Third Quarter Revenue Increased 15%
Year-Over-Year or 13% on a Constant Currency Basis
Maintained Full-Year 2023 Revenue Growth
Outlook of 13% Year-Over-Year
Raised Full-Year 2023 Adjusted EBITDA Outlook
to $139.2 - $139.7 Million with Adjusted EBITDA Margin of 33%
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, 2023.
“As the Age of the MSP advances, the IT outsourcing market
remains strong,” said N-able president and CEO John Pagliuca.
“Compelling market trends are driving MSP growth, including the
fast-moving shift to consolidate and modernize their environments,
the movement upmarket, and increasing security standards - all
centered on the need to support the expanding small and medium
enterprise IT ecosystem. We added new capabilities in the third
quarter to meet these evolving market needs, including exciting
developments to our security suite. As we move forward, our vision
is clear, and we are invigorated by the opportunity to elevate our
standing as a vendor of choice for MSPs.”
“Our third quarter results were strong, exceeding our guidance
on the top and bottom lines,” added N-able executive vice president
and CFO Tim O’Brien. “Looking ahead, we believe we are uniquely
positioned to benefit from an appealing market opportunity. We
intend to continue to invest in product innovation that advances
our strategy of empowering MSPs with purpose-built technology while
maintaining cost discipline across other areas of the
business.”
Third quarter 2023 financial highlights:
- Total revenue of $107.6 million, representing approximately
15.0% year-over-year growth, or approximately 12.9% year-over-year
growth on a constant currency basis.
- Subscription revenue of $105.2 million, representing
approximately 15.3% year-over-year growth, or approximately 13.2%
year-over-year growth on a constant currency basis.
- GAAP gross margin of 83.9% and non-GAAP gross margin of
84.6%.
- GAAP net income of $6.0 million, or $0.03 per diluted share,
and non-GAAP net income of $17.2 million, or $0.09 per diluted
share.
- Adjusted EBITDA of $36.6 million, up approximately 27%
year-over-year, representing an adjusted EBITDA margin of
34.0%.
For a reconciliation of our GAAP to non-GAAP results, please see
the tables below.
Additional highlights for the third quarter of 2023 include:
- N-able secured #1 RMM provider for the third year running in
CRN’s 2023 annual report card (ARC) awards. CRN’s ARC Awards—
considered one of the most prestigious honors in the IT
industry—are based on research conducted by The Channel Company
with an invitation-only survey. In this year's survey, 3,300
solution providers across North America rated 68 vendor partners on
four criteria: product innovation, support, partnership, and
managed cloud services. N-able was also ranked first by solution
providers in support, partnership, and product innovation.
- N-able deepened relationship with SentinelOne to empower MSPs
with enterprise-grade security solutions. N-able announced an
enhanced integration of N-able EDR and launched N-able Attack
Surface Management powered by SentinelOne.
- N-able was recognized by Comparably - a leading workplace
culture and corporate brand reputation platform - with three awards
in the third quarter, Best Employee Compensation, Happiest
Employees, and Best Company Perks & Benefits.
Balance Sheet
At September 30, 2023, total cash and cash equivalents were
$127.4 million and total debt, net of debt issuance costs, was
$335.5 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.”
Financial Outlook
As of November 13, 2023, N-able is providing its financial
outlook for the fourth quarter of 2023 and full-year 2023. The
financial information below represents forward-looking non-GAAP
financial information, including adjusted EBITDA. These non-GAAP
financial measures exclude, among other items mentioned below,
amortization of acquired intangible assets and developed
technology, depreciation expense, income tax expense, interest
expense, net, unrealized foreign currency losses (gains),
acquisition related costs, spin-off costs, stock-based compensation
expense and related employer-paid payroll taxes and restructuring
and other costs. We have not reconciled our estimates of these
non-GAAP financial measures to their most directly comparable GAAP
measure as a result of uncertainty regarding, and the potential
variability of, these excluded items in future periods.
Accordingly, reconciliation is not available without unreasonable
effort, although it is important to note that these excluded items
could be material to our results computed in accordance with GAAP
in future periods. Our reported results provide reconciliations of
non-GAAP financial measures to their nearest GAAP equivalents.
The financial outlook provided below reflects N-able's
expectations, as of the date of this release, regarding the impact
on its business of changing foreign exchange rates and current
macroeconomic dynamics.
Financial Outlook for the Fourth Quarter of 2023
N-able management currently expects to achieve the following
results for the fourth quarter of 2023:
- Total revenue in the range of $106.5 to $107.0 million,
representing approximately 11% to 12% year-over-year growth, or
approximately 10% to 11% growth on a constant currency basis.
- Adjusted EBITDA in the range of $35.0 to $35.5 million,
representing approximately 33% of total revenue.
Financial Outlook for Full-Year 2023
N-able management currently expects to achieve the following
results for the full-year 2023:
- Total revenue in the range of $420.0 to $420.5 million,
representing approximately 13% year-over-year growth on both a
reported and constant currency basis.
- Adjusted EBITDA in the range of $139.2 to $139.7 million,
representing approximately 33% of total revenue.
Additional details on the company's outlook will be provided on
the conference call.
Conference Call and Webcast
In conjunction with this announcement, N-able will host a
conference call today to discuss its financial results, business
and business outlook at 8:30 a.m. ET on November 13, 2023. A live
webcast of the call will be available on the N-able Investor
Relations website at http://investors.n-able.com. A replay of the
webcast will be available on a temporary basis shortly after the
event on the N-able Investor Relations website.
Forward-Looking Statements
This press release contains “forward-looking” statements, which
are subject to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, including statements regarding our
financial outlook for the second quarter and full year 2023 and the
impact of macroeconomic conditions on our business. These
forward-looking statements are based on management's beliefs and
assumptions and on information currently available to management.
Forward-looking statements include all statements that are not
historical facts and may be signified by terms such as “aim,”
“anticipate,” “believe,” “continue,” “expect,” “feel,” “intend,”
“estimate,” “seek,” “plan,” “may,” “can,” “could,” “should,”
“will,” “would” or similar expressions and the negatives of those
terms. Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results,
performance or achievements to be materially and adversely
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Factors
that could cause or contribute to such differences include, but are
not limited to, the following: (a) risks related to our spin-off
from SolarWinds into a newly created and separately-traded public
company, including that the spin-off could disrupt or adversely
affect our business, results of operations and financial condition,
that the spin-off may not achieve some or all of any anticipated
benefits with respect to our business; that the distribution,
together with certain related transactions, may not qualify as a
transaction that is generally tax-free for U.S. federal income tax
purposes, which could result in N-able incurring significant tax
liabilities, and, in certain circumstances, requiring us to
indemnify SolarWinds for material taxes and other related amounts
pursuant to indemnification obligations under the tax matters
agreement; (b) the possibility that a worsening of the global
COVID-19 pandemic or a new pandemic or other public health crisis
may adversely affect our business, results of operations and
financial condition or that the impact of such occurrences could
negatively affect the global economy or the business operations and
financial conditions of our customers, their end customers and our
prospective customers; (c) the impact of adverse economic
conditions; (d) our ability to sell subscriptions to new managed
service provider (“MSP”) partners, to sell additional solutions to
our existing MSP partners and to increase the usage of our
solutions by our existing MSP partners, as well as our ability to
generate and maintain MSP partner loyalty; (e) any decline in our
renewal or net retention rates; (f) the possibility that general
economic conditions or uncertainty may cause information technology
spending to be reduced or purchasing decisions to be delayed,
including as a result of the COVID-19 pandemic, inflation, actions
taken by central banks to counter inflation, rising interest rates,
the impact of bank failures and related financial services industry
uncertainty, war and political unrest, military conflict (including
between Russia and Ukraine), terrorism, sanctions or other
geopolitical events globally, or that such factors may otherwise
harm our business, financial condition or results of operations;
(g) any inability to generate significant volumes of high-quality
sales leads from our digital marketing initiatives and convert such
leads into new business at acceptable conversion rates; (h) any
inability to successfully identify, complete and integrate
acquisitions and manage our growth effectively; (i) risks
associated with our international operations including, but not
