TTM Dollar Based Net Revenue Retention Rate of
105%
Updates Mid-Point of Full-Year 2024 Revenue
Outlook to $462M
Raises Full-Year 2024 Adjusted EBITDA Margin
Outlook to 37%
N-able, Inc. (NYSE:NABL), a global software company helping IT
services providers deliver remote monitoring and management, data
protection as-a-service and security solutions, today reported
results for its third quarter ended September 30, 2024.
“IT keeps businesses running and our software helps keep IT
systems running and secure for small and medium sized enterprises
and MSPs across the globe,” said N-able president and CEO John
Pagliuca. “We made considerable progress during the quarter as our
product development and go-to-market engines continued to deliver
the resiliency and efficiency our customers need. We aim to
continue building on this progress as we close out the year.”
“Our outperformance against our quarterly revenue and adjusted
EBITDA guidance reflects our commitment to our mission and our
execution,” added N-able CFO Tim O’Brien. “We are confident that
delivering resiliency and efficiency to our customers is a winning
value proposition, and we continue to make investments that drive
these outcomes, positioning our customers and N-able to grow.”
Third quarter 2024 financial highlights:
- Total revenue of $116.4 million, representing 8.3%
year-over-year growth, or 7.3% year-over-year growth on a constant
currency basis.
- Subscription revenue of $115.0 million, representing 9.3%
year-over-year growth, or 8.3% year-over-year growth on a constant
currency basis.
- GAAP gross margin of 82.9% and non-GAAP gross margin of
83.7%.
- GAAP net income of $10.8 million, or $0.06 per diluted share,
and non-GAAP net income of $24.3 million, or $0.13 per diluted
share.
- Adjusted EBITDA of $44.8 million, up 22.7% year-over-year,
representing an adjusted EBITDA margin of 38.5%.
For a reconciliation of our GAAP to non-GAAP results, please see
the tables below.
Additional highlights for the third quarter of 2024 include:
- N-able launched global compliance initiatives to help fuel
cyber resilience for its partners across a growing number of
cybersecurity-focused compliance frameworks. Coming on the heels of
the finalized Cybersecurity Maturity Model Certification (CMMC) 2.0
regulation, the initiatives extend ongoing product security, cloud
infrastructure, and operational enhancements intended to address a
number of overlapping controls in CMMC 2.0, NIS2, Cyber Essentials,
Essential Eight, and other like-minded cybersecurity
frameworks.
- N-able was honored with a 2024 Stevie award for great
employers. The Stevie Awards for Great Employers recognize the
world’s best employers and the human resources professionals,
teams, achievements, and HR-related products and suppliers who help
to create and drive great places to work.
- N-able expanded its Technology Alliance Program (TAP),
furthering our open Ecoverse vision. New relationships include
Bocada, AlertOps, DeskDay, PIXM, and Hudu. N‑able TAP brings
industry-leading technology companies together to further develop
and integrate their solutions with the expansive solutions
portfolio from N‑able. This lets MSPs leverage a trusted community
of providers focused on helping them succeed with a variety of
third-party integrations and services, allowing them to serve their
customers with more flexibility and choice.
Balance Sheet
As of September 30, 2024, total cash and cash equivalents were
$174.4 million and total debt, net of debt issuance costs, was
$333.6 million.
The financial results included in this press release are
preliminary and pending final review by the company and its
external auditors. Financial results will not be final until N-able
files its quarterly report on Form 10-Q for the period. Information
about N-able's use of non-GAAP financial measures is provided below
under “Non-GAAP Financial Measures.”
Financial Outlook
As of November 7, 2024, N-able is providing its financial
outlook for the fourth quarter of 2024 and full-year 2024. The
financial information below represents forward-looking non-GAAP
financial information, including adjusted EBITDA. These non-GAAP
financial measures exclude, among other items mentioned below,
amortization of acquired intangible assets and developed
technology, depreciation expense, income tax expense, interest
expense, net, unrealized foreign currency (gains) losses,
transaction related costs, spin-off costs, stock-based compensation
expense and related employer-paid payroll taxes and restructuring
and other costs. We have not reconciled our estimates of these
non-GAAP financial measures to their most directly comparable GAAP
measure as a result of uncertainty regarding, and the potential
variability of, these excluded items in future periods.
