N-able Announces Third Quarter 2022 Results
N-able (NYSE:NABL) raised its full-year 2022 Adjusted EBITDA outlook to 30% while maintaining a revenue growth forecast of 7% year-over-year, or 12% to 13% in constant currency. The company reported Q3 2022 total revenue of $93.5 million, reflecting a 6% increase year-over-year, and a subscription revenue of $91.2 million. With a GAAP net income of $0.3 million and adjusted EBITDA of $28.8 million, N-able emphasizes strong growth in security and data protection services. The firm also launched new products to enhance its offerings for managed service providers (MSPs).
- Raised full-year 2022 Adjusted EBITDA outlook to 30%.
- Total revenue of $93.5 million, representing 6% year-over-year growth.
- Subscription revenue increased to $91.2 million, up 6% year-over-year.
- GAAP gross margin at 83.9% and non-GAAP gross margin at 84.8%.
- Launched new solutions enhancing service offerings for MSPs.
- Achieved a TTM Dollar-Based Net Retention Rate of 104%.
- GAAP net income only $0.3 million, indicating minimal profitability.
Raised Full-Year 2022 Adjusted EBITDA Outlook to
Third Quarter Subscription Revenue Increased
TTM Dollar-Based Net Retention Rate of
“We are proud of our third quarter results, which came in above the high end of our outlook for both revenue and profit. Just after the end of the third quarter we hosted many of our partners at our Empower conference with the theme ‘Own the Cloud’. Across the board we received validation that our strategy is on track and that we are helping our partners drive successful, recession-resilient businesses,” said N-able President and CEO
"The revenue growth and adjusted EBITDA we delivered in the third quarter reflect our efforts to focus on particular categories of partners, including MSP aggregators and emerging-growth MSPs, with particularly strong growth in our security and data protection offerings,” added N-able Executive Vice President and CFO
Third quarter 2022 financial highlights:
-
Total revenue of
$93.5 million 6% year-over-year growth, or approximately13% year-over-year growth on a constant currency basis. -
Subscription revenue of
$91.2 million 6% year-over-year growth, or approximately13% year-over-year growth on a constant currency basis. -
GAAP gross margin of
83.9% and non-GAAP gross margin of84.8% . -
GAAP net income of
$0.3 million $0.00 $12.3 million $0.07 -
Adjusted EBITDA of
$28.8 million 30.9% .
For a reconciliation of our GAAP to non-GAAP results, please see the tables below.
Additional highlights for the third quarter of 2022 include:
- N-able launched N-sight™ RMM all-in-one solution for growing MSPs that combines N-able’s award-winning cloud-based RMM, N-able Take Control for remote support, and MSP Manager for professional services automation to make it easier for MSPs to start quickly and scale efficiently at a highly competitive price point.
- N-able launched Cloud User Hub, which leverages the technology acquired from its acquisition of Spinpanel. Cloud User Hub is a multi-tenant Microsoft 365 management and automation platform built for Microsoft Cloud services to automate the provisioning, security, and management of all Microsoft tenants, users, and licenses in a single consolidated hub.
- N-able was voted winner in the MSP RMM Platforms category of the 2022 CRN Annual Report Card (ARC) Awards for the second year running, ranking first in the Product Innovation, Partnership, and Managed and Cloud Services subcategories. The ARC Awards, one of the most prestigious honors in the IT industry, is based on independent votes by solution providers who include N-able’s customers.
- N-able released a new feature added on to N-able Mail Assure called Private Portal, which is an extra layer of email security designed to help protect critical business data. Private Portal, included with Mail Assure free of charge, sends a notification to recipients when they receive an email with business-critical information based on policies configured by the user or company.
Balance Sheet
At
The financial results included in this press release are preliminary and pending final review by the company and its external auditors. Financial results will not be final until N-able files its quarterly report on Form 10-Q for the period. Information about N-able's use of non-GAAP financial measures is provided below under “Non-GAAP Financial Measures.” In addition, through
Financial Outlook
As of
The financial outlook provided below reflects N-able's updated expectations, as of the date of this release, regarding the impact on its business of changing FX rates and current macroeconomic dynamics.
Financial Outlook for the Fourth Quarter of 2022
N-able management currently expects to achieve the following results for the fourth quarter of 2022:
-
Total revenue in the range of
$93.3 $93.8 million 5% year-over-year growth, or approximately11% to12% growth on a constant currency basis. -
Adjusted EBITDA in the range of
$27.5 $28.0 million 30% of total revenue.
Financial Outlook for Full-Year 2022
N-able management currently expects to achieve the following results for the full year 2022:
-
Total revenue in the range of
$369.3 $369.8 million 7% year-over-year growth, or12% to13% year-over-year growth on a constant currency basis. -
Adjusted EBITDA in the range of
$111.0 $111.5 million 30% of total revenue.
Additional details on the company's outlook will be provided on the conference call.