limited to, regulatory, political, tax and labor conditions; (j)
foreign exchange gains and losses related to expenses and sales
denominated in currencies other than the functional currency of an
associated entity; (k) risks that cyberattacks, including the
cyberattack on SolarWinds’ Orion Software Platform and internal
systems announced by SolarWinds in December 2020, or the Cyber
Incident, and other security incidents may result in compromises or
breaches of our, our MSP partners’, or their SME customers’
systems, the insertion of malicious code, malware, ransomware or
other vulnerabilities into our, our MSP partners’, or their SME
customers’ environments, the exploitation of vulnerabilities in
our, our MSP partners’, or their SME customers’ security, the theft
or misappropriation of our, our MSP partners’, or their SME
customers’ proprietary and confidential information, and
interference with our, our MSP partners’, or their SME customers’
operations, exposure to legal and other liabilities, higher MSP
partner and employee attrition and the loss of key personnel,
negative impacts to our sales, renewals and upgrades and
reputational harm and other serious negative consequences, any or
all of which could materially harm our business; (l) our status as
a controlled company; (m) our ability to attract and retain
qualified employees and key personnel as a standalone public
company; (n) the timing and success of new product introductions
and product upgrades by us or our competitors; (o) our ability to
protect and defend our intellectual property and not infringe upon
others’ intellectual property; (p) the possibility that our
operating income could fluctuate and may decline as percentage of
revenue as we make further expenditures to expand our operations in
order to support additional growth in our business; (q) our
indebtedness, including increased borrowing costs resulting from
rising interest rates, potential restrictions on our operations and
the impact of events of default; (r) our ability to operate our
business internationally and increase sales of our solutions to our
MSP partners located outside of the United States; (s) increased
costs associated with the loss of emerging growth company status as
of the end of 2023; and (t) such other risks and uncertainties
described more fully in documents filed with or furnished to the
Securities and Exchange Commission, including the risk factors
discussed in N-able’s Annual Report on Form 10-K for the year ended
December 31, 2022, that N-able filed with the SEC on March 14,
2023. All information provided in this release is as of the date
hereof and N-able undertakes no duty to update this information
except as required by law.
Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with
GAAP, we use certain non-GAAP financial measures to clarify and
enhance our understanding, and aid in the period-to-period
comparison, of our performance. We believe that these non-GAAP
financial measures provide supplemental information that is
meaningful when assessing our operating performance because they
exclude the impact of certain amounts that our management and board
of directors do not consider part of core operating results when
assessing our operational performance, allocating resources,
preparing annual budgets and determining compensation. Accordingly,
these non-GAAP financial measures may provide insight to investors
into the motivation and decision-making of management in operating
the business.
N-able also believes that these non-GAAP financial measures are
used by investors and security analysts to (a) compare and evaluate
its performance from period to period and (b) compare its
performance to those of its competitors. These non-GAAP measures
exclude certain items that can vary substantially from company to
company depending upon their financing and accounting methods, the
book value of their assets, their capital structures and the method
by which their assets were acquired.
As a result, these non-GAAP financial measures have limitations
and should not be considered in isolation from, or as a substitute
for, their most comparable GAAP measures. These non-GAAP financial
measures are not prepared in accordance with GAAP, do not reflect a
comprehensive system of accounting and may not be completely
comparable to similarly titled measures of other companies due to
potential differences in the exact method of calculation between
companies. Certain items that are excluded from these non-GAAP
financial measures can have a material impact on operating and net
income.
N-able's management and board of directors compensate for these
limitations by using these non-GAAP financial measures as
supplements to GAAP financial measures and by reviewing the
reconciliations of the non-GAAP financial measures to their most
comparable GAAP financial measure. Set forth in the tables below
are the corresponding GAAP financial measures for each non-GAAP
financial measure presented. Investors are encouraged to review the
reconciliations of these non-GAAP financial measures to their most
comparable GAAP financial measures that are set forth in the tables
below.