Accordingly, reconciliation is not available without unreasonable
effort, although it is important to note that these excluded items
could be material to our results computed in accordance with GAAP
in future periods. Our reported results provide reconciliations of
non-GAAP financial measures to their nearest GAAP equivalents.
The financial outlook provided below reflects N-able's
expectations, as of the date of this release, regarding the impact
on its business of changing foreign exchange rates and current
macroeconomic dynamics.
Financial Outlook for the Fourth Quarter of 2024
N-able management currently expects to achieve the following
results for the fourth quarter of 2024:
- Total revenue in the range of $111.5 to $113.0 million,
representing 3% to 4% year-over-year growth on a reported and
constant currency basis.
- Adjusted EBITDA in the range of $38.0 to $38.5 million,
representing approximately 34% of total revenue.
Financial Outlook for Full-Year 2024
N-able management currently expects to achieve the following
results for the full-year 2024:
- Total revenue in the range of $461.2 to $462.7 million,
representing approximately 9% to 10% year-over-year growth, or
approximately 9% growth on a constant currency basis.
- Adjusted EBITDA in the range of $169.3 to $169.8 million,
representing approximately 37% of total revenue.
Additional details on the company's outlook will be provided on
the conference call.
Conference Call and Webcast
In conjunction with this announcement, N-able will host a
conference call today to discuss its financial results, business
and business outlook at 8:30 a.m. ET on November 7, 2024. A live
webcast of the call will be available on the N-able Investor
Relations website at http://investors.n-able.com. A replay of the
webcast will be available on a temporary basis shortly after the
event on the N-able Investor Relations website.
Forward-Looking Statements
This press release contains “forward-looking” statements, which
are subject to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, including statements regarding our
financial outlook for the fourth quarter and full-year 2024 and the
impact of macroeconomic conditions on our business. These
forward-looking statements are based on management's beliefs and
assumptions and on information currently available to management.
Forward-looking statements include all statements that are not
historical facts and may be signified by terms such as “aim,”
“anticipate,” “believe,” “continue,” “expect,” “feel,” “intend,”
“estimate,” “seek,” “plan,” “may,” “can,” “could,” “should,”
“will,” “would” or similar expressions and the negatives of those
terms. Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results,
performance or achievements to be materially and adversely
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Factors
that could cause or contribute to such differences include, but are
not limited to, the following: (a) risks related to our spin-off
from SolarWinds into a newly created and separately-traded public
company, including that the spin-off may not achieve some or all of
any anticipated benefits with respect to our business; that the
distribution, together with certain related transactions, may not
qualify as a transaction that is generally tax-free for U.S.
federal income tax purposes, which could result in N-able incurring
significant tax liabilities, and, in certain circumstances,
requiring us to indemnify SolarWinds for material taxes and other
related amounts pursuant to indemnification obligations under the
tax matters agreement; (b) the impact of adverse economic
conditions; (c) our ability to sell subscriptions to new managed
service provider (“MSP”) partners, to sell additional solutions to
our existing MSP partners and to increase the usage of our
solutions by our existing MSP partners, as well as our ability to
generate and maintain MSP partner loyalty; (d) any decline in our
renewal or net retention rates; (e) the possibility that general
economic conditions or uncertainty may cause information technology
spending to be reduced or purchasing decisions to be delayed,
including as a result of inflation, actions taken by central banks
to counter inflation, rising interest rates, war and political
unrest, military conflict (including between Russia and Ukraine and
in the Middle East), terrorism, sanctions or other geopolitical
events globally, or that such factors may otherwise harm our
business, financial condition or results of operations; (f) any
inability to generate significant volumes of high-quality sales
leads from our digital marketing initiatives and convert such leads
into new business at acceptable conversion rates; (g) any inability
to successfully identify, complete and integrate acquisitions and
manage our growth effectively; (h) any inability to resell
third-party software or integrate third-party software into our
solutions, or find suitable replacements for such third-party
software; (i) risks associated with our international operations;
(j) foreign exchange gains and losses related to expenses and sales
denominated in currencies other than the functional currency of an
associated entity; (k) risks that cyberattacks, including the
cyberattack on SolarWinds’ Orion Software Platform and internal
systems announced by SolarWinds in December 2020 (the “Cyber
Incident”), and other security incidents may result in compromises
or breaches of our, our MSP partners’, or their SME customers’