Conference Call and Webcast
In conjunction with this announcement, N-able will host a conference call today to discuss its financial results, business and business outlook at
Forward-Looking Statements
This press release contains “forward-looking” statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our financial outlook for the fourth quarter and full year 2022 and the impact of macroeconomic conditions on our business. These forward-looking statements are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements that are not historical facts and may be signified by terms such as “aim,” “anticipate,” “believe,” “continue,” “expect,” “feel,” “intend,” “estimate,” “seek,” “plan,” “may,” “can,” “could,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially and adversely different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the following: (a) risks related to our spin-off from SolarWinds into a newly created and separately traded public company, including that the spin-off could disrupt or adversely affect our business, results of operations and financial condition, that the spin-off may not achieve some or all of any anticipated benefits with respect to our business, that the distribution, together with certain related transactions, may not qualify as a transaction that is generally tax-free for
Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with GAAP, we use certain non-GAAP financial measures to clarify and enhance our understanding, and aid in the period-to-period comparison, of our performance. We believe that these non-GAAP financial measures provide supplemental information that is meaningful when assessing our operating performance because they exclude the impact of certain amounts that our management and board of directors do not consider part of core operating results when assessing our operational performance, allocating resources, preparing annual budgets and determining compensation. Accordingly, these non-GAAP financial measures may provide insight to investors into the motivation and decision-making of management in operating the business.
N-able also believes that these non-GAAP financial measures are used by investors and security analysts to (a) compare and evaluate its performance from period to period and (b) compare its performance to those of its competitors. These non-GAAP measures exclude certain items that can vary substantially from company to company depending upon their financing and accounting methods, the book value of their assets, their capital structures and the method by which their assets were acquired.
As a result, these non-GAAP financial measures have limitations and should not be considered in isolation from, or as a substitute for, their most comparable GAAP measures. These non-GAAP financial measures are not prepared in accordance with GAAP, do not reflect a comprehensive system of accounting and may not be completely comparable to similarly titled measures of other companies due to potential differences in the exact method of calculation between companies. Certain items that are excluded from these non-GAAP financial measures can have a material impact on operating and net income (loss).
N-able's management and board of directors compensate for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measure. Set forth in the tables below are the corresponding GAAP financial measures for each non-GAAP financial measure presented. Investors are encouraged to review the reconciliations of these non-GAAP financial measures to their most comparable GAAP financial measures that are set forth in the tables below.
Non-GAAP Gross Margin, Non-GAAP Operating Income and Non-GAAP Operating Margin. We provide non-GAAP total cost of revenue, non-GAAP gross margin, non-GAAP operating expense and non-GAAP operating income and related non-GAAP gross and operating margins excluding such items as stock-based compensation expense and related employer-paid payroll taxes, amortization of acquired intangible assets, acquisition related costs, spin-off costs and restructuring costs and other. Management believes these measures are useful for the following reasons:
- Stock-Based Compensation Expense and Related Employer-Paid Payroll Taxes. We provide non-GAAP information that excludes expenses related to stock-based compensation and related employer-paid payroll taxes associated with our employees’ participation in N-able's stock-based incentive compensation plans. We believe that the exclusion of stock-based compensation expense provides for a better comparison of our operating results to prior periods and to our peer companies as the calculations of stock-based compensation vary from period to period and company to company due to different valuation methodologies, subjective assumptions and the variety of award types. Employer-paid payroll taxes on stock-based compensation is dependent on our stock price and the timing of the taxable events related to the equity awards, over which our management has little control, and does not necessarily correlate to the core operation of our business. Because of these unique characteristics of stock-based compensation and related employer-paid payroll taxes, management excludes these expenses when analyzing the organization’s business performance.
- Amortization of Acquired Intangible Assets. We provide non-GAAP information that excludes expenses related to purchased intangible assets associated with our acquisitions. We believe that eliminating this expense from our non-GAAP measures is useful to investors because the amortization of acquired intangible assets can be inconsistent in amount and frequency and is significantly impacted by the timing and magnitude of our acquisition transactions, which also vary in frequency from period to period. Accordingly, we analyze the performance of our operations in each period without regard to such expenses.
- Acquisition Related Costs. We exclude certain expense items resulting from acquisitions, such as legal, accounting and advisory fees, changes in fair value of contingent consideration, costs related to integrating the acquired businesses, deferred compensation, severance and retention expense. We consider these adjustments, to some extent, to be unpredictable and dependent on a significant number of factors that are outside of our control. Furthermore, acquisitions result in operating expenses that would not otherwise have been incurred by us in the normal course of our organic business operations. We believe that providing non-GAAP measures that exclude acquisition related costs allows investors to better review and understand the historical and current results of our continuing operations and also facilitates comparisons to our historical results and results of less acquisitive peer companies, both with and without such adjustments.
- Spin-off Costs. We exclude certain expense items resulting from the spin-off into a newly created and separately traded public company. These costs include legal, accounting and advisory fees, system implementation costs and other incremental costs incurred by us related to the separation from SolarWinds. The spin-off transaction results in operating expenses that would not otherwise have been incurred by us in the normal course of our organic business operations. We believe that providing non-GAAP measures that exclude these costs facilitates a more meaningful evaluation of our operating performance and comparisons to our past operating performance.
