration, revenue recognition, and income taxes[207](index=207&type=chunk) - There have been no material changes to N-able's critical accounting policies and estimates since the 2024 Annual Report[203](index=203&type=chunk) [Recent Accounting Pronouncements](index=40&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2, 'Summary of Significant Accounting Policies,' for a comprehensive description of recently adopted accounting pronouncements - A full description of recently adopted accounting pronouncements is provided in Note 2. Summary of Significant Accounting Policies[204](index=204&type=chunk) [Item 3. Quantitative and Qualitative Disclosures of Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20of%20Market%20Risk) N-able's market risk disclosures focus on interest rate risk, primarily from its variable-rate Credit Agreement borrowings, and foreign currency exchange risk due to its global operations. The company details the potential impact of interest rate changes and the effects of foreign currency fluctuations on its financial results [Interest Rate Risk](index=40&type=section&id=Interest%20Rate%20Risk) N-able's primary interest rate risk stems from its variable-rate borrowings under the Credit Agreement. A hypothetical 100 basis point increase in interest rates would result in an approximate $3.4 million annual impact on interest expense. The company's cash and cash equivalents have no material market risk Key Financial Metrics | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :------------------------------------ | :-------------------------- | :-------------------------- | | Cash and cash equivalents | $93.9 | $85.2 | | Total borrowings (net of costs) | $332.1 | $333.1 | | Weighted-average interest rate | 7.34% | 7.53% | - A hypothetical **100 basis point** increase in interest rates would result in an annual impact to interest expense of approximately **$3.4 million**[208](index=208&type=chunk) - Outstanding borrowings under the Credit Agreement bear interest at variable rates (SOFR-based or EURIBOR), making financial results and cash flows susceptible to interest rate changes[206](index=206&type=chunk)[208](index=208&type=chunk) [Foreign Currency Exchange Risk](index=41&type=section&id=Foreign%20Currency%20Exchange%20Risk) N-able faces foreign currency exchange risk due to its global operations, sales in multiple currencies, and international investments. Fluctuations in currencies like the Euro, British Pound Sterling, and Canadian Dollar against the U.S. dollar can impact reported assets, liabilities, revenue, operating expenses, and cash flows through both transaction and translation risks - N-able is exposed to adverse movements in foreign currency exchange rates due to selling in multiple currencies, international investments, and foreign headcount[211](index=211&type=chunk) - Primary currency exposures include the Euro, British Pound Sterling, and Canadian Dollar against the U.S. dollar[211](index=211&type=chunk) - Foreign currency fluctuations impact reported total assets, liabilities, revenue, operating expenses, and cash flows of foreign subsidiaries upon translation into U.S. dollars[215](index=215&type=chunk) [Foreign Currency Transaction Risk](index=41&type=section&id=Foreign%20Currency%20Transaction%20Risk) Foreign currency transaction risks for N-able typically arise from selling annual and multi-year subscriptions in various currencies, as well as from accounts receivable and other intercompany transactions denominated in foreign currencies - Foreign currency exposures typically arise from selling annual and multi-year subscriptions in multiple currencies, accounts receivable, and other intercompany transactions[214](index=214&type=chunk) [Foreign Currency Translation Risk](index=41&type=section&id=Foreign%20Currency%20Translation%20Risk) Foreign currency translation risk impacts N-able's reported assets, liabilities, revenue, operating expenses, and cash flows when foreign subsidiaries' financial statements are converted to U.S. dollars. A stronger U.S. dollar reduces reported amounts for international operations, while a weaker dollar increases them, with translation gains or losses recorded in accumulated other comprehensive income (loss) - Fluctuations in foreign currencies impact the amount of total assets, liabilities, revenue, operating expenses, and cash flows reported for foreign subsidiaries upon translation into U.S. dollars[215](index=215&type=chunk) - A stronger U.S. dollar reduces reported amounts for international operations, while a weaker U.S. dollar increases them[215](index=215&type=chunk) - Translation gains or los

Financial Performance & Growth - N-able's Annual Recurring Revenue (ARR) reached $514 million [9] - The company achieved an ARR growth rate of 14% [9] - N-able's Net Retention Rate (TTM) is 102% [9] - The Non-GAAP Adjusted EBITDA Margin (TTM) is 32% [9] - The Non-GAAP Gross Margin (TTM) is 82% [9] Market Opportunity & Strategy - The Small and Mid-market Business (SMB & Mid-market) IT Total Addressable Market (TAM) is estimated at $2.1 trillion in 2025 [13] - N-able estimates a cross-sell opportunity of over $2.5 billion across its product lines [51] - N-able projects an Average Revenue Per Customer TTM of $194000 in Q2 2025 [61] Future Outlook - N-able anticipates Q3 2025 ARR to be between $525 million and $530 million, representing a year-over-year growth of 9-10% [63] - The company forecasts Q3 2025 revenue to be between $127 million and $128 million, a year-over-year increase of 9-10% [63] - N-able expects Q3 2025 Adjusted EBITDA margin to be 28%-29%, translating to $36 million - $37 million [63] - N-able projects FY'25 revenue to be between $500 million and $503 million, a year-over-year increase of 7-8% [63]

