N-able Announces Fourth Quarter and Full-Year 2023 Results
- None.
- None.
Insights
The reported full-year revenue growth of 13.5% and the forecasted year-over-year growth of 9% to 10% for 2024 by N-able, Inc. reflect a positive trajectory in the company's financial performance. A key metric, the dollar-based net retention rate of 110%, indicates that existing customers are increasing their spending, which is a strong sign of customer satisfaction and product stickiness. This metric is particularly important for subscription-based models, as it underscores the long-term revenue potential from the current customer base.
The significant increase in adjusted EBITDA margin by over 300 basis points demonstrates operational efficiency and the ability to scale profitably. The adjusted EBITDA margin of 34% to 35% outlook for 2024 suggests that the company is expecting to maintain or improve its cost management while continuing to grow revenue. Investors and stakeholders might view these figures as indicative of a company that is managing its growth effectively while expanding its profitability.
It is also noteworthy that the company's GAAP and non-GAAP gross margins are above 80%, which is relatively high and may reflect a competitive advantage in terms of cost structure or pricing power. The distinction between GAAP and non-GAAP figures, often used to exclude non-recurring items and provide a clearer picture of ongoing financial health, is crucial for investors assessing the company's performance.
The demand for IT management software, driven by increasing security threats, compliance standards and IT complexity, presents a growing market for N-able, Inc. The company's focus on expanding its suite of software products, such as the introduction of Managed Detection and Response (MDR) and Cloud Commander, is a strategic response to these market needs. Such enhancements can be seen as an effort to differentiate its offerings and capture more market share in the managed services provider (MSP) and small and mid-sized enterprise (SME) segments.
Furthermore, the company's advancements in automation with Generative AI indicate an investment in innovation, which may improve operational efficiencies for MSPs. This could be a compelling value proposition that sets N-able apart from competitors. The recognition from the ChannelPro SMB All-Star Award serves as a testament to the company's commitment to its target market and could enhance its reputation among potential and existing customers.
N-able's product advancements, such as the Managed Detection and Response (MDR) service and the integration of Generative AI for device management, are significant. The MDR service addresses a critical need for cybersecurity in the SME space, which is often underserved by traditional enterprise-grade solutions. By providing a tailored solution for MSPs, N-able is capitalizing on a niche market that requires specialized security offerings.
The use of Generative AI for automating script creation and mundane tasks could be a game-changer for MSPs, potentially reducing operational costs and improving service delivery. These technological enhancements are likely to increase the stickiness of N-able's products and could lead to higher adoption rates. It's important for stakeholders to understand the potential of these technologies to drive future growth and how they might contribute to sustaining the 'Rule of 50' performance goal, which implies a balance of growth and profitability that is highly regarded in the SaaS industry.
Full-Year 2023 Revenue Increased
TTM Dollar-Based Net Retention Rate of
Full-Year 2024 Revenue Outlook of
Full-Year 2024 Adjusted EBITDA Margin Outlook of
“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 13.2% year-over-year growth, or11.4% year-over-year growth on a constant currency basis. -
Subscription revenue of
$106.1 million 13.6% year-over-year growth, or11.7% year-over-year growth on a constant currency basis. -
GAAP gross margin of
83.7% and non-GAAP gross margin of84.5% . -
GAAP net income of
$9.4 million $0.05 $19.8 million $0.11 -
Adjusted EBITDA of
$39.2 million 25.7% year-over-year, representing an adjusted EBITDA margin of36.2% .
Full-year 2023 financial highlights:
-
Total revenue of
$421.9 million 13.5% year-over-year growth on both a reported and constant currency basis. -
Subscription revenue of
$412.1 million 13.6% year-over-year growth, or13.7% year-over-year growth on a constant currency basis. -
GAAP gross margin of
83.8% and non-GAAP gross margin of84.6% . -
GAAP net income of
$23.4 million $0.13 $68.2 million $0.37 -
Adjusted EBITDA of
$143.4 million 25.0% year-over-year, representing an adjusted EBITDA margin of34.0% .
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
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 $111.5 million 11% to12% year-over-year growth on both a reported and constant currency basis. -
Adjusted EBITDA in the range of
$37.5 $38.0 million 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 $465.0 million 9% to10% year-over-year growth, or9% to11% on a constant currency basis. -
Adjusted EBITDA in the range of
$158.0 $162.0 million 34% to35% 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
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
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 |
|
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, |
|
183 |
|
|
181 |
|
|
Preferred stock, |
|
— |
|
|
— |
|
|
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. |
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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
|
|
2023 |
|
2022 |
|
Growth
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
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
Source: N-able, Inc.
FAQ
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