EX-99.1 2 nabl-20221231x8kxex991.htm EX-99.1 Document
Exhibit 99.1
n-ablelogoa.jpg
N-able Announces Fourth Quarter and Full-Year 2022 Results

Full-Year 2023 Revenue Outlook of 10% to 11% Year-Over-Year Growth, 11% to 12% on a Constant Currency Basis, and Adjusted EBITDA Margin Outlook of 30% to 31%

Fourth Quarter Subscription Revenue Increased 7% Year-Over-Year, 13% in Constant Currency

TTM Dollar-Based Net Retention Rate of 103% Includes ~5 Points of Negative FX Impact

BURLINGTON, Massachusetts - February 23, 2023 - 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, 2022.

“Last year illustrated the strength of our business model, as we delivered strong financial results, executed on our strategic initiatives to enhance our product portfolio and elevated our reputation as vendor of choice for the MSP market,” said N-able president and CEO John Pagliuca. “In 2023, we intend to work with our partners to raise the bar and continue to provide them with the tools and services that they need to manage their small and medium enterprise customer environments, secure their endpoints and cloud assets, and grow their businesses and the value they provide in their markets. We are focused and inspired by our partners to innovate, guide, and empower them to achieve their business goals in 2023 and beyond.”

"For the fourth quarter and full-year 2022 we exceeded both our revenue growth and adjusted EBITDA outlook, which we believe reflects the resilience of our market, the strength of our business model, and the mission-critical nature of the services our MSP Partners provide,” added N-able executive vice president and CFO Tim O’Brien. “As we look ahead to 2023, we intend to continue to invest in enhancing our offerings, bringing new products to market, and executing on our go-to-market strategies to capitalize on our market opportunity in a profitable and sustainable manner.”

Fourth quarter 2022 financial highlights:

•Total revenue of $95.8 million, representing approximately 7% year-over-year growth, or approximately 13% year-over-year growth on a constant currency basis.
•Subscription revenue of $93.4 million, representing approximately 7% year-over-year growth, or approximately 13% year-over-year growth on a constant currency basis.
•GAAP gross margin of 84.3% and non-GAAP gross margin of 85.0%.
•GAAP net income of $7.0 million, or $0.04 per diluted share, and non-GAAP net income of $18.0 million, or $0.10 per diluted share.
•Adjusted EBITDA of $31.2 million, representing an adjusted EBITDA margin of 32.6%.

Full-year 2022 financial highlights:

•Total revenue of $371.8 million, representing approximately 7% year-over-year growth, or approximately 13% year-over-year growth on a constant currency basis.
•Subscription revenue of $362.6 million, representing approximately 8% year-over-year growth, or approximately 13% year-over-year growth on a constant currency basis.
•GAAP gross margin of 84.2% and non-GAAP gross margin of 85.2%.
•GAAP net income of $16.7 million, or $0.09 per diluted share, and non-GAAP net income of $61.8 million, or $0.34 per diluted share.
•Adjusted EBITDA of $114.7 million, representing an adjusted EBITDA margin of 30.9%.

For a reconciliation of our GAAP to non-GAAP results, please see the tables below.

Additional highlights for the fourth quarter of 2022 include:



•N-able was awarded “Security Vendor of the Year” for the value it provides helping customers and partners stay ahead of ever-evolving IT threats, and “Backup and Archive Innovation of the Year” for Cove Data Protection, at the 13th annual SDC Awards ceremony held in London. Winners are selected by the voting public and readers of Digitalization World’s stable of publications.
•N-able’s Empower Partner Conference was held in Las Vegas, NV, in early October, with a multi-day event entitled “Own the Cloud” to discuss and debate industry trends, best practices, and opportunities attended by more than 450 partners and 35 sponsors from around the world.
•N-able hosted its first in-person distributor conference since before the COVID-19 pandemic in Salzburg, Austria, as it continues to expand its distribution landscape across Latin America, Europe, and the Middle East, bringing the total number of N-able distributors to over 80, spanning across 50 countries and reaching around 6,500 MSPs and IT resellers.