systems, the insertion of malicious code, malware, ransomware or
other vulnerabilities into our, our MSP partners’, or their SME
customers’ environments, the exploitation of vulnerabilities in
our, our MSP partners’, or their SME customers’ security, the theft
or misappropriation of our, our MSP partners’, or their SME
customers’ proprietary and confidential information, and
interference with our, our MSP partners’, or their SME customers’
operations, exposure to legal and other liabilities, higher MSP
partner and employee attrition and the loss of key personnel,
negative impacts to our sales, renewals and upgrades and
reputational harm and other serious negative consequences, any or
all of which could materially harm our business; (l) our status as
a controlled company; (m) our ability to attract and retain
qualified employees and key personnel; (n) the timing and success
of new product introductions and product upgrades by us or our
competitors; (o) our ability to protect and defend our intellectual
property and not infringe upon others’ intellectual property; (p)
the possibility that our operating income could fluctuate and may
decline as a percentage of revenue as we make further expenditures
to expand our operations in order to support additional growth in
our business; (q) our indebtedness, including increased borrowing
costs resulting from rising interest rates, potential restrictions
on our operations and the impact of events of default; (r) our
ability to operate our business internationally and increase sales
of our solutions to our MSP partners located outside of the United
States; and (s) such other risks and uncertainties described more
fully in documents filed with or furnished to the Securities and
Exchange Commission, including the risk factors described in
N-able’s Annual Report on Form 10-K for the year ended December 31,
2023, that N-able filed with the SEC on February 29, 2024. All
information provided in this release is as of the date hereof and
N-able undertakes no duty to update this information except as
required by law.
Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with
GAAP, we use certain non-GAAP financial measures to clarify and
enhance our understanding, and aid in the period-to-period
comparison, of our performance. We believe that these non-GAAP
financial measures provide supplemental information that is
meaningful when assessing our operating performance because they
exclude the impact of certain amounts that our management and board
of directors do not consider part of core operating results when
assessing our operational performance, allocating resources,
preparing annual budgets and determining compensation. Accordingly,
these non-GAAP financial measures may provide insight to investors
into the motivation and decision-making of management in operating
the business.
N-able also believes that these non-GAAP financial measures are
used by investors and securities analysts to (a) compare and
evaluate its performance from period to period and (b) compare its
performance to those of its competitors. These non-GAAP measures
exclude certain items that can vary substantially from company to
company depending upon their financing and accounting methods, the
book value of their assets, their capital structures and the method
by which their assets were acquired.
As a result, these non-GAAP financial measures have limitations
and should not be considered in isolation from, or as a substitute
for, their most comparable GAAP measures. These non-GAAP financial
measures are not prepared in accordance with GAAP, do not reflect a
comprehensive system of accounting and may not be completely
comparable to similarly titled measures of other companies due to
potential differences in the exact method of calculation between
companies. Certain items that are excluded from these non-GAAP
financial measures can have a material impact on operating and net
income.
N-able's management and board of directors compensate for these
limitations by using these non-GAAP financial measures as
supplements to GAAP financial measures and by reviewing the
reconciliations of the non-GAAP financial measures to their most
comparable GAAP financial measure. Set forth in the tables below
are the corresponding GAAP financial measures for each non-GAAP
financial measure presented. Investors are encouraged to review the
reconciliations of these non-GAAP financial measures to their most
comparable GAAP financial measures that are set forth in the tables
below.
Non-GAAP Gross Margin, Non-GAAP Operating Income and Non-GAAP
Operating Margin. We provide non-GAAP total cost of revenue,
non-GAAP gross margin, non-GAAP operating expense and non-GAAP
operating income and related non-GAAP gross and operating margins
excluding such items as stock-based compensation expense and
related employer-paid payroll taxes, amortization of acquired
intangible assets, transaction related costs, spin-off costs and
restructuring costs and other. We define non-GAAP gross and
operating margins as non-GAAP gross profit and operating income
divided by total revenue. Management believes these measures are
useful for the following reasons:
- Stock-Based Compensation Expense and Related Employer-Paid
Payroll Taxes. We provide non-GAAP information that excludes
expenses related to stock-based compensation and related
employer-paid payroll taxes associated with our employees’
participation in N-able's stock-based incentive compensation plans.