[Executive Summary](index=1&type=section&id=Executive%20Summary) N-able achieved strong Q2 2025 results, surpassing $500 million ARR, exceeding guidance, and initiating a share repurchase program [Q2 2025 Performance Overview](index=1&type=section&id=Q2%202025%20Performance%20Overview) N-able surpassed $500 million ARR, exceeded Q2 revenue and Adjusted EBITDA guidance, and began a share repurchase program - Surpassed **$500 million ARR** milestone[1](index=1&type=chunk)[2](index=2&type=chunk) - Exceeded second quarter revenue and **Adjusted EBITDA** guidance[1](index=1&type=chunk)[2](index=2&type=chunk) - Began executing on share repurchase program[2](index=2&type=chunk) - Cyber-resiliency platform designed to provide comprehensive protection against AI-turbocharged complexity and risk[2](index=2&type=chunk) [Recent Business Highlights](index=1&type=section&id=Recent%20Business%20Highlights) N-able announced a new CMO, launched UEM product certifications, expanded its Ecoverse, and hosted Empower 2025 customer event - Appointed Vikram Ramesh as Chief Marketing Officer to accelerate security transformation and growth[4](index=4&type=chunk) - N-able U launched product certifications to boost Unified Endpoint Management (UEM) operational efficiency and simplify IT and security management[4](index=4&type=chunk) - Expanded Ecoverse with key Technology Alliance Program integrations, including Xurrent, SeedPod Cyber, ScalePad Lifecycle Manager, Rewst, Derdack SIGNL4, and Webroot by OpenText DNS Protection[4](index=4&type=chunk) - Hosted Empower 2025 customer event in Berlin, bringing together global IT leaders to advance cyber resilience and partner collaboration[4](index=4&type=chunk)[5](index=5&type=chunk) [Financial Results](index=1&type=section&id=Financial%20Results) N-able reported strong Q2 2025 financial results, including revenue growth, increased ARR, and a positive outlook for Q3 and full-year 2025 [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) N-able reported Q2 2025 total revenue of **$131.2 million** (9.9% YoY growth), ARR of **$513.7 million**, and Adjusted EBITDA of **$41.6 million** Q2 2025 Key Financial Metrics (YoY Growth) | Metric | Value (Millions) | YoY Growth (Reported) | YoY Growth (Constant Currency) | | :----------------------- | :------------------- | :---------------------------- | :----------------------------- | | Total Revenue | $131.2 | 9.9% | 7.9% | | Subscription Revenue | $129.9 | 10.6% | 8.6% | | Total ARR | $513.7 | 14.5% | 12.0% | | GAAP Gross Margin | 78.1% | - | - | | Non-GAAP Gross Margin | 81.8% | - | - | | GAAP Net Loss | $(4.0) | - | - | | GAAP Diluted EPS | $(0.02) | - | - | | Non-GAAP Net Income | $20.4 | - | - | | Non-GAAP Diluted EPS | $0.11 | - | - | | Adjusted EBITDA | $41.6 | - | - | | Adjusted EBITDA Margin | 31.7% | - | - | [Balance Sheet Summary](index=2&type=section&id=Balance%20Sheet%20Summary) As of June 30, 2025, N-able reported **$93.9 million** in cash and **$332.1 million** in total net debt, with preliminary financial results Balance Sheet Snapshot (June 30, 2025) | Metric | Value (Millions) | | :-------------------------- | :--------------- | | Total Cash and Cash Equivalents | $93.9 | | Total Debt (net) | $332.1 | - Financial results are preliminary and pending final review by the company and its external auditors[6](index=6&type=chunk) [Financial Outlook](index=2&type=section&id=Financial%20Outlook) N-able provided its Q3 and full-year 2025 financial outlook, considering FX rates and macroeconomic conditions, including non-GAAP measures - Financial outlook reflects expectations regarding changing foreign exchange rates and current macroeconomic dynamics[8](index=8&type=chunk) - Estimates of non-GAAP financial measures are not reconciled to GAAP due to uncertainty and potential variability of excluded items in future periods[7](index=7&type=chunk) [Third Quarter 2025 Outlook](index=2&type=section&id=Third%20Quarter%202025%20Outlook) N-able projects Q3 2025 total revenue between **$127 million** and **$128 million**, and Adjusted EBITDA from **$36 million** to **$37 million** Q3 2025 Financial Outlook | Metric | Range (Millions) | YoY Growth (Reported & Constant Currency) | % of Total Revenue | | :---------------- | :--------------- | :---------------------------------------- | :----------------- | | Total Revenue | $127 - $128 | 9% - 10% | - | | Adjusted EBITDA | $36 - $37 | - | 28% - 29% | [Full-Year 2025 Outlook](index=2&type=section&id=Full-Year%202025%20Outlook) N-able forecasts full-year 2025 total ARR between **$525 million** and **$530 million**, and total revenue from **$500 million** to **$503 million** Full-Year 2025 Financial Outlook | Metric | Range (Millions) | YoY Growth (Reported) | YoY Growth (Constant Currency) | % of Total Revenue | | :---------------- | :--------------- | :-------------------- | :----------------------------- | :----------------- | | Total ARR | $525 - $530 | 9% - 10% | 7% - 9% | - | | Total Revenue | $500 - $503 | 7% - 8% | 7% - 8% | - | | Adjusted EBITDA | $141 - $144 | - | - | 28% - 29% | [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) This section details N-able's non-GAAP financial measures, their rationale, limitations, and specific definitions for key metrics [Rationale and Limitations](index=4&type=section&id=Rationale%20and%20Limitations) N-able uses non-GAAP measures for operational insights and comparisons, acknowledging their limitations and non-GAAP nature - Non-GAAP measures clarify and enhance understanding of performance, aid period-to-period comparison, and are used for assessing operational performance, resource allocation, budgeting, and compensation[13](index=13&type=chunk) - These measures exclude the impact of certain amounts that management and the board do not consider part of core operating results[13](index=13&type=chunk) - Non-GAAP measures have limitations: they are not prepared in accordance with GAAP, do not reflect a comprehensive accounting system, and may not be completely comparable to other companies' measures[15](index=15&type=chunk) - Management compensates for limitations by using non-GAAP measures as supplements to GAAP and reviewing reconciliations[16](index=16&type=chunk) [Definitions of Non-GAAP and Other Metrics](index=5&type=section&id=Definitions%20of%20Non-GAAP%20and%20Other%20Metrics) This section defines N-able's key non-GAAP metrics: ARR, Gross Margin, Operating Income, Net Income, Adjusted EBITDA, and Unlevered Free Cash Flow - **Annual Recurring Revenue (ARR):** Annualized recurring revenue and related usage revenue from subscriptions, excluding credits and reserves, recognized on the last day of the reporting period[17](index=17&type=chunk) - **Non-GAAP Gross Margin, Operating Income, and Operating Margin:** Excludes stock-based compensation, amortization of acquired intangible assets, transaction-related costs, spin-off costs, and restructuring costs[18](index=18&type=chunk) - **Adjusted EBITDA and Adjusted EBITDA Margin:** Net income or loss, excluding amortization, depreciation, income tax expense, interest expense, unrealized foreign currency (gains) losses, transaction-related costs, spin-off costs, stock-based compensation, and restructuring