Balance Sheet

At December 31, 2022, total cash and cash equivalents were $98.8 million and total debt, net of debt issuance costs, was $337.0 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.” In addition, through July 19, 2021, the date of completion of N-able’s separation from SolarWinds Corporation (“SolarWinds”), N-able operated as part of SolarWinds and the financial results for the periods through such date have been prepared from SolarWinds’ historical accounting records and presented on a stand-alone basis as if N-able’s business’ operations had been conducted independently from SolarWinds. While the allocations and estimates in these carve-out financials are based on assumptions that N-able’s management believes are reasonable, the financial results presented may not be indicative of the financial position, results of operations and cash flows of N-able in the future or if N-able had been a separate, stand-alone publicly traded entity during the periods presented. N-able’s financial results for the period from July 20, 2021, through December 31, 2022, are based on our reported results as a stand-alone company.

Financial Outlook

As of February 23, 2023, N-able is providing its financial outlook for the first quarter of 2023 and full-year 2023. The financial information below represents forward-looking non-GAAP financial information, including adjusted EBITDA. These non-GAAP financial measures exclude, among other items mentioned below, amortization of acquired intangible assets and developed technology, depreciation expense, income tax expense (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 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 FX rates and current macroeconomic dynamics.

Financial Outlook for the First Quarter of 2023

N-able management currently expects to achieve the following results for the first quarter of 2023:

•Total revenue in the range of $97.5 to $98.0 million, representing approximately 7% to 8% year-over-year growth, or approximately 11% to 12% growth on a constant currency basis.
•Adjusted EBITDA in the range of $29.0 to $29.5 million, representing approximately 30% of total revenue.

Financial Outlook for Full-Year 2023

N-able management currently expects to achieve the following results for the full-year 2023:

•Total revenue in the range of $408 to $412 million, representing 10% to 11% year-over-year growth, or 11% to 12% year-over-year growth on a constant currency basis.
•Adjusted EBITDA in the range of $122 to $126 million, representing approximately 30% to 31% 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 23, 2023. A live webcast of the call will be available on the N-able Investor Relations website at http://investors.n-able.com. A live dial-in will be available domestically at +1 (844) 200-6205 and internationally at +1 (929) 526-1599. To access the live call, please dial in 5-10 minutes before the scheduled start time and enter the conference passcode 206883 to gain access to the conference call. 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 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 U.S. federal income tax purposes, which could result in N-able incurring significant tax liabilities, and, in certain circumstances, requiring us to indemnify SolarWinds for material taxes and other related amounts pursuant to indemnification obligations under the tax matters agreement; (b) the possibility that the global COVID-19 pandemic may continue to adversely affect our business, results of operations and financial condition or the impact of the COVID-19 pandemic on the global economy or on the business operations and financial conditions of our customers, their end-customers and our prospective customers; (c) the impact of adverse economic conditions; (d) our ability to sell subscriptions to new managed service providers (“MSP”) partners, to sell additional solutions to our existing MSP partners and to increase the usage of our solutions by our existing MSP partners, as well as our ability to generate and maintain MSP partner loyalty; (e) any decline in our renewal or net retention rates; (f) the possibility that general economic conditions or uncertainty may cause information technology spending to be reduced or purchasing decisions to be delayed, including as a result of the COVID-19 pandemic, inflation, actions taken by central banks to counter inflation, rising interest rates, war and political unrest, military conflict (including between Russia and Ukraine), terrorism, sanctions or other geopolitical events globally, or that such factors may otherwise harm our business, financial condition or results of operations; (g) any inability to generate significant volumes of high quality sales leads from our digital marketing initiatives and convert such leads into new business at acceptable conversion rates; (h) any inability to successfully identify, complete and integrate acquisitions and manage our growth effectively; (i) risks associated with our international operations; (j) foreign exchange gains and losses related to expenses and sales denominated in currencies other than the functional currency of an associated entity; (k) risks that cyberattacks, including the cyberattack on SolarWinds’ Orion Software Platform and internal systems announced by SolarWinds in December 2020, or the Cyber Incident, and other security incidents may result, in compromises or breaches of our, our MSP partners’, or their SME customers’ systems, the insertion of malicious code, malware, ransomware or other vulnerabilities into our, our MSP partners’, or their SME customers’ environments, the exploitation of vulnerabilities in our, our MSP partners’, or their SME customers’ security, the theft or misappropriation of our, our MSP partners’, or their SME customers’ proprietary and confidential information, and interference with our, our MSP partners’, or their SME customers’ operations, exposure to legal and other liabilities, higher MSP partner and employee attrition and the loss of key personnel, negative impacts to our sales, renewals and upgrades and reputational harm and other serious negative consequences, any or all of which could materially harm our business; (l) our status as a controlled company; (m) our ability to attract and retain qualified employees and key personnel as a standalone public company; (n) the timing and success of new product introductions and product upgrades by us or our competitors; (o) our ability to protect and defend our intellectual property and not infringe upon others’ intellectual property; (p) the possibility that our operating income could fluctuate and may decline as percentage of revenue as we make further expenditures to expand our operations in order to support additional growth in our business; (q) our indebtedness, including increased borrowing costs resulting from rising interest rates, potential restrictions on our operations and the impact of events of default; (r) our ability to operate our business internationally and increase sales of our solutions to our MSP partners located outside of the United States; 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, 2021, that N-able filed with the SEC on March 8, 2022; in the Quarterly Report


