N-ABLE(US:NABL)2025-05-08 13:20PART I - FINANCIAL INFORMATION Item 1. Financial Statements (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 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 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 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 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 businesses30 - 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 consideration56 - 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 2024117119 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 acquisition126 - 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 Initiative145 - 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 expenses129148149 Item 3. Quantitative and Qualitative Disclosures About Market Risk 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 million186187 - 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 Dollar191 Item 4. Controls and Procedures 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 level197 - 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 reporting198 PART II - OTHER INFORMATION Item 1. Legal Proceedings 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 position109200 Item 1A. Risk Factors 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 Report201 Item 2. Unregistered Sales of Equity and Use of Proceeds 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, 2025202 - The company did not repurchase any shares under the program during the first quarter of 2025202 Item 5. Other Information 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, 2025203 Item 6. Exhibits 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 certifications206