N-able CEO: ‘Solid Execution’ Leads To ‘Strong’ First Full Year Post-SolarWinds

‘We were pleased to deliver these results amidst an uncertain macroeconomic environment. Our MSP partners and their small and medium enterprise customers continue to deal with industry-specific headwinds of labor scarcity, increasing IT complexity in the move to the cloud, as well as the relentless growth of cybersecurity threats,’ says N-able President and CEO John Pagliuca.

MSP-focused software developer N-able closed its first full year as a standalone company on an upbeat note, with revenue and income up significantly over the previous year.

Investors liked what they saw from N-able, driving shares in the company up by just over 15 percent over the trading day Thursday to $11.81 per share.

That growth was a result of N-Able and its employees, known as “N-ablites,” executing on its plans across the board, said John Pagliuca, president and CEO of the Burlington, Mass.-based company.

[Related: N-Able CEO John Pagliuca: Kaseya/Datto Merger Proof MSP Model Is Right]

N-able in July 2021 was spun out of SolarWinds via an IPO that established it as an independent company focused on software and services for MSPs.

Pagliuca, speaking to financial analysts during N-Able’s fourth fiscal quarter 2022 financial conference call, said N-Able started 2022 with its rally cry “Earn More Fans” as a way to bring its employees, MSPs, and industry stakeholders and investors together.

“Through the solid execution of our strategy by N-ablites across the globe, we believe we are successfully delivering on this mission,” he said. “We achieved strong financial results, executed important initiatives across all product categories, and enhanced our broader platform experience for our partners. And we did all of this while laying the groundwork for future success.”

During the fourth fiscal quarter, N-able’s ability to deliver strong profits while simultaneously driving revenue growth is proof of the strength of its model and the robust demand for the company’s platforms and services, Pagliuca said.

This included revenue of $95.8 million and adjusted EBITDA of $31.2 million, for a constant currency revenue growth of 13 percent and an adjusted EBITDA margin of 32.6 percent, he said.

“We were pleased to deliver these results amidst an uncertain macroeconomic environment,” he said. “Our MSP partners and their small and medium enterprise customers continue to deal with industry-specific headwinds of labor scarcity, increasing IT complexity in the move to the cloud, as well as the relentless growth of cybersecurity threats.”

N-able operates a resilient business model to deliver both growth and profit thanks to a core of must-have software and services through an efficient platform experience and the genuinely partner-first approach, Pagliuca said.

“Our software is high in the IT priority stack, and customers have generally sought monitoring, data protection, and security solutions regardless of the economic environment,” he said. “We exist to make our partners more efficient, more effective, and more secure. Or, as we have said before, turning industry headwinds into tailwinds for both our MSP partners and for us.”

On the issue of labor scarcity, Pagliuca, quoting a December 2022 report from CompTIA, said the U.S. unemployment rate for technology occupations in all sectors stood at 1.8 percent, or about half the national average.

“The difficulty SMEs (small and midsize enterprises) have in hiring talent is compounded by the fact that IT is getting more complex and more mission-critical to business operations,” he said. “SMEs face application and vendor sprawl, network challenges, hybrid work environments, and moving workloads to the cloud. And cybersecurity continues to drive spending as well.”

For its fourth fiscal quarter 2022, which ended December 31, N-able reported revenue of $95.8 million, up 7 percent from the $89.5 million the company reported for its fourth fiscal quarter 2021. That included subscription revenue of $93.5 million, also up about 7 percent over last year.

Revenue for its fourth fiscal quarter beat analyst expectations by $2.21 million, according to Seeking Alpha.

N-Able also reported GAAP net income of $7 million or 4 cents per share, up from last year’s $2.1 million or 1 cent per share. On a non-GAAP basis, the company reported net income of $18.0 million or 10 cents per share, up from last year’s $13.4 million or 7 cents per share.

Fourth quarter non-GAAP earning beat analyst expectations by 3 cents per share, Seeking Alpha reported.

For all of fiscal 2022, N-able reported revenue of $371.8 million, up about 7 percent over last year’s $346.5 million. That included subscription revenue of $362.6 million, up about 8 percent over last year.

GAAP net income for all of fiscal 2022 was $16.7 million, or 9 cents per share, up significantly from last year’s $113,000, or essentially zero cents per share. On a non-GAAP basis, N-able reported net income of $61.8 million, or 34 cents pre share, up from last year’s $59 million or 35 cents per share.

Looking forward, N-able expects first fiscal quarter 2023 revenue in the range of $97.5 to $98.0 million, representing approximately 7 percent to 8 percent year-over-year growth. For its full fiscal year 2023, the company expects revenue in the range of $408 to $412 million, representing 10 percent to 11 percent year-over-year growth.