on Form 10-Q for the period ended March 31, 2022, that N-able filed with the SEC on May 12, 2022; and those that will be discussed in the Annual Report on Form 10-K for the period ended December 31, 2022 that N-able anticipates filing on or before March 31, 2023. All information provided in this release is as of the date hereof and N-able undertakes no duty to update this information except as required by law.

Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with GAAP, we use certain non-GAAP financial measures to clarify and enhance our understanding, and aid in the period-to-period comparison, of our performance. We believe that these non-GAAP financial measures provide supplemental information that is meaningful when assessing our operating performance because they exclude the impact of certain amounts that our management and board of directors do not consider part of core operating results when assessing our operational performance, allocating resources, preparing annual budgets and determining compensation. Accordingly, these non-GAAP financial measures may provide insight to investors into the motivation and decision-making of management in operating the business.

N-able also believes that these non-GAAP financial measures are used by investors and security analysts to (a) compare and evaluate its performance from period to period and (b) compare its performance to those of its competitors. These non-GAAP measures exclude certain items that can vary substantially from company to company depending upon their financing and accounting methods, the book value of their assets, their capital structures and the method by which their assets were acquired.

As a result, these non-GAAP financial measures have limitations and should not be considered in isolation from, or as a substitute for, their most comparable GAAP measures. These non-GAAP financial measures are not prepared in accordance with GAAP, do not reflect a comprehensive system of accounting and may not be completely comparable to similarly titled measures of other companies due to potential differences in the exact method of calculation between companies. Certain items that are excluded from these non-GAAP financial measures can have a material impact on operating and net income (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 U.S. Dollars are converted into U.S. Dollars at the average exchange rates in effect during the corresponding prior period presented. We believe that providing non-GAAP revenue on a constant currency basis facilitates the comparison of non-GAAP revenue to prior periods.

Unlevered Free Cash Flow. Unlevered free cash flow is a measure of our liquidity used by management to evaluate cash flow from operations, after the deduction of capital expenditures and prior to the impact of our capital structure, acquisition-related costs, restructuring costs, spin-off costs, employer-paid payroll taxes on stock awards and other one-time items, that can be used by us for strategic opportunities and strengthening our balance sheet. However, given our debt obligations, unlevered free cash flow does not represent residual cash flow available for discretionary expenses.

About N-able

N-able fuels IT services providers with powerful software solutions to monitor, manage, and secure their customers’ systems, data, and networks. Built on a scalable platform, we offer secure infrastructure and tools to simplify complex ecosystems, as well as resources to navigate evolving IT needs. We help partners excel at every stage of growth, protect their customers, and expand their offerings with an ever-increasing, flexible portfolio of integrations from leading technology providers. n-able.com



© 2023 N-able, Inc. All rights reserved.

Source: N-able, Inc.
Category: Financial
CONTACTS:
Investors: Media: 
Tim O'Brien
ir@n-able.com
 Kim Cecchini
Phone: 919.957.5019
pr@n-able.com		Geoffrey Mogilner
Phone: 773.257.3512
geoffrey.mogilner@n-able.com