- Restructuring Costs and Other. We provide non-GAAP information that excludes restructuring costs such as severance, certain employee relocation costs, and the estimated costs of exiting and terminating facility lease commitments, as they relate to our corporate restructuring and exit activities. These costs are inconsistent in amount and are significantly impacted by the timing and nature of these events. Therefore, although we may incur these types of expenses in the future, we believe that eliminating these costs for purposes of calculating the non-GAAP financial measures facilitates a more meaningful evaluation of our operating performance and comparisons to our past operating performance.
Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) Per Diluted Share. We believe that the use of non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share is helpful to our investors to clarify and enhance their understanding of past performance and future prospects. Non-GAAP net income (loss) is calculated as net income (loss) excluding the adjustments to non-GAAP gross profit and non-GAAP operating income and the income tax effect of the non-GAAP exclusions. We define non-GAAP net income (loss) per diluted share as non-GAAP net income (loss) divided by the weighted average outstanding common shares.
Adjusted EBITDA and Adjusted EBITDA Margin. We regularly monitor adjusted EBITDA and adjusted EBITDA margin, as they are measures we use to assess our operating performance. We define adjusted EBITDA as net income or loss, excluding amortization of acquired intangible assets and developed technology, depreciation expense, income tax expense (benefit), interest expense, net, unrealized foreign currency (gains) losses, acquisition related costs, spin-off costs, stock-based compensation expense and related employer-paid payroll taxes and restructuring and other costs. We define adjusted EBITDA margin as adjusted EBITDA divided by total revenue. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include: although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our related party debt; adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
Non-GAAP Revenue on a Constant Currency Basis. We provide non-GAAP revenue on a constant currency basis to provide a framework for assessing our performance excluding the effect of foreign currency rate fluctuations. To present this information, current period results for revenue contracts denominated in currencies other than
Unlevered Free Cash Flow. Unlevered free cash flow is a measure of our liquidity used by management to evaluate cash flow from operations, after the deduction of capital expenditures and prior to the impact of our capital structure, acquisition-related costs, restructuring costs, spin-off costs, employer-paid payroll taxes on stock awards and other one-time items, that can be used by us for strategic opportunities and strengthening our balance sheet. However, given our debt obligations, unlevered free cash flow does not represent residual cash flow available for discretionary expenses.
About N-able
N-able fuels IT services providers with powerful software solutions to monitor, manage, and secure their customers’ systems, data, and networks. Built on a scalable platform, we offer secure infrastructure and tools to simplify complex ecosystems, as well as resources to navigate evolving IT needs. We help partners excel at every stage of growth, protect their customers, and expand their offerings with an ever-increasing, flexible portfolio of integrations from leading technology providers. n-able.com
© 2022
Source:
Category: Financial
|
||||||
Consolidated Balance Sheets |
||||||
(In thousands) |
||||||
(Unaudited) |
||||||
|
|
|
|
|||
|
|
2022 |
|
|
|
2021 |