Non-GAAP Gross Margin, Non-GAAP Operating Income and Non-GAAP
Operating Margin. We provide non-GAAP total cost of revenue,
non-GAAP gross margin, non-GAAP operating expense and non-GAAP
operating income and related non-GAAP gross and operating margins
excluding such items as stock-based compensation expense and
related employer-paid payroll taxes, amortization of acquired
intangible assets, acquisition related costs, spin-off costs and
restructuring costs and other. We define non-GAAP gross and
operating margins as non-GAAP gross profit and operating income
divided by total revenue. Management believes these measures are
useful for the following reasons:
- Stock-Based Compensation Expense and Related Employer-Paid
Payroll Taxes. We provide non-GAAP information that excludes
expenses related to stock-based compensation and related
employer-paid payroll taxes associated with our employees’
participation in N-able's stock-based incentive compensation plans.
We believe that the exclusion of stock-based compensation expense
provides for a better comparison of our operating results to prior
periods and to our peer companies as the calculations of
stock-based compensation vary from period to period and company to
company due to different valuation methodologies, subjective
assumptions and the variety of award types. Employer-paid payroll
taxes on stock-based compensation is dependent on our stock price
and the timing of the taxable events related to the equity awards,
over which our management has little control, and does not
necessarily correlate to the core operation of our business.
Because of these unique characteristics of stock-based compensation
and related employer-paid payroll taxes, management excludes these
expenses when analyzing the organization’s business
performance.
- Amortization of Acquired Technologies and Intangible Assets. We
provide non-GAAP information that excludes expenses related to
purchased technologies and intangible assets associated with our
acquisitions. We believe that eliminating this expense from our
non-GAAP measures is useful to investors because the amortization
of acquired technologies and intangible assets can be inconsistent
in amount and frequency and is significantly impacted by the timing
and magnitude of our acquisition transactions, which also vary in
frequency from period to period. Accordingly, we analyze the
performance of our operations in each period without regard to such
expenses.
- Acquisition Related Costs. We exclude certain expense items
resulting from acquisitions, such as legal, accounting and advisory
fees, changes in fair value of contingent consideration, costs
related to integrating the acquired businesses, deferred
compensation, severance and retention expense. We consider these
adjustments, to some extent, to be unpredictable and dependent on a
significant number of factors that are outside of our control.
Furthermore, acquisitions result in operating expenses that would
not otherwise have been incurred by us in the normal course of our
organic business operations. We believe that providing non-GAAP
measures that exclude acquisition related costs allows investors to
better review and understand the historical and current results of
our continuing operations and also facilitates comparisons to our
historical results and results of less acquisitive peer companies,
both with and without such adjustments.
- Spin-off Costs. We exclude certain expense items resulting from
the spin-off into a newly created and separately traded public
company. These costs include legal, accounting and advisory fees,
system implementation costs and other incremental costs incurred by
us related to the separation from SolarWinds. The spin-off
transaction results in operating expenses that would not otherwise
have been incurred by us in the normal course of our organic
business operations. We believe that providing non-GAAP measures
that exclude these costs facilitates a more meaningful evaluation
of our operating performance and comparisons to our past operating
performance.
- Restructuring Costs and Other. We provide non-GAAP information
that excludes restructuring costs such as severance, certain
employee relocation costs, and the estimated costs of exiting and
terminating facility lease commitments, as they relate to our
corporate restructuring and exit activities. These costs are
inconsistent in amount and are significantly impacted by the timing
and nature of these events. Therefore, although we may incur these
types of expenses in the future, we believe that eliminating these
costs for purposes of calculating the non-GAAP financial measures
facilitates a more meaningful evaluation of our operating
performance and comparisons to our past operating performance.
Non-GAAP Net Income and Non-GAAP Net Income Per Diluted
Share. We believe that the use of non-GAAP net income and
non-GAAP net income per diluted share is helpful to our investors
to clarify and enhance their understanding of past performance and
future prospects. Non-GAAP net income is calculated as net income
excluding the adjustments to non-GAAP gross profit and non-GAAP
operating income and the income tax effect of the non-GAAP
exclusions. We define non-GAAP net income per diluted share as
non-GAAP net income divided by the weighted average outstanding
common shares.