N-able, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31,
20222021
Assets
Current assets:
Cash and cash equivalents$98,847 $66,736 
Accounts receivable, net of allowances of $1,330 and $1,653 as of December 31, 2022 and 2021, respectively34,798 33,041 
Income tax receivable7,814 7,250 
Prepaid and other current assets12,697 13,962 
Total current assets154,156 120,989 
Property and equipment, net37,404 38,748 
Operating lease right-of-use assets31,752 36,206 
Deferred taxes795 1,681 
Goodwill828,795 840,923 
Intangible assets, net8,873 8,066 
Other assets, net17,082 9,086 
Total assets$1,078,857 $1,055,699 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$3,544 $5,865 
Due to affiliates— 464 
Accrued liabilities and other35,630 30,944 
Current operating lease liabilities5,771 4,830 
Income taxes payable1,629 4,600 
Current portion of deferred revenue11,740 10,675 
Current debt obligation3,500 3,500 
Total current liabilities61,814 60,878 
Long-term liabilities:
Deferred revenue, net of current portion387 223 
Non-current deferred taxes2,783 2,632 
Non-current operating lease liabilities33,110 37,822 
Long-term debt, net of current portion333,488 335,379 
Other long-term liabilities5,204 410 
Total liabilities436,786 437,344 
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value: 550,000,000 shares authorized and 180,849,537 and 179,049,429 shares issued and outstanding as of December 31, 2022 and 2021, respectively181 179 
Preferred stock, $0.001 par value: 50,000,000 shares authorized and 50,000,000 shares issued and outstanding as of December 31, 2022 and 2021, respectively— — 
Additional paid-in capital632,871 602,996 
Accumulated other comprehensive (loss) income(7,815)15,053 
Retained earnings16,834 127 
Total stockholders' equity642,071 618,355 
Total liabilities and stockholders' equity$1,078,857 $1,055,699 




N-able, Inc.
Consolidated Statements of Operations
(In thousands, except per share information)
(Unaudited)

Three Months Ended December 31,Twelve Months Ended December 31,
2022202120222021
Revenue:
Subscription and other revenue$95,755 $89,503 $371,769 346,456 
Cost of revenue:
Cost of revenue14,641 12,311 56,133 46,677 
Amortization of acquired technologies434 997 2,477 5,755 
Total cost of revenue15,075 13,308 58,610 52,432 
Gross profit80,680 76,195 313,159 294,024 
Operating expenses:
Sales and marketing31,078 32,288 125,301 112,678 
Research and development16,820 14,767 63,484 53,959 
General and administrative 17,006 19,095 71,125 80,575 
Amortization of acquired intangibles1,467 1,547 5,853 13,482 
Total operating expenses66,371 67,697 265,763 260,694 
Operating income14,309 8,498 47,396 33,330 
Other expense:
Interest expense, net(6,393)(4,761)(18,852)(20,472)
Other income (expense), net2,442 201 1,881 (1,266)
Total other expense(3,951)(4,560)(16,971)(21,738)
Income before income taxes10,358 3,938 30,425 11,592 
Income tax expense3,373 1,882 13,718 11,479 
Net income$6,985 $2,056 $16,707 $113 
Net income per share:
Basic earnings per share$0.04 $0.01 $0.09 $0.00 
Diluted earnings per share$0.04 $0.01 $0.09 $0.00 
Weighted-average shares used to compute net income per share:
Shares used in computation of basic earnings per share180,712 178,950 180,136 167,460 
Shares used in computation of diluted earnings per share182,162 180,234 181,297 168,667 



