N-ABLE(US:NABL)2022-11-11 21:11Financial Data and Key Metrics Changes - Q3 2022 revenue reached $93.5 million, representing a 13% year-over-year growth on a constant currency basis [7][44] - Adjusted EBITDA was $28.9 million, resulting in a 31% EBITDA margin, exceeding the high end of the forecast [8][49] - Gross margin decreased to 84.8% from 87.7% in Q3 2021, attributed to foreign exchange rates, product mix, and data center investments [48] - Dollar-based net revenue retention was 104% on a reported basis, reflecting a 4-point negative FX impact [46] Business Line Data and Key Metrics Changes - Subscription revenue was $91.2 million, showing a 6% year-over-year growth [44] - EDR and Cove Data Protection offerings continued to outpace total company revenue growth [46] - The Cove Data Protection solution demonstrated significant competitive differentiation and growth, with a focus on its TrueDelta innovation [23][24] Market Data and Key Metrics Changes - Approximately 44% of revenue was generated outside North America [50] - Cloud-based IT spending by SMEs is projected to grow from $600 billion in 2022 to $1 trillion by 2027, indicating a strong macro tailwind for the company [10] Company Strategy and Development Direction - The company aims to expand integrated cloud offerings to help MSPs manage and protect multi-cloud environments [15] - Focus on high LTV products and optimizing marketing spend in profitable geographies [82] - The company is positioned to be recession-resilient, addressing challenges like labor scarcity and cybersecurity [22] Management's Comments on Operating Environment and Future Outlook - Management noted that while some partners experienced elongated sales cycles, most did not feel a material slowdown in their cross-sell business [21] - The company is taking a prudent approach to forecasting, with a focus on maintaining strong demand despite macroeconomic uncertainties [102] - Retention rates remain strong, with no degradation observed [101] Other Important Information - The company hosted its Empower Partner Conference, welcoming over 450 partners, which was seen as a significant event for engagement and industry discussion [8][9] - The company is focusing on product and engineering investments while moderating spending in other areas [52] Q&A Session Summary Question: Clarification on partners generating over $50,000 ARR - The number of partners generating over $50,000 ARR is 1,786, with growth primarily affected by FX rates [67][68] Question: Insights on gross margins and sales/marketing expenses - Gross margin pressure is attributed to new product investments, FX impacts, and data center costs, while sales and marketing expenses saw a seasonal decline [70][72] Question: Specifics on operational expenditure tightening - The company is focusing on high ROI initiatives and pulling back on less profitable marketing efforts in certain geographies [80][82] Question: Comparison of current environment to early COVID period - The current environment is different, with MSPs not experiencing the same reluctance to add new customers as seen during the pandemic [86][88] Question: Macro headwinds and device adds - The company is seeing some slowdown in device adds due to flat PC shipments, but overall demand remains strong [96][97]