Full-Year 2023 Revenue Increased 13.5%
Year-Over-Year
TTM Dollar-Based Net Retention Rate of 110%
Full-Year 2024 Revenue Outlook of 9% to 10%
Year-Over-Year Growth
Full-Year 2024 Adjusted EBITDA Margin Outlook
of 34% to 35%
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,
2023.
“Our 2023 performance was strong, and we believe lays the
groundwork for a successful 2024,” said N-able president and CEO
John Pagliuca. “Demand for effective IT management software has
remained robust, with increasing security threats, intensifying
compliance standards, and rising IT complexity challenging MSPs and
SMEs across the globe. With our expanding suite of purpose-built
software products - including the recent additions of MDR and Cloud
Commander - N-able is poised to meet these needs. We have high
ambitions in 2024 and are determined to deliver for our customers
and stakeholders.”
“Our fourth quarter results exceeded expectations on the top and
bottom lines capping a successful year where we advanced our
product roadmap, expanded our cross-sell opportunity, and drove
double digit revenue growth while growing our full-year adjusted
EBITDA margin by over 300 basis points,” added N-able CFO Tim
O’Brien. “Our 2024 operating plan builds on this momentum and we
believe positions us to advance critical strategic initiatives as
we aim to achieve a sustained Rule of 50 performance goal.”
Fourth quarter 2023 financial highlights:
- Total revenue of $108.4 million, representing 13.2%
year-over-year growth, or 11.4% year-over-year growth on a constant
currency basis.
- Subscription revenue of $106.1 million, representing 13.6%
year-over-year growth, or 11.7% year-over-year growth on a constant
currency basis.
- GAAP gross margin of 83.7% and non-GAAP gross margin of
84.5%.
- GAAP net income of $9.4 million, or $0.05 per diluted share,
and non-GAAP net income of $19.8 million, or $0.11 per diluted
share.
- Adjusted EBITDA of $39.2 million, up 25.7% year-over-year,
representing an adjusted EBITDA margin of 36.2%.
Full-year 2023 financial highlights:
- Total revenue of $421.9 million, representing 13.5%
year-over-year growth on both a reported and constant currency
basis.
- Subscription revenue of $412.1 million, representing 13.6%
year-over-year growth, or 13.7% year-over-year growth on a constant
currency basis.
- GAAP gross margin of 83.8% and non-GAAP gross margin of
84.6%.
- GAAP net income of $23.4 million, or $0.13 per diluted share,
and non-GAAP net income of $68.2 million, or $0.37 per diluted
share.
- Adjusted EBITDA of $143.4 million, up 25.0% 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 fourth quarter of 2023
include:
- N-able Advances Security Suite with Introduction of N-able
Managed Detection and Response. N-able MDR combines a powerful
security operations platform with expert services, giving managed
services providers (MSPs) a broad range of capabilities to set a
new standard of cybersecurity for their small and mid-sized
customers.
- N-able Enhances Device Management Capabilities Through
Automation with Generative AI. These new capabilities help MSPs to
automate creation of scripts based on prompts and provide tools to
leverage machine learnings to automate mundane tasks.
- N-able Awarded 2023 ChannelPro SMB All-Star Award. N-able was
celebrated for recognizing the role MSPs play in delivering
infrastructure-as-a-service with hyperscalers. ChannelPro
specifically commended N-able for critical updates made to Cove,
N-able's cloud-first data protection product.
Balance Sheet
As of December 31, 2023, total cash and cash equivalents were
$153.0 million and total debt, net of debt issuance costs, was
$335.0 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.”
Financial Outlook
As of February 22, 2024, N-able is providing its financial
outlook for the first quarter of 2024 and full-year 2024. 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 (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 foreign exchange rates and current
macroeconomic dynamics.
Financial Outlook for the First Quarter of 2024
N-able management currently expects to achieve the following
results for the first quarter of 2024:
- Total revenue in the range of $111.0 to $111.5 million,
representing approximately 11% to 12% year-over-year growth on both
a reported and constant currency basis.