N-able, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

Three Months Ended December 31,Twelve Months Ended December 31,
2022202120222021
Cash flows from operating activities
Net income $6,985 $2,056 $16,707 $113 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization6,170 8,713 24,440 33,771 
(Benefit from) provision for doubtful accounts(461)604 (323)2,153 
Stock-based compensation expense8,449 8,468 36,527 29,430 
Amortization of debt issuance costs404 408 1,623 732 
Loss on lease modification— 271 — 271 
Deferred taxes(1,636)513 (1,423)(1,913)
Operating lease right-of-use assets, net(15)(2,548)(1,168)(741)
(Gain) loss on foreign currency exchange rates(2,135)238 (1,246)1,433 
Gain on contingent consideration(249)— (83)— 
Other non-cash expenses105 — 148 — 
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business combinations:
Accounts receivable(3,710)2,668 (3,432)(5,567)
Income taxes receivable2,235 (4,899)(567)(5,999)
Prepaid expenses and other assets680 (372)283 (10,673)
Accounts payable813 1,283 (1,624)(455)
Due to and from affiliates— (468)(402)(8,302)
Accrued liabilities and other(123)(723)3,003 11,923 
Accrued related party interest payable— — — (2,477)
Income taxes payable(278)2,174 (3,188)158 
Deferred revenue865 565 1,358 1,253 
Other long-term assets299 231 780 231 
Net cash provided by operating activities18,398 19,182 71,413 45,341 
Cash flows from investing activities
Purchases of property and equipment(3,144)(11,255)(12,834)(30,664)
Purchases of intangible assets(4,664)(1,249)(8,176)(4,169)
Acquisitions, net of cash acquired103 — (9,199)— 
Net cash used in investing activities(7,705)(12,504)(30,209)(34,833)
Cash flows from financing activities
Proceeds from Private Placement, net of $9,000 of issuance costs— — — 216,000 
Distribution of net proceeds from Private Placement to Parent— — — (216,000)
Payments of tax withholding obligations related to restricted stock units(1,972)(1,849)(8,325)(2,230)
Exercise of stock options77 5 108 23 
Proceeds from issuance of common stock under employee stock purchase plan— — 1,315 — 
Proceeds from Credit Agreement— — — 350,000 
Repayments of borrowings due to affiliates— — — (372,650)
Repayments of borrowings from Credit Agreement(875)(875)(3,500)(875)
Net transfers from (to) Parent— 863 — (6,515)
Payment for debt issuance costs— — — (10,075)
Net cash used in financing activities(2,770)(1,856)(10,402)(42,322)
Effect of exchange rate changes on cash and cash equivalents3,195 342 1,309 (1,240)
Net increase (decrease) in cash and cash equivalents11,118 5,164 32,111 (33,054)
Cash and cash equivalents
Beginning of period87,729 61,572 66,736 99,790 
End of period$98,847 $66,736 $98,847 $66,736 


Supplemental disclosure of cash flow information
Cash paid for interest$5,322 $2,591 $15,570 $20,387 
Cash paid for income taxes$3,146 $4,044 $16,303 $19,029 
Supplemental disclosure of non-cash activities:
Change in purchases of property, equipment and leasehold improvements included in accounts payable and accrued expenses$(156)$(404)$(728)$1,138 
Right-of-use assets obtained in exchange for operating lease liabilities$— $— $967 $31,079 




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,
2022202120222021
GAAP cost of revenue$15,075 $13,308 $58,610 $52,432 
Stock-based compensation expense and related employer-paid payroll taxes(263)(277)(1,218)(1,042)
Amortization of acquired technologies(434)(997)(2,477)(5,755)
Restructuring costs and other(20)— (61)— 
Non-GAAP cost of revenue$14,358 $12,034 $54,854 $45,635 
GAAP gross profit$80,680 $76,195 $313,159 $294,024 
Stock-based compensation expense and related employer-paid payroll taxes263 277 1,218 1,042 
Amortization of acquired technologies434 997 2,477 5,755 
Restructuring costs and other20 — 61 — 
Non-GAAP gross profit$81,397 $77,469 $316,915 $300,821 
GAAP sales and marketing expense$31,078 $32,288 $125,301 $112,678 
Stock-based compensation expense and related employer-paid payroll taxes(2,919)(2,592)(12,500)(9,029)
Acquisition related costs(3)— (21)— 
Restructuring costs and other(429)51 (441)50 
Spin-off costs— — — (448)
Non-GAAP sales and marketing expense$27,727 $29,747 $112,339 $103,251 
GAAP research and development expense$16,820 $14,767 $63,484 $53,959 
Stock-based compensation expense and related employer-paid payroll taxes(1,463)(1,248)(6,400)(4,757)
Acquisition related costs(16)— (48)— 
Restructuring costs and other(678)(70)(1,028)(138)
Spin-off costs— (2)— (309)
Non-GAAP research and development expense$14,663 $13,447 $56,008 $48,755 
GAAP general and administrative expense$17,006 $19,095 $71,125 $80,575 
Stock-based compensation expense and related employer-paid payroll taxes(4,033)(4,618)(17,540)(15,264)
Acquisition related costs236 — (220)87 
Restructuring costs and other(555)(271)(1,132)(334)
Spin-off costs(268)(1,101)(1,616)(14,896)
Non-GAAP general and administrative expense$12,386 $13,105 $50,617 $50,168 
GAAP operating income$14,309 $8,498 $47,396 $33,330 
Amortization of acquired technologies434 997 2,477 5,755 
Amortization of acquired intangibles1,468 1,547 5,854 13,482 
Stock-based compensation expense and related employer-paid payroll taxes8,678 8,735 37,658 30,092 
Acquisition related costs(217)— 289 (87)
Restructuring costs and other1,682 290 2,662 422 
Spin-off costs268 1,103 1,616 15,653 
Non-GAAP operating income$26,622 $21,170 $97,952 $98,647 
GAAP operating margin14.9 %9.5 %12.7 %9.6 %


