Exceeded $100 Million Quarterly Revenue
Milestone with Q2 Revenue of $106.1 Million
Raised Full-Year 2023 Revenue Outlook to $419.5
- $421.0 Million
Raised Full-Year 2023 Adjusted EBITDA Outlook
to $135.5 - $137.0 Million with Adjusted EBITDA Margin of 32% to
33%
TTM Dollar-Based Net Retention Rate of 105%,
109% on a Constant Currency Basis
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, 2023.
“Our strong second quarter highlights the power of our model,
the differentiation of our offerings, and our relentless focus on
empowering our MSPs,” said N-able president and CEO John Pagliuca.
“The positive relationship we have with our partners allows us to
innovate to meet their needs and ensures we are investing to give
MSPs the tools and support to provide mission-critical IT services
over the long term. By staying focused on creating value for our
stakeholders, we are able to realize the potential of our business
model.”
“Surpassing $100 million in revenue for the second quarter is a
culmination of strategic investments we have made in R&D,
brand-building, our customer success teams, and creating a
purpose-driven culture focused on enabling our MSPs' businesses,”
added N-able executive vice president and CFO Tim O’Brien. “As we
enter the back half of the year, we are focused on operational
excellence, disciplined cost management, and executing on
initiatives that advance our strategy of efficiently delivering
enterprise-grade technology to MSPs.”
Second quarter 2023 financial highlights:
- Total revenue of $106.1 million, representing approximately 16%
year-over-year growth, or approximately 17% year-over-year growth
on a constant currency basis.
- Subscription revenue of $103.4 million, representing
approximately 16% year-over-year growth, or approximately 17%
year-over-year growth on a constant currency basis.
- GAAP gross margin of 84.0% and non-GAAP gross margin of
84.8%.
- GAAP net income of $4.5 million, or $0.02 per diluted share,
and non-GAAP net income of $16.3 million, or $0.09 per diluted
share.
- Adjusted EBITDA of $34.9 million, up approximately 26%
year-over-year, representing an adjusted EBITDA margin of
32.9%.
For a reconciliation of our GAAP to non-GAAP results, please see
the tables below.
Additional highlights for the second quarter of 2023
include:
- N-able introduced disaster recovery as a service (DRaaS) with
the addition of Standby Image recovery in Microsoft Azure. This new
feature delivers expanded continuity capabilities, helping MSPs and
IT professionals provide a full range of recovery services—from
fast, straightforward file-level restore to flexible, affordable
disaster recovery, now including recovery in Microsoft Azure.
- N-able was recognized by Comparably, a leading workplace
culture and corporate brand reputation platform, with a ‘Best
Career Growth’ award for the second consecutive year.
- N-able strengthened its Diversity, Equality, and Belonging
commitment by signing the CEO Action for Diversity and Inclusion
Pledge. The CEO Action for Diversity & Inclusion was founded in
2017 and is the largest CEO-driven business commitment to advance
diversity and inclusion in the workplace, with more than 2,400 CEOs
pledging to create more inclusive cultures.
Balance Sheet
At June 30, 2023, total cash and cash equivalents were $109.2
million and total debt, net of debt issuance costs, was $336.0
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 10, 2023, N-able is providing its financial outlook
for the third quarter of 2023 and full-year 2023. 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 losses (gains), acquisition 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 FX rates and current macroeconomic
dynamics.
Financial Outlook for the Third Quarter of 2023
N-able management currently expects to achieve the following
results for the third quarter of 2023:
- Total revenue in the range of $106.5 to $107.0 million,
representing approximately 14% year-over-year growth, or
approximately 12% to 13% growth on a constant currency basis.
- Adjusted EBITDA in the range of $34.5 to $35.0 million,
representing approximately 32% to 33% of total revenue.
Financial Outlook for Full-Year 2023
N-able management currently expects to achieve the following
results for the full-year 2023:
- Total revenue in the range of $419.5 to $421.0 million,
representing approximately 13% year-over-year growth on both a
reported and constant currency basis.
