Full-Year 2023 Revenue Outlook of 10% to 11%
Year-Over-Year Growth, 11% to 12% on a Constant Currency Basis, and
Adjusted EBITDA Margin Outlook of 30% to 31%
Fourth Quarter Subscription Revenue Increased
7% Year-Over-Year, 13% in Constant Currency
TTM Dollar-Based Net Retention Rate of 103%
Includes ~5 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 fourth quarter and full-year ended December 31,
2022.
“Last year illustrated the strength of our business model, as we
delivered strong financial results, executed on our strategic
initiatives to enhance our product portfolio and elevated our
reputation as vendor of choice for the MSP market,” said N-able
president and CEO John Pagliuca. “In 2023, we intend to work with
our partners to raise the bar and continue to provide them with the
tools and services that they need to manage their small and medium
enterprise customer environments, secure their endpoints and cloud
assets, and grow their businesses and the value they provide in
their markets. We are focused and inspired by our partners to
innovate, guide, and empower them to achieve their business goals
in 2023 and beyond.”
"For the fourth quarter and full-year 2022 we exceeded both our
revenue growth and adjusted EBITDA outlook, which we believe
reflects the resilience of our market, the strength of our business
model, and the mission-critical nature of the services our MSP
Partners provide,” added N-able executive vice president and CFO
Tim O’Brien. “As we look ahead to 2023, we intend to continue to
invest in enhancing our offerings, bringing new products to market,
and executing on our go-to-market strategies to capitalize on our
market opportunity in a profitable and sustainable manner.”
Fourth quarter 2022 financial highlights:
- Total revenue of $95.8 million, representing approximately 7%
year-over-year growth, or approximately 13% year-over-year growth
on a constant currency basis.
- Subscription revenue of $93.4 million, representing
approximately 7% year-over-year growth, or approximately 13%
year-over-year growth on a constant currency basis.
- GAAP gross margin of 84.3% and non-GAAP gross margin of
85.0%.
- GAAP net income of $7.0 million, or $0.04 per diluted share,
and non-GAAP net income of $18.0 million, or $0.10 per diluted
share.
- Adjusted EBITDA of $31.2 million, representing an adjusted
EBITDA margin of 32.6%.
Full-year 2022 financial highlights:
- Total revenue of $371.8 million, representing approximately 7%
year-over-year growth, or approximately 13% year-over-year growth
on a constant currency basis.
- Subscription revenue of $362.6 million, representing
approximately 8% year-over-year growth, or approximately 13%
year-over-year growth on a constant currency basis.
- GAAP gross margin of 84.2% and non-GAAP gross margin of
85.2%.
- GAAP net income of $16.7 million, or $0.09 per diluted share,
and non-GAAP net income of $61.8 million, or $0.34 per diluted
share.
- Adjusted EBITDA of $114.7 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 fourth quarter of 2022
include:
- N-able was awarded “Security Vendor of the Year” for the value
it provides helping customers and partners stay ahead of
ever-evolving IT threats, and “Backup and Archive Innovation of the
Year” for Cove Data Protection, at the 13th annual SDC Awards
ceremony held in London. Winners are selected by the voting public
and readers of Digitalization World’s stable of publications.
- N-able’s Empower Partner Conference was held in Las Vegas, NV,
in early October, with a multi-day event entitled “Own the Cloud”
to discuss and debate industry trends, best practices, and
opportunities attended by more than 450 partners and 35 sponsors
from around the world.
- N-able hosted its first in-person distributor conference since
before the COVID-19 pandemic in Salzburg, Austria, as it continues
to expand its distribution landscape across Latin America, Europe,
and the Middle East, bringing the total number of N-able
distributors to over 80, spanning across 50 countries and reaching
around 6,500 MSPs and IT resellers.
Balance Sheet
At December 31, 2022, total cash and cash equivalents were $98.8
million and total debt, net of debt issuance costs, was $337.0
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 Annual Report on Form 10-K 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
December 31, 2022, are based on our reported results as a
stand-alone company.