Non-GAAP operating margin27.8 %23.7 %26.3 %28.5 %
GAAP net income$6,985 $2,056 $16,707 $113 
Amortization of acquired technologies434 997 2,477 5,755 
Amortization of acquired intangibles1,468 1,547 5,854 13,482 
Stock-based compensation expense and related employer-paid payroll taxes8,678 8,735 37,658 30,092 
Acquisition related costs(217)— 289 (87)
Restructuring costs and other1,682 290 2,662 422 
Spin-off costs268 1,103 1,616 15,653 
Tax benefits associated with above adjustments (1)(1,332)(1,300)(5,430)(6,445)
Non-GAAP net income$17,966 $13,428 $61,833 $58,985 
GAAP diluted earnings per share$0.04 $0.01 $0.09 $0.00 
Non-GAAP diluted earnings per share$0.10 $0.07 $0.34 $0.35 
    Shares used in computation of diluted earnings per share:182,162 180,234 181,297 168,667 
_________________
(1) The tax benefits associated with non-GAAP adjustments for the three and twelve months ended December 31, 2022, and 2021, 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,
2022202120222021
Net income $6,985 $2,056 $16,707 $113 
Amortization2,643 3,123 11,191 20,384 
Depreciation3,527 5,589 13,249 13,385 
Income tax expense3,373 1,882 13,718 11,479 
Interest expense, net6,393 4,761 18,852 20,472 
Unrealized foreign currency (gains) losses(2,135)238 (1,246)1,433 
Acquisition related costs(217)— 289 (87)
Spin-off costs268 1,103 1,616 15,653 
Stock-based compensation expense and related employer-paid payroll taxes8,678 8,735 37,658 30,092 
Restructuring costs and other1,682 290 2,662 422 
Adjusted EBITDA$31,197 $27,777 $114,696 $113,346 
Adjusted EBITDA margin32.6 %31.0 %30.9 %32.7 %





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,
20222021Growth Rate20222021Growth Rate
GAAP subscription revenue$93,392 $87,253 7.0 %$362,609 $336,845 7.6 %
Estimated foreign currency impact (1)
5,291 — 6.1 18,955 — 5.6 
Non-GAAP subscription revenue on a constant currency basis$98,683 $87,253 13.1 %$381,564 $336,845 13.3 %
GAAP other revenue$2,363 $2,250 5.0 %$9,160 $9,611 (4.7)%
Estimated foreign currency impact (1)
69 — 3.1 192 — 2.0 
Non-GAAP other revenue on a constant currency basis$2,432 $2,250 8.1 %$9,352 $9,611 (2.7)%
GAAP subscription and other revenue$95,755 $89,503 7.0 %$371,769 $346,456 7.3 %
Estimated foreign currency impact (1)
5,360 — 6.0 19,147 — 5.5 
Non-GAAP subscription and other revenue on a constant currency basis$101,115 $89,503 13.0 %$390,916 $346,456 12.8 %
_________________
(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, 2022.



N-able, Inc.
Reconciliation of Unlevered Free Cash Flow
(In thousands)
(Unaudited)

Three Months Ended December 31,Twelve Months Ended December 31,
2022202120222021
Net cash provided by operating activities$18,398 $19,182 $71,413 $45,341 
Capital expenditures (1)(7,808)(12,504)(21,010)(34,833)
Free cash flow10,590 6,678 50,403 10,508 
Cash paid for interest, net of cash interest received5,322 2,591 15,570 20,387 
Cash paid for acquisition related costs, restructuring costs, spin-off costs, employer-paid payroll taxes on stock awards and other one-time items1,677 1,082 8,881 16,763 
Unlevered free cash flow (excluding forfeited tax shield)17,589 10,351 74,854 47,658 
Forfeited tax shield related to interest payments (2)— (283)— (4,116)
Unlevered free cash flow$17,589 $10,068 $74,854 $43,542 
_________________
(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 26.5% for the three and twelve months ended December 31, 2021.