N-able, Inc. Q3 FY2024 earnings call

• Third quarter results: Revenue growth, adjusted EBITDA margin. - Product progress: Expanded API and data analytics capabilities, unified agent with 1M+ devices activated, Cove updates (data retention model, Microsoft 365 backup enhancements), security initiatives (global compliance, SOC2 audit, Passportal service). - Channel response: Positive feedback at distributor conference. - Strategic pillars: Ecoverse, Cove, and XDR as foundational investments; focus on resiliency and efficiency for customers.

Revenue for the third quarter was $116.4 million, representing 8% year-over-year growth on a reported basis and 7% on a constant currency basis. Adjusted EBITDA was $44.8 million, with an approximately 39% adjusted EBITDA margin. Cove is the fastest-growing and now the largest recurring revenue product group. Data protection showed strong tailwinds, with Cove driving growth, and the security suite had steady demand. Subscription revenue was $115 million, up 9% Y/Y on a reported basis and 8% on a constant currency basis. Partners with over $50,000 of ARR increased to 2,275, representing 57% of total ARR. Dollar-based net revenue retention was approximately 105% (104% constant currency).

• Q4 2024: Total revenue expected $111.5M-$113M (3%-4% Y/Y growth), adjusted EBITDA $38M-$38.5M (34% margin). - Full-year 2024: Total revenue $461.2M-$462.7M (9%-10% Y/Y growth), adjusted EBITDA $169.3M-$169.8M (37% margin). - FX rates updated impact revenue negatively; revenue recognition from long-term contracts has mixed impact; headwinds from estate optimization and pricing expected to persist into first half 2025.

• Headwinds from estate optimization and pricing, which are transitory but expected to persist into first half 2025. - Mix of customers entering long-term contracts shifting towards SaaS, affecting revenue recognition in certain segments.

Q: What's the macro perspective on MSPs and how it affects the business?

A: Survey shows MSPs are healthy, planning to grow, with strong demand for security and disaster recovery. MSPs are being pulled into larger enterprises via co-managed models.

Q: On updated guidance and long-term contracts, what's the impact?

A: Related to mix of customers entering SaaS vs on-prem contracts; new customers have higher mix of SaaS, existing customers have lower conversion on on-prem, net effect $3M impact.

Q: Mix of on-prem and SaaS in the business and its impact?

A: On-prem is ~15% of business, trending downward; shift to SaaS is positive as it's better for TCO and scale, resonating with market and larger MSPs.