We believe that the exclusion of stock-based compensation expense
provides for a better comparison of our operating results to prior
periods and to our peer companies as the calculations of
stock-based compensation vary from period to period and company to
company due to different valuation methodologies, subjective
assumptions and the variety of award types. Employer-paid payroll
taxes on stock-based compensation is dependent on our stock price
and the timing of the taxable events related to the equity awards,
over which our management has little control, and does not
necessarily correlate to the core operation of our business.
Because of these unique characteristics of stock-based compensation
and related employer-paid payroll taxes, management excludes these
expenses when analyzing the organization’s business
performance.
- Amortization of Acquired Technologies and Intangible Assets. We
provide non-GAAP information that excludes expenses related to
purchased technologies and intangible assets associated with our
acquisitions. We believe that eliminating this expense from our
non-GAAP measures is useful to investors because the amortization
of acquired technologies and intangible assets can be inconsistent
in amount and frequency and is significantly impacted by the timing
and magnitude of our acquisition transactions, which also vary in
frequency from period to period. Accordingly, we analyze the
performance of our operations in each period without regard to such
expenses.
- Transaction Related Costs. We exclude certain expense items
resulting from proposed and completed acquisitions, dispositions
and similar transactions, such as legal, accounting and advisory
fees, changes in fair value of contingent consideration, costs
related to integrating the acquired businesses, deferred
compensation, severance and retention expense. We consider these
adjustments, to some extent, to be unpredictable and dependent on a
significant number of factors that are outside of our control.
Furthermore, such proposed and completed transactions result in
operating expenses that would not otherwise have been incurred by
us in the normal course of our organic business operations. We
believe that providing non-GAAP measures that exclude transaction
related costs allows investors to better review and understand the
historical and current results of our continuing operations and
also facilitates comparisons to our historical results and results
of peer companies with different transaction related activities,
both with and without such adjustments.
- Spin-off Costs. We exclude certain expense items resulting from
the spin-off into a newly created and separately traded public
company. These costs include legal, accounting and advisory fees,
system implementation costs and other incremental costs incurred by
us related to the separation from SolarWinds. The spin-off
transaction results in operating expenses that would not otherwise
have been incurred by us in the normal course of our organic
business operations. We believe that providing non-GAAP measures
that exclude these costs facilitates a more meaningful evaluation
of our operating performance and comparisons to our past operating
performance.
- Restructuring Costs and Other. We provide non-GAAP information
that excludes restructuring costs such as severance, certain
employee relocation costs, and the estimated costs of exiting and
terminating facility lease commitments, as they relate to our
corporate restructuring and exit activities. These costs are
inconsistent in amount and are significantly impacted by the timing
and nature of these events. Therefore, although we may incur these
types of expenses in the future, we believe that eliminating these
costs for purposes of calculating the non-GAAP financial measures
facilitates a more meaningful evaluation of our operating
performance and comparisons to our past operating performance.
Non-GAAP Net Income and Non-GAAP Net Income Per Diluted
Share. We believe that the use of non-GAAP net income and
non-GAAP net income per diluted share is helpful to our investors
to clarify and enhance their understanding of past performance and
future prospects. Non-GAAP net income is calculated as net income
excluding the adjustments to non-GAAP gross profit and non-GAAP
operating income and the income tax effect of the non-GAAP
exclusions. We define non-GAAP net income per diluted share as
non-GAAP net income divided by the weighted average outstanding
common shares.
Adjusted EBITDA and Adjusted EBITDA Margin. We regularly
monitor adjusted EBITDA and adjusted EBITDA margin, as they are
measures we use to assess our operating performance. We define
adjusted EBITDA as net income or loss, excluding amortization of
acquired intangible assets and developed technology, depreciation
expense, income tax expense, interest expense, net, unrealized
foreign currency (gains) losses, transaction related costs,
spin-off costs, stock-based compensation expense and related
employer-paid payroll taxes and restructuring and other costs. We
define adjusted EBITDA margin as adjusted EBITDA divided by total
revenue. Adjusted EBITDA has limitations as an analytical tool, and
you should not consider it in isolation or as a substitute for
analysis of our results as reported under GAAP. Some of these
limitations include: although depreciation and amortization are
non-cash charges, the assets being depreciated and amortized may
have to be replaced in the future, and adjusted EBITDA does not
reflect cash capital expenditure requirements for such replacements
or for new capital expenditure requirements; adjusted EBITDA does
not reflect changes in, or cash requirements for, our working
capital needs; adjusted EBITDA does not reflect the significant
interest expense, or the cash requirements necessary to service
interest or principal payments, on our related party debt; adjusted
EBITDA does not reflect tax payments that may represent a reduction
in cash available to us; and other companies, including companies
in our industry, may calculate adjusted EBITDA differently, which
reduces its usefulness as a comparative measure.