costs[20](index=20&type=chunk) - **Non-GAAP Revenue on a Constant Currency Basis:** Current period revenue converted to U.S. Dollars using average exchange rates from the corresponding prior period to assess performance excluding foreign currency fluctuations[21](index=21&type=chunk) - **Unlevered Free Cash Flow:** Cash flow from operations, after deducting capital expenditures and prior to the impact of capital structure, transaction-related costs, restructuring costs, spin-off costs, employer-paid payroll taxes on stock awards, and certain one-time items[22](index=22&type=chunk) [Forward-Looking Statements and Risk Factors](index=2&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This section outlines forward-looking statements and key risk factors that could materially impact N-able's financial results and operations [Forward-Looking Statements and Risk Factors](index=2&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This section details forward-looking statements and key risk factors, including economic conditions, customer retention, cybersecurity, and spin-off risks - Statements regarding financial outlook for Q3 and full-year 2025 and macroeconomic conditions are forward-looking and subject to safe harbor provisions[11](index=11&type=chunk) - Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially and adversely different[12](index=12&type=chunk) - **Key Risk Factors:** * Impact of adverse economic conditions, including inflation, rising interest rates, war, and political unrest * Ability to sell subscriptions to new customers, sell additional solutions to existing customers, and maintain customer loyalty * Any decline in renewal or net retention rates * Risks that cyberattacks and other security incidents may compromise systems, lead to data theft, or interfere with operations * Ability to attract and retain qualified employees and key personnel * Risks related to the spin-off from SolarWinds, including potential tax liabilities and failure to achieve anticipated benefits[12](index=12&type=chunk) [Company Information](index=2&type=section&id=Company%20Information) This section provides an overview of N-able's mission, technology, partner-first approach, and contact information for inquiries [About N-able](index=6&type=section&id=About%20N-able) N-able is a global software company providing a unified cyber-resiliency platform with AI-powered capabilities and a partner-first approach - Mission: Protect businesses against evolving cyberthreats with a unified cyber-resiliency platform to manage, secure, and recover[23](index=23&type=chunk) - Technology infrastructure includes AI-powered capabilities, market-leading third-party integrations, and flexibility to employ technologies of choice[23](index=23&type=chunk) - Partner-first approach combines products with experts, training, and peer-led events to empower customers[23](index=23&type=chunk) [Conference Call and Contacts](index=2&type=section&id=Conference%20Call%20and%20Contacts) N-able will host a conference call and webcast on August 7, 2025, to discuss financial results, with contact information provided - Conference call and webcast to discuss financial results and business outlook scheduled for August 7, 2025, at 8:30 a.m. ET[10](index=10&type=chunk) - Live webcast available on N-able Investor Relations website: http://investors.n-able.com[10](index=10&type=chunk) - Investor Contact: Griffin Gyr (gryr@n-able.com)[25](index=25&type=chunk) - Media Contact: Kim Cecchini (pr@n-able.com, Phone: 202.391.5205)[25](index=25&type=chunk) [Unaudited Consolidated Financial Statements](index=8&type=section&id=Unaudited%20Consolidated%20Financial%20Statements) This section presents N-able's unaudited consolidated balance sheets, statements of operations, and cash flows for recent periods [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) Consolidated balance sheets show N-able's financial position as of June 30, 2025, with total assets at **$1,386.0 million** and equity at **$809.4 million** Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------- | :-------------- | :---------------- | :----- | | Cash and cash equivalents | $93,874 | $85,196 | +$8,678 | | Total current assets | $186,656 | $183,923 | +$2,733 | | Goodwill | $1,023,226 | $977,013 | +$46,213 | | Total assets | $1,386,002 | $1,338,847 | +$47,155 | | Total current liabilities | $151,092 | $150,098 | +$994 | | Long-term debt, net | $328,639 | $329,606 | -$967 | | Total liabilities | $576,585 | $579,559 | -$2,974 | | Total stockholders' equity | $809,417 | $759,288 | +$50,129 | [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations detail N-able's Q2 2025 performance, with **$131.2 million** revenue and a **$4.0 million** net loss Consolidated Statements of Operations Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------- | :------ | :------ | :------ | :------ | | Subscription and other revenue | $131,249 | $119,447 | $249,446 | $233,196 | | Total cost of revenue | $28,697 | $19,164 | $56,375 | $37,461 | | Gross profit | $102,552 | $100,283 | $193,071 | $195,735 | | Total operating expenses | $92,430 | $78,304 | $181,125 | $153,265 | | Operating income | $10,122 | $21,979 | $11,946 | $42,470 | | Net (loss) income | $(4,022) | $9,455 | $(11,184) | $16,911 | | Diluted (loss) income per share | $(0.02) | $0.05 | $(0.06) | $0.09 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated cash flows show Q2 2025 operating cash flow at **$24.2 million** and increased financing cash outflow due to stock repurchases Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Net cash provided by operating activities | $24,187 | $27,278 | $43,864 | $31,462 | | Net cash used in investing activities | $(6,498) | $(5,145) | $(12,574) | $(10,272) | | Net cash used in financing activities | $(18,291) | $(4,965) | $(25,580) | $(16,881) | | Net (decrease) increase in cash and cash equivalents | $(216) | $18,282 | $8,678 | $4,461 | | Cash and cash equivalents, end of period | $93,874 | $157,509 | $93,874 | $157,509 | - Repurchase of common stock amounted to **$10,000 thousand** in Q2 2025 and for the six months ended June 30, 2025[31](index=31&type=chunk) [Reconciliation of GAAP to Non-GAAP Financial Measures](index=12&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section provides detailed reconciliations from GAAP to non-GAAP financial measures for various performance indicators [Non-GAAP Cost of Revenue and Gross Profit Reconciliation](index=12&type=section&id=Non-GAAP%20Cost%20of%20Revenue%20and%20Gross%20Profit%20Reconciliation) This section reconciles GAAP cost of revenue and gross profit to non-GAAP equivalents, showing Q2 2025 non-GAAP gross profit at **$107.4 million** Q2 2025 GAAP to Non-GAAP Cost of Revenue & Gross Profit (in thousands) | Metric | GAAP (Q2 2025) | Adjustments | Non-GAAP (Q2 2025) | | :------------------------------------------------ | :------------- | :---------- | :----------------- | | Cost of revenue | $28,697 | $(4,809) | $23,888 | | Gross profit | $102,552 | $4,809 | $107,361 | | *Adjustments include stock-based compensation expense and related employer-paid payroll taxes, amortization of acquired technologies, and transaction related costs.