Adjusted EBITDA and Adjusted EBITDA Margin. We regularly
monitor adjusted EBITDA and adjusted EBITDA margin, as they are
measures we use to assess our operating performance. We define
adjusted EBITDA as net income or loss, excluding amortization of
acquired intangible assets and developed technology, depreciation
expense, income tax expense, interest expense, net, unrealized
foreign currency losses (gains), acquisition related costs,
spin-off costs, stock-based compensation expense and related
employer-paid payroll taxes and restructuring and other costs. We
define adjusted EBITDA margin as adjusted EBITDA divided by total
revenue. Adjusted EBITDA has limitations as an analytical tool, and
you should not consider it in isolation or as a substitute for
analysis of our results as reported under GAAP. Some of these
limitations include: although depreciation and amortization are
non-cash charges, the assets being depreciated and amortized may
have to be replaced in the future, and adjusted EBITDA does not
reflect cash capital expenditure requirements for such replacements
or for new capital expenditure requirements; adjusted EBITDA does
not reflect changes in, or cash requirements for, our working
capital needs; adjusted EBITDA does not reflect the significant
interest expense, or the cash requirements necessary to service
interest or principal payments, on our related party debt; adjusted
EBITDA does not reflect tax payments that may represent a reduction
in cash available to us; and other companies, including companies
in our industry, may calculate adjusted EBITDA differently, which
reduces its usefulness as a comparative measure.
Non-GAAP Revenue on a Constant Currency Basis. We provide
non-GAAP revenue on a constant currency basis to provide a
framework for assessing our performance excluding the effect of
foreign currency rate fluctuations. To present this information,
current period results for revenue contracts denominated in
currencies other than U.S. Dollars are converted into U.S. Dollars
at the average exchange rates in effect during the corresponding
prior period presented. We believe that providing non-GAAP revenue
on a constant currency basis facilitates the comparison of non-GAAP
revenue to prior periods.
Unlevered Free Cash Flow. Unlevered free cash flow is a
measure of our liquidity used by management to evaluate cash flow
from operations, after the deduction of capital expenditures and
prior to the impact of our capital structure, acquisition-related
costs, restructuring costs, spin-off costs, employer-paid payroll
taxes on stock awards and other one-time items, that can be used by
us for strategic opportunities and strengthening our balance sheet.
However, given our debt obligations, unlevered free cash flow does
not represent residual cash flow available for discretionary
expenses.
About N-able
N-able fuels IT services providers with powerful software
solutions to monitor, manage, and secure their customers’ systems,
data, and networks. Built on a scalable platform, we offer secure
infrastructure and tools to simplify complex ecosystems, as well as
resources to navigate evolving IT needs. We help partners excel at
every stage of growth, protect their customers, and expand their
offerings with an ever-increasing, flexible portfolio of
integrations from leading technology providers. n-able.com
© 2023 N-able, Inc. All rights reserved.
Source: N-able, Inc. Category: Financial
N-able, Inc.
Consolidated Balance
Sheets
(In thousands)
(Unaudited)
September 30,
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
127,433
$
98,847
Accounts receivable, net of allowances of
$1,717 and $1,330 as of September 30, 2023 and December 31, 2022,
respectively
39,141
34,798
Income tax receivable
16,665
7,814
Prepaid and other current assets
20,710
12,697
Total current assets
203,949
154,156
Property and equipment, net
36,220
37,404
Operating lease right-of-use assets
30,170
31,752
Deferred taxes
1,527
795
Goodwill
821,954
828,795
Intangible assets, net
6,851
8,873
Other assets, net
21,991
17,082
Total assets
$
1,122,662
$
1,078,857
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$
3,606
$
3,544
Accrued liabilities and other
43,907
35,630
Current operating lease liabilities
5,789
5,771
Income taxes payable
11,299
1,629
Current portion of deferred revenue
11,525
11,740
Current debt obligation
3,500
3,500
Total current liabilities
79,626
61,814
Long-term liabilities:
Deferred revenue, net of current
portion
161
387
Non-current deferred taxes
1,920
2,783
Non-current operating lease
liabilities
30,910
33,110
Long-term debt, net of current portion
331,980
333,488
Other long-term liabilities
3,385
5,204
Total liabilities
447,982
436,786
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value:
550,000,000 shares authorized and 182,918,788 and 180,849,537
shares issued and outstanding as of September 30, 2023 and December
31, 2022, respectively
183
181
Preferred stock, $0.001 par value:
50,000,000 shares authorized and no shares issued and outstanding
as of September 30, 2023 and December 31, 2022, respectively
—
—
Additional paid-in capital
657,522
632,871
Accumulated other comprehensive loss
(13,920
)
(7,815
)
Retained earnings
30,895
16,834
Total stockholders' equity
674,680
642,071
Total liabilities and stockholders'
equity
$
1,122,662
$
1,078,857
N-able, Inc.
