Second Quarter Subscription Revenue Increased
8% Year-Over-Year, 14% in Constant Currency
TTM Dollar-Based Net Retention Rate of 106%
Includes ~ 2 Points of Negative FX Impact
Adjusted Full-Year 2022 Revenue Outlook of 7%
Year-Over-Year Growth, or 12% to 13% on a Constant Currency Basis,
Accounting for Current Macroeconomic Dynamics
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, 2022.
“As we celebrate N-able’s one-year anniversary as an independent
public company, our second quarter results once again beat our
expectations, and our reputation as the software provider who helps
solve the challenges our partners face continues to strengthen,”
said N-able President and CEO John Pagliuca. “We are beginning to
see the benefit of the strategic initiatives we set in place, and
we are getting an enthusiastic reception across the market to the
power of our platform and the differentiation of our services and
partner success resources. As we enter the second half of 2022, we
will continue to work closely with our MSP partners to help them
standardize on our holistic suite of tools and the exciting new
products yet to come.”
“Our results for the second quarter reflect the success of our
multi-product sales approach, with particularly strong growth in
our security and data protection offerings,” added N-able Executive
Vice President and CFO Tim O’Brien. “We believe we have a winning
business model that creates value for our stakeholders and is
adaptable to, and built to capitalize on, shifting trends in the
market. We intend to continue to balance investment in our business
and our people, execute on our strategy, and monitor the current
macro dynamics so we can continue to drive growth and deliver the
products and services on which our partners rely.”
Second quarter 2022 financial highlights:
- Total revenue of $91.6 million, representing approximately 7%
year-over-year growth, or approximately 13% year-over-year growth
on a constant currency basis.
- Subscription revenue of $89.4 million, representing
approximately 8% year-over-year growth, or approximately 14%
year-over-year growth on a constant currency basis.
- GAAP gross margin of 84.5% and non-GAAP gross margin of
85.5%.
- GAAP net income of $4.3 million, or $0.02 per diluted share,
and non-GAAP net income of $16.0 million, or $0.09 per diluted
share.
- Adjusted EBITDA of $27.6 million, representing an adjusted
EBITDA margin of 30.1%.
For a reconciliation of our GAAP to non-GAAP results, please see
the tables below.
Additional highlights for the second quarter of 2022
include:
- N-able launched Cove Data Protection™, the cloud-first data
protection-as-a-service (DPaaS) solution that modernizes data
protection for MSPs, and subsequently announced an additional
feature called Standby Image, which together gives MSP partners the
ability to provide robust, business-class disaster recovery without
the administrative and cost burdens of traditional image backup
products.
- N-able received Stevie® honors across four separate categories
of the 20th annual American Business Awards® for business
excellence: a gold award for IT Department of the Year, silver
awards for Human Resources Executive of the Year and Customer
Service Team of the Year, and a bronze award for Achievement in
Product Innovation for Cove Data Protection™.
- N-able launched N-able™ N-hanced Services™ to help MSP partners
unlock the full potential of N-able products, optimize their
business, and accelerate time to value by delivering solutions to
their customers faster.
- N-able celebrated the first anniversary of MarketBuilder, a
marketing automation toolset that provides MSPs with content and
campaigns they can quickly and easily brand and use in their own
sales and marketing programs. To date, MarketBuilder has been
adopted by more than 2,500 N-able partners worldwide, and MSPs have
generated over 4,600 leads, created 14,000 social media posts with
a combined 1.8 million followers, and sent 350,000 emails with an
open rate of approximately 20% using the tool.
- N-able announced that Cove Data Protection™ for Microsoft 365®
has surpassed one million protected Microsoft 365 users, and since
the launch in December 2019, more than 4,600 N-able partners are
utilizing the solution to help prevent data loss across more than
36,000 customer domains and over 1.2 million Exchange™
mailboxes.
- Subsequent to the end of the second quarter, N-able announced
that it acquired Spinpanel, a multi-tenant Microsoft 365 management
and automation platform built for Microsoft Cloud services to
automate the provisioning, security, and management of all
Microsoft tenants, users, and licenses in a single consolidated
hub. This acquisition is intended to enhance N-able’s cloud
strategy.
Balance Sheet
At June 30, 2022, total cash and cash equivalents were $86.6
million and total debt was $337.9 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.” In addition, through July 19,
2021, the date of completion of N-able’s separation from SolarWinds
Corporation (“SolarWinds”), N-able operated as part of SolarWinds
and the financial results for the periods through such date have
been prepared from SolarWinds’ historical accounting records and
presented on a stand-alone basis as if N-able’s business’
operations had been conducted independently from SolarWinds. While
the allocations and estimates in these carve-out financials are
based on assumptions that N-able’s management believes are
reasonable, the financial results presented may not be indicative
of the financial position, results of operations and cash flows of
N-able in the future or if N-able had been a separate, stand-alone
publicly traded entity during the periods presented. N-able’s
financial results for the period from July 20, 2021, through June
30, 2022, are based on our reported results as a stand-alone
company.