- Adjusted EBITDA in the range of $135.5 to $137.0 million,
representing approximately 32% to 33% 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 10, 2023. 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 second quarter and full year 2023 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 could disrupt or adversely
affect our business, results of operations and financial condition,
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 possibility that a worsening of the global
COVID-19 pandemic or a new pandemic or other public health crisis
may adversely affect our business, results of operations and
financial condition or that the impact of such occurrences could
negatively affect the global economy or the business operations and
financial conditions of our customers, their end customers and our
prospective customers; (c) the impact of adverse economic
conditions; (d) 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; (e) any decline in our
renewal or net retention rates; (f) 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 the COVID-19 pandemic, inflation, actions
taken by central banks to counter inflation, rising interest rates,
the impact of bank failures and related financial services industry
uncertainty, war and political unrest, military conflict (including
between Russia and Ukraine), terrorism, sanctions or other
geopolitical events globally, or that such factors may otherwise
harm our business, financial condition or results of operations;
(g) 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; (h) any
inability to successfully identify, complete and integrate
acquisitions and manage our growth effectively; (i) risks
associated with our international operations including, but not
limited to, regulatory, political, tax and labor conditions; (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, or 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 as a standalone public
company; (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 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; (s) increased
costs associated with the loss of emerging growth company status;
and (t) such other risks and uncertainties described more fully in
documents filed with or furnished to the Securities and Exchange
Commission, including the risk factors discussed in N-able’s Annual
Report on Form 10-K for the year ended December 31, 2022, that
N-able filed with the SEC on March 14, 2023. 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, acquisition 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.
- Acquisition Related Costs. We exclude certain expense items
resulting from acquisitions, 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, acquisitions 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 acquisition 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 less acquisitive peer companies,
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 losses (gains), acquisition 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, acquisition-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
© 2023 N-able, Inc. All rights reserved.
Source: N-able, Inc. Category: Financial
N-able, Inc.
Consolidated Balance
Sheets
(In thousands)
(Unaudited)
June 30,
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
109,190
$
98,847
Accounts receivable, net of allowances of
$1,259 and $1,330 as of June 30, 2023 and December 31, 2022,
respectively
40,164
34,798
Income tax receivable
15,738
7,814
Prepaid and other current assets
18,545
12,697
Total current assets
183,637
154,156
Property and equipment, net
38,302
37,404
Operating lease right-of-use assets
29,561
31,752
Deferred taxes
1,566
795
Goodwill
831,666
828,795
Intangible assets, net
7,499
8,873
Other assets, net
20,810
17,082
Total assets
$
1,113,041
$
1,078,857
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$
5,600
$
3,544
Accrued liabilities and other
39,507
35,630
Current operating lease liabilities
5,816
5,771
Income taxes payable
7,657
1,629
Current portion of deferred revenue
11,543
11,740
Current debt obligation
3,500
3,500
Total current liabilities
73,623
61,814
Long-term liabilities:
Deferred revenue, net of current
portion
171
387
Non-current deferred taxes
1,986
2,783
Non-current operating lease
liabilities
30,690
33,110
Long-term debt, net of current portion
332,450
333,488
Other long-term liabilities
5,214
5,204
Total liabilities
444,134
436,786
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value:
550,000,000 shares authorized and 182,471,083 and 180,849,537
shares issued and outstanding as of June 30, 2023 and December 31,
2022, respectively
182
181
Preferred stock, $0.001 par value:
50,000,000 shares authorized and no shares issued and outstanding
as of June 30, 2023 and December 31, 2022, respectively
—
—
Additional paid-in capital
647,188
632,871
Accumulated other comprehensive loss
(3,345
)
(7,815
)
Retained earnings
24,882
16,834
Total stockholders' equity
668,907
642,071
Total liabilities and stockholders'
equity
$
1,113,041
$
1,078,857
N-able, Inc.