Non-GAAP Revenue on a Constant Currency Basis. We provide
non-GAAP revenue on a constant currency basis to provide a
framework for assessing our performance excluding the effect of
foreign currency rate fluctuations. To present this information,
current period results for revenue contracts denominated in
currencies other than U.S. Dollars are converted into U.S. Dollars
at the average exchange rates in effect during the corresponding
prior period presented. We believe that providing non-GAAP revenue
on a constant currency basis facilitates the comparison of non-GAAP
revenue to prior periods.
Unlevered Free Cash Flow. Unlevered free cash flow is a
measure of our liquidity used by management to evaluate cash flow
from operations, after the deduction of capital expenditures and
prior to the impact of our capital structure, transaction related
costs, restructuring costs, spin-off costs, employer-paid payroll
taxes on stock awards and other one-time items, that can be used by
us for strategic opportunities and strengthening our balance sheet.
However, given our debt obligations, unlevered free cash flow does
not represent residual cash flow available for discretionary
expenses.
About N-able
N-able fuels IT services providers with powerful software
solutions to monitor, manage, and secure their customers’ systems,
data, and networks. Built on a scalable platform, we offer secure
infrastructure and tools to simplify complex ecosystems, as well as
resources to navigate evolving IT needs. We help partners excel at
every stage of growth, protect their customers, and expand their
offerings with an ever-increasing, flexible portfolio of
integrations from leading technology providers. n-able.com
© 2024 N-able, Inc. All rights reserved.
Category: Financial
N-able, Inc.
Consolidated Balance
Sheets
(In thousands)
(Unaudited)
September 30,
December 31,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
174,445
$
153,048
Accounts receivable, net of allowances of
$1,099 and $1,171 as of September 30, 2024 and December 31, 2023,
respectively
39,626
40,013
Income tax receivable
14,897
8,001
Recoverable taxes
21,907
12,116
Current contract assets
16,020
1,124
Prepaid and other current assets
15,382
10,489
Total current assets
282,277
224,791
Property and equipment, net
34,514
36,838
Operating lease right-of-use assets
29,732
32,067
Deferred taxes
1,066
1,087
Goodwill
843,884
838,497
Intangible assets, net
5,379
6,717
Other assets, net
26,606
22,794
Total assets
$
1,223,458
$
1,162,791
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$
6,530
$
5,239
Accrued liabilities and other
46,472
49,366
Current operating lease liabilities
6,116
6,443
Income taxes payable
20,234
4,523
Current portion of deferred revenue
10,926
12,646
Current debt obligation
3,500
3,500
Total current liabilities
93,778
81,717
Long-term liabilities:
Deferred revenue, net of current
portion
244
167
Non-current deferred taxes
1,885
1,820
Non-current operating lease
liabilities
32,177
33,064
Long-term debt, net of current portion
330,081
331,509
Other long-term liabilities
342
3,154
Total liabilities
458,507
451,431
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value:
550,000,000 shares authorized and 185,747,109 and 183,220,689
shares issued and outstanding as of September 30, 2024 and December
31, 2023, respectively
186
183
Preferred stock, $0.001 par value:
50,000,000 shares authorized and no shares issued and outstanding
as of September 30, 2024 and December 31, 2023, respectively
—
—
Additional paid-in capital
686,072
666,522
Accumulated other comprehensive income
10,779
4,409
Retained earnings
67,914
40,246
Total stockholders' equity
764,951
711,360
Total liabilities and stockholders'
equity
$
1,223,458
$
1,162,791
N-able, Inc.