Financial Outlook
As of August 11, 2022, N-able is providing its financial outlook
for the third quarter of 2022 and full year 2022. 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 (benefit), interest
expense, net, unrealized foreign currency (gains) losses,
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 updated
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 2022
N-able management currently expects to achieve the following
results for the third quarter of 2022:
- Total revenue in the range of $92.5 to $93.0 million,
representing approximately 5% year-over-year growth, or
approximately 11% to 12% growth on a constant currency basis.
- Adjusted EBITDA in the range of $26.5 to $27.0 million,
representing approximately 29% of total revenue.
Financial Outlook for Full-Year 2022
N-able management currently expects to achieve the following
results for the full year 2022:
- Total revenue in the range of $370 to $372 million,
representing 7% year-over-year growth, or 12% to 13% year-over-year
growth on a constant currency basis.
- Adjusted EBITDA in the range of $107.0 to $109.0 million,
representing approximately 29% 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 11, 2022. A live
webcast of the call will be available on the N-able Investor
Relations website at http://investors.n-able.com. A live dial-in
will be available domestically at +1 (844) 200-6205 and
internationally at +1 (929) 526-1599. To access the live call,
please dial in 5-10 minutes before the scheduled start time and
enter the conference passcode 577598 to gain access to the
conference call. 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 2022 and the
impact of foreign exchange rates and 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 the global COVID-19 pandemic may continue to adversely affect
our business, results of operations and financial condition or the
impact of the COVID-19 pandemic on the global economy or on the
business operations and financial conditions of our customers,
their end-customers and our prospective customers; (c) our ability
to sell subscriptions to new 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 the COVID-19 pandemic, inflation,
rising interest rates, 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 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) risks
associated with our international operations; (i) foreign exchange
gains and losses related to expenses and sales denominated in
currencies other than the functional currency of an associated
entity; (j) 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; (k) our status as a controlled company; (l) our
ability to attract and retain qualified employees and key personnel
as a standalone public company; (m) the timing and success of new
product introductions and product upgrades by us or our
competitors; (n) our ability to protect and defend our intellectual
property and not infringe upon others’ intellectual property; (o)
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; (p) our indebtedness, including rising interest rates,
potential restrictions on our operations and the impact of events
of default; (q) our ability to operate our business internationally
and increase sales of our solutions to our MSP partners located
outside of the United States; and (r) 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, 2021, that N-able filed with the SEC on
March 8, 2022; and in the Quarterly Report on Form 10-Q for the
period ended March 31, 2022, that N-able filed with the SEC on May
12, 2022. 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 (loss).
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. 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 Intangible Assets. We provide non-GAAP
information that excludes expenses related to purchased 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 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 (Loss) and Non-GAAP Net Income (Loss) Per
Diluted Share. We believe that the use of non-GAAP net income
(loss) and non-GAAP net income (loss) per diluted share is helpful
to our investors to clarify and enhance their understanding of past
performance and future prospects. Non-GAAP net income (loss) is
calculated as net income (loss) 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 (loss) per diluted share as non-GAAP net income (loss)
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 (benefit), interest expense, net,
unrealized foreign currency (gains) losses, 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
© 2022 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,
2022
2021
Assets
Current assets:
Cash and cash equivalents
$
86,618
$
66,736
Accounts receivable, net of allowances of
$1,580 and $1,653 as of June 30, 2022 and December 31, 2021,
respectively
34,087
33,041
Income tax receivable
9,092
7,250
Prepaid and other current assets
13,629
13,962
Total current assets
143,426
120,989
Property and equipment, net
36,451
38,748
Operating lease right-of-use assets
34,417
36,206
Deferred taxes
1,697
1,681
Goodwill
809,707
840,923
Intangible assets, net
3,569
8,066
Other assets, net
9,504
9,086
Total assets
$
1,038,771
$
1,055,699
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$
4,384
$
5,865
Due to affiliates
145
464
Accrued liabilities and other
26,683
30,944
Current operating lease liabilities
5,795
4,830
Income taxes payable
6,983
4,600
Current portion of deferred revenue
10,991
10,675
Current debt obligation
3,500
3,500
Total current liabilities
58,481
60,878
Long-term liabilities:
Deferred revenue, net of current
portion
158
223
Non-current deferred taxes
3,121
2,632
Non-current operating lease
liabilities
36,176
37,822
Long-term debt, net of current portion
334,429
335,379
Other long-term liabilities
412
410
Total liabilities
432,777
437,344
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value:
550,000,000 shares authorized and 180,146,580 and 179,049,429
shares issued and outstanding as of June 30, 2022 and December 31,
2021, respectively
180
179
Preferred stock, $0.001 par value:
50,000,000 shares authorized and no shares issued and outstanding
as of June 30, 2022 and December 31, 2021, respectively
—
—
Additional paid-in capital
616,148
602,996
Accumulated other comprehensive (loss)
income
(19,889
)
15,053
Retained earnings
9,555
127
Total stockholders' equity
605,994
618,355
Total liabilities and stockholders'
equity
$
1,038,771
$
1,055,699
N-able, Inc.