* | | | | [Non-GAAP Operating Expenses Reconciliation](index=12&type=section&id=Non-GAAP%20Operating%20Expenses%20Reconciliation) This section reconciles GAAP operating expenses to non-GAAP, adjusting for stock-based compensation, transaction, and restructuring costs Q2 2025 GAAP to Non-GAAP Operating Expenses (in thousands) | Metric | GAAP (Q2 2025) | Adjustments | Non-GAAP (Q2 2025) | | :-------------------------------- | :------------- | :---------- | :----------------- | | Sales and marketing expense | $42,362 | $(6,153) | $36,209 | | Research and development expense | $26,336 | $(3,290) | $23,046 | | General and administrative expense | $23,229 | $(9,095) | $14,134 | | *Adjustments primarily include stock-based compensation expense and related employer-paid payroll taxes, transaction related costs, and restructuring costs.* | | | | [Non-GAAP Operating Income and Net Income Reconciliation](index=12&type=section&id=Non-GAAP%20Operating%20Income%20and%20Net%20Income%20Reconciliation) N-able reconciles GAAP operating income and net (loss) income to non-GAAP, showing Q2 2025 non-GAAP operating income of **$34.0 million** and net income of **$20.4 million** Q2 2025 GAAP to Non-GAAP Operating Income & Net Income (in thousands) | Metric | GAAP (Q2 2025) | Adjustments | Non-GAAP (Q2 2025) | | :------------------------------------------------ | :------------- | :---------- | :----------------- | | Operating income | $10,122 | $23,850 | $33,972 | | Operating margin | 7.7% | - | 25.9% | | Net (loss) income | $(4,022) | $24,417 | $20,395 | | Diluted (loss) income per share | $(0.02) | - | $0.11 | | *Adjustments include amortization of acquired technologies and intangibles, stock-based compensation, transaction related costs, restructuring costs, interest on deferred consideration, and tax benefits.* | | | | [Adjusted EBITDA Reconciliation](index=14&type=section&id=Adjusted%20EBITDA%20Reconciliation) This section reconciles GAAP net (loss) income to Adjusted EBITDA, reporting Q2 2025 Adjusted EBITDA at **$41.6 million** with a **31.7%** margin Q2 2025 GAAP Net (Loss) Income to Adjusted EBITDA (in thousands) | Metric | Q2 2025 | Q2 2024 | | :------------------------------------------------ | :------ | :------ | | Net (loss) income | $(4,022) | $9,455 | | Amortization | $6,262 | $1,879 | | Depreciation | $4,602 | $4,025 | | Income tax expense | $5,200 | $6,060 | | Interest expense, net | $8,090 | $7,606 | | Unrealized foreign currency losses | $2,377 | $445 | | Transaction related costs | $5,577 | $4,919 | | Spin-off costs | — | — | | Stock-based compensation expense and related employer-paid payroll taxes | $13,150 | $12,164 | | Restructuring costs and other | $391 | $259 | | **Adjusted EBITDA** | **$41,627** | **$46,812** | | Adjusted EBITDA margin | 31.7% | 39.2% | [Non-GAAP Revenue on a Constant Currency Basis Reconciliation](index=15&type=section&id=Non-GAAP%20Revenue%20on%20a%20Constant%20Currency%20Basis%20Reconciliation) This section reconciles GAAP revenue to non-GAAP constant currency revenue, showing Q2 2025 growth of **7.9%** excluding FX impact Q2 2025 GAAP to Non-GAAP Revenue (Constant Currency, in thousands) | Metric | GAAP (Q2 2025) | Estimated FX Impact | Non-GAAP (Q2 2025) | Reported Growth | Constant Currency Growth | | :---------------------------------------- | :------------- | :------------------ | :----------------- | :-------------- | :----------------------- | | Subscription revenue | $129,874 | $(2,395) | $127,479 | 10.6% | 8.6% | | Other revenue | $1,375 | $(4) | $1,371 | (32.4)% | (32.6)% | | Total subscription and other revenue | $131,249 | $(2,399) | $128,850 | 9.9% | 7.9% | - Estimated foreign currency impact is calculated using average foreign currency exchange rates from the comparable prior year monthly periods[39](index=39&type=chunk) [Unlevered Free Cash Flow Reconciliation](index=16&type=section&id=Unlevered%20Free%20Cash%20Flow%20Reconciliation) This section reconciles operating cash flow to Unlevered Free Cash Flow, reporting Q2 2025 Unlevered Free Cash Flow at **$33.3 million** Q2 2025 Unlevered Free Cash Flow (in thousands) | Metric | Q2 2025 | Q2 2024 | | :---------------------------------------------------------------------------------------------------------------- | :------ | :------ | | Net cash provided by operating activities | $24,187 | $27,278 | | Purchases of property and equipment | $(3,788) | $(3,242) | | Purchases of intangible assets | $(3,009) | $(1,903) | | Free cash flow | $17,390 | $22,133 | | Cash paid for interest, net | $6,259 | $7,292 | | Cash paid for transaction related costs, restructuring costs, spin-off costs, employer-paid payroll taxes on stock awards and other one-time items | $9,628 | $6,029 | | **Unlevered free cash flow** | **$33,277** | **$35,454** |

Financial Data and Key Metrics Changes - First quarter ARR grew 11% year over year in constant currency, with total ARR reaching $492.7 million, reflecting a 10% year-over-year growth on a reported basis [24][26] - First quarter revenue was $118.2 million, exceeding guidance by $2.2 million, representing approximately 4% year-over-year growth on a reported basis [25][26] - Adjusted EBITDA for the first quarter was $31.6 million, reflecting a 27% margin, which was above the high end of guidance [27][30] - Gross margin for the first quarter was 80.6%, down from 84.7% in the same period in 2024 [27] Business Line Data and Key Metrics Changes - Subscription revenue was $116.8 million, representing approximately 5% year-over-year growth on a reported basis [26] - The company ended the quarter with 2,398 customers contributing $50,000 or more of ARR, up approximately 10% year over year [26] - Dollar-based net revenue retention was approximately 101% on both a reported and constant currency basis [26] Market