Assets |
|
|
|
|||
Current assets: |
|
|
|
|||
Cash and cash equivalents |
$ |
87,729 |
|
|
$ |
66,736 |
Accounts receivable, net of allowances of |
|
31,625 |
|
|
|
33,041 |
Income tax receivable |
|
9,973 |
|
|
|
7,250 |
Prepaid and other current assets |
|
14,265 |
|
|
|
13,962 |
Total current assets |
|
143,592 |
|
|
|
120,989 |
Property and equipment, net |
|
37,271 |
|
|
|
38,748 |
Operating lease right-of-use assets |
|
33,033 |
|
|
|
36,206 |
Deferred taxes |
|
1,707 |
|
|
|
1,681 |
|
|
795,937 |
|
|
|
840,923 |
Intangible assets, net |
|
9,994 |
|
|
|
8,066 |
Other assets, net |
|
9,922 |
|
|
|
9,086 |
Total assets |
$ |
1,031,456 |
|
|
$ |
1,055,699 |
Liabilities and stockholders' equity |
|
|
|
|||
Current liabilities: |
|
|
|
|||
Accounts payable |
$ |
2,797 |
|
|
$ |
5,865 |
Due to affiliates |
|
— |
|
|
|
464 |
Accrued liabilities and other |
|
33,802 |
|
|
|
30,944 |
Current operating lease liabilities |
|
5,763 |
|
|
|
4,830 |
Income taxes payable |
|
2,606 |
|
|
|
4,600 |
Current portion of deferred revenue |
|
10,953 |
|
|
|
10,675 |
Current debt obligation |
|
3,500 |
|
|
|
3,500 |
Total current liabilities |
|
59,421 |
|
|
|
60,878 |
Long-term liabilities: |
|
|
|
|||
Deferred revenue, net of current portion |
|
281 |
|
|
|
223 |
Non-current deferred taxes |
|
5,224 |
|
|
|
2,632 |
Non-current operating lease liabilities |
|
34,130 |
|
|
|
37,822 |
Long-term debt, net of current portion |
|
333,959 |
|
|
|
335,379 |
Other long-term liabilities |
|
4,309 |
|
|
|
410 |
Total liabilities |
|
437,324 |
|
|
|
437,344 |
Commitments and contingencies |
|
|
|
|||
Stockholders’ equity: |
|
|
|
|||
Common stock, |
|
180 |
|
|
|
179 |
Preferred stock, |
|
— |
|
|
|
— |
Additional paid-in capital |
|
626,240 |
|
|
|
602,996 |
Accumulated other comprehensive (loss) income |
|
(42,137 |
) |
|
|
15,053 |
Retained earnings |
|
9,849 |
|
|
|
127 |
Total stockholders' equity |
|
594,132 |
|
|
|
618,355 |
Total liabilities and stockholders' equity |
$ |
1,031,456 |
|
|
$ |
1,055,699 |
|
|||||||||||||||
Consolidated Statements of Operations |
|||||||||||||||
(In thousands, except per share information) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue: |
|
|
|
|
|
|
|
||||||||
Subscription and other revenue |
$ |
93,527 |
|
|
$ |
88,423 |
|
|
$ |
276,014 |
|
|
|
256,953 |
|
Cost of revenue: |
|
|
|
|
|
|
|
||||||||
Cost of revenue |
|
14,587 |
|
|
|
11,279 |
|
|
|
41,492 |
|
|
|
34,366 |
|
Amortization of acquired technologies |
|
516 |
|
|
|
1,017 |
|
|
|
2,043 |
|
|
|
4,758 |
|
Total cost of revenue |
|
15,103 |
|
|
|
12,296 |
|
|
|
43,535 |
|
|
|
39,124 |
|
Gross profit |
|
78,424 |
|
|
|
76,127 |
|
|
|
232,479 |
|
|
|
217,829 |
|
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Sales and marketing |
|
31,149 |
|
|
|
30,178 |
|
|
|
94,223 |
|
|
|
80,390 |
|
Research and development |
|
16,038 |
|
|
|
14,649 |
|
|
|
46,664 |
|
|
|
39,192 |
|
General and administrative |
|
18,050 |
|
|
|
19,888 |
|
|
|
54,119 |
|
|
|
61,480 |
|
Amortization of acquired intangibles |
|
1,465 |
|
|
|
1,640 |
|
|
|
4,386 |
|
|
|
11,935 |
|
Total operating expenses |
|
66,702 |
|
|
|
66,355 |
|
|
|
199,392 |
|
|
|
192,997 |
|
Operating income |
|
11,722 |
|
|
|
9,772 |
|
|
|
33,087 |
|
|
|
24,832 |
|
Other expense: |
|
|
|
|
|
|
|
||||||||
Interest expense, net |
|
(5,088 |
) |
|
|
(3,111 |
) |
|
|
(12,459 |
) |
|
|
(15,711 |
) |
Other expense, net |
|
(1,795 |
) |
|
|
(884 |
) |
|
|
(561 |
) |
|
|
(1,467 |
) |
Total other expense |
|
(6,883 |
) |
|
|
(3,995 |
) |
|
|
(13,020 |
) |
|
|
(17,178 |
) |
Income before income taxes |
|
4,839 |
|
|
|
5,777 |
|
|
|
20,067 |
|
|
|
7,654 |
|
Income tax expense |
|
4,545 |
|
|
|
3,904 |
|
|
|
10,345 |
|
|
|
9,597 |
|
Net income (loss) |
$ |
294 |
|
|
$ |
1,873 |
|
|
$ |
