N-able, Inc. Q4 FY2025 earnings call

John Pagliuca noted entering 2026 with momentum from profitable growth. Solidified AI SOC market with Adlumin acquisition, crossed $200 million ARR in data protection, expanded into VAR channel, opened R&D center in India. Emphasized AI as tailwind, with AI embedded across platform. 2026 plan includes product innovation like N-zo AI workflow assistant for UEM, further AI in security operations (AI handles 90% of threats), new cyber warranty program. Data protection to add DRaaS and Google Workspace workload coverage. Marketing to capitalize on brand strength, sales to accelerate portfolio adoption and expand VAR channel. Tim O'Brien discussed execution with focus and purpose, deepened presence in data protection and security operations, expanded channel reach, accelerated AI innovation. Refinanced credit facility, increased commitment, supports capital allocation including share buybacks and M&A.

Fourth quarter and full year 2025 revenue grew 9% year-over-year in constant currency. Exited 2025 with ARR of $540 million, growing 8% at constant currency. Adjusted EBITDA in fourth quarter was $39 million (30% margin) and $153 million for full year (30% margin). Fourth quarter total ARR was $540 million, growing 12% year-over-year on reported basis and 8% on constant currency basis. Total revenue was $130 million, $3 million above guidance, with subscription revenue $129 million. Full year 2025 total revenue $511 million, growing 10% on reported basis and 9% on constant currency basis. Subscription revenue $506 million. Approximately 45% of revenue outside North America. Fourth quarter gross margin 80%, full year 2025 gross margin 81%. Fourth quarter adjusted EBITDA $39 million (30% margin), full year 2025 adjusted EBITDA $153 million (30% margin). Unlevered free cash flow $28 million in fourth quarter and $101 million for full year. Ended 2025 with $540 million ARR, 61% of ARR from customers with over $50,000 ARR. Dollar-based net revenue retention approximately 103% reported and 102% constant currency on trailing 12-month basis.

First quarter 2026 total revenue range $131M - $132M (11%-12% reported growth, 6%-7% constant currency). Adjusted EBITDA range $35.5M - $36.5M (27%-28% margin). Full year 2026 total revenue outlook $554M - $559M (8%-9% reported growth, 7%-8% constant currency). ARR outlook $581M - $586M (8%-9% growth). Adjusted EBITDA $167M - $171M (30%-31% margin). CapEx expected 5% of revenue. Unlevered free cash flow $114M - $118M. Weighted average diluted shares outstanding approximately 188M - 191M. Non-GAAP tax rate 24%-27%.

Q: ARR grew about 8% on constant currency in 4Q. What gives confidence in higher constant currency ARR growth in 2026?

A: Guidance underwritten by steady assumptions, including steady to slