N-able, Inc. Q4 FY2024 earnings call

• Successfully launched XDR as part of security objectives, acquired Adlumin and its cloud-native AI-powered XDR platform, and welcomed over 175 Adlumin colleagues.
• Deepened data protection capabilities with innovations like immutable backups and enhanced restore through AI. Cove protects over 180,000 businesses and outpaces total company growth.
• Accelerated innovation in UEM, including new APIs, integrations, and an AI-powered developer portal. Recognized as a 2024 RMM champion.
• Transitioned business from less than 10% of revenue from annual contracts to over 50% in 2024, expanding routes to market through resellers and channel providers.
• Pillars for 2025: expand security leadership, scale go-to-market with resellers, and elevate customer experience with tailored support.

Fourth quarter revenue grew 7% year-over-year in constant currency, and full year 2024 revenue grew 10% at constant currency. ARR was $482 million, growing 10% at constant currency. Adjusted EBITDA in the fourth quarter was $38.1 million (32.7% margin) and $169.4 million for the full year (36.3% margin). Cove is the largest revenue generating product. Adlumin became a significant part, with its XDR solution being a fast-growing SKU and pipeline generator. Unified Endpoint Management (UEM) saw innovation with new APIs, integrations, and AI-powered features.

• First quarter 2025: total revenue expected $115M-$116M (1%-2% Y/Y growth or 3%-4% constant currency), adjusted EBITDA $27.5M-$28.5M (24%-25% margin).
• Full year 2025: total revenue $486.5M-$492.5M (4%-6% Y/Y growth or 6%-8% constant currency), ARR $514M-$522M (7%-8% Y/Y growth or 7%-9% constant currency), adjusted EBITDA $132M-$138M (27%-28% margin).
• Assumes FX rates of 1.04 for euro and 1.25 for pound in 2025, with revenue impact from FX fluctuations.

• Impact of global economic environment on business.
• Risks associated with forward-looking statements, including those concerning financial outlook, market opportunities.
• FX rate fluctuations affecting revenue.
• Integration challenges of Adlumin acquisition.
• Timing of revenue recognition leading to transitory lumpiness in revenue.

Q: What was the revenue contribution from Adlumin in Q4?

A: Tim O'Brien said Q4 contribution from Adlumin was in the range of about $2.5 million, and Adlumin represented approximately $21 million of ARR at acquisition.

Q: How is engagement with Adlumin's reseller and partnership arrangements?

A: John Pagliuca said resellers are enthusiastic, as N-able now offers a one-stop shop with Cove, UEM, and EDR, and they plan to scale the Adlumin reseller channel in North America and internationally.

Q: What's the expected growth in ARR in 2025?

A: Tim O'Brien said ARR is expected to accelerate in 2025, with constant currency growth of 7%-9% and pro forma constant currency growth acceleration.

Q: How are gross and net retention expected to be in 2025?

A: Tim O'Brien said both gross and net retention are expected to improve, bottoming out in the first quarter and improving from Q2 onwards.

Q: How to drive consolidation for Cove customers?

A: John Pagliuca said they are showing customers the power of an integrated platform, introducing N-able's offerings, and integrating Cove with XDR to provide a complete view across the estate, leading to cross-sell opportunities.