Raised Full-Year 2022 Adjusted EBITDA Outlook
to 30% and Maintained Full-Year 2022 Revenue Outlook of 7%
Year-Over-Year Growth, or 12% to 13% on a Constant Currency
Basis
Third Quarter Subscription Revenue Increased 6%
Year-Over-Year, 13% in Constant Currency
TTM Dollar-Based Net Retention Rate of 104%
Includes ~ 4 Points of Negative FX Impact
N-able, Inc. (NYSE:NABL), a global software company helping IT
services providers deliver remote monitoring and management, data
protection as-a-service, and security solutions, today reported
results for its third quarter ended September 30, 2022.
“We are proud of our third quarter results, which came in above
the high end of our outlook for both revenue and profit. Just after
the end of the third quarter we hosted many of our partners at our
Empower conference with the theme ‘Own the Cloud’. Across the board
we received validation that our strategy is on track and that we
are helping our partners drive successful, recession-resilient
businesses,” said N-able President and CEO John Pagliuca. “Our
offerings in RMM, data protection, and security are leaders in the
market, and we are committed to innovating on the cutting edge as
MSPs become even more mission-critical to SMEs globally. We are
focused on helping our partners manage everything, secure
everything, and accelerate their growth, and my fellow N-ablites
are driven to fulfill this mission every day.”
"The revenue growth and adjusted EBITDA we delivered in the
third quarter reflect our efforts to focus on particular categories
of partners, including MSP aggregators and emerging-growth MSPs,
with particularly strong growth in our security and data protection
offerings,” added N-able Executive Vice President and CFO Tim
O’Brien. “We demonstrated strong cost management in the quarter
while continuing to focus investment on growth and strategic
initiatives. We plan to continue to prioritize our growth-oriented
investments while maintaining cost discipline across other aspects
of the business."
Third quarter 2022 financial highlights:
- Total revenue of $93.5 million, representing approximately 6%
year-over-year growth, or approximately 13% year-over-year growth
on a constant currency basis.
- Subscription revenue of $91.2 million, representing
approximately 6% year-over-year growth, or approximately 13%
year-over-year growth on a constant currency basis.
- GAAP gross margin of 83.9% and non-GAAP gross margin of
84.8%.
- GAAP net income of $0.3 million, or $0.00 per diluted share,
and non-GAAP net income of $12.3 million, or $0.07 per diluted
share.
- Adjusted EBITDA of $28.8 million, representing an adjusted
EBITDA margin of 30.9%.
For a reconciliation of our GAAP to non-GAAP results, please see
the tables below.
Additional highlights for the third quarter of 2022 include:
- N-able launched N-sight™ RMM all-in-one solution for growing
MSPs that combines N-able’s award-winning cloud-based RMM, N-able
Take Control for remote support, and MSP Manager for professional
services automation to make it easier for MSPs to start quickly and
scale efficiently at a highly competitive price point.
- N-able launched Cloud User Hub, which leverages the technology
acquired from its acquisition of Spinpanel. Cloud User Hub is 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.
- N-able was voted winner in the MSP RMM Platforms category of
the 2022 CRN Annual Report Card (ARC) Awards for the second year
running, ranking first in the Product Innovation, Partnership, and
Managed and Cloud Services subcategories. The ARC Awards, one of
the most prestigious honors in the IT industry, is based on
independent votes by solution providers who include N-able’s
customers.
- N-able released a new feature added on to N-able Mail Assure
called Private Portal, which is an extra layer of email security
designed to help protect critical business data. Private Portal,
included with Mail Assure free of charge, sends a notification to
recipients when they receive an email with business-critical
information based on policies configured by the user or
company.
Balance Sheet
At September 30, 2022, total cash and cash equivalents were
$87.7 million and total debt was $337.5 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
September 30, 2022, are based on our reported results as a
stand-alone company.
Financial Outlook
As of November 10, 2022, N-able is providing its financial
outlook for the fourth 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 Fourth Quarter of 2022
N-able management currently expects to achieve the following
results for the fourth quarter of 2022:
- Total revenue in the range of $93.3 to $93.8 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 $27.5 to $28.0 million,
representing approximately 30% 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 $369.3 to $369.8 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 $111.0 to $111.5 million,
representing approximately 30% of total revenue.
Additional details on the company's outlook will be provided on
the conference call.
Conference Call and Webcast
In conjunction with this announcement, N-able will host a
conference call today to discuss its financial results, business
and business outlook at 8:30 a.m. ET on November 10, 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 806763 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 fourth quarter and full year 2022 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 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) the impact of adverse economic
conditions; (d) 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; (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, 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; (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; (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 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
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)
September 30,
December 31,
2022
2021
Assets
Current assets:
Cash and cash equivalents
$
87,729
$
66,736
Accounts receivable, net of allowances of
$1,791 and $1,653 as of September 30, 2022 and December 31, 2021,
respectively
31,625
33,041
Income tax receivable
9,973
7,250
Prepaid and other current assets
14,265
13,962
Total current assets
143,592
120,989
Property and equipment, net
37,271
38,748
Operating lease right-of-use assets
33,033
36,206
Deferred taxes
1,707
1,681
Goodwill
795,937
840,923
Intangible assets, net
9,994
8,066
Other assets, net
9,922
9,086
Total assets
$
1,031,456
$
1,055,699
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$
2,797
$
5,865
Due to affiliates
—
464
Accrued liabilities and other
33,802
30,944
Current operating lease liabilities
5,763
4,830
Income taxes payable
2,606
4,600
Current portion of deferred revenue
10,953
10,675
Current debt obligation
3,500
3,500
Total current liabilities
59,421
60,878
Long-term liabilities:
Deferred revenue, net of current
portion
281
223
Non-current deferred taxes
5,224
2,632
Non-current operating lease
liabilities
34,130
37,822
Long-term debt, net of current portion
333,959
335,379
Other long-term liabilities
4,309
410
Total liabilities
437,324
437,344
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value:
550,000,000 shares authorized and 180,459,957 and 179,049,429
shares issued and outstanding as of September 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 September 30, 2022 and December 31, 2021, respectively
—
—
Additional paid-in capital
626,240
602,996
Accumulated other comprehensive (loss)
income
(42,137
)
15,053
Retained earnings
9,849
127
Total stockholders' equity
594,132
618,355
Total liabilities and stockholders'
equity
$
1,031,456
$
1,055,699
N-able, Inc.
Consolidated Statements of
Operations
(In thousands, except per
share information)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Revenue:
Subscription and other revenue
$
93,527
$
88,423
$
276,014
256,953
Cost of revenue:
Cost of revenue
14,587
11,279
41,492
34,366
Amortization of acquired technologies
516
1,017
2,043
4,758
Total cost of revenue
15,103
12,296
43,535
39,124
Gross profit
78,424
76,127
232,479
217,829
Operating expenses:
Sales and marketing
31,149
30,178
94,223
80,390
Research and development
16,038
14,649
46,664
39,192
General and administrative
18,050
19,888
54,119
61,480
Amortization of acquired intangibles
1,465
1,640
4,386
11,935
Total operating expenses
66,702
66,355
199,392
192,997
Operating income
11,722
9,772
33,087
24,832
Other expense:
Interest expense, net
(5,088
)
(3,111
)
(12,459
)
(15,711
)
Other expense, net
(1,795
)
(884
)
(561
)
(1,467
)
Total other expense
(6,883
)
(3,995
)
(13,020
)
(17,178
)
Income before income taxes
4,839
5,777
20,067
7,654
Income tax expense
4,545
3,904
10,345
9,597
Net income (loss)
$
294
$
1,873
$
9,722
$
(1,943
)
Net income (loss) per share:
Basic earnings (loss) per share
$
0.00
$
0.01
$
0.05
$
(0.01
)
Diluted earnings (loss) per share
$
0.00
$
0.01
$
0.05
$
(0.01
)
Weighted-average shares used to compute
net income (loss) per share:
Shares used in computation of basic
earnings (loss) per share:
180,323
174,468
180,072
163,601
Shares used in computation of diluted
earnings (loss) per share:
181,145
175,752
180,966
163,601
N-able, Inc.
Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Cash flows from operating activities
Net income (loss)
$
294
$
1,873
$
9,722
$
(1,943
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
6,037
5,769
18,270
25,058
Provision for doubtful accounts
211
1,049
138
1,549
Stock-based compensation expense
10,112
11,939
28,078
20,962
Deferred taxes
(132
)
(45
)
213
(2,426
)
Amortization of debt issuance costs
405
324
1,219
324
Operating lease right-of-use assets,
net
(729
)
(3,428
)
(1,153
)
1,807
Loss on foreign currency exchange
rates
1,486
728
889
1,195
Loss on contingent consideration
166
—
166
—
Other non-cash expenses
—
—
43
—
Changes in operating assets and
liabilities, net of assets acquired and liabilities assumed in
business combinations:
Accounts receivable
1,790
(6,908
)
278
(8,235
)
Income tax receivable
(918
)
(947
)
(2,802
)
(1,100
)
Prepaid expenses and other assets
(614
)
(4,184
)
(397
)
(10,301
)
Accounts payable
(1,598
)
3,598
(2,437
)
(1,738
)
Due to and from affiliates
61
(20,018
)
(402
)
(7,834
)
Accrued liabilities and other
4,948
12,763
3,126
12,646
Accrued related party interest payable
—
(438
)
—
(2,477
)
Income taxes payable
(4,875
)
181
(2,910
)
(2,016
)
Deferred revenue
135
814
493
688
Other long-term assets
369
—
481
—
Net cash provided by operating
activities
17,148
3,070
53,015
26,159
Cash flows from investing activities
Purchases of property and equipment
(4,263
)
(6,652
)
(9,690
)
(19,409
)
Purchases of intangible assets
(1,156
)
(668
)
(3,512
)
(2,920
)
Acquisitions, net of cash acquired
(9,302
)
—
(9,302
)
—
Net cash used in investing activities
(14,721
)
(7,320
)
(22,504
)
(22,329
)
Cash flows from financing activities
Proceeds from Private Placement, net of
$9,000 of issuance costs
—
216,000
—
216,000
Distribution of net proceeds from Private
Placement to Parent
—
(216,000
)
—
(216,000
)
Payments of tax withholding obligations
related to restricted stock
(810
)
(381
)
(6,353
)
(381
)
Exercise of stock options
4
18
31
18
Proceeds from issuance of common stock
under employee stock purchase plan
747
—
1,315
—
Proceeds from Credit Agreement
—
350,000
—
350,000
Payments for debt issuance costs
—
(10,075
)
—
(10,075
)
Repayments of borrowings from Credit
Agreement
(875
)
—
(2,625
)
—
Repayments of borrowings due to
affiliates
—
(304,030
)
—
(372,650
)
Net transfers to Parent
—
(18,161
)
—
(7,378
)
Net cash (used in) provided by financing
activities
(934
)
17,371
(7,632
)
(40,466
)
Effect of exchange rate changes on cash
and cash equivalents
(382
)
(1,149
)
(1,886
)
(1,582
)
Net increase (decrease) in cash and cash
equivalents
1,111
11,972
20,993
(38,218
)
Cash and cash equivalents
Beginning of period
86,618
49,600
66,736
99,790
End of period
$
87,729
$
61,572
$
87,729
$
61,572
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
4,065
$
3,156
$
10,248
$
17,796
Cash paid for income taxes
$
9,328
$
4,699
$
13,157
$
14,985
Supplemental disclosure of non-cash
activities:
Change in purchases of property, equipment
and leasehold improvements included in accounts payable and accrued
expenses
$
11
$
1,542
$
(572
)
$
1,542
Right-of-use assets obtained in exchange
for operating lease liabilities
$
—
$
9,844
$
967
$
31,079
N-able, Inc.