Consolidated Statements of
Operations
(In thousands, except per
share information)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Revenue:
Subscription and other revenue
$
91,627
$
85,340
$
182,487
168,530
Cost of revenue:
Cost of revenue
13,624
11,783
26,905
23,087
Amortization of acquired technologies
545
1,037
1,527
3,741
Total cost of revenue
14,169
12,820
28,432
26,828
Gross profit
77,458
72,520
154,055
141,702
Operating expenses:
Sales and marketing
32,020
24,498
63,074
50,212
Research and development
15,241
12,501
30,626
24,543
General and administrative
18,440
21,364
36,069
41,592
Amortization of acquired intangibles
1,460
4,276
2,921
10,295
Total operating expenses
67,161
62,639
132,690
126,642
Operating income
10,297
9,881
21,365
15,060
Other expense:
Interest expense, net
(3,845
)
(6,082
)
(7,371
)
(12,600
)
Other income (expense), net
175
(54
)
1,234
(583
)
Total other expense
(3,670
)
(6,136
)
(6,137
)
(13,183
)
Income before income taxes
6,627
3,745
15,228
1,877
Income tax expense
2,300
3,283
5,800
5,693
Net income (loss)
$
4,327
$
462
$
9,428
$
(3,816
)
Net income (loss) per share:
Basic earnings (loss) per share
$
0.02
$
0.00
$
0.05
$
(0.02
)
Diluted earnings (loss) per share
$
0.02
$
0.00
$
0.05
$
(0.02
)
Weighted-average shares used to compute
net income (loss) per share:
Shares used in computation of basic
earnings (loss) per share:
180,034
158,124
179,948
158,124
Shares used in computation of diluted
earnings (loss) per share:
180,504
158,124
180,675
158,124
N-able, Inc.
Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Cash flows from operating activities
Net income (loss)
$
4,327
$
462
$
9,428
$
(3,816
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
5,895
7,959
12,233
19,289
(Benefit from) provision for doubtful
accounts
(56
)
217
(73
)
500
Stock-based compensation expense
9,797
4,274
17,966
9,023
Deferred taxes
(135
)
(931
)
345
(2,381
)
Amortization of debt issuance costs
416
—
814
—
Operating lease right-of-use assets,
net
468
151
(424
)
—
Loss (gain) on foreign currency exchange
rates
228
46
(597
)
467
Other non-cash expenses
4
(2
)
43
—
Changes in operating assets and
liabilities, net of assets acquired and liabilities assumed in
business combinations:
Accounts receivable
(415
)
(1,515
)
(1,512
)
(1,327
)
Income tax receivable
(912
)
393
(1,884
)
(153
)
Prepaid expenses and other assets
276
(2,524
)
217
(6,117
)
Accounts payable
1,204
(2,022
)
(839
)
(5,336
)
Due to and from affiliates
(69
)
1,607
(463
)
12,184
Accrued liabilities and other
3,123
6,969
(1,822
)
5,118
Accrued related party interest payable
—
(5,284
)
—
(2,039
)
Income taxes payable
(1,398
)
406
1,965
(2,197
)
Deferred revenue
(315
)
(286
)
358
(126
)
Other long-term assets
299
—
112
—
Net cash provided by operating
activities
22,737
9,920
35,867
23,089
Cash flows from investing activities
Purchases of property and equipment
(2,723
)
(10,340
)
(5,427
)
(12,757
)
Purchases of intangible assets
(1,215
)
83
(2,356
)
(2,252
)
Net cash used in investing activities
(3,938
)
(10,257
)
(7,783
)
(15,009
)
Cash flows from financing activities
Payments of tax withholding obligations
related to restricted stock
(990
)
—
(5,543
)
—
Exercise of stock options
11
—
27
—
Proceeds from issuance of common stock
under employee stock purchase plan
—
—
568
—
Repayments of borrowings from Credit
Agreement
(875
)
—
(1,750
)
—
Repayments of borrowings due to
affiliates
—
(68,620
)
—
(68,620
)
Net transfers from Parent
—
8,400
—
10,783
Net cash used in financing activities
(1,854
)
(60,220
)
(6,698
)
(57,837
)
Effect of exchange rate changes on cash
and cash equivalents
(766
)
(1,061
)
(1,504
)
(433
)
Net increase (decrease) in cash and cash
equivalents
16,179
(61,618
)
19,882
(50,190
)
Cash and cash equivalents
Beginning of period
70,439
111,218
66,736
99,790
End of period
$
86,618
$
49,600
$
86,618
$
49,600
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