- Adjusted EBITDA in the range of $37.5 to $38.0 million,
representing approximately 34% of total revenue.
Financial Outlook for Full-Year 2024
N-able management currently expects to achieve the following
results for the full-year 2024:
- Total revenue in the range of $460.0 to $465.0 million,
representing approximately 9% to 10% year-over-year growth, or 9%
to 11% on a constant currency basis.
- Adjusted EBITDA in the range of $158.0 to $162.0 million,
representing approximately 34% to 35% 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 22, 2024. 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 first quarter and full-year 2024 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 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 impact of adverse economic
conditions; (c) 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; (d) any decline in our
renewal or net retention rates; (e) the possibility that general
economic conditions or uncertainty may cause information technology
spending to be reduced or purchasing decisions to be delayed,
including as a result of inflation, actions taken by central banks
to counter inflation, rising interest rates, war and political
unrest, military conflict (including between Russia and Ukraine and
in the Middle East), terrorism, sanctions or other geopolitical
events globally, or that such factors may otherwise harm our
business, financial condition or results of operations; (f) any
inability to generate significant volumes of high-quality sales
leads from our digital marketing initiatives and convert such leads
into new business at acceptable conversion rates; (g) any inability
to successfully identify, complete and integrate acquisitions and
manage our growth effectively; (h) any inability to resell
third-party software or integrate third-party software into our
solutions, or find suitable replacements for such third-party
software; (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 (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; (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, 2022, that
N-able filed with the SEC on March 14, 2023, and those that will be
discussed in the Annual Report on Form 10-K for the period ended
December 31, 2023, that N-able anticipates filing on or before
February 29, 2024. 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 (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
© 2024 N-able, Inc. All rights reserved.
Source: N-able, Inc. Category: Financial
N-able, Inc.
Consolidated Balance
Sheets
(In thousands)
(Unaudited)
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
153,048
$
98,847
Accounts receivable, net of allowances of
$1,171 and $1,330 as of December 31, 2023 and 2022,
respectively
40,013
34,798
Income tax receivable
8,001
7,814
Prepaid and other current assets
23,729
12,697
Total current assets
224,791
154,156
Property and equipment, net
36,838
37,404
Operating lease right-of-use assets
32,067
31,752
Deferred taxes
1,087
795
Goodwill
838,497
828,795
Intangible assets, net
6,717
8,873
Other assets, net
22,794
17,082
Total assets
$
1,162,791
$
1,078,857
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$
5,239
$
3,544
Accrued liabilities and other
49,366
35,630
Current operating lease liabilities
6,443
5,771
Income taxes payable
4,523
1,629
Current portion of deferred revenue
12,646
11,740
Current debt obligation
3,500
3,500
Total current liabilities
81,717
61,814
Long-term liabilities:
Deferred revenue, net of current
portion
167
387
Non-current deferred taxes
1,820
2,783
Non-current operating lease
liabilities
33,064
33,110
Long-term debt, net of current portion
331,509
333,488
Other long-term liabilities
3,154
5,204
Total liabilities
451,431
436,786
Commitments and contingencies (Note
15)
Stockholders’ equity:
Common stock, $0.001 par value:
550,000,000 shares authorized and 183,220,689 and 180,849,537
shares issued and outstanding as of December 31, 2023 and 2022,
respectively
183
181
Preferred stock, $0.001 par value:
50,000,000 shares authorized and no shares issued and outstanding
as of December 31, 2023 and 2022, respectively
—
—
Additional paid-in capital
666,522
632,871
Accumulated other comprehensive income
(loss)
4,409
(7,815
)
Retained earnings
40,246
16,834
Total stockholders' equity
711,360
642,071
Total liabilities and stockholders'
equity
$
1,162,791
$
1,078,857
N-able, Inc.