Data and Key Metrics Changes - Approximately 43% of revenue was generated outside of North America during the quarter [28] - The company is targeting to reach $750 million in ARR by 2028, driven by security success, scaling go-to-market efforts, and boosting customer expansion [8][24] Company Strategy and Development Direction - The company is focused on enhancing its cyber resiliency platform to address the growing demand for security solutions among small and mid-market businesses [7][8] - Key growth pillars include expanding the go-to-market strategy to capture a broader range of channel providers, including resellers and system integrators [18][19] - The company is committed to CMMC 2.0 readiness to enhance its appeal in regulated sectors [20] Management's Comments on Operating Environment and Future Outlook - Management noted that while there is some elongation in deal cycles, overall demand for cyber resiliency solutions remains strong [42][68] - The company is raising its full-year revenue and ARR guidance based on strong first-quarter results and updated foreign exchange rates [29][31] - Management expressed confidence in the growth potential driven by new product launches and channel expansion efforts [30][31] Other Important Information - The company announced a $75 million share repurchase authorization program, indicating confidence in its business [24] - The adjusted EBITDA outlook for the full year is raised to $134 million to $139 million, representing a margin of 27% to 28% [31] Q&A Session Summary Question: Contribution of AdLumin acquisition to revenue growth - The AdLumin acquisition contributed approximately $21 million of ARR, which should help in calculating the organic growth rate [36] Question: Considerations for seasonality in ARR - Management expects ARR growth to be consistent throughout the year with slight improvements [37] Question: Market spending environment and customer feedback - Demand for cyber resiliency remains strong, although some deals are taking longer to close [42][68] Question: Dollar-based net retention dynamics - Management expects the current retention rate to be a trough, with improvements driven by cross-sell opportunities [46] Question: Reseller traction and growth potential - The company is in the early stages of expanding its reseller network, with expectations for more significant impacts in 2026 [55][57] Question: Impact of FX on revenue guidance - The increase in revenue guidance is primarily related to FX, with constant currency outlook held steady [66] Question: EBITDA margin expectations - The focus for 2025 is on growth acceleration, with expectations to return to low 30s EBITDA margins in 2026 [71]

Financial Data and Key Metrics Changes - First quarter ARR grew 11% year over year in constant currency, with total ARR reaching $492.7 million, reflecting a 10% year-over-year growth on a reported basis [24][25] - First quarter revenue was $118.2 million, exceeding guidance by $2.2 million, representing approximately 4% year-over-year growth on a reported basis [25][26] - Adjusted EBITDA for the first quarter was $31.6 million, reflecting a 27% margin, which was above the high end of guidance [26][27] - Gross margin for the first quarter was 80.6%, down from 84.7% in the same period in 2024 [26] Business Line Data and Key Metrics Changes - Subscription revenue was $116.8 million, representing approximately 5% year-over-year growth on a reported basis [25] - The company ended the quarter with 2,398 customers contributing $50,000 or more of ARR, up approximately 10% year over year [25] - Dollar-based net revenue retention was approximately 101% on both a reported and constant currency basis [25] Market Data and Key Metrics Changes - Approximately 43% of revenue was generated outside of North America during the quarter [28] - The company is targeting $750 million in ARR by 2028, driven by three growth pillars: driving security success, scaling go-to-market efforts, and boosting customer expansion [7][8] Company Strategy and Development Direction - The company is focused on expanding its go-to-market strategy by partnering with a broader range of channel providers, including resellers and system integrators [18][19] - The launch of new security capabilities and the growth of channel partners are seen as key components of the company's innovation and growth strategy [33] - The company is committed to CMMC 2.0 readiness to enhance its appeal in regulated sectors [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for cybersecurity solutions, noting that the need for cyber resiliency is a must for businesses [42] - Despite some anecdotal evidence of longer sales cycles, the overall demand remains strong, and the pipeline is robust [42][70] - The company raised its revenue and ARR guidance for the full year, reflecting strong first-quarter results and updated foreign exchange rates [29][30] Other Important Information - The company announced a $75 million share repurchase authorization program, indicating confidence in its business [24] - The adjusted EBITDA guidance for the full year was raised, with expectations of $134 million to $139 million, representing a margin of 27% to 28% [31] Q&A Session Summary Question: Contribution of AdLumin acquisition to revenue growth - The AdLumin acquisition contributed approximately $21 million of ARR at the time of acquisition, which should help in calculating organic growth rates [36][37] Question: Considerations for seasonality in ARR - Management expects ARR growth to be consistent throughout the year, with slight improvements as the year progresses [38] Question: Market spending environment and customer feedback - Demand for cybersecurity solutions remains strong, with no significant changes in metrics, although some deals are taking longer to close [42][70] Question: Dollar-based net revenue retention dynamics - Management expects the current retention rate to be a trough, with improvements driven by cross-selling opportunities [45][47] Question: Reseller traction and growth potential - The company is in the early stages of expanding its reseller network, with expectations for more significant impacts in 2026 [56][58] Question: Integration of offerings into a single platform - The company is focused on automating workflows and integrating its offerings to enhance efficiency and security for customers [96][100]