Reconciliation of GAAP to
Non-GAAP Financial Measures
(In thousands, except per
share information)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
GAAP cost of revenue
$
15,103
$
12,296
$
43,535
$
39,124
Stock-based compensation expense and
related employer-paid payroll taxes
(335
)
(425
)
(955
)
(765
)
Amortization of acquired technologies
(516
)
(1,017
)
(2,043
)
(4,758
)
Restructuring costs and other
(11
)
—
(41
)
—
Non-GAAP cost of revenue
$
14,241
$
10,854
$
40,496
$
33,601
GAAP gross profit
$
78,424
$
76,127
$
232,479
$
217,829
Stock-based compensation expense and
related employer-paid payroll taxes
335
425
955
765
Amortization of acquired technologies
516
1,017
2,043
4,758
Restructuring costs and other
11
—
41
—
Non-GAAP gross profit
$
79,286
$
77,569
$
235,518
$
223,352
GAAP sales and marketing expense
$
31,149
$
30,178
$
94,223
$
80,390
Stock-based compensation expense and
related employer-paid payroll taxes
(3,235
)
(4,161
)
(9,581
)
(6,437
)
Acquisition related costs
(4
)
—
(18
)
—
Restructuring costs and other
(10
)
(1
)
(12
)
(1
)
Spin-off costs
—
(89
)
—
(448
)
Non-GAAP sales and marketing expense
$
27,900
$
25,927
$
84,612
$
73,504
GAAP research and development expense
$
16,038
$
14,649
$
46,664
$
39,192
Stock-based compensation expense and
related employer-paid payroll taxes
(1,706
)
(2,183
)
(4,937
)
(3,509
)
Acquisition related costs
—
—
(32
)
—
Restructuring costs and other
(238
)
—
(350
)
(68
)
Spin-off costs
—
(76
)
—
(307
)
Non-GAAP research and development
expense
$
14,094
$
12,390
$
41,345
$
35,308
GAAP general and administrative
expense
$
18,050
$
19,888
$
54,119
$
61,480
Stock-based compensation expense and
related employer-paid payroll taxes
(4,946
)
(5,116
)
(13,507
)
(10,646
)
Acquisition related costs
(233
)
—
(456
)
87
Restructuring costs and other
(292
)
—
(577
)
(63
)
Spin-off costs
(394
)
(2,238
)
(1,348
)
(13,795
)
Non-GAAP general and administrative
expense
$
12,185
$
12,534
$
38,231
$
37,063
GAAP operating income
$
11,722
$
9,772
$
33,087
$
24,832
Amortization of acquired technologies
516
1,017
2,043
4,758
Amortization of acquired intangibles
1,465
1,640
4,386
11,935
Stock-based compensation expense and
related employer-paid payroll taxes
10,222
11,885
28,980
21,357
Acquisition related costs
237
—
506
(87
)
Restructuring costs and other
551
1
980
132
Spin-off costs
394
2,404
1,348
14,550
Non-GAAP operating income
$
25,107
$
26,719
$
71,330
$
77,477
GAAP operating margin
12.5
%
11.1
%
12.0
%
9.7
%
Non-GAAP operating margin
26.8
%
30.2
%
25.8
%
30.2
%
GAAP net income (loss)
$
294
$
1,873
$
9,722
$
(1,943
)
Amortization of acquired technologies
516
1,017
2,043
4,758
Amortization of acquired intangibles
1,465
1,640
4,386
11,935
Stock-based compensation expense and
related employer-paid payroll taxes
10,222
11,885
28,980
21,357
Acquisition related costs
237
—
506
(87
)
Restructuring costs and other
551
1
980
132
Spin-off costs
394
2,404
1,348
14,550
Tax benefits associated with above
adjustments (1)
(1,383
)
(1,647
)
(4,098
)
(5,145
)
Non-GAAP net income
$
12,296
$
17,173
$
43,867
$
45,557
GAAP diluted earnings (loss) per share
$
0.00
$
0.01
$
0.05
$