Financial Outlook
As of February 23, 2023, N-able is providing its financial
outlook for the first 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 (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
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 First Quarter of 2023
N-able management currently expects to achieve the following
results for the first quarter of 2023:
- Total revenue in the range of $97.5 to $98.0 million,
representing approximately 7% to 8% year-over-year growth, or
approximately 11% to 12% growth on a constant currency basis.
- Adjusted EBITDA in the range of $29.0 to $29.5 million,
representing approximately 30% 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 $408 to $412 million,
representing 10% to 11% year-over-year growth, or 11% to 12%
year-over-year growth on a constant currency basis.
- Adjusted EBITDA in the range of $122 to $126 million,
representing approximately 30% to 31% 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 February 23, 2023. 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 206883 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 managed
service providers (“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,
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; (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; 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; 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; and those that will be discussed in the Annual
Report on Form 10-K for the period ended December 31, 2022 that
N-able anticipates filing on or before March 31, 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 (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
© 2023 N-able, Inc. All rights reserved.
Source: N-able, Inc. Category: Financial
N-able, Inc.
Consolidated Balance
Sheets
(In thousands)
(Unaudited)
December 31,
2022
2021
Assets
Current assets:
Cash and cash equivalents
$
98,847
$
66,736
Accounts receivable, net of allowances of
$1,330 and $1,653 as of December 31, 2022 and 2021,
respectively
34,798
33,041
Income tax receivable
7,814
7,250
Prepaid and other current assets
12,697
13,962
Total current assets
154,156
120,989
Property and equipment, net
37,404
38,748
Operating lease right-of-use assets
31,752
36,206
Deferred taxes
795
1,681
Goodwill
828,795
840,923
Intangible assets, net
8,873
8,066
Other assets, net
17,082
9,086
Total assets
$
1,078,857
$
1,055,699
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$
3,544
$
5,865
Due to affiliates
—
464
Accrued liabilities and other
35,630
30,944
Current operating lease liabilities
5,771
4,830
Income taxes payable
1,629
4,600
Current portion of deferred revenue
11,740
10,675
Current debt obligation
3,500
3,500
Total current liabilities
61,814
60,878
Long-term liabilities:
Deferred revenue, net of current
portion
387
223
Non-current deferred taxes
2,783
2,632
Non-current operating lease
liabilities
33,110
37,822
Long-term debt, net of current portion
333,488
335,379
Other long-term liabilities
5,204
410
Total liabilities
436,786
437,344
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value:
550,000,000 shares authorized and 180,849,537 and 179,049,429
shares issued and outstanding as of December 31, 2022 and 2021,
respectively
181
179
Preferred stock, $0.001 par value:
50,000,000 shares authorized and 50,000,000 shares issued and
outstanding as of December 31, 2022 and 2021, respectively
—
—
Additional paid-in capital
632,871
602,996
Accumulated other comprehensive (loss)
income
(7,815
)
15,053
Retained earnings
16,834
127
Total stockholders' equity
642,071
618,355
Total liabilities and stockholders'
equity
$
1,078,857
$
1,055,699
N-able, Inc.
Consolidated Statements of
Operations
(In thousands, except per
share information)
(Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2022
2021
2022
2021
Revenue:
Subscription and other revenue
$
95,755
$
89,503
$
371,769
346,456
Cost of revenue:
Cost of revenue
14,641
12,311
56,133
46,677
Amortization of acquired technologies
434
997
2,477
5,755
Total cost of revenue
15,075
13,308
58,610
52,432
Gross profit
80,680
76,195
313,159
294,024
Operating expenses:
Sales and marketing
31,078
32,288
125,301
112,678
Research and development
16,820
14,767
63,484
53,959
General and administrative
17,006
19,095
71,125
80,575
Amortization of acquired intangibles
1,467
1,547
5,853
13,482
Total operating expenses
66,371
67,697
265,763
260,694
Operating income
14,309
8,498
47,396
33,330
Other expense:
Interest expense, net
(6,393
)
(4,761
)
(18,852
)
(20,472
)
Other income (expense), net
2,442
201
1,881
(1,266
)
Total other expense
(3,951
)
(4,560
)
(16,971
)
(21,738
)
Income before income taxes
10,358
3,938
30,425
11,592
Income tax expense
3,373
1,882
13,718
11,479
Net income
$
6,985
$
2,056
$
16,707
$
113
Net income per share:
Basic earnings per share
$
0.04
$
0.01
$
0.09
$
0.00
Diluted earnings per share
$
0.04
$
0.01
$
0.09
$
0.00
Weighted-average shares used to compute
net income per share:
Shares used in computation of basic
earnings per share
180,712
178,950
180,136
167,460
Shares used in computation of diluted
earnings per share
182,162
180,234
181,297
168,667
N-able, Inc.
Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2022
2021
2022
2021
Cash flows from operating activities
Net income
$
6,985
$
2,056
$
16,707
$
113
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
6,170
8,713
24,440
33,771
(Benefit from) provision for doubtful
accounts
(461
)
604
(323
)
2,153
Stock-based compensation expense
8,449
8,468
36,527
29,430
Amortization of debt issuance costs
404
408
1,623
732
Loss on lease modification
—
271
—
271
Deferred taxes
(1,636
)
513
(1,423
)
(1,913
)
Operating lease right-of-use assets,
net
(15
)
(2,548
)
(1,168
)
(741
)
(Gain) loss on foreign currency exchange
rates
(2,135
)
238
(1,246
)
1,433
Gain on contingent consideration
(249
)
—
(83
)
—
Other non-cash expenses
105
—
148
—
Changes in operating assets and
liabilities, net of assets acquired and liabilities assumed in
business combinations:
Accounts receivable
(3,710
)
2,668
(3,432
)
(5,567
)
Income taxes receivable
2,235
(4,899
)
(567
)
(5,999
)
Prepaid expenses and other assets
680
(372
)
283
(10,673
)
Accounts payable
813
1,283
(1,624
)
(455
)
Due to and from affiliates
—
(468
)
(402
)
(8,302
)
Accrued liabilities and other
(123
)
(723
)
3,003
11,923
Accrued related party interest payable
—
—
—
(2,477
)
Income taxes payable
(278
)
2,174
(3,188
)
158
Deferred revenue
865
565
1,358
1,253
Other long-term assets
299
231
780
231
Net cash provided by operating
activities
18,398
19,182
71,413
45,341
Cash flows from investing activities
Purchases of property and equipment
(3,144
)
(11,255
)
(12,834
)
(30,664
)
Purchases of intangible assets
(4,664
)
(1,249
)
(8,176
)
(4,169
)
Acquisitions, net of cash acquired
103
—
(9,199
)
—
Net cash used in investing activities
(7,705
)
(12,504
)
(30,209
)
(34,833
)
Cash flows from financing activities
Proceeds from Private Placement, net of
$9,000 of issuance costs
—
—
—
216,000
Distribution of net proceeds from Private
Placement to Parent
—
—
—
(216,000
)
Payments of tax withholding obligations
related to restricted stock units
(1,972
)
(1,849
)
(8,325
)
(2,230
)
Exercise of stock options
77
5
108
23
Proceeds from issuance of common stock
under employee stock purchase plan
—
—
1,315
—
Proceeds from Credit Agreement
—
—
—
350,000
Repayments of borrowings due to
affiliates
—
—
—
(372,650
)
Repayments of borrowings from Credit
Agreement
(875
)
(875
)
(3,500
)
(875
)
Net transfers from (to) Parent
—
863
—
(6,515
)
Payment for debt issuance costs
—
—
—
(10,075
)
Net cash used in financing activities
(2,770
)
(1,856
)
(10,402
)
(42,322
)
Effect of exchange rate changes on cash
and cash equivalents
3,195
342
1,309
(1,240
)
Net increase (decrease) in cash and cash
equivalents
11,118
5,164
32,111
(33,054
)
Cash and cash equivalents
Beginning of period
87,729
61,572
66,736
99,790
End of period
$
98,847
$
66,736
$
98,847
$
66,736
Supplemental disclosure of cash flow
information
Cash paid for interest
$
5,322
$
2,591
$
15,570
$
20,387
Cash paid for income taxes
$
3,146
$
4,044
$
16,303
$
19,029
Supplemental disclosure of non-cash
activities:
Change in purchases of property, equipment
and leasehold improvements included in accounts payable and accrued
expenses
$
(156
)
$
(404
)
$
(728
)
$
1,138
Right-of-use assets obtained in exchange
for operating lease liabilities
$
—
$
—
$
967
$
31,079
N-able, Inc.