Consolidated Statements of
Operations
(In thousands, except per
share information)
(Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
Revenue:
Subscription and other revenue
$
108,415
$
95,755
$
421,880
$
371,769
Cost of revenue:
Cost of revenue
17,164
14,641
66,369
56,133
Amortization of acquired technologies
457
434
1,839
2,477
Total cost of revenue
17,621
15,075
68,208
58,610
Gross profit
90,794
80,680
353,672
313,159
Operating expenses:
Sales and marketing
33,579
31,078
134,691
125,301
Research and development
19,384
16,820
78,180
63,484
General and administrative
16,008
17,006
69,885
71,125
Amortization of acquired intangibles
12
1,467
597
5,853
Total operating expenses
68,983
66,371
283,353
265,763
Operating income
21,811
14,309
70,319
47,396
Other expense:
Interest expense, net
(7,720
)
(6,393
)
(30,252
)
(18,852
)
Other income, net
2,690
2,442
4,259
1,881
Total other expense, net
(5,030
)
(3,951
)
(25,993
)
(16,971
)
Income before income taxes
16,781
10,358
44,326
30,425
Income tax expense
7,430
3,373
20,914
13,718
Net income
$
9,351
$
6,985
$
23,412
$
16,707
Net income per share:
Basic earnings per share
$
0.05
$
0.04
$
0.13
$
0.09
Diluted earnings per share
$
0.05
$
0.04
$
0.13
$
0.09
Weighted-average shares used to compute
net income per share:
Shares used in computation of basic
earnings per share:
183,072
180,712
182,371
180,136
Shares used in computation of diluted
earnings per share:
186,495
182,162
185,980
181,297
N-able, Inc.
Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
Cash flows from operating activities
Net income
$
9,351
$
6,985
$
23,412
$
16,707
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
5,481
6,170
21,623
24,440
Benefit from doubtful accounts
(546
)
(461
)
(159
)
(323
)
Stock-based compensation expense
10,677
8,449
43,570
36,527
Deferred taxes
350
(1,636
)
330
(1,423
)
Amortization of debt issuance costs
404
404
1,601
1,623
Operating lease right-of-use assets,
net
(500
)
(15
)
(1,550
)
(1,168
)
(Gain) loss on foreign currency exchange
rates
(1,779
)
(2,135
)
358
(1,246
)
Gain on contingent consideration
(485
)
(249
)
(1,443
)
(83
)
Other non-cash expenses
92
105
220
148
Changes in operating assets and
liabilities, net of assets acquired and liabilities assumed in
business combinations:
Accounts receivable
(939
)
(3,710
)
(7,060
)
(3,432
)
Income tax receivable
8,700
2,235
(174
)
(567
)
Prepaid expenses and other assets
(2,802
)
680
(10,823
)
283
Accounts payable
1,451
813
1,833
(1,624
)
Due to and from affiliates
—
—
—
(402
)
Accrued liabilities and other
7,381
(123
)
16,065
3,003
Income taxes payable
(6,525
)
(278
)
2,966
(3,188
)
Deferred revenue
1,127
865
684
1,358
Other long-term assets
(68
)
299
(1,274
)
780
Other long-term liabilities
(150
)
—
(90
)
—
Net cash provided by operating
activities
31,220
18,398
90,089
71,413
Cash flows from investing activities
Purchases of property and equipment
(3,293
)
(3,144
)
(13,780
)
(12,834
)
Purchases of intangible assets
(1,881
)
(4,664
)
(8,556
)
(8,176
)
Acquisitions, net of cash acquired
—
103
—
(9,199
)
Net cash used in investing activities
(5,174
)
(7,705
)
(22,336
)
(30,209
)
Cash flows from financing activities
Payments of tax withholding obligations
related to restricted stock units
(1,748
)
(1,972
)
(11,976
)
(8,325
)
Exercise of stock options
—
77
72
108
Proceeds from issuance of common stock
under employee stock purchase plan
—
—
1,681
1,315
Deferred acquisition payments
(600
)
—
(1,450
)
—