9,722 |
|
|
$ |
(1,943 |
) |
Net income (loss) per share: |
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share |
$ |
0.00 |
|
|
$ |
0.01 |
|
|
$ |
0.05 |
|
|
$ |
(0.01 |
) |
Diluted earnings (loss) per share |
$ |
0.00 |
|
|
$ |
0.01 |
|
|
$ |
0.05 |
|
|
$ |
(0.01 |
) |
Weighted-average shares used to compute net income (loss) per share: |
|
|
|
|
|
|
|
||||||||
Shares used in computation of basic earnings (loss) per share: |
|
180,323 |
|
|
|
174,468 |
|
|
|
180,072 |
|
|
|
163,601 |
|
Shares used in computation of diluted earnings (loss) per share: |
|
181,145 |
|
|
|
175,752 |
|
|
|
180,966 |
|
|
|
163,601 |
|
|
|||||||||||||||
Consolidated Statements of Cash Flows |
|||||||||||||||
(In thousands) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
|
|
|
||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
||||||||
Net income (loss) |
$ |
294 |
|
|
$ |
1,873 |
|
|
$ |
9,722 |
|
|
$ |
(1,943 |
) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
6,037 |
|
|
|
5,769 |
|
|
|
18,270 |
|
|
|
25,058 |
|
Provision for doubtful accounts |
|
211 |
|
|
|
1,049 |
|
|
|
138 |
|
|
|
1,549 |
|
Stock-based compensation expense |
|
10,112 |
|
|
|
11,939 |
|
|
|
28,078 |
|
|
|
20,962 |
|
Deferred taxes |
|
(132 |
) |
|
|
(45 |
) |
|
|
213 |
|
|
|
(2,426 |
) |
Amortization of debt issuance costs |
|
405 |
|
|
|
324 |
|
|
|
1,219 |
|
|
|
324 |
|
Operating lease right-of-use assets, net |
|
(729 |
) |
|
|
(3,428 |
) |
|
|
(1,153 |
) |
|
|
1,807 |
|
Loss on foreign currency exchange rates |
|
1,486 |
|
|
|
728 |
|
|
|
889 |
|
|
|
1,195 |
|
Loss on contingent consideration |
|
166 |
|
|
|
— |
|
|
|
166 |
|
|
|
— |
|
Other non-cash expenses |
|
— |
|
|
|
— |
|
|
|
43 |
|
|
|
— |
|
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business combinations: |
|
|
|
|
|
|
|
||||||||
Accounts receivable |
|
1,790 |
|
|
|
(6,908 |
) |
|
|
278 |
|
|
|
(8,235 |
) |
Income tax receivable |
|
(918 |
) |
|
|
(947 |
) |
|
|
(2,802 |
) |
|
|
(1,100 |
) |
Prepaid expenses and other assets |
|
(614 |
) |
|
|
(4,184 |
) |
|
|
(397 |
) |
|
|
(10,301 |
) |
Accounts payable |
|
(1,598 |
) |
|
|
3,598 |
|
|
|
(2,437 |
) |
|
|
(1,738 |
) |
Due to and from affiliates |
|
61 |
|
|
|
(20,018 |
) |
|
|
(402 |
) |
|
|
(7,834 |
) |
Accrued liabilities and other |
|
4,948 |
|
|
|
12,763 |
|
|
|
3,126 |
|
|
|
12,646 |
|
Accrued related party interest payable |
|
— |
|
|
|
(438 |
) |
|
|
— |
|
|
|
(2,477 |
) |
Income taxes payable |
|
(4,875 |
) |
|
|
181 |
|
|
|
(2,910 |
) |
|
|
(2,016 |
) |
Deferred revenue |
|
135 |
|
|
|
814 |
|
|
|
493 |
|
|
|
688 |
|
Other long-term assets |
|
369 |
|
|
|
— |
|
|
|
481 |
|
|
|
— |
|
Net cash provided by operating activities |
|
17,148 |
|
|
|
3,070 |
|
|
|
53,015 |
|
|
|
26,159 |
|
Cash flows from investing activities |
|
|
|
|
|
|
|
||||||||
Purchases of property and equipment |
|
(4,263 |
) |
|
|
(6,652 |
) |
|
|
(9,690 |
) |
|
|
(19,409 |
) |
Purchases of intangible assets |
|
(1,156 |
) |
|
|
(668 |
) |
|
|
(3,512 |
) |
|
|
(2,920 |
) |
Acquisitions, net of cash acquired |
|
(9,302 |
) |
|
|
— |
|
|
|
(9,302 |
) |
|
|
— |
|
Net cash used in investing activities |
|
(14,721 |
) |
|
|
(7,320 |
) |
|
|
(22,504 |
) |
|
|
(22,329 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
|
||||||||
Proceeds from Private Placement, net of |
|
— |
|
|
|
216,000 |
|
|
|
— |
|
|
|
216,000 |
|
Distribution of net proceeds from Private Placement to Parent |
|
— |
|
|
|
(216,000 |
) |
|
|
— |
|
|
|
(216,000 |
) |
Payments of tax withholding obligations related to restricted stock |
|
(810 |
) |
|
|
(381 |
) |
|
|
(6,353 |
) |
|
|
(381 |
) |
Exercise of stock options |
|
4 |
|
|
|
18 |
|
|
|
31 |
|
|
|
18 |
|
Proceeds from issuance of common stock under employee stock purchase plan |
|
747 |
|
|
|
— |
|
|
|
1,315 |