Consolidated Statements of
Operations
(In thousands, except per
share information)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Revenue:
Subscription and other revenue
$
116,442
$
107,567
$
349,638
$
313,465
Cost of revenue:
Cost of revenue
19,433
16,893
55,975
49,205
Amortization of acquired technologies
467
463
1,386
1,382
Total cost of revenue
19,900
17,356
57,361
50,587
Gross profit
96,542
90,211
292,277
262,878
Operating expenses:
Sales and marketing
32,294
33,660
100,960
101,112
Research and development
22,995
19,752
67,468
58,796
General and administrative
17,330
18,438
57,427
53,877
Amortization of acquired intangibles
15
11
44
585
Total operating expenses
72,634
71,861
225,899
214,370
Operating income
23,908
18,350
66,378
48,508
Other expense:
Interest expense, net
(7,535
)
(7,802
)
(22,762
)
(22,532
)
Other income (expense), net
2,269
(423
)
3,696
1,569
Total other expense, net
(5,266
)
(8,225
)
(19,066
)
(20,963
)
Income before income taxes
18,642
10,125
47,312
27,545
Income tax expense
7,885
4,112
19,644
13,484
Net income
$
10,757
$
6,013
$
27,668
$
14,061
Net income per share:
Basic earnings per share
$
0.06
$
0.03
$
0.15
$
0.08
Diluted earnings per share
$
0.06
$
0.03
$
0.15
$
0.08
Weighted-average shares used to compute
net income per share:
Shares used in computation of basic
earnings per share:
185,506
182,710
184,840
182,135
Shares used in computation of diluted
earnings per share:
188,074
186,221
188,039
185,506
N-able, Inc.
Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Cash flows from operating activities
Net income
$
10,757
$
6,013
$
27,668
$
14,061
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
6,054
5,329
17,777
16,142
(Benefit from) provision for doubtful
accounts
(166
)
458
(72
)
387
Stock-based compensation expense
11,508
11,298
34,863
32,893
Deferred taxes
89
(34
)
89
(20
)
Amortization of debt issuance costs
401
405
1,198
1,197
Operating lease right-of-use assets,
net
(53
)
(538
)
52
(1,050
)
(Gain) loss on foreign currency exchange
rates
(548
)
1,582
693
2,137
Gain on contingent consideration
(2,364
)
(631
)
(3,711
)
(958
)
Loss on lease modification
1,059
—
1,059
—
Other non-cash expenses
(100
)
—
(16
)
128
Changes in operating assets and
liabilities, net of assets acquired and liabilities assumed in
business combinations:
Accounts receivable
(2,733
)
(215
)
(841
)
(6,121
)
Income tax receivable
(2,505
)
(955
)
(6,888
)
(8,874
)
Recoverable taxes
(3,060
)
(1,785
)
(9,738
)
(6,759
)
Current contract assets
(3,439
)
(132
)
(14,896
)
(477
)
Prepaid expenses and other assets
(1,555
)
(290
)
(4,731
)
(785
)
Accounts payable
332
(490
)
1,151
382
Accrued liabilities and other
1,686
4,287
(1,807
)
8,684
Income taxes payable
6,728
3,510
15,893
9,491
Deferred revenue
440
(28
)
(1,642
)
(443
)
Other long-term assets
(987
)
(288
)
(2,618
)
(1,206
)
Other long-term liabilities
445
16
(32
)
60
Net cash provided by operating
activities
21,989
27,512
53,451
58,869
Cash flows from investing activities
Purchases of property and equipment
(3,740
)
(3,518
)
(10,420
)
(10,487
)
Purchases of intangible assets
(1,574
)
(2,006
)
(5,166
)
(6,675
)
Net cash used in investing activities
(5,314
)
(5,524
)
(15,586
)
(17,162
)
Cash flows from financing activities
Payments of tax withholding obligations
related to restricted stock units
(2,826
)
(1,988
)
(18,165
)
(10,228
)
Exercise of stock options
4
46
12
72
Proceeds from issuance of common stock
under employee stock purchase plan
1,182
910
2,382
1,681
Deferred acquisition payments
—
(850
)
(1,000
)
(850
)
Repayments of borrowings from Credit
Agreement
(875
)
(875
)
(2,625
)
(2,625
)
Net cash used in financing activities
(2,515
)
(2,757
)
(19,396
)
(11,950
)
Effect of exchange rate changes on cash
and cash equivalents
2,776
(988
)
2,928
(1,171
)
Net increase in cash and cash
equivalents
16,936
18,243
21,397
28,586
Cash and cash equivalents
Beginning of period
157,509
109,190
153,048
98,847
End of period
$
174,445
$
127,433
$
174,445
$
127,433
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
7,198
$
7,416
$
21,760
$
21,119
Cash paid for income taxes
$
2,147
$
1,156
$
8,162
$
11,046
Supplemental disclosure of non-cash
activities:
Change in purchases of property, equipment
and leasehold improvements included in accounts payable and accrued
expenses
$
(152
)
$
(1,509
)
$
2
$
(553
)
Right-of-use assets obtained in exchange
for operating lease liabilities
$
2,628
$
1,835
$
2,628
$
2,318
N-able, Inc.