Repayments of borrowings from Credit
Agreement
(875
)
(875
)
(3,500
)
(3,500
)
Net cash used in financing activities
(3,223
)
(2,770
)
(15,173
)
(10,402
)
Effect of exchange rate changes on cash
and cash equivalents
2,792
3,195
1,621
1,309
Net increase in cash and cash
equivalents
25,615
11,118
54,201
32,111
Cash and cash equivalents
Beginning of period
127,433
87,729
98,847
66,736
End of period
$
153,048
$
98,847
$
153,048
$
98,847
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
7,318
$
5,322
$
28,437
$
15,570
Cash paid for income taxes
$
3,888
$
3,146
$
14,934
$
16,303
Supplemental disclosure of non-cash
activities:
Change in purchases of property, equipment
and leasehold improvements included in accounts payable and accrued
expenses
$
175
$
(156
)
$
(378
)
$
(728
)
Right-of-use assets obtained in exchange
for operating lease liabilities
$
2,805
$
—
$
5,123
$
967
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,
2023
2022
2023
2022
GAAP cost of revenue
$
17,621
$
15,075
$
68,208
$
58,610
Stock-based compensation expense and
related employer-paid payroll taxes
(363
)
(263
)
(1,434
)
(1,218
)
Amortization of acquired technologies
(457
)
(434
)
(1,839
)
(2,477
)
Restructuring costs and other
(36
)
(20
)
(74
)
(61
)
Non-GAAP cost of revenue
$
16,765
$
14,358
$
64,861
$
54,854
GAAP gross profit
$
90,794
$
80,680
$
353,672
$
313,159
Stock-based compensation expense and
related employer-paid payroll taxes
363
263
1,434
1,218
Amortization of acquired technologies
457
434
1,839
2,477
Restructuring costs and other
36
20
74
61
Non-GAAP gross profit
$
91,650
$
81,397
$
357,019
$
316,915
GAAP sales and marketing expense
$
33,579
$
31,078
$
134,691
$
125,301
Stock-based compensation expense and
related employer-paid payroll taxes
(3,715
)
(2,919
)
(15,287
)
(12,500
)
Acquisition related costs
4
(3
)
(24
)
(21
)
Restructuring costs and other
(263
)
(429
)
(290
)
(441
)
Non-GAAP sales and marketing expense
$
29,605
$
27,727
$
119,090
$
112,339
GAAP research and development expense
$
19,384
$
16,820
$
78,180
$
63,484
Stock-based compensation expense and
related employer-paid payroll taxes
(2,225
)
(1,463
)
(8,995
)
(6,400
)
Acquisition related costs
—
(16
)
(8
)
(48
)
Restructuring costs and other
(87
)
(678
)
(926
)
(1,028
)
Non-GAAP research and development
expense
$
17,072
$
14,663
$
68,251
$
56,008
GAAP general and administrative
expense
$
16,008
$
17,006
$
69,885
$
71,125
Stock-based compensation expense and
related employer-paid payroll taxes
(4,565
)
(4,033
)
(19,377
)
(17,540
)
Acquisition related costs
474
236
1,128
(220
)
Restructuring costs and other
(109
)
(555
)
(823
)
(1,132
)
Spin-off costs
(112
)
(268
)
(735
)
(1,616
)
Non-GAAP general and administrative
expense
$
11,696
$
12,386
$
50,078
$
50,617
GAAP operating income
$
21,811
$
14,309
$
70,319
$
47,396
Amortization of acquired technologies
457
434
1,839
2,477
Amortization of acquired intangibles
12
1,468
597
5,854
Stock-based compensation expense and
related employer-paid payroll taxes
10,868
8,678
45,093
37,658
Acquisition related costs
(478
)
(217
)
(1,096
)
289
Restructuring costs and other
495
1,682
2,113
2,662
Spin-off costs
112
268
735
1,616
Non-GAAP operating income
$
33,277
$
26,622
$
119,600
$
97,952
GAAP operating margin
20.1
%
14.9
%
16.7
%
12.7
%
Non-GAAP operating margin
30.7
%
27.8
%
28.3
%
26.3
%
GAAP net income
$
9,351
$
6,985
$
23,412
$
16,707
Amortization of acquired technologies
457
434
1,839
2,477
Amortization of acquired intangibles