Consolidated Statements of
Operations
(In thousands, except per
share information)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenue:
Subscription and other revenue
$
106,080
$
91,627
$
205,898
$
182,487
Cost of revenue:
Cost of revenue
16,559
13,624
32,312
26,905
Amortization of acquired technologies
463
545
919
1,527
Total cost of revenue
17,022
14,169
33,231
28,432
Gross profit
89,058
77,458
172,667
154,055
Operating expenses:
Sales and marketing
34,889
32,020
67,452
63,074
Research and development
20,234
15,241
39,044
30,626
General and administrative
18,091
18,440
35,439
36,069
Amortization of acquired intangibles
10
1,460
574
2,921
Total operating expenses
73,224
67,161
142,509
132,690
Operating income
15,834
10,297
30,158
21,365
Other expense:
Interest expense, net
(7,530
)
(3,845
)
(14,730
)
(7,371
)
Other income, net
1,004
175
1,992
1,234
Total other expense
(6,526
)
(3,670
)
(12,738
)
(6,137
)
Income before income taxes
9,308
6,627
17,420
15,228
Income tax expense
4,799
2,300
9,372
5,800
Net income
$
4,509
$
4,327
$
8,048
$
9,428
Net income per share:
Basic earnings per share
$
0.02
$
0.02
$
0.04
$
0.05
Diluted earnings per share
$
0.02
$
0.02
$
0.04
$
0.05
Weighted-average shares used to compute
net income per share:
Shares used in computation of basic
earnings per share:
182,249
180,034
181,843
179,948
Shares used in computation of diluted
earnings per share:
185,643
180,504
184,732
180,675
N-able, Inc.
Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Cash flows from operating activities
Net income
$
4,509
$
4,327
$
8,048
$
9,428
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
5,146
5,895
10,813
12,233
Provision for (benefit from) doubtful
accounts
20
(56
)
(71
)
(73
)
Stock-based compensation expense
11,745
9,797
21,595
17,966
Deferred taxes
6
(135
)
14
345
Amortization of debt issuance costs
398
416
792
814
Operating lease right-of-use assets,
net
(402
)
468
(512
)
(424
)
Loss (gain) on foreign currency exchange
rates
530
228
555
(597
)
Gain on contingent consideration
(567
)
—
(327
)
—
Other non-cash expenses
97
4
128
43
Changes in operating assets and
liabilities, net of assets acquired and liabilities assumed in
business combinations:
Accounts receivable
(4,513
)
(415
)
(5,906
)
(1,512
)
Income tax receivable
(2,103
)
(912
)
(7,919
)
(1,884
)
Prepaid expenses and other assets
(3,633
)
276
(5,814
)
217
Accounts payable
1,142
1,204
872
(839
)
Due to and from affiliates
—
(69
)
—
(463
)
Accrued liabilities and other
8,234
3,123
4,397
(1,822
)
Income taxes payable
684
(1,398
)
5,981
1,965
Deferred revenue
(924
)
(315
)
(415
)
358
Other long-term assets
357
299
(918
)
112
Other long-term liabilities
—
—
44
—
Net cash provided by operating
activities
20,726
22,737
31,357
35,867
Cash flows from investing activities
Purchases of property and equipment
(3,565
)
(2,723
)
(6,969
)
(5,427
)
Purchases of intangible assets
(2,458
)
(1,215
)
(4,669
)
(2,356
)
Net cash used in investing activities
(6,023
)
(3,938
)
(11,638
)
(7,783
)
Cash flows from financing activities
Payments of tax withholding obligations
related to restricted stock units
(2,402
)
(990
)
(8,240
)
(5,543
)
Exercise of stock options
5
11
26
27
Proceeds from issuance of common stock
under employee stock purchase plan
—
—
771
568
Repayments of borrowings from Credit
Agreement
(875
)
(875
)