|
|
|
— |
|
Proceeds from Credit Agreement |
|
— |
|
|
|
350,000 |
|
|
|
— |
|
|
|
350,000 |
|
Payments for debt issuance costs |
|
— |
|
|
|
(10,075 |
) |
|
|
— |
|
|
|
(10,075 |
) |
Repayments of borrowings from Credit Agreement |
|
(875 |
) |
|
|
— |
|
|
|
(2,625 |
) |
|
|
— |
|
Repayments of borrowings due to affiliates |
|
— |
|
|
|
(304,030 |
) |
|
|
— |
|
|
|
(372,650 |
) |
Net transfers to Parent |
|
— |
|
|
|
(18,161 |
) |
|
|
— |
|
|
|
(7,378 |
) |
Net cash (used in) provided by financing activities |
|
(934 |
) |
|
|
17,371 |
|
|
|
(7,632 |
) |
|
|
(40,466 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
(382 |
) |
|
|
(1,149 |
) |
|
|
(1,886 |
) |
|
|
(1,582 |
) |
Net increase (decrease) in cash and cash equivalents |
|
1,111 |
|
|
|
11,972 |
|
|
|
20,993 |
|
|
|
(38,218 |
) |
Cash and cash equivalents |
|
|
|
|
|
|
|
||||||||
Beginning of period |
|
86,618 |
|
|
|
49,600 |
|
|
|
66,736 |
|
|
|
99,790 |
|
End of period |
$ |
87,729 |
|
|
$ |
61,572 |
|
|
$ |
87,729 |
|
|
$ |
61,572 |
|
|
|
|
|
|
|
|
|
||||||||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
||||||||
Cash paid for interest |
$ |
4,065 |
|
|
$ |
3,156 |
|
|
$ |
10,248 |
|
|
$ |
17,796 |
|
Cash paid for income taxes |
$ |
9,328 |
|
|
$ |
4,699 |
|
|
$ |
13,157 |
|
|
$ |
14,985 |
|
|
|
|
|
|
|
|
|
||||||||
Supplemental disclosure of non-cash activities: |
|
|
|
|
|
|
|
||||||||
Change in purchases of property, equipment and leasehold improvements included in accounts payable and accrued expenses |
$ |
11 |
|
|
$ |
1,542 |
|
|
$ |
(572 |
) |
|
$ |
1,542 |
|
Right-of-use assets obtained in exchange for operating lease liabilities |
$ |
— |
|
|
$ |
9,844 |
|
|
$ |
967 |
|
|
$ |
31,079 |
|
|
|||||||||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures |
|||||||||||||||
(In thousands, except per share information) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
|
|
|
||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
||||||||
GAAP cost of revenue |
$ |
15,103 |
|
|
$ |
12,296 |
|
|
$ |
43,535 |
|
|
$ |
39,124 |
|
Stock-based compensation expense and related employer-paid payroll taxes |
|
(335 |
) |
|
|
(425 |
) |
|
|
(955 |
) |
|
|
(765 |
) |
Amortization of acquired technologies |
|
(516 |
) |
|
|
(1,017 |
) |
|
|
(2,043 |
) |
|
|
(4,758 |
) |
Restructuring costs and other |
|
(11 |
) |
|
|
— |
|
|
|
(41 |
) |
|
|
— |
|
Non-GAAP cost of revenue |
$ |
14,241 |
|
|
$ |
10,854 |
|
|
$ |
40,496 |
|
|
$ |
33,601 |
|
|
|
|
|
|
|
|
|
||||||||
GAAP gross profit |
$ |
78,424 |
|
|
$ |
76,127 |
|
|
$ |
232,479 |
|
|
$ |
217,829 |
|
Stock-based compensation expense and related employer-paid payroll taxes |
|
335 |
|
|
|
425 |
|
|
|
955 |
|
|
|
765 |
|
Amortization of acquired technologies |
|
516 |
|
|
|
1,017 |
|
|
|
2,043 |
|
|
|
4,758 |
|
Restructuring costs and other |
|
11 |
|
|
|
— |
|
|
|
41 |
|
|
|
— |
|
Non-GAAP gross profit |
$ |
79,286 |
|
|
$ |
77,569 |
|
|
$ |
235,518 |
|
|
$ |
223,352 |
|
|
|
|
|
|
|
|
|
||||||||
GAAP sales and marketing expense |
$ |
31,149 |
|
|
$ |
30,178 |
|
|
$ |
94,223 |
|
|
$ |
80,390 |
|
Stock-based compensation expense and related employer-paid payroll taxes |
|
(3,235 |
) |
|
|
(4,161 |
) |
|
|
(9,581 |
) |
|
|
(6,437 |
) |
Acquisition related costs |
|
(4 |
) |
|
|
— |
|
|
|
(18 |
) |
|
|
— |
|
Restructuring costs and other |
|
(10 |
) |
|
|
(1 |
) |
|
|
(12 |
) |
|
|
(1 |
) |
Spin-off costs |
|
— |
|
|
|
(89 |
) |
|
|
— |
|
|
|
(448 |
) |
Non-GAAP sales and marketing expense |
$ |
27,900 |
|
|
$ |
25,927 |
|
|
$ |
84,612 |
|
|
$ |
73,504 |
|
|
|
|
|
|
|
|
|
||||||||
GAAP research and development expense |
$ |
16,038 |
|
|
$ |
14,649 |
|
|
$ |
46,664 |
|
|
$ |
39,192 |
|
Stock-based compensation expense and related employer-paid payroll taxes |
|
(1,706 |
) |
|
|
(2,183 |
) |