12
1,468
597
5,854
Stock-based compensation expense and
related employer-paid payroll taxes
10,868
8,678
45,093
37,658
Acquisition related costs
(478
)
(217
)
(1,096
)
289
Restructuring costs and other
495
1,682
2,113
2,662
Spin-off costs
112
268
735
1,616
Tax benefits associated with above
adjustments (1)
(992
)
(1,332
)
(4,472
)
(5,430
)
Non-GAAP net income
$
19,825
$
17,966
$
68,221
$
61,833
GAAP diluted earnings per share
$
0.05
$
0.04
$
0.13
$
0.09
Non-GAAP diluted earnings per share
$
0.11
$
0.10
$
0.37
$
0.34
Shares used in computation of diluted
earnings per share:
186,495
182,162
185,980
181,297
_________________
(1) The tax benefits associated with
non-GAAP adjustments for the three and twelve months ended December
31, 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 December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
Net income
$
9,351
$
6,985
$
23,412
$
16,707
Amortization
1,571
2,643
6,396
11,191
Depreciation
3,910
3,527
15,227
13,249
Income tax expense
7,430
3,373
20,914
13,718
Interest expense, net
7,720
6,393
30,252
18,852
Unrealized foreign currency (gains)
losses
(1,779
)
(2,135
)
358
(1,246
)
Acquisition related costs
(478
)
(217
)
(1,096
)
289
Spin-off costs
112
268
735
1,616
Stock-based compensation expense and
related employer-paid payroll taxes
10,868
8,678
45,093
37,658
Restructuring costs and other
495
1,682
2,113
2,662
Adjusted EBITDA
$
39,200
$
31,197
$
143,404
$
114,696
Adjusted EBITDA margin
36.2
%
32.6
%
34.0
%
30.9
%
N-able, Inc.
Reconciliation of GAAP Revenue
to Non-GAAP Revenue on a Constant Currency Basis
(In thousands, except
percentages)
(Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2023
2022
Growth Rate
2023
2022
Growth Rate
GAAP subscription revenue
$
106,067
$
93,392
13.6
%
$
412,072
$
362,609
13.6
%
Estimated foreign currency impact (1)
(1,726
)
—
(1.9
)
166
—
0.1
Non-GAAP subscription revenue on a
constant currency basis
$
104,341
$
93,392
11.7
%
$
412,238
$
362,609
13.7
%
GAAP other revenue
$
2,348
$
2,363
(0.7
)%
$
9,808
$
9,160
7.1
%
Estimated foreign currency impact (1)
(1
)
—
—
52
—
0.5
Non-GAAP other revenue on a constant
currency basis
$
2,347
$
2,363
(0.7
)%
$
9,860
$
9,160
7.6
%
GAAP subscription and other revenue
$
108,415
$
95,755
13.2
%
$
421,880
$
371,769
13.5
%
Estimated foreign currency impact (1)
(1,727
)
—
(1.8
)
218
—
—
Non-GAAP subscription and other revenue on
a constant currency basis
$
106,688
$
95,755
11.4
%
$
422,098
$
371,769
13.5
%
_________________
(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, 2023.
N-able, Inc.
Reconciliation of Unlevered
Free Cash Flow
(In thousands)
(Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
Net cash provided by operating
activities
$
31,220
$
18,398
$
90,089
$
71,413
Purchases of property and equipment
(3,293
)
(3,144
)
(13,780
)
(12,834
)
Purchases of intangible assets
(1,881
)
(4,664
)
(8,556
)
(8,176
)
Free cash flow
26,046
10,590
67,753
50,403
Cash paid for interest, net of cash
interest received
7,318
5,322
28,437
15,570
Cash paid for acquisition related costs,
restructuring costs, spin-off costs, employer-paid payroll taxes on
stock awards and other one-time items
1,243
1,677
6,128
8,881
Unlevered free cash flow
$
34,607
$
17,589
$
102,318
$
74,854
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240221708196/en/
Investors: Tim O'Brien ir@n-able.com
Media: Kim Cecchini Phone: 202.391.5205 pr@n-able.com
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