(1,750
)
(1,750
)
Net cash used in financing activities
(3,272
)
(1,854
)
(9,193
)
(6,698
)
Effect of exchange rate changes on cash
and cash equivalents
(321
)
(766
)
(183
)
(1,504
)
Net increase in cash and cash
equivalents
11,110
16,179
10,343
19,882
Cash and cash equivalents
Beginning of period
98,080
70,439
98,847
66,736
End of period
$
109,190
$
86,618
$
109,190
$
86,618
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
7,014
$
3,126
$
13,703
$
6,183
Cash paid for income taxes
$
5,225
$
3,122
$
9,890
$
3,829
Supplemental disclosure of non-cash
activities:
Change in purchases of property, equipment
and leasehold improvements included in accounts payable and accrued
expenses
$
1,119
$
(100
)
$
956
$
(583
)
Right-of-use assets obtained in exchange
for operating lease liabilities
$
483
$
—
$
483
$
967
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,
2023
2022
2023
2022
GAAP cost of revenue
$
17,022
$
14,169
$
33,231
$
28,432
Stock-based compensation expense and
related employer-paid payroll taxes
(381
)
(296
)
(717
)
(620
)
Amortization of acquired technologies
(463
)
(545
)
(919
)
(1,527
)
Restructuring costs and other
(8
)
(23
)
(17
)
(30
)
Non-GAAP cost of revenue
$
16,170
$
13,305
$
31,578
$
26,255
GAAP gross profit
$
89,058
$
77,458
$
172,667
$
154,055
Stock-based compensation expense and
related employer-paid payroll taxes
381
296
717
620
Amortization of acquired technologies
463
545
919
1,527
Restructuring costs and other
8
23
17
30
Non-GAAP gross profit
$
89,910
$
78,322
$
174,320
$
156,232
GAAP sales and marketing expense
$
34,889
$
32,020
$
67,452
$
63,074
Stock-based compensation expense and
related employer-paid payroll taxes
(4,116
)
(3,359
)
(7,658
)
(6,346
)
Acquisition related costs
(24
)
(14
)
(24
)
(14
)
Restructuring costs and other
(24
)
(2
)
(24
)
(2
)
Non-GAAP sales and marketing expense
$
30,725
$
28,645
$
59,746
$
56,712
GAAP research and development expense
$
20,234
$
15,241
$
39,044
$
30,626
Stock-based compensation expense and
related employer-paid payroll taxes
(2,405
)
(1,684
)
(4,395
)
(3,231
)
Acquisition related costs
(8
)
(32
)
(8
)
(32
)
Restructuring costs and other
(152
)
(72
)
(790
)
(112
)
Non-GAAP research and development
expense
$
17,669
$
13,453
$
33,851
$
27,251
GAAP general and administrative
expense
$
18,091
$
18,440
$
35,439
$
36,069
Stock-based compensation expense and
related employer-paid payroll taxes
(5,132
)
(4,635
)
(9,880
)
(8,561
)
Acquisition related costs
310
(223
)
41
(223
)
Restructuring costs and other
(225
)
(260
)
(205
)
(285
)
Spin-off costs
(227
)
(420
)
(457
)
(954
)
Non-GAAP general and administrative
expense
$
12,817
$
12,902
$
24,938
$
26,046
GAAP operating income
$
15,834
$
10,297
$
30,158
$
21,365
Amortization of acquired technologies
463
545
919
1,527
Amortization of acquired intangibles
10
1,460
574
2,921
Stock-based compensation expense and
related employer-paid payroll taxes
12,034
9,974
22,650
18,758
Acquisition related costs
(278
)
269
(9
)
269
Restructuring costs and other
409
357
1,036
429
Spin-off costs
227
420
457
954
Non-GAAP operating income
$
28,699
$
23,322
$
55,785
$
46,223
GAAP operating margin
14.9
%
11.2
%
14.6
%
11.7
%
Non-GAAP operating margin
27.1
%
25.5
%
27.1
%
25.3
%
GAAP net income
$
4,509
$
4,327
$
8,048
$
9,428
Amortization of acquired technologies
463
545
919
1,527