Reconciliation of GAAP to
Non-GAAP Financial Measures
(In thousands, except per
share information)
(Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2022
2021
2022
2021
GAAP cost of revenue
$
15,075
$
13,308
$
58,610
$
52,432
Stock-based compensation expense and
related employer-paid payroll taxes
(263
)
(277
)
(1,218
)
(1,042
)
Amortization of acquired technologies
(434
)
(997
)
(2,477
)
(5,755
)
Restructuring costs and other
(20
)
—
(61
)
—
Non-GAAP cost of revenue
$
14,358
$
12,034
$
54,854
$
45,635
GAAP gross profit
$
80,680
$
76,195
$
313,159
$
294,024
Stock-based compensation expense and
related employer-paid payroll taxes
263
277
1,218
1,042
Amortization of acquired technologies
434
997
2,477
5,755
Restructuring costs and other
20
—
61
—
Non-GAAP gross profit
$
81,397
$
77,469
$
316,915
$
300,821
GAAP sales and marketing expense
$
31,078
$
32,288
$
125,301
$
112,678
Stock-based compensation expense and
related employer-paid payroll taxes
(2,919
)
(2,592
)
(12,500
)
(9,029
)
Acquisition related costs
(3
)
—
(21
)
—
Restructuring costs and other
(429
)
51
(441
)
50
Spin-off costs
—
—
—
(448
)
Non-GAAP sales and marketing expense
$
27,727
$
29,747
$
112,339
$
103,251
GAAP research and development expense
$
16,820
$
14,767
$
63,484
$
53,959
Stock-based compensation expense and
related employer-paid payroll taxes
(1,463
)
(1,248
)
(6,400
)
(4,757
)
Acquisition related costs
(16
)
—
(48
)
—
Restructuring costs and other
(678
)
(70
)
(1,028
)
(138
)
Spin-off costs
—
(2
)
—
(309
)
Non-GAAP research and development
expense
$
14,663
$
13,447
$
56,008
$
48,755
GAAP general and administrative
expense
$
17,006
$
19,095
$
71,125
$
80,575
Stock-based compensation expense and
related employer-paid payroll taxes
(4,033
)
(4,618
)
(17,540
)
(15,264
)
Acquisition related costs
236
—
(220
)
87
Restructuring costs and other
(555
)
(271
)
(1,132
)
(334
)
Spin-off costs
(268
)
(1,101
)
(1,616
)
(14,896
)
Non-GAAP general and administrative
expense
$
12,386
$
13,105
$
50,617
$
50,168
GAAP operating income
$
14,309
$
8,498
$
47,396
$
33,330
Amortization of acquired technologies
434
997
2,477
5,755
Amortization of acquired intangibles
1,468
1,547
5,854
13,482
Stock-based compensation expense and
related employer-paid payroll taxes
8,678
8,735
37,658
30,092
Acquisition related costs
(217
)
—
289
(87
)
Restructuring costs and other
1,682
290
2,662
422
Spin-off costs
268
1,103
1,616
15,653
Non-GAAP operating income
$
26,622
$
21,170
$
97,952
$
98,647
GAAP operating margin
14.9
%
9.5
%
12.7
%
9.6
%
Non-GAAP operating margin
27.8
%
23.7
%
26.3
%
28.5
%
GAAP net income
$
6,985
$
2,056
$
16,707
$
113
Amortization of acquired technologies
434
997
2,477
5,755
Amortization of acquired intangibles
1,468
1,547
5,854
13,482
Stock-based compensation expense and
related employer-paid payroll taxes
8,678
8,735
37,658
30,092
Acquisition related costs
(217
)
—
289
(87
)
Restructuring costs and other
1,682
290
2,662
422
Spin-off costs
268
1,103
1,616
15,653
Tax benefits associated with above
adjustments (1)
(1,332
)
(1,300
)
(5,430
)
(6,445
)
Non-GAAP net income
$
17,966
$
13,428
$
61,833
$
58,985
GAAP diluted earnings per share
$
0.04
$
0.01
$
0.09
$
0.00
Non-GAAP diluted earnings per share
$
0.10
$
0.07
$
0.34
$
0.35
