N-ABLE(NABL) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fourth quarter revenue grew 7% year-over-year in constant currency, with full year 2024 revenue growing 10% at constant currency [8][39] - Adjusted EBITDA for the fourth quarter was $38.1 million, reflecting a 32.7% margin, while full year adjusted EBITDA was$ 169.4 million, reflecting a 36.3% margin [9][43] - Annual recurring revenue (ARR) as of December 31, 2024, was $482 million, growing 10% at constant currency [8][42] Business Line Data and Key Metrics Changes - Cove Data Protection remains the largest revenue-generating product, protecting over 180,000 businesses and outpacing total company growth [17][30] - The acquisition of Adlumin has positioned it as one of the two highest booking products since its acquisition [15][16] Market Data and Key Metrics Changes - Approximately 45% of revenue was generated outside of North America in the fourth quarter, and 46% for the full year [46] - The company is focusing on expanding its presence in the North American reseller channel and international markets such as the U.K., DACH, and Australia [33][34] Company Strategy and Development Direction - The company aims to expand its security leadership, scale its go-to-market strategy, and elevate customer experience as part of its 2025 strategy [22][34] - The acquisition of Adlumin is expected to create multi-dimensional value by unifying security, endpoint management, and data protection [12][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position for growth in 2025, driven by strong demand in cybersecurity and digital transformation [58][60] - The company anticipates some headwinds in the first half of 2025 due to long-term contract commitments but expects acceleration in the second half [108][109] Other Important Information - The company transitioned from less than 10% of revenue from annual contracts to over 50% in 2024, which is expected to improve customer retention [19][20] - The company is investing in new development sites and anticipates a low point in adjusted EBITDA margins in Q1 2025 due to integration costs from the Adlumin acquisition [53][54] Q&A Session Summary Question: What was the revenue contribution from Adlumin in Q4? - The revenue contribution from Adlumin in Q4 was approximately$ 2.5 million from the acquisition date of November 20 through the end of the year [65] Question: What is the expected growth in annual contracts? - The initiative to move customers to annual contracts will continue, with expectations for a natural blend up over time, but not a significant uptick like in 2024 [68] Question: How has engagement been with Adlumin's reseller and partnership arrangements? - Engagement with resellers has been enthusiastic, as they now have a partner that offers a comprehensive portfolio, allowing for scaling in 2025 [75] Question: What competitive landscape does Adlumin face? - Adlumin competes with various players but differentiates itself through its cloud-native, endpoint-agnostic capabilities and the ability to separate software from service [80][82] Question: What is the expected organic growth rate for 2025? - The company expects organic growth to be impacted by long-term contract commitments in the first half of the year, with expectations for improvement in the second half [108][116]