Second-Quarter 2024 Revenue Increased 13%
Year-Over-Year
Raised Mid-Point of Full-Year 2024 Revenue
Outlook to $464.0M
Raised Full-Year 2024 Adjusted EBITDA Margin
Outlook to 36%
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 second quarter ended June 30, 2024.
“N-able’s second quarter performance underscores the need for IT
solutions among small and medium sized businesses and MSPs,” said
N-able president and CEO John Pagliuca. “Our award winning data
protection product Cove and our powerful security suite showed
particular strength, highlighting the importance of resilience and
protection. We also saw continued success with our long-term
contract initiative, which we believe further cements N-able as a
strategic partner within our customers’ operations. We are eager to
build on the progress we made in the second quarter and advance our
mission to empower MSPs with leading software solutions.”
“Our second quarter performance marks our seventh consecutive
quarter operating north of the Rule of 45 on a constant currency
revenue growth and adjusted EBITDA basis,” added N-able CFO Tim
O’Brien. “As we enter the second half of the year, we are focused
on strong execution and are raising the mid-point of our full-year
revenue and profit outlook.”
Second quarter 2024 financial highlights:
- Total revenue of $119.4 million, representing 12.6%
year-over-year growth, or 12.7% year-over-year growth on a constant
currency basis.
- Subscription revenue of $117.4 million, representing 13.6%
year-over-year growth, or 13.7% year-over-year growth on a constant
currency basis.
- GAAP gross margin of 84.0% and non-GAAP gross margin of
84.7%.
- GAAP net income of $9.5 million, or $0.05 per diluted share,
and non-GAAP net income of $26.6 million, or $0.14 per diluted
share.
- Adjusted EBITDA of $46.8 million, up 34.1% year-over-year,
representing an adjusted EBITDA margin of 39.2%.
For a reconciliation of our GAAP to non-GAAP results, please see
the tables below.
Additional highlights for the second quarter of 2024
include:
- N-able was named to the prestigious MES Midmarket 100 for the
second consecutive year. The MES Midmarket 100 recognizes top
vendors that have proven themselves to be forward-thinking
technology providers offering products and services that support
midmarket organizations and drive growth and innovation for those
customers.
- N-able signed the CISA Secure by Design Pledge. N-able was part
of the first group of companies committed to the pledge and is
currently the only vendor signed up with an ecosystem that is built
from the ground up with MSPs in mind. The CISA pledge is taken by
companies who are committed to making a good-faith effort to work
towards increased security and transparency within the next year.
By signing the pledge, N‑able is further prioritizing security in
its products and services, while building on its defenses against
cyberthreats.
- N-able and MSPAlliance joined forces to help MSPs navigate
cybersecurity compliance requirements. Built by MSPs exclusively
for MSPs, Cyber Verify empowers MSPs across diverse sizes and
maturity levels with a set of comprehensive tools and resources to
facilitate a seamless integration of compliance processes that
elevate the quality of services delivered to their clientele and
deliver powerful, recurring revenue services. N‑able partners using
MSPAlliance’s Cyber Verify Program can quickly identify gaps,
certify alignment with compliance requirements, and offer
Compliance-as-a-Service solutions to their customers.
- N-able was honored by Comparably for the third consecutive year
for best career growth. N‑able was also included on the Best
Leadership Teams annual list, which highlights the dedication and
vision of the leadership team anchored by the company’s core
values: N-rich Lives, N-spire Others, and N-joy the Journey.
Balance Sheet
As of June 30, 2024, total cash and cash equivalents were $157.5
million and total debt, net of debt issuance costs, was $334.1
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 August 8, 2024, N-able is providing its financial outlook
for the third 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 Third Quarter of 2024
N-able management currently expects to achieve the following
results for the third quarter of 2024:
- Total revenue in the range of $114.5 to $115.0 million,
representing 6% to 7% year-over-year growth, or approximately 7%
growth on a constant currency basis.
- Adjusted EBITDA in the range of $39.5 to $40.0 million,
representing approximately 35% 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 $463.0 to $465.0 million,
representing approximately 10% year-over-year growth on both a
reported and a constant currency basis.