Shares used in computation of diluted
earnings per share:
182,162
180,234
181,297
168,667
_________________
(1) The tax benefits associated with
non-GAAP adjustments for the three and twelve months ended December
31, 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 to Adjusted EBITDA
(In thousands)
(Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2022
2021
2022
2021
Net income
$
6,985
$
2,056
$
16,707
$
113
Amortization
2,643
3,123
11,191
20,384
Depreciation
3,527
5,589
13,249
13,385
Income tax expense
3,373
1,882
13,718
11,479
Interest expense, net
6,393
4,761
18,852
20,472
Unrealized foreign currency (gains)
losses
(2,135
)
238
(1,246
)
1,433
Acquisition related costs
(217
)
—
289
(87
)
Spin-off costs
268
1,103
1,616
15,653
Stock-based compensation expense and
related employer-paid payroll taxes
8,678
8,735
37,658
30,092
Restructuring costs and other
1,682
290
2,662
422
Adjusted EBITDA
$
31,197
$
27,777
$
114,696
$
113,346
Adjusted EBITDA margin
32.6
%
31.0
%
30.9
%
32.7
%
N-able, Inc.
Reconciliation of GAAP Revenue
to Non-GAAP Revenue on a Constant Currency Basis
(In thousands, except
percentages)
(Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2022
2021
Growth Rate
2022
2021
Growth Rate
GAAP subscription revenue
$
93,392
$
87,253
7.0
%
$
362,609
$
336,845
7.6
%
Estimated foreign currency impact (1)
5,291
—
6.1
18,955
—
5.6
Non-GAAP subscription revenue on a
constant currency basis
$
98,683
$
87,253
13.1
%
$
381,564
$
336,845
13.3
%
GAAP other revenue
$
2,363
$
2,250
5.0
%
$
9,160
$
9,611
(4.7
)%
Estimated foreign currency impact (1)
69
—
3.1
192
—
2.0
Non-GAAP other revenue on a constant
currency basis
$
2,432
$
2,250
8.1
%
$
9,352
$
9,611
(2.7
)%
GAAP subscription and other revenue
$
95,755
$
89,503
7.0
%
$
371,769
$
346,456
7.3
%
Estimated foreign currency impact (1)
5,360
—
6.0
19,147
—
5.5
Non-GAAP subscription and other revenue on
a constant currency basis
$
101,115
$
89,503
13.0
%
$
390,916
$
346,456
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 twelve months ended December 31, 2022.
N-able, Inc.
Reconciliation of Unlevered
Free Cash Flow
(In thousands)
(Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2022
2021
2022
2021
Net cash provided by operating
activities
$
18,398
$
19,182
$
71,413
$
45,341
Capital expenditures (1)
(7,808
)
(12,504
)
(21,010
)
(34,833
)
Free cash flow
10,590
6,678
50,403
10,508
Cash paid for interest, net of cash
interest received
5,322
2,591
15,570
20,387
Cash paid for acquisition related costs,
restructuring costs, spin-off costs, employer-paid payroll taxes on
stock awards and other one-time items
1,677
1,082
8,881
16,763
Unlevered free cash flow (excluding
forfeited tax shield)
17,589
10,351
74,854
47,658
Forfeited tax shield related to interest
payments (2)
—
(283
)
—
(4,116
)
Unlevered free cash flow
$
17,589
$
10,068
$
74,854
$
43,542
_________________
(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 twelve months ended December 31, 2021.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230222006052/en/
Investors: Tim O'Brien ir@n-able.com
Media: Kim Cecchini Phone: 919.957.5019 pr@n-able.com
Geoffrey Mogilner Phone: 773.257.3512
geoffrey.mogilner@n-able.com
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