3,126
$
11,367
$
6,183
$
14,640
Cash paid for income taxes
$
3,122
$
2,634
$
3,829
$
9,816
Supplemental disclosure of non-cash
activities:
Change in purchases of property, equipment
and leasehold improvements included in accounts payable and accrued
expenses
$
(100
)
$
(619
)
$
(583
)
$
(2,653
)
Right-of-use assets obtained in exchange
for operating lease liabilities
$
—
$
20,919
$
967
$
21,235
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,
2022
2021
2022
2021
GAAP cost of revenue
$
14,169
$
12,820
$
28,432
$
26,828
Stock-based compensation expense and
related employer-paid payroll taxes
(296
)
(155
)
(620
)
(340
)
Amortization of acquired technologies
(545
)
(1,037
)
(1,527
)
(3,741
)
Restructuring costs and other
(23
)
—
(30
)
—
Non-GAAP cost of revenue
$
13,305
$
11,628
$
26,255
$
22,747
GAAP gross profit
$
77,458
$
72,520
$
154,055
$
141,702
Stock-based compensation expense and
related employer-paid payroll taxes
296
155
620
340
Amortization of acquired technologies
545
1,037
1,527
3,741
Restructuring costs and other
23
—
30
—
Non-GAAP gross profit
$
78,322
$
73,712
$
156,232
$
145,783
GAAP sales and marketing expense
$
32,020
$
24,498
$
63,074
$
50,212
Stock-based compensation expense and
related employer-paid payroll taxes
(3,359
)
(1,006
)
(6,346
)
(2,276
)
Acquisition related costs
(14
)
—
(14
)
—
Restructuring costs and other
(2
)
—
(2
)
—
Spin-off costs
—
(20
)
—
(359
)
Non-GAAP sales and marketing expense
$
28,645
$
23,472
$
56,712
$
47,577
GAAP research and development expense
$
15,241
$
12,501
$
30,626
$
24,543
Stock-based compensation expense and
related employer-paid payroll taxes
(1,684
)
(549
)
(3,231
)
(1,326
)
Acquisition related costs
(32
)
—
(32
)
—
Restructuring costs and other
(72
)
(63
)
(112
)
(68
)
Spin-off costs
—
(80
)
—
(231
)
Non-GAAP research and development
expense
$
13,453
$
11,809
$
27,251
$
22,918
GAAP general and administrative
expense
$
18,440
$
21,364
$
36,069
$
41,592
Stock-based compensation expense and
related employer-paid payroll taxes
(4,635
)
(2,640
)
(8,561
)
(5,530
)
Acquisition related costs
(223
)
87
(223
)
87
Restructuring costs and other
(260
)
(55
)
(285
)
(63
)
Spin-off costs
(420
)
(5,932
)
(954
)
(11,557
)
Non-GAAP general and administrative
expense
$
12,902
$
12,824
$
26,046
$
24,529
GAAP operating income
$
10,297
$
9,881
$
21,365
$
15,060
Amortization of acquired technologies
545
1,037
1,527
3,741
Amortization of acquired intangibles
1,460
4,276
2,921
10,295
Stock-based compensation expense and
related employer-paid payroll taxes
9,974
4,350
18,758
9,472
Acquisition related costs
269
(87
)
269
(87
)
Restructuring costs and other
357
117
429
130
Spin-off costs
420
6,033
954
12,148
Non-GAAP operating income
$
23,322
$
25,607
$
46,223
$
50,759
GAAP operating margin
11.2
%
11.6
%
11.7
%
8.9
%
Non-GAAP operating margin
25.5
%
30.0
%
25.3
%
30.1
%
GAAP net income (loss)
$
4,327
$
462
$
9,428
$
(3,816
)
Amortization of acquired technologies
545
1,037
1,527
3,741
Amortization of acquired intangibles
1,460
4,276
2,921
10,295
Stock-based compensation expense and
related employer-paid payroll taxes
9,974
4,350
18,758
9,472
Acquisition related costs
269
(87
)
269
(87
)
Restructuring costs and other
357
117
429
130
Spin-off costs
420
6,033
954
12,148
Tax benefits associated with above
adjustments (1)
(1,378
)
(1,273
)
(2,715
)
(3,498
)
Non-GAAP net income
$
15,974
$
14,915
$
31,571
$
28,385
GAAP diluted earnings (loss) per share
$
0.02
$
0.00
$
0.05
$
(0.02
)
Non-GAAP diluted earnings per share
$
0.09
$
0.09
$
0.17
$
0.18
Shares used in computation of diluted
earnings (loss) per share:
180,504
158,124
180,675
158,124
_________________
(1) The tax benefits associated with
non-GAAP adjustments for the three and six months ended June 30,
2022, and 2021, respectively, is calculated utilizing the Company's
individual statutory tax rates for each impacted subsidiary.