- Adjusted EBITDA in the range of $165.5 to $167.5 million,
representing approximately 36% 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 August 8, 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 third 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 security 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)
June 30,
December 31,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
157,509
$
153,048
Accounts receivable, net of allowances of
$1,265 and $1,171 as of June 30, 2024 and December 31, 2023,
respectively
37,195
40,013
Income tax receivable
12,368
8,001
Recoverable taxes
18,794
12,116
Prepaid and other current assets
26,339
11,613
Total current assets
252,205
224,791
Property and equipment, net
34,691
36,838
Operating lease right-of-use assets
29,370
32,067
Deferred taxes
1,032
1,087
Goodwill
826,985
838,497
Intangible assets, net
5,621
6,717
Other assets, net
24,759
22,794
Total assets
$
1,174,663
$
1,162,791
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$
6,221
$
5,239
Accrued liabilities and other
44,946
49,366
Current operating lease liabilities
5,942
6,443
Income taxes payable
13,816
4,523
Current portion of deferred revenue
10,544
12,646
Current debt obligation
3,500
3,500
Total current liabilities
84,969
81,717
Long-term liabilities:
Deferred revenue, net of current
portion
187
167
Non-current deferred taxes
1,774
1,820
Non-current operating lease
liabilities
30,203
33,064
Long-term debt, net of current portion
330,555
331,509
Other long-term liabilities
2,605
3,154
Total liabilities
450,293
451,431
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value:
550,000,000 shares authorized and 185,233,181 and 183,220,689
shares issued and outstanding as of June 30, 2024 and December 31,
2023, respectively
185
183
Preferred stock, $0.001 par value:
50,000,000 shares authorized and no shares issued and outstanding
as of June 30, 2024 and December 31, 2023, respectively
—
—
Additional paid-in capital
676,049
666,522
Accumulated other comprehensive (loss)
income
(9,021
)
4,409
Retained earnings
57,157
40,246
Total stockholders' equity
724,370
711,360
Total liabilities and stockholders'
equity
$
1,174,663
$
1,162,791
N-able, Inc.
Consolidated Statements of
Operations
(In thousands, except per
share information)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Revenue:
Subscription and other revenue
$
119,447
$
106,080
$
233,196
$
205,898
Cost of revenue:
Cost of revenue
18,706
16,559
36,542
32,312
Amortization of acquired technologies
458
463
919
919
Total cost of revenue
19,164
17,022
37,461
33,231
Gross profit
100,283
89,058
195,735
172,667
Operating expenses:
Sales and marketing
32,850
34,889
68,666
67,452
Research and development
22,391
20,234
44,473
39,044
General and administrative
23,048
18,091
40,097
35,439
Amortization of acquired intangibles
15
10
29
574
Total operating expenses
78,304
73,224
153,265
142,509
Operating income
21,979
15,834
42,470
30,158
Other expense:
Interest expense, net
(7,606
)
(7,530
)
(15,227
)
(14,730
)
Other income, net
1,142
1,004
1,427
1,992
Total other expense, net
(6,464
)
(6,526
)
(13,800
)
(12,738
)
Income before income taxes
15,515
9,308
28,670
17,420
Income tax expense
6,060
4,799
11,759
9,372
Net income
$
9,455
$
4,509
$
16,911
$
8,048
Net income per share:
Basic earnings per share
$
0.05
$
0.02
$
0.09
$
0.04
Diluted earnings per share
$
0.05
$
0.02
$
0.09
$
0.04
Weighted-average shares used to compute
net income per share:
Shares used in computation of basic
earnings per share:
184,996
182,249
184,504
181,843
Shares used in computation of diluted
earnings per share:
187,274
185,643
187,560
184,732
N-able, Inc.
Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Cash flows from operating activities
Net income
$
9,455
$
4,509
$
16,911
$
8,048
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
5,904
5,146
11,723
10,813
Provision for (benefit from) doubtful
accounts
41
20
94
(71
)
Stock-based compensation expense
11,808
11,745
23,355
21,595
Deferred taxes
6
6
—
14
Amortization of debt issuance costs
398
398
797
792
Operating lease right-of-use assets,
net
151
(402
)
105
(512
)
Loss on foreign currency exchange
rates
445
530
1,241
555
Loss (gain) on contingent
consideration
60
(567
)
(1,347
)
(327
)
Other non-cash expenses
—
97
84
128
Changes in operating assets and
liabilities, net of assets acquired and liabilities assumed in
business combinations:
Accounts receivable
2,013
(4,513
)
1,892
(5,906
)
Income tax receivable
(1,921
)
(2,103
)
(4,383
)
(7,919
)
Recoverable taxes
(3,214
)
(4,657
)
(6,678
)
(4,974
)
Prepaid expenses and other assets
(9,116
)
1,024
(14,633
)
(840
)
Accounts payable
2,208
1,142
819
872
Accrued liabilities and other
8,212
8,234
(3,493
)
4,397
Income taxes payable
3,160
684
9,165
5,981
Deferred revenue
(2,371
)
(924
)
(2,082
)
(415
)
Other long-term assets
289
357
(1,631
)
(918
)
Other long-term liabilities
(250
)
—
(477
)
44
Net cash provided by operating
activities
27,278
20,726
31,462
31,357
Cash flows from investing activities
Purchases of property and equipment
(3,242
)
(3,565
)
(6,680
)
(6,969
)
Purchases of intangible assets
(1,903
)
(2,458
)
(3,592
)
(4,669
)
Net cash used in investing activities
(5,145
)
(6,023
)
(10,272
)
(11,638
)
Cash flows from financing activities
Payments of tax withholding obligations
related to restricted stock units
(3,098
)
(2,402
)
(15,339
)
(8,240
)
Exercise of stock options
8
5
8
26
Proceeds from issuance of common stock
under employee stock purchase plan
—
—
1,200
771
Deferred acquisition payments
(1,000
)
—
(1,000
)
—
Repayments of borrowings from Credit
Agreement
(875
)
(875
)
(1,750
)
(1,750
)
Net cash used in financing activities
(4,965
)
(3,272
)
(16,881
)
(9,193
)
Effect of exchange rate changes on cash
and cash equivalents
1,114
(321
)
152
(183
)
Net increase in cash and cash
equivalents
18,282
11,110
4,461
10,343
Cash and cash equivalents
Beginning of period
139,227
98,080
153,048
98,847
End of period
$
157,509
$
109,190
$
157,509
$
109,190
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
7,292
$
7,014
$
14,562
$
13,703
Cash paid for income taxes
$
4,236
$
5,225
$
6,015
$
9,890
Supplemental disclosure of non-cash
activities:
Change in purchases of property, equipment
and leasehold improvements included in accounts payable and accrued
expenses
$
(25
)
$
1,119
$
154
$
956
Right-of-use assets obtained in exchange
for operating lease liabilities
$
—
$
483
$
—
$
483
N-able, Inc.
Reconciliation of GAAP to
Non-GAAP Financial Measures
(In thousands, except per
share information)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
GAAP cost of revenue
$
19,164
$
17,022
$
37,461
$
33,231
Stock-based compensation expense and
related employer-paid payroll taxes
(441
)
(381
)
(888
)
(717
)
Amortization of acquired technologies
(458
)
(463
)
(919
)
(919
)
Restructuring costs and other
—
(8
)
—
(17
)
Non-GAAP cost of revenue
$
18,265
$
16,170
$
35,654
$
31,578
GAAP gross profit
$
100,283
$
89,058
$
195,735
$
172,667
Stock-based compensation expense and
related employer-paid payroll taxes
441
381
888
717
Amortization of acquired technologies
458
463
919
919
Restructuring costs and other
—
8
—
17
Non-GAAP gross profit
$
101,182
$
89,910
$
197,542
$
174,320
GAAP sales and marketing expense
$
32,850
$
34,889
$
68,666
$
67,452
Stock-based compensation expense and
related employer-paid payroll taxes
(3,856
)
(4,116
)
(8,229
)
(7,658
)
Transaction related costs
(4
)
(24
)
(4
)
(24
)
Restructuring costs and other
(247
)
(24
)
(418
)
(24
)
Non-GAAP sales and marketing expense
$
28,743
$
30,725
$
60,015
$
59,746
GAAP research and development expense
$
22,391
$
20,234
$
44,473
$
39,044
Stock-based compensation expense and
related employer-paid payroll taxes
(2,748
)
(2,405
)
(5,533
)
(4,395
)
Transaction related costs
(25
)
(8
)
(25
)
(8
)
Restructuring costs and other
(33
)
(152
)
(57
)
(790
)
Non-GAAP research and development
expense
$
19,585
$
17,669
$
38,858
$
33,851
GAAP general and administrative
expense
$
23,048
$
18,091
$
40,097
$
35,439
Stock-based compensation expense and
