N-ABLE(NABL) - 2025 Q2 - Quarterly Results

Executive Summary N-able achieved strong Q2 2025 results, surpassing $500 million ARR, exceeding guidance, and initiating a share repurchase program Q2 2025 Performance Overview 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][2] - Exceeded second quarter revenue and Adjusted EBITDA guidance[1][2] - Began executing on share repurchase program[2] - Cyber-resiliency platform designed to provide comprehensive protection against AI-turbocharged complexity and risk[2] Recent Business Highlights 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] - N-able U launched product certifications to boost Unified Endpoint Management (UEM) operational efficiency and simplify IT and security management[4] - 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] - Hosted Empower 2025 customer event in Berlin, bringing together global IT leaders to advance cyber resilience and partner collaboration[4][5] Financial Results 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 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 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] Financial Outlook 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] - Estimates of non-GAAP financial measures are not reconciled to GAAP due to uncertainty and potential variability of excluded items in future periods[7] Third Quarter 2025 Outlook 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 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 This section details N-able's non-GAAP financial measures, their rationale, limitations, and specific definitions for key metrics Rationale and Limitations 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] - These measures exclude the impact of certain amounts that management and the board do not consider part of core operating results[13] - 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] - Management compensates for limitations by using non-GAAP measures as supplements to GAAP and reviewing reconciliations[16] Definitions of Non-GAAP and Other Metrics 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] - 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] - 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] - 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] - 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] Forward-Looking Statements and Risk Factors 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 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] - Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially and adversely different[12] - 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] Company Information This section provides an overview of N-able's mission, technology, partner-first approach, and contact information for inquiries About N-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] - Technology infrastructure includes AI-powered capabilities, market-leading third-party integrations, and flexibility to employ technologies of choice[23] - Partner-first approach combines products with experts, training, and peer-led events to empower customers[23] Conference Call and Contacts 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] - 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] - Media Contact: Kim Cecchini (pr@n-able.com, Phone: 202.391.5205)[25] Unaudited Consolidated Financial Statements This section presents N-able's unaudited consolidated balance sheets, statements of operations, and cash flows for recent periods Consolidated Balance Sheets 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 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 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] Reconciliation of GAAP to Non-GAAP Financial Measures 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 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 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 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 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 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] Unlevered Free Cash Flow Reconciliation 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 |