N-able, Inc.
Reconciliation of GAAP Net
Income (Loss) to Adjusted EBITDA
(In thousands)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Net income (loss)
$
4,327
$
462
$
9,428
$
(3,816
)
Amortization
2,694
5,313
5,837
14,036
Depreciation
3,201
2,646
6,396
5,252
Income tax expense
2,300
3,283
5,800
5,693
Interest expense, net
3,845
6,082
7,371
12,600
Unrealized foreign currency losses
(gains)
228
46
(597
)
467
Acquisition related costs
269
(87
)
269
(87
)
Spin-off costs
420
6,033
954
12,148
Stock-based compensation expense and
related employer-paid payroll taxes
9,974
4,350
18,758
9,472
Restructuring costs and other
357
117
429
130
Adjusted EBITDA
$
27,615
$
28,245
$
54,645
$
55,895
Adjusted EBITDA margin
30.1
%
33.1
%
29.9
%
33.2
%
N-able, Inc.
Reconciliation of GAAP Revenue
to Non-GAAP Revenue on a Constant Currency Basis
(In thousands)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
Growth Rate
2022
2021
Growth Rate
GAAP subscription revenue
$
89,369
$
82,821
7.9
%
$
178,004
$
163,492
8.9
%
Estimated foreign currency impact (1)
4,832
—
5.8
7,381
—
4.5
Non-GAAP subscription revenue on a
constant currency basis
$
94,201
$
82,821
13.7
%
$
185,385
$
163,492
13.4
%
GAAP other revenue
$
2,258
$
2,519
(10.4
)%
$
4,483
$
5,038
(11.0
)%
Estimated foreign currency impact (1)
43
—
1.7
69
—
1.4
Non-GAAP other revenue on a constant
currency basis
$
2,301
$
2,519
(8.7
)%
$
4,552
$
5,038
(9.6
)%
GAAP subscription and other revenue
$
91,627
$
85,340
7.4
%
$
182,487
$
168,530
8.3
%
Estimated foreign currency impact (1)
4,875
—
5.7
7,450
—
4.4
Non-GAAP subscription and other revenue on
a constant currency basis
$
96,502
$
85,340
13.1
%
$
189,937
$
168,530
12.7
%
_________________
(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, 2022.
N-able, Inc.
Reconciliation of Unlevered
Free Cash Flow
(In thousands)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Net cash provided by operating
activities
$
22,737
$
9,920
$
35,867
$
23,089
Capital expenditures (1)
(3,938
)
(10,257
)
(7,783
)
(15,009
)
Free cash flow
18,799
(337
)
28,084
8,080
Cash paid for interest, net of cash
interest received
3,126
11,367
6,183
14,640
Cash paid for acquisition related costs,
restructuring costs, spin-off costs, employer-paid payroll taxes on
stock awards and other one-time items
3,144
6,920
4,319
13,247
Unlevered free cash flow (excluding
forfeited tax shield)
25,069
17,950
38,586
35,967
Forfeited tax shield related to interest
payments (2)
—
(2,965
)
—
(3,833
)
Unlevered free cash flow
$
25,069
$
14,985
$
38,586
$
32,134
_________________
(1) Includes purchases of property and
equipment and purchases of intangible assets.
(2) Forfeited tax shield related to interest payments assumes a
statutory rate of 26.5% for the three and six months ended June 30,
2021.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220810005823/en/
Investors: Tim O'Brien ir@n-able.com
Media: Kim Cecchini Phone: 919.957.5019 pr@n-able.com
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