Consolidated Statements of
Operations
(In thousands, except per
share information)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue:
Subscription and other revenue
$
107,567
$
93,527
$
313,465
$
276,014
Cost of revenue:
Cost of revenue
16,893
14,587
49,205
41,492
Amortization of acquired technologies
463
516
1,382
2,043
Total cost of revenue
17,356
15,103
50,587
43,535
Gross profit
90,211
78,424
262,878
232,479
Operating expenses:
Sales and marketing
33,660
31,149
101,112
94,223
Research and development
19,752
16,038
58,796
46,664
General and administrative
18,438
18,050
53,877
54,119
Amortization of acquired intangibles
11
1,465
585
4,386
Total operating expenses
71,861
66,702
214,370
199,392
Operating income
18,350
11,722
48,508
33,087
Other expense:
Interest expense, net
(7,802
)
(5,088
)
(22,532
)
(12,459
)
Other (expense) income, net
(423
)
(1,795
)
1,569
(561
)
Total other expense, net
(8,225
)
(6,883
)
(20,963
)
(13,020
)
Income before income taxes
10,125
4,839
27,545
20,067
Income tax expense
4,112
4,545
13,484
10,345
Net income
$
6,013
$
294
$
14,061
$
9,722
Net income per share:
Basic earnings per share
$
0.03
$
0.00
$
0.08
$
0.05
Diluted earnings per share
$
0.03
$
0.00
$
0.08
$
0.05
Weighted-average shares used to compute
net income per share:
Shares used in computation of basic
earnings per share:
182,710
180,323
182,135
180,072
Shares used in computation of diluted
earnings per share:
186,221
181,145
185,506
180,966
N-able, Inc.
Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Cash flows from operating activities
Net income
$
6,013
$
294
$
14,061
$
9,722
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
5,329
6,037
16,142
18,270
Provision for doubtful accounts
458
211
387
138
Stock-based compensation expense
11,298
10,112
32,893
28,078
Deferred taxes
(34
)
(132
)
(20
)
213
Amortization of debt issuance costs
405
405
1,197
1,219
Operating lease right-of-use assets,
net
(538
)
(729
)
(1,050
)
(1,153
)
Loss on foreign currency exchange
rates
1,582
1,486
2,137
889
(Gain) loss on contingent
consideration
(631
)
166
(958
)
166
Other non-cash expenses
—
—
128
43
Changes in operating assets and
liabilities, net of assets acquired and liabilities assumed in
business combinations:
Accounts receivable
(215
)
1,790
(6,121
)
278
Income tax receivable
(955
)
(918
)
(8,874
)
(2,802
)
Prepaid expenses and other assets
(2,207
)
(614
)
(8,021
)
(397
)
Accounts payable
(490
)
(1,598
)
382
(2,437
)
Due to and from affiliates
—
61
—
(402
)
Accrued liabilities and other
4,287
4,948
8,684
3,126
Income taxes payable
3,510
(4,875
)
9,491
(2,910
)
Deferred revenue
(28
)
135
(443
)
493
Other long-term assets
(288
)
369
(1,206
)
481
Other long-term liabilities
16
—
60
—
Net cash provided by operating
activities
27,512
17,148
58,869
53,015
Cash flows from investing activities
Purchases of property and equipment
(3,518
)
(4,263
)
(10,487
)
(9,690
)
Purchases of intangible assets
(2,006
)
(1,156
)
(6,675
)
(3,512
)
Acquisitions, net of cash acquired
—
(9,302
)
—
(9,302
)
Net cash used in investing activities
(5,524
)
(14,721
)
(17,162
)
(22,504
)
Cash flows from financing activities
Payments of tax withholding obligations
related to restricted stock units
(1,988
)
(810
)
(10,228
)
(6,353
)
Exercise of stock options
46
4
72
31
Proceeds from issuance of common stock
under employee stock purchase plan
910
747
1,681
1,315
Deferred acquisition payments
(850
)
—
(850
)
—
Repayments of borrowings from Credit
Agreement
(875
)
(875
)
(2,625
)
(2,625
)
Net cash used in financing activities
(2,757
)
(934
)
(11,950
)
(7,632
)
Effect of exchange rate changes on cash
and cash equivalents
(988
)
(382
)
(1,171
)
(1,886
)
Net increase in cash and cash
equivalents
18,243
1,111
28,586
20,993
Cash and cash equivalents
Beginning of period
109,190
86,618
98,847
66,736
End of period
$
127,433
$
87,729
$
127,433
$
87,729