Company Performance - N-able reported quarterly earnings of $0.08 per share, exceeding the Zacks Consensus Estimate of $0.06 per share, but down from $0.11 per share a year ago, representing an earnings surprise of 33.33% [1] - The company posted revenues of $118.2 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.15% and up from $113.75 million year-over-year [2] - N-able has surpassed consensus EPS estimates in all four of the last quarters [2] Stock Outlook - N-able shares have declined approximately 23.6% since the beginning of the year, compared to a decline of 4.3% for the S&P 500 [3] - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates at $0.08 for the coming quarter and $0.31 for the current fiscal year [4][7] Industry Context - The Technology Services industry, to which N-able belongs, is currently ranked in the top 27% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - The performance of N-able's stock may also be influenced by the overall industry outlook and trends in earnings estimate revisions [5][8]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited consolidated financial statements for N-able, Inc. as of March 31, 2025, and for the three months then ended, show total revenue of **$118.2 million** and a net loss of **$7.2 million**, a significant shift from a net income of **$7.5 million** in the same period of 2024, with total assets increasing slightly to **$1.35 billion** and cash flow from operations improving significantly to **$19.7 million** from **$4.2 million** year-over-year [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets were **$1.352 billion**, a slight increase from **$1.339 billion** at December 31, 2024, primarily driven by a rise in goodwill and cash and cash equivalents, while total liabilities decreased slightly to **$577.0 million** and total stockholders' equity increased to **$775.1 million** Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $183,785 | $183,920 | | **Goodwill** | $991,352 | $977,010 | | **Total Assets** | **$1,352,077** | **$1,338,840** | | **Total Current Liabilities** | $153,670 | $150,090 | | **Long-term Debt, net** | $329,121 | $329,600 | | **Total Liabilities** | **$576,976** | **$579,550** | | **Total Stockholders' Equity** | **$775,101** | **$759,280** | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2025, N-able reported a net loss of **$7.2 million**, compared to a net income of **$7.5 million** in the prior-year period, as revenue grew **3.9%** to **$118.2 million**, but a significant increase in total cost of revenue (up **51.3%**) and operating expenses (up **18.3%**) led to a sharp decline in operating income from **$20.5 million** to **$1.8 million** Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Subscription and other revenue | $118,197 | $113,740 | | Gross Profit | $90,519 | $95,450 | | Operating Income | $1,824 | $20,490 | | Net (Loss) Income | $(7,162) | $7,450 | | Diluted (Loss) Income Per Share | $(0.04) | $0.00 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first quarter of 2025, net cash provided by operating activities was **$19.7 million**, a substantial increase from **$4.2 million** in Q1 2024, while net cash used in investing activities was **$6.1 million** and net cash used in financing activities decreased to **$7.3 million** from **$11.9 million** year-over-year, resulting in an **$8.9 million** increase in cash and cash equivalents during the quarter Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $19,677 | $4,184 | | Net cash used in investing activities | $(6,076) | $(5,127) | | Net cash used in financing activities | $(7,289) | $(11,916) | | **Net increase (decrease) in cash** | **$8,894** | **$(13,821)** | | **Cash and cash equivalents, end of period** | **$94,090** | **$139,227** | [Notes to the Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies and financial results, covering topics such as operations, revenue recognition, acquisitions, goodwill, parent company relationships, fair value measurements, debt structure, and geographic revenue breakdown - The company provides cloud-based security, data protection, and unified endpoint management software solutions for managed service providers (MSPs) that serve small and medium-sized businesses[30](index=30&type=chunk) - On November 20, 2024, the company acquired Adlumin, Inc. for aggregate consideration including **$98.7 million** in cash, up to **1.57 million** shares of common stock, and potential future payments of up to **$150 million** in deferred and contingent consideration[56](index=56&type=chunk) - The company operates as a single operating and reportable segment, with revenue from the United States accounting for **51.2%** of total revenue in Q1 2025, up from **47.9%** in Q1 2024[117](index=117&type=chunk)[119](index=119&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial results for Q1 2025, highlighting a **3.9%** revenue increase to **$118.2 million** and a **10.3%** rise in Annual Recurring Revenue (ARR) to **$492.7 million**, detailing the drivers behind increased costs that led to a net loss of **$7.2 million** compared to a net income of **$7.5 million** in the prior year, and covering the impact of the Adlumin acquisition, the Long-Term Contract Initiative, non-GAAP measures like Adjusted EBITDA (which decreased to **$31.6 million** from **$39.6 million**), and the company's liquidity position Q1 2025 Key Financial Highlights | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $118.2M | $113.7M | +3.9% | | Net (Loss) Income | $(7.2)M | $7.5M | -196% | | Adjusted EBITDA | $31.6M | $39.6M | -20.2% | | Cash Flow from Operations | $19.7M | $4.2M | +370% | - Annual Recurring Revenue (ARR) grew **10.3%** to **$492.7 million** as of March 31, 2025, up from **$446.6 million** a year prior, driven by steady demand and the Adlumin acquisition[126](index=126&type=chunk) - The annual dollar-based net revenue retention rate was approximately **101%** for the trailing twelve months ended March 31, 2025, down from **111%** a year ago, reflecting pressure from pricing changes and the Long-Term Contract Initiative[145](index=145&type=chunk) - The decrease in profitability was primarily due to increased cost of revenue and operating expenses related to the Adlumin acquisition, including higher amortization, personnel costs, and transaction-related expenses[129](index=129&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks, primarily from interest rate fluctuations on its variable-rate debt and foreign currency exchange rate movements, with **$332.6 million** in borrowings under its Credit