(0.01
)
Non-GAAP diluted earnings per share
$
0.07
$
0.10
$
0.24
$
0.28
Shares used in computation of diluted
earnings (loss) per share:
181,145
175,752
180,966
163,601
_________________
(1) The tax benefits associated with non-GAAP adjustments for
the three and nine months ended September 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 September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Net income (loss)
$
294
$
1,873
$
9,722
$
(1,943
)
Amortization
2,711
3,225
8,548
17,261
Depreciation
3,326
2,544
9,722
7,796
Income tax expense
4,545
3,904
10,345
9,597
Interest expense, net
5,088
3,111
12,459
15,711
Unrealized foreign currency losses
1,486
728
889
1,195
Acquisition related costs
237
—
506
(87
)
Spin-off costs
394
2,404
1,348
14,550
Stock-based compensation expense and
related employer-paid payroll taxes
10,222
11,885
28,980
21,357
Restructuring costs and other
551
1
980
132
Adjusted EBITDA
$
28,854
$
29,675
$
83,499
$
85,569
Adjusted EBITDA margin
30.9
%
33.6
%
30.3
%
33.3
%
N-able, Inc.
Reconciliation of GAAP Revenue
to Non-GAAP Revenue on a Constant Currency Basis
(In thousands, except
percentages)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
Growth Rate
2022
2021
Growth Rate
GAAP subscription revenue
$
91,213
$
86,100
5.9%
$
269,217
$
249,592
7.9%
Estimated foreign currency impact (1)
6,283
—
7.3
13,664
—
5.5
Non-GAAP subscription revenue on a
constant currency basis
$
97,496
$
86,100
13.2%
$
282,881
$
249,592
13.3%
GAAP other revenue
$
2,314
$
2,323
(0.4) %
$
6,797
$
7,361
(7.7) %
Estimated foreign currency impact (1)
54
—
2.3
123
—
1.7
Non-GAAP other revenue on a constant
currency basis
$
2,368
$
2,323
1.9%
$
6,920
$
7,361
(6.0) %
GAAP subscription and other revenue
$
93,527
$
88,423
5.8%
$
276,014
$
256,953
7.4%
Estimated foreign currency impact (1)
6,337
—
7.2
13,787
—
5.4
Non-GAAP subscription and other revenue on
a constant currency basis
$
99,864
$
88,423
12.9%
$
289,801
$
256,953
12.8%
_________________
(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 nine months ended September 30, 2022.
N-able, Inc.
Reconciliation of Unlevered
Free Cash Flow
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Net cash provided by operating
activities
$
17,148
$
3,070
$
53,015
$
26,159
Capital expenditures (1)
(5,419
)
(7,320
)
(13,202
)
(22,329
)
Free cash flow
11,729
(4,250
)
39,813
3,830
Cash paid for interest, net of cash
interest received
4,065
3,156
10,248
17,796
Cash paid for acquisition related costs,
restructuring costs, spin-off costs, employer-paid payroll taxes on
stock awards and other one-time items
2,885
2,434
7,204
15,681
Unlevered free cash flow (excluding
forfeited tax shield)
18,679
1,340
57,265
37,307
Forfeited tax shield related to interest
payments (2)
—
—
—
(3,833
)
Unlevered free cash flow
$
18,679
$
1,340
$
57,265
$
33,474
_________________
(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 nine months
ended September 30, 2021.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221109006000/en/
Investors: Tim O'Brien ir@n-able.com
Media: Kim Cecchini Phone: 919.957.5019 pr@n-able.com
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