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
7,416
$
4,065
$
21,119
$
10,248
Cash paid for income taxes
$
1,156
$
9,328
$
11,046
$
13,157
Supplemental disclosure of non-cash
activities:
Change in purchases of property, equipment
and leasehold improvements included in accounts payable and accrued
expenses
$
(1,509
)
$
11
$
(553
)
$
(572
)
Right-of-use assets obtained in exchange
for operating lease liabilities
$
1,835
$
—
$
2,318
$
967
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,
2023
2022
2023
2022
GAAP cost of revenue
$
17,356
$
15,103
$
50,587
$
43,535
Stock-based compensation expense and
related employer-paid payroll taxes
(354
)
(335
)
(1,071
)
(955
)
Amortization of acquired technologies
(463
)
(516
)
(1,382
)
(2,043
)
Restructuring costs and other
(21
)
(11
)
(38
)
(41
)
Non-GAAP cost of revenue
$
16,518
$
14,241
$
48,096
$
40,496
GAAP gross profit
$
90,211
$
78,424
$
262,878
$
232,479
Stock-based compensation expense and
related employer-paid payroll taxes
354
335
1,071
955
Amortization of acquired technologies
463
516
1,382
2,043
Restructuring costs and other
21
11
38
41
Non-GAAP gross profit
$
91,049
$
79,286
$
265,369
$
235,518
GAAP sales and marketing expense
$
33,660
$
31,149
$
101,112
$
94,223
Stock-based compensation expense and
related employer-paid payroll taxes
(3,914
)
(3,235
)
(11,572
)
(9,581
)
Acquisition related costs
(4
)
(4
)
(28
)
(18
)
Restructuring costs and other
(3
)
(10
)
(27
)
(12
)
Non-GAAP sales and marketing expense
$
29,739
$
27,900
$
89,485
$
84,612
GAAP research and development expense
$
19,752
$
16,038
$
58,796
$
46,664
Stock-based compensation expense and
related employer-paid payroll taxes
(2,375
)
(1,706
)
(6,770
)
(4,937
)
Acquisition related costs
—
—
(8
)
(32
)
Restructuring costs and other
(49
)
(238
)
(839
)
(350
)
Non-GAAP research and development
expense
$
17,328
$
14,094
$
51,179
$
41,345
GAAP general and administrative
expense
$
18,438
$
18,050
$
53,877
$
54,119
Stock-based compensation expense and
related employer-paid payroll taxes
(4,932
)
(4,946
)
(14,812
)
(13,507
)
Acquisition related costs
613
(233
)
654
(456
)
Restructuring costs and other
(509
)
(292
)
(714
)
(577
)
Spin-off costs
(166
)
(394
)
(623
)
(1,348
)
Non-GAAP general and administrative
expense
$
13,444
$
12,185
$
38,382
$
38,231
GAAP operating income
$
18,350
$
11,722
$
48,508
$
33,087
Amortization of acquired technologies
463
516
1,382
2,043
Amortization of acquired intangibles
11
1,465
585
4,386
Stock-based compensation expense and
related employer-paid payroll taxes
11,575
10,222
34,225
28,980
Acquisition related costs
(609
)
237
(618
)
506
Restructuring costs and other
582
551
1,618
980
Spin-off costs
166
394
623
1,348
Non-GAAP operating income
$
30,538
$
25,107
$
86,323
$
71,330
GAAP operating margin
17.1
%
12.5
%
15.5
%
12.0
%
Non-GAAP operating margin
28.4
%
26.8
%
27.5
%
25.8
%
GAAP net income
$
6,013
$
294
$
14,061
$
9,722
Amortization of acquired technologies
463
516
1,382
2,043
Amortization of acquired intangibles
11
1,465
585
4,386
Stock-based compensation expense and
related employer-paid payroll taxes
11,575
10,222
34,225
28,980
Acquisition related costs
(609
)
237
(618
)
506
Restructuring costs and other
582
551
1,618
980
Spin-off costs
166
394
623
1,348
Tax benefits associated with above
adjustments (1)
(1,041
)
(1,383
)
(3,480
)
(4,098
)
Non-GAAP net income
$
17,160
$
12,296
$
48,396
$
43,867
GAAP diluted earnings per share
$
0.03
$
0.00
$
0.08
$
0.05
Non-GAAP diluted earnings per share
$
0.09
$
0.07
$
0.26
$
0.24
Shares used in computation of diluted
earnings per share:
186,221
181,145
185,506
180,966
_________________
(1) The tax benefits associated with
non-GAAP adjustments for the three and nine months ended September
30, 2023, and 2022, respectively, is calculated utilizing the
Company's individual statutory tax rates for each impacted
subsidiary.