Reconciliation of GAAP to
Non-GAAP Financial Measures
(In thousands, except per
share information)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
GAAP cost of revenue
$
19,900
$
17,356
$
57,361
$
50,587
Stock-based compensation expense and
related employer-paid payroll taxes
(416
)
(354
)
(1,304
)
(1,071
)
Amortization of acquired technologies
(467
)
(463
)
(1,386
)
(1,382
)
Restructuring costs and other
—
(21
)
—
(38
)
Non-GAAP cost of revenue
$
19,017
$
16,518
$
54,671
$
48,096
GAAP gross profit
$
96,542
$
90,211
$
292,277
$
262,878
Stock-based compensation expense and
related employer-paid payroll taxes
416
354
1,304
1,071
Amortization of acquired technologies
467
463
1,386
1,382
Restructuring costs and other
—
21
—
38
Non-GAAP gross profit
$
97,425
$
91,049
$
294,967
$
265,369
GAAP sales and marketing expense
$
32,294
$
33,660
$
100,960
$
101,112
Stock-based compensation expense and
related employer-paid payroll taxes
(3,918
)
(3,914
)
(12,147
)
(11,572
)
Transaction related costs
(55
)
(4
)
(59
)
(28
)
Restructuring costs and other
—
(3
)
(418
)
(27
)
Non-GAAP sales and marketing expense
$
28,321
$
29,739
$
88,336
$
89,485
GAAP research and development expense
$
22,995
$
19,752
$
67,468
$
58,796
Stock-based compensation expense and
related employer-paid payroll taxes
(2,719
)
(2,375
)
(8,252
)
(6,770
)
Transaction related costs
(20
)
—
(45
)
(8
)
Restructuring costs and other
(37
)
(49
)
(94
)
(839
)
Non-GAAP research and development
expense
$
20,219
$
17,328
$
59,077
$
51,179
GAAP general and administrative
expense
$
17,330
$
18,438
$
57,427
$
53,877
Stock-based compensation expense and
related employer-paid payroll taxes
(4,766
)
(4,932
)
(15,246
)
(14,812
)
Transaction related costs
1,886
613
(1,608
)
654
Restructuring costs and other
(3,103
)
(509
)
(3,513
)
(714
)
Spin-off costs
—
(166
)
(51
)
(623
)
Non-GAAP general and administrative
expense
$
11,347
$
13,444
$
37,009
$
38,382
GAAP operating income
$
23,908
$
18,350
$
66,378
$
48,508
Amortization of acquired technologies
467
463
1,386
1,382
Amortization of acquired intangibles
15
11
44
585
Stock-based compensation expense and
related employer-paid payroll taxes
11,819
11,575
36,950
34,225
Transaction related costs
(1,811
)
(609
)
1,712
(618
)
Restructuring costs and other
3,140
582
4,025
1,618
Spin-off costs
—
166
51
623
Non-GAAP operating income
$
37,538
$
30,538
$
110,546
$
86,323
GAAP operating margin
20.5
%
17.1
%
19.0
%
15.5
%
Non-GAAP operating margin
32.2
%
28.4
%
31.6
%
27.5
%
GAAP net income
$
10,757
$
6,013
$
27,668
$
14,061
Amortization of acquired technologies
467
463
1,386
1,382
Amortization of acquired intangibles
15
11
44
585
Stock-based compensation expense and
related employer-paid payroll taxes
11,819
11,575
36,950
34,225
Transaction related costs
(1,811
)
(609
)
1,712
(618
)
Restructuring costs and other
3,140
582
4,025
1,618
Spin-off costs
—
166
51
623
Tax benefits associated with above
adjustments (1)
(136
)
(1,041
)
(1,104
)
(3,480
)
Non-GAAP net income
$
24,251
$
17,160
$
70,732
$
48,396
GAAP diluted earnings per share
$
0.06
$
0.03
$
0.15
$
0.08
Non-GAAP diluted earnings per share
$
0.13
$
0.09
$
0.38
$
0.26
Shares used in computation of diluted
earnings per share:
188,074
186,221
188,039
185,506
_________________
(1) The tax benefits associated with
non-GAAP adjustments for the three and nine months ended September
30, 2024, and 2023, respectively, is calculated utilizing the
Company's individual statutory tax rates for each impacted
subsidiary.