|
|
(4,937 |
) |
|
|
(3,509 |
) |
Acquisition related costs |
|
— |
|
|
|
— |
|
|
|
(32 |
) |
|
|
— |
|
Restructuring costs and other |
|
(238 |
) |
|
|
— |
|
|
|
(350 |
) |
|
|
(68 |
) |
Spin-off costs |
|
— |
|
|
|
(76 |
) |
|
|
— |
|
|
|
(307 |
) |
Non-GAAP research and development expense |
$ |
14,094 |
|
|
$ |
12,390 |
|
|
$ |
41,345 |
|
|
$ |
35,308 |
|
|
|
|
|
|
|
|
|
||||||||
GAAP general and administrative expense |
$ |
18,050 |
|
|
$ |
19,888 |
|
|
$ |
54,119 |
|
|
$ |
61,480 |
|
Stock-based compensation expense and related employer-paid payroll taxes |
|
(4,946 |
) |
|
|
(5,116 |
) |
|
|
(13,507 |
) |
|
|
(10,646 |
) |
Acquisition related costs |
|
(233 |
) |
|
|
— |
|
|
|
(456 |
) |
|
|
87 |
|
Restructuring costs and other |
|
(292 |
) |
|
|
— |
|
|
|
(577 |
) |
|
|
(63 |
) |
Spin-off costs |
|
(394 |
) |
|
|
(2,238 |
) |
|
|
(1,348 |
) |
|
|
(13,795 |
) |
Non-GAAP general and administrative expense |
$ |
12,185 |
|
|
$ |
12,534 |
|
|
$ |
38,231 |
|
|
$ |
37,063 |
|
|
|
|
|
|
|
|
|
||||||||
GAAP operating income |
$ |
11,722 |
|
|
$ |
9,772 |
|
|
$ |
33,087 |
|
|
$ |
24,832 |
|
Amortization of acquired technologies |
|
516 |
|
|
|
1,017 |
|
|
|
2,043 |
|
|
|
4,758 |
|
Amortization of acquired intangibles |
|
1,465 |
|
|
|
1,640 |
|
|
|
4,386 |
|
|
|
11,935 |
|
Stock-based compensation expense and related employer-paid payroll taxes |
|
10,222 |
|
|
|
11,885 |
|
|
|
28,980 |
|
|
|
21,357 |
|
Acquisition related costs |
|
237 |
|
|
|
— |
|
|
|
506 |
|
|
|
(87 |
) |
Restructuring costs and other |
|
551 |
|
|
|
1 |
|
|
|
980 |
|
|
|
132 |
|
Spin-off costs |
|
394 |
|
|
|
2,404 |
|
|
|
1,348 |
|
|
|
14,550 |
|
Non-GAAP operating income |
$ |
25,107 |
|
|
$ |
26,719 |
|
|
$ |
71,330 |
|
|
$ |
77,477 |
|
GAAP operating margin |
|
12.5 |
% |
|
|
11.1 |
% |
|
|
12.0 |
% |
|
|
9.7 |
% |
Non-GAAP operating margin |
|
26.8 |
% |
|
|
30.2 |
% |
|
|
25.8 |
% |
|
|
30.2 |
% |
|
|
|
|
|
|
|
|
||||||||
GAAP net income (loss) |
$ |
294 |
|
|
$ |
1,873 |
|
|
$ |
9,722 |
|
|
$ |
(1,943 |
) |
Amortization of acquired technologies |
|
516 |
|
|
|
1,017 |
|
|
|
2,043 |
|
|
|
4,758 |
|
Amortization of acquired intangibles |
|
1,465 |
|
|
|
1,640 |
|
|
|
4,386 |
|
|
|
11,935 |
|
Stock-based compensation expense and related employer-paid payroll taxes |
|
10,222 |
|
|
|
11,885 |
|
|
|
28,980 |
|
|
|
21,357 |
|
Acquisition related costs |
|
237 |
|
|
|
— |
|
|
|
506 |
|
|
|
(87 |
) |
Restructuring costs and other |
|
551 |
|
|
|
1 |
|
|
|
980 |
|
|
|
132 |
|
Spin-off costs |
|
394 |
|
|
|
2,404 |
|
|
|
1,348 |
|
|
|
14,550 |
|
Tax benefits associated with above adjustments (1) |
|
(1,383 |
) |
|
|
(1,647 |
) |
|
|
(4,098 |
) |
|
|
(5,145 |
) |
Non-GAAP net income |
$ |
12,296 |
|
|
$ |
17,173 |
|
|
$ |
43,867 |
|
|
$ |
45,557 |
|
|
|
|
|
|
|
|
|
||||||||
GAAP diluted earnings (loss) per share |
$ |
0.00 |
|
|
$ |
0.01 |
|
|
$ |
0.05 |
|
|
$ |
(0.01 |
) |
Non-GAAP diluted earnings per share |
$ |
0.07 |
|
|
$ |
0.10 |
|
|
$ |
0.24 |
|
|
$ |
0.28 |
|
|
|
|
|
|
|
|
|
||||||||
Shares used in computation of diluted earnings (loss) per share: |
|
181,145 |
|
|
|
175,752 |
|
|
|
180,966 |
|
|
|
163,601 |
|
_________________
(1) The tax benefits associated with non-GAAP adjustments for the three and nine months ended
|
|||||||||||||||
Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA |
|||||||||||||||
(In thousands) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
|
|
|
||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
||||||||||||||
Net income (loss) |
$ |
294 |
|
|
$ |
1,873 |
|
|
$ |
9,722 |
|
|
$ |
(1,943 |
) |
Amortization |
|
2,711 |
|
|
|
3,225 |
|
|
|
8,548 |
|
|
|
17,261 |
|
Depreciation |
|
3,326 |
|
|
|
2,544 |
|
|
|
9,722 |
|
|
|
7,796 |
|
Income tax expense |
|
4,545 |
|
|
|
3,904 |
|
|
|
10,345 |
|