Agreement as of March 31, 2025, where a hypothetical **100 basis point** increase in interest rates would result in an approximate **$3.4 million** annual increase in interest expense, and faces foreign currency transaction and translation risks from its global operations, particularly involving the Euro, British Pound Sterling, and Canadian Dollar against the U.S. Dollar - The company's debt under the Credit Agreement bears interest at a floating SOFR-based rate, where a hypothetical **100 basis point** increase in interest rates would increase annual interest expense by approximately **$3.4 million**[186](index=186&type=chunk)[187](index=187&type=chunk) - As a global company, N-able is exposed to foreign currency exchange risk from selling in multiple currencies and operating in various countries, with key currencies including the Euro, British Pound Sterling, and Canadian Dollar[191](index=191&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of March 31, 2025, and concluded they were **effective at a reasonable assurance level**, with no material changes in the company's internal control over financial reporting during the first quarter of 2025 - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were **effective at a reasonable assurance level**[197](index=197&type=chunk) - No changes occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[198](index=198&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, and management believes the resolution of any pending claims is **not expected to have a material adverse impact** on its financial statements - The company states that the resolution of any pending legal claims is **not expected to have a material adverse impact** on its consolidated financial statements, cash flows, or financial position[109](index=109&type=chunk)[200](index=200&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) There have been **no material changes** to the company's risk factors from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - **No material changes** in risk factors were reported from those disclosed in the 2024 Annual Report[201](index=201&type=chunk) [Item 2. Unregistered Sales of Equity and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20and%20Use%20of%20Proceeds) On March 11, 2025, the board of directors approved a share repurchase program authorizing the repurchase of up to **$75.0 million** of the company's common stock, which has no expiration date and does not obligate the company to acquire a specific amount of shares, and no shares were repurchased under this program in the three months ended March 31, 2025 - A share repurchase program for up to **$75.0 million** of common stock was approved on March 11, 2025[202](index=202&type=chunk) - The company **did not repurchase any shares** under the program during the first quarter of 2025[202](index=202&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) During the first quarter of 2025, **no directors or officers adopted or terminated any Rule 10b5-1 trading plans** or other non-Rule 10b5-1 trading arrangements - **No directors or officers adopted or terminated any Rule 10b5-1 trading plans** during the three months ended March 31, 2025[203](index=203&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section provides an index of the exhibits filed with the Form 10-Q, including agreements related to the spin-off from SolarWinds, corporate governance documents, and officer certifications - Lists exhibits filed with the report, including the Separation and Distribution Agreement, corporate charters, and Sarbanes-Oxley certifications[206](index=206&type=chunk)

Company Overview - N-able's Annual Recurring Revenue (ARR) reached $493 million as of March 31, 2025 [8] - The company boasts a recurring revenue of approximately 100% [8] - N-able achieved a Net Retention Rate (TTM) of 101% [8] - ARR growth is at 11% at constant currency [8] - Non-GAAP Adjusted EBITDA Margin (TTM) stands at 34% [8] - Non-GAAP Gross Margin (TTM) is 83% [8] Market Opportunity - The Small and Mid-market (SMB) IT Total Addressable Market (TAM) is estimated at $2.1 trillion in 2025 [13] - N-able's total addressable market is $44 billion, encompassing Unified Endpoint Management (UEM) at $14 billion, Data Protection at $6 billion, and Security Operations at $24 billion [22] Financial Outlook - Q2 2025 ARR is projected to be between $492 million and $497 million, representing a year-over-year growth of 6-7% or 6-8% at constant currency [60] - FY 2025 ARR is projected to be between $519 million and $525 million, representing a year-over-year growth of 8-9% or 7-9% at constant currency [60]

[N-able First Quarter 2025 Results](index=1&type=section&id=N-able%20First%20Quarter%202025%20Results) [Q1 2025 Performance Highlights](index=1&type=section&id=First%20quarter%202025%20financial%20highlights) N-able reported strong Q1 2025 results, exceeding guidance with solid revenue and ARR growth, despite a GAAP net loss, while raising full-year outlook - Raised the midpoint of the full-year 2025 revenue outlook from **$489.5 million** to **$494.5 million**[1](index=1&type=chunk) Q1 2025 Financial Highlights vs. Q1 2024 | Metric | Q1 2025 ($M) | YoY Growth (Reported) | YoY Growth (Constant Currency) | | :--- | :--- | :--- | :--- | | Total Revenue | $118.2 | 3.9% | 5.7% | | Subscription Revenue | $116.8 | 4.8% | 6.6% | | Total ARR | $492.7 | 10.3% | 10.9% | | Adjusted EBITDA | $31.6 | -20.2% | N/A | | GAAP Net (Loss) Income | $(7.2) | N/A | N/A | | Non-GAAP Net Income | $15.6 | -21.2% | N/A | | GAAP Diluted EPS | $(0.04) | N/A | N/A | | Non-GAAP Diluted EPS | $0.08 | -27.3% | N/A | - As of March 31, 2025, the company held **$94.1 million** in cash and cash equivalents and had total debt of **$332.6 million**[5](index=5&type=chunk) [Recent Business Highlights](index=1&type=section&id=Additional%20recent%20business%20highlights) N-able advanced strategic initiatives by launching new security capabilities, enhancing product offerings, and approving a **$75 million** share repurchase program - Launched its first annual 2025 State of the SOC Report, providing insights on security operations trends[4](index=4&type=chunk) - Expanded Microsoft Cloud management and security capabilities with Adlumin Breach Prevention for Microsoft 365[4](index=4&type=chunk) - Announced the upcoming launch of a built-in Vulnerability Management feature for its N-central and N-sight UEM products[4](index=4&type=chunk) - The Board of Directors approved a share