N-able, Inc.
Reconciliation of GAAP Net
Income to Adjusted EBITDA
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Net income
$
10,757
$
6,013
$
27,668
$
14,061
Amortization
2,099
1,437
5,840
4,825
Depreciation
3,956
3,892
11,938
11,317
Income tax expense
7,885
4,112
19,644
13,484
Interest expense, net
7,535
7,802
22,762
22,532
Unrealized foreign currency (gains)
losses
(548
)
1,582
693
2,137
Transaction related costs
(1,811
)
(609
)
1,712
(618
)
Spin-off costs
—
166
51
623
Stock-based compensation expense and
related employer-paid payroll taxes
11,819
11,575
36,950
34,225
Restructuring costs and other
3,140
582
4,025
1,618
Adjusted EBITDA
$
44,832
$
36,552
$
131,283
$
104,204
Adjusted EBITDA margin
38.5
%
34.0
%
37.5
%
33.2
%
N-able, Inc.
Reconciliation of GAAP Revenue
to Non-GAAP Revenue on a Constant Currency Basis
(In thousands, except
percentages)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
Growth Rate
2024
2023
Growth Rate
GAAP subscription revenue
$
114,998
$
105,208
9.3
%
$
343,928
$
306,005
12.4
%
Estimated foreign currency impact (1)
(1,007
)
—
(1.0
)
(1,065
)
—
(0.4
)
Non-GAAP subscription revenue on a
constant currency basis
$
113,991
$
105,208
8.3
%
$
342,863
$
306,005
12.0
%
GAAP other revenue
$
1,444
$
2,359
(38.8
)%
$
5,710
$
7,460
(23.5
)%
Estimated foreign currency impact (1)
—
—
—
7
—
0.1
Non-GAAP other revenue on a constant
currency basis
$
1,444
$
2,359
(38.8
)%
$
5,717
$
7,460
(23.4
)%
GAAP subscription and other revenue
$
116,442
$
107,567
8.3
%
$
349,638
$
313,465
11.5
%
Estimated foreign currency impact (1)
(1,007
)
—
(1.0
)
(1,058
)
—
(0.3
)
Non-GAAP subscription and other revenue on
a constant currency basis
$
115,435
$
107,567
7.3
%
$
348,580
$
313,465
11.2
%
_________________
(1) The estimated foreign currency impact
is calculated using the average foreign currency exchange rates in
the comparable prior year monthly periods and applying those rates
to foreign-denominated revenue in the corresponding monthly periods
for the three and nine months ended September 30, 2024.
N-able, Inc.
Reconciliation of Unlevered
Free Cash Flow
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Net cash provided by operating
activities
$
21,989
$
27,512
$
53,451
$
58,869
Purchases of property and equipment
(3,740
)
(3,518
)
(10,420
)
(10,487
)
Purchases of intangible assets
(1,574
)
(2,006
)
(5,166
)
(6,675
)
Free cash flow
16,675
21,988
37,865
41,707
Cash paid for interest, net of cash
interest received
7,198
7,416
21,760
21,119
Cash paid for transaction related costs,
restructuring costs, spin-off costs, employer-paid payroll taxes on
stock awards and other one-time items
3,103
833
10,084
4,885
Unlevered free cash flow
$
26,976
$
30,237
$
69,709
$
67,711
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241106674686/en/
Investors: Griffin Gyr ir@n-able.com
Media: Kim Cecchini Phone: 202.391.5205 pr@n-able.com
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