|
|
9,597 |
|
Interest expense, net |
|
5,088 |
|
|
|
3,111 |
|
|
|
12,459 |
|
|
|
15,711 |
|
Unrealized foreign currency losses |
|
1,486 |
|
|
|
728 |
|
|
|
889 |
|
|
|
1,195 |
|
Acquisition related costs |
|
237 |
|
|
|
— |
|
|
|
506 |
|
|
|
(87 |
) |
Spin-off costs |
|
394 |
|
|
|
2,404 |
|
|
|
1,348 |
|
|
|
14,550 |
|
Stock-based compensation expense and related employer-paid payroll taxes |
|
10,222 |
|
|
|
11,885 |
|
|
|
28,980 |
|
|
|
21,357 |
|
Restructuring costs and other |
|
551 |
|
|
|
1 |
|
|
|
980 |
|
|
|
132 |
|
Adjusted EBITDA |
$ |
28,854 |
|
|
$ |
29,675 |
|
|
$ |
83,499 |
|
|
$ |
85,569 |
|
Adjusted EBITDA margin |
|
30.9 |
% |
|
|
33.6 |
% |
|
|
30.3 |
% |
|
|
33.3 |
% |
|
|||||||||||||||
Reconciliation of GAAP Revenue to Non-GAAP Revenue on a Constant Currency Basis |
|||||||||||||||
(In thousands, except percentages) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
|
|
|
||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
2022 |
|
|
2021 |
|
Growth
|
|
|
2022 |
|
|
2021 |
|
Growth
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP subscription revenue |
$ |
91,213 |
|
$ |
86,100 |
|
|
|
$ |
269,217 |
|
$ |
249,592 |
|
|
Estimated foreign currency impact (1) |
|
6,283 |
|
|
— |
|
7.3 |
|
|
13,664 |
|
|
— |
|
5.5 |
Non-GAAP subscription revenue on a constant currency basis |
$ |
97,496 |
|
$ |
86,100 |
|
|
|
$ |
282,881 |
|
$ |
249,592 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP other revenue |
$ |
2,314 |
|
$ |
2,323 |
|
(0.4) % |
|
$ |
6,797 |
|
$ |
7,361 |
|
(7.7) % |
Estimated foreign currency impact (1) |
|
54 |
|
|
— |
|
2.3 |
|
|
123 |
|
|
— |
|
1.7 |
Non-GAAP other revenue on a constant currency basis |
$ |
2,368 |
|
$ |
2,323 |
|
|
|
$ |
6,920 |
|
$ |
7,361 |
|
(6.0) % |
|
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP subscription and other revenue |
$ |
93,527 |
|
$ |
88,423 |
|
|
|
$ |
276,014 |
|
$ |
256,953 |
|
|
Estimated foreign currency impact (1) |
|
6,337 |
|
|
— |
|
7.2 |
|
|
13,787 |
|
|
— |
|
5.4 |
Non-GAAP subscription and other revenue on a constant currency basis |
$ |
99,864 |
|
$ |
88,423 |
|
|
|
$ |
289,801 |
|
$ |
256,953 |
|
|
_________________
(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
|
|||||||||||||||
Reconciliation of Unlevered Free Cash Flow |
|||||||||||||||
(In thousands) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
|
|
|
||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
||||||||
Net cash provided by operating activities |
$ |
17,148 |
|
|
$ |
3,070 |
|
|
$ |
53,015 |
|
|
$ |
26,159 |
|
Capital expenditures (1) |
|
(5,419 |
) |
|
|
(7,320 |
) |
|
|
(13,202 |
) |
|
|
(22,329 |
) |
Free cash flow |
|
11,729 |
|
|
|
(4,250 |
) |
|
|
39,813 |
|
|
|
3,830 |
|
Cash paid for interest, net of cash interest received |
|
4,065 |
|
|
|
3,156 |
|
|
|
10,248 |
|
|
|
17,796 |
|
Cash paid for acquisition related costs, restructuring costs, spin-off costs, employer-paid payroll taxes on stock awards and other one-time items |
|
2,885 |
|
|
|
2,434 |
|
|
|
7,204 |
|
|
|
15,681 |
|
Unlevered free cash flow (excluding forfeited tax shield) |
|
18,679 |
|
|
|
1,340 |
|
|
|
57,265 |
|
|
|
37,307 |
|
Forfeited tax shield related to interest payments (2) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,833 |
) |
Unlevered free cash flow |
$ |
18,679 |
|
|
$ |
1,340 |
|
|
$ |
57,265 |
|
|
$ |
33,474 |
|
_________________
(1) Includes purchases of property and equipment and purchases of intangible assets.
(2) Forfeited tax shield related to interest payments assumes a statutory rate of
View source version on businesswire.com: https://www.businesswire.com/news/home/20221109006000/en/
Investors:
ir@n-able.com
Media:
Phone: 919.957.5019
pr@n-able.com
Source:
FAQ
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