Amortization of acquired intangibles
10
1,460
574
2,921
Stock-based compensation expense and
related employer-paid payroll taxes
12,034
9,974
22,650
18,758
Acquisition related costs
(278
)
269
(9
)
269
Restructuring costs and other
409
357
1,036
429
Spin-off costs
227
420
457
954
Tax benefits associated with above
adjustments (1)
(1,112
)
(1,378
)
(2,439
)
(2,715
)
Non-GAAP net income
$
16,262
$
15,974
$
31,236
$
31,571
GAAP diluted earnings per share
$
0.02
$
0.02
$
0.04
$
0.05
Non-GAAP diluted earnings per share
$
0.09
$
0.09
$
0.17
$
0.17
Shares used in computation of diluted
earnings per share:
185,643
180,504
184,732
180,675
_________________
(1) The tax benefits associated with
non-GAAP adjustments for the three and six months ended June 30,
2023, and 2022, 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,
2023
2022
2023
2022
Net income
$
4,509
$
4,327
$
8,048
$
9,428
Amortization
1,391
2,694
3,388
5,837
Depreciation
3,755
3,201
7,425
6,396
Income tax expense
4,799
2,300
9,372
5,800
Interest expense, net
7,530
3,845
14,730
7,371
Unrealized foreign currency losses
(gains)
530
228
555
(597
)
Acquisition related costs
(278
)
269
(9
)
269
Spin-off costs
227
420
457
954
Stock-based compensation expense and
related employer-paid payroll taxes
12,034
9,974
22,650
18,758
Restructuring costs and other
409
357
1,036
429
Adjusted EBITDA
$
34,906
$
27,615
$
67,652
$
54,645
Adjusted EBITDA margin
32.9
%
30.1
%
32.9
%
29.9
%
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,
2023
2022
Growth Rate
2023
2022
Growth Rate
GAAP subscription revenue
$
103,355
$
89,369
15.6
%
$
200,797
$
178,004
12.8
%
Estimated foreign currency impact (1)
929
—
1.0
3,826
—
2.1
Non-GAAP subscription revenue on a
constant currency basis
$
104,284
$
89,369
16.7
%
$
204,623
$
178,004
15.0
%
GAAP other revenue
$
2,725
$
2,258
20.7
%
$
5,101
$
4,483
13.8
%
Estimated foreign currency impact (1)
16
—
0.7
57
—
1.3
Non-GAAP other revenue on a constant
currency basis
$
2,741
$
2,258
21.4
%
$
5,158
$
4,483
15.1
%
GAAP subscription and other revenue
$
106,080
$
91,627
15.8
%
$
205,898
$
182,487
12.8
%
Estimated foreign currency impact (1)
945
—
1.0
3,883
—
2.1
Non-GAAP subscription and other revenue on
a constant currency basis
$
107,025
$
91,627
16.8
%
$
209,781
$
182,487
15.0
%
_________________
(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
in the three and six months ended June 30, 2023.
N-able, Inc.
Reconciliation of Unlevered
Free Cash Flow
(In thousands)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net cash provided by operating
activities
$
20,726
$
22,737
$
31,357
$
35,867
Capital expenditures (1)
(6,023
)
(3,938
)
(11,638
)
(7,783
)
Free cash flow
14,703
18,799
19,719
28,084
Cash paid for interest, net of cash
interest received
7,014
3,126
13,703
6,183
Cash paid for acquisition related costs,
restructuring costs, spin-off costs, employer-paid payroll taxes on
stock awards and other one-time items
1,895
3,144
4,052
4,319
Unlevered free cash flow
$
23,612
$
25,069
$
37,474
$
38,586
_________________
(1) Includes purchases of property and
equipment and purchases of intangible assets.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230809007660/en/
Investors: Tim O'Brien ir@n-able.com
Media: Kim Cecchini Phone: 202.391.5205 pr@n-able.com
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