related employer-paid payroll taxes
(5,118
)
(5,132
)
(10,480
)
(9,880
)
Transaction related costs
(4,890
)
310
(3,494
)
41
Restructuring costs and other
21
(225
)
(410
)
(205
)
Spin-off costs
—
(227
)
(51
)
(457
)
Non-GAAP general and administrative
expense
$
13,061
$
12,817
$
25,662
$
24,938
GAAP operating income
$
21,979
$
15,834
$
42,470
$
30,158
Amortization of acquired technologies
458
463
919
919
Amortization of acquired intangibles
15
10
29
574
Stock-based compensation expense and
related employer-paid payroll taxes
12,164
12,034
25,131
22,650
Transaction related costs
4,919
(278
)
3,523
(9
)
Restructuring costs and other
259
409
885
1,036
Spin-off costs
—
227
51
457
Non-GAAP operating income
$
39,794
$
28,699
$
73,008
$
55,785
GAAP operating margin
18.4
%
14.9
%
18.2
%
14.6
%
Non-GAAP operating margin
33.3
%
27.1
%
31.3
%
27.1
%
GAAP net income
$
9,455
$
4,509
$
16,911
$
8,048
Amortization of acquired technologies
458
463
919
919
Amortization of acquired intangibles
15
10
29
574
Stock-based compensation expense and
related employer-paid payroll taxes
12,164
12,034
25,131
22,650
Transaction related costs
4,919
(278
)
3,523
(9
)
Restructuring costs and other
259
409
885
1,036
Spin-off costs
—
227
51
457
Tax benefits associated with above
adjustments (1)
(624
)
(1,112
)
(968
)
(2,439
)
Non-GAAP net income
$
26,646
$
16,262
$
46,481
$
31,236
GAAP diluted earnings per share
$
0.05
$
0.02
$
0.09
$
0.04
Non-GAAP diluted earnings per share
$
0.14
$
0.09
$
0.25
$
0.17
Shares used in computation of diluted
earnings per share:
187,274
185,643
187,560
184,732
_________________
(1) The tax benefits associated with
non-GAAP adjustments for the three and six months ended June 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 June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net income
$
9,455
$
4,509
$
16,911
$
8,048
Amortization
1,879
1,391
3,741
3,388
Depreciation
4,025
3,755
7,982
7,425
Income tax expense
6,060
4,799
11,759
9,372
Interest expense, net
7,606
7,530
15,227
14,730
Unrealized foreign currency losses
445
530
1,241
555
Transaction related costs
4,919
(278
)
3,523
(9
)
Spin-off costs
—
227
51
457
Stock-based compensation expense and
related employer-paid payroll taxes
12,164
12,034
25,131
22,650
Restructuring costs and other
259
409
885
1,036
Adjusted EBITDA
$
46,812
$
34,906
$
86,451
$
67,652
Adjusted EBITDA margin
39.2
%
32.9
%
37.1
%
32.9
%
N-able, Inc.
Reconciliation of GAAP Revenue
to Non-GAAP Revenue on a Constant Currency Basis
(In thousands, except
percentages)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
Growth Rate
2024
2023
Growth Rate
GAAP subscription revenue
$
117,413
$
103,355
13.6
%
$
228,930
$
200,797
14.0
%
Estimated foreign currency impact (1)
153
—
0.1
(58
)
—
0.0
Non-GAAP subscription revenue on a
constant currency basis
$
117,566
$
103,355
13.7
%
$
228,872
$
200,797
14.0
%
GAAP other revenue
$
2,034
$
2,725
(25.4
)%
$
4,266
$
5,101
(16.4
)%
Estimated foreign currency impact (1)
3
—
0.1
7
—
0.1
Non-GAAP other revenue on a constant
currency basis
$
2,037
$
2,725
(25.2
)%
$
4,273
$
5,101
(16.2
)%
GAAP subscription and other revenue
$
119,447
$
106,080
12.6
%
$
233,196
$
205,898
13.3
%
Estimated foreign currency impact (1)
156
—
0.1
(51
)
—
—
Non-GAAP subscription and other revenue on
a constant currency basis
$
119,603
$
106,080
12.7
%
$
233,145
$
205,898
13.2
%
_________________
(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 six months ended June 30, 2024.
N-able, Inc.
Reconciliation of Unlevered
Free Cash Flow
(In thousands)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net cash provided by operating
activities
$
27,278
$
20,726
$
31,462
$
31,357
Purchases of property and equipment
(3,242
)
(3,565
)
(6,680
)
(6,969
)
Purchases of intangible assets
(1,903
)
(2,458
)
(3,592
)
(4,669
)
Free cash flow
22,133
14,703
21,190
19,719
Cash paid for interest, net of cash
interest received
7,292
7,014
14,562
13,703
Cash paid for transaction related costs,
restructuring costs, spin-off costs, employer-paid payroll taxes on
stock awards and other one-time items
6,029
1,895
6,981
4,052
Unlevered free cash flow
$
35,454
$
23,612
$
42,733
$
37,474
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240807531994/en/
Investors: Tim O'Brien ir@n-able.com
Media: Kim Cecchini 202.391.5205 pr@n-able.com
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