repurchase program authorizing up to **$75 million** of its common stock[4](index=4&type=chunk) [Financial Outlook](index=2&type=section&id=Financial%20Outlook) N-able provided its non-GAAP financial outlook for Q2 and full-year 2025, raising full-year revenue guidance and projecting continued growth Q2 2025 Financial Outlook (Non-GAAP) | Metric | Range ($M) | YoY Growth (Reported & Constant Currency) | | :--- | :--- | :--- | | Total Revenue | $125.5 - $126.5 | ~5% to 6% | | Adjusted EBITDA | $34.0 - $35.0 | ~27% to 28% of revenue | Full-Year 2025 Financial Outlook (Non-GAAP) | Metric | Range ($M) | YoY Growth (Reported) | YoY Growth (Constant Currency) | | :--- | :--- | :--- | :--- | | Total ARR | $519 - $525 | 8% to 9% | ~7% to 9% | | Total Revenue | $492 - $497 | ~6% to 7% | ~6% to 8% | | Adjusted EBITDA | $134 - $139 | ~27% to 28% of revenue | N/A | [Financial Statements](index=8&type=section&id=Financial%20Statements) This section presents N-able's unaudited consolidated financial statements for Q1 2025, detailing its financial position and performance [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) N-able's total assets increased to **$1.35 billion** as of March 31, 2025, with a marginal decrease in liabilities and an increase in stockholders' equity Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$1,352,077** | **$1,338,847** | | Cash and cash equivalents | $94,090 | $85,196 | | Goodwill | $991,352 | $977,013 | | **Total Liabilities** | **$576,976** | **$579,559** | | Long-term debt, net | $329,121 | $329,606 | | **Total Stockholders' Equity** | **$775,101** | **$759,288** | [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) N-able reported **$118.2 million** in Q1 2025 total revenue, but higher operating expenses led to a significant decrease in operating income and a net loss of **$7.2 million** Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Subscription and other revenue | $118,197 | $113,749 | | Gross Profit | $90,519 | $95,452 | | Operating Income | $1,824 | $20,491 | | Net (Loss) Income | $(7,162) | $7,456 | | Diluted (Loss) Income Per Share | $(0.04) | $0.04 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly improved to **$19.7 million** in Q1 2025, resulting in an **$8.9 million** net increase in cash for the quarter Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $19,677 | $4,184 | | Less: Capital Expenditures | $(6,076) | $(5,127) | | Free cash flow | $13,601 | $(943) | | Add: Cash paid for interest & other items | $14,534 | $8,222 | | **Unlevered free cash flow** | **$28,135** | **$7,279** | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=11&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section details the reconciliation of GAAP to non-GAAP financial measures, adjusting for items like stock-based compensation and amortization to present core operating performance [Reconciliation of GAAP to Non-GAAP Financial Measures (Summary)](index=11&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures%20(Summary)) N-able's Q1 2025 GAAP operating income of **$1.8 million** was adjusted to a non-GAAP operating income of **$25.3 million**, with a GAAP net loss of **$7.2 million** reconciled to a non-GAAP net income of **$15.6 million** GAAP to Non-GAAP Reconciliation Summary (Q1 2025, in thousands) | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Gross Profit | $90,519 | $4,782 | $95,301 | | Operating Income | $1,824 | $23,466 | $25,290 | | Net (Loss) Income | $(7,162) | $22,783 | $15,621 | | Diluted EPS | $(0.04) | $0.12 | $0.08 | [Reconciliation of GAAP Net (Loss) Income to Adjusted EBITDA](index=13&type=section&id=Reconciliation%20of%20GAAP%20Net%20(Loss)%20Income%20to%20Adjusted%20EBITDA) Adjusted EBITDA for Q1 2025 was **$31.6 million**, or **26.8%** margin, derived from GAAP net loss by adding back non-operating and non-cash items Adjusted EBITDA Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net (loss) income | $(7,162) | $7,456 | | Adjustments (Amortization, Depreciation, Taxes, Interest, etc.) | $38,805 | $32,183 | | **Adjusted EBITDA** | **$31,643** | **$39,639** | | Adjusted EBITDA Margin | 26.8% | 34.8% | [Reconciliation of GAAP Revenue to Non-GAAP Revenue on a Constant Currency Basis](index=14&type=section&id=Reconciliation%20of%20GAAP%20Revenue%20to%20Non-GAAP%20Revenue%20on%20a%20Constant%20Currency%20Basis) Q1 2025 GAAP total revenue growth was **3.9%** year-over-year, with constant currency growth at **5.7%** after adjusting for a **$2.0 million** negative currency impact Constant Currency Revenue Reconciliation (Q1 2025 vs Q1 2024) | Revenue Type | GAAP Growth | Constant Currency Growth | | :--- | :--- | :--- | | Subscription Revenue | 4.8% | 6.6% | | Total Revenue | 3.9% | 5.7% | [Reconciliation of Unlevered Free Cash Flow](index=15&type=section&id=Reconciliation%20of%20Unlevered%20Free%20Cash%20Flow) Unlevered free cash flow significantly increased to **$28.1 million** in Q1 2025, calculated from operating cash flow adjusted for capital expenditures and interest Unlevered Free Cash Flow Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $19,677 | $4,184 | | Less: Capital Expenditures | $(6,076) | $(5,127) | | Free cash flow | $13,601 | $(943) | | Add: Cash paid for interest & other items | $14,534 | $8,222 | | **Unlevered free cash flow** | **$28,135** | **$7,279** | [Explanation of Non-GAAP Financial Measures and Other Metrics](index=4&type=section&id=Non-GAAP%20Financial%20Measures) N-able utilizes non-GAAP financial measures and key metrics like ARR, Adjusted EBITDA, and Unlevered Free Cash Flow to provide a clearer view of core operating performance - The company uses non-GAAP measures to exclude items that management does not consider part of core operating results, such as stock-based compensation, amortization of acquired assets, transaction costs, and spin-off costs[13](index=13&type=chunk)[19](index=19&type=chunk) - Annual Recurring Revenue (ARR) is calculated by annualizing recurring revenue from subscriptions recognized on the last day of the reporting period[18](index=18&type=chunk) - Adjusted EBITDA is defined as net income excluding amortization, depreciation, taxes, interest, foreign currency effects, transaction costs, stock-based compensation, and other specific costs[21](index=21&type=chunk) - Unlevered Free Cash Flow is a liquidity measure calculated as cash flow from operations, less capital expenditures, and before the impact of capital structure and certain one-time items[23](index=23&type=chunk)