N-able, Inc.
Reconciliation of GAAP Net
Income to Adjusted EBITDA
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net income
$
6,013
$
294
$
14,061
$
9,722
Amortization
1,437
2,711
4,825
8,548
Depreciation
3,892
3,326
11,317
9,722
Income tax expense
4,112
4,545
13,484
10,345
Interest expense, net
7,802
5,088
22,532
12,459
Unrealized foreign currency losses
1,582
1,486
2,137
889
Acquisition related costs
(609
)
237
(618
)
506
Spin-off costs
166
394
623
1,348
Stock-based compensation expense and
related employer-paid payroll taxes
11,575
10,222
34,225
28,980
Restructuring costs and other
582
551
1,618
980
Adjusted EBITDA
$
36,552
$
28,854
$
104,204
$
83,499
Adjusted EBITDA margin
34.0
%
30.9
%
33.2
%
30.3
%
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,
2023
2022
Growth Rate
2023
2022
Growth Rate
GAAP subscription revenue
$
105,208
$
91,213
15.3
%
$
306,005
$
269,217
13.7
%
Estimated foreign currency impact (1)
(1,934
)
—
(2.1
)
1,892
—
0.7
Non-GAAP subscription revenue on a
constant currency basis
$
103,274
$
91,213
13.2
%
$
307,897
$
269,217
14.4
%
GAAP other revenue
$
2,359
$
2,314
1.9
%
$
7,460
$
6,797
9.8
%
Estimated foreign currency impact (1)
(4
)
—
(0.2
)
53
—
0.8
Non-GAAP other revenue on a constant
currency basis
$
2,355
$
2,314
1.8
%
$
7,513
$
6,797
10.5
%
GAAP subscription and other revenue
$
107,567
$
93,527
15.0
%
$
313,465
$
276,014
13.6
%
Estimated foreign currency impact (1)
(1,938
)
—
(2.1
)
1,945
—
0.7
Non-GAAP subscription and other revenue on
a constant currency basis
$
105,629
$
93,527
12.9
%
$
315,410
$
276,014
14.3
%
_________________
(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, 2023.
N-able, Inc.
Reconciliation of Unlevered
Free Cash Flow
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net cash provided by operating
activities
$
27,512
$
17,148
$
58,869
$
53,015
Purchases of property and equipment
(3,518
)
(4,263
)
(10,487
)
(9,690
)
Purchases of intangible assets
(2,006
)
(1,156
)
(6,675
)
(3,512
)
Free cash flow
21,988
11,729
41,707
39,813
Cash paid for interest, net of cash
interest received
7,416
4,065
21,119
10,248
Cash paid for acquisition related costs,
restructuring costs, spin-off costs, employer-paid payroll taxes on
stock awards and other one-time items
833
2,885
4,885
7,204
Unlevered free cash flow
$
30,237
$
18,679
$
67,711
$
57,265
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231110336002/en/
Investors: Tim O'Brien ir@n-able.com
Media: Kim Cecchini Phone: 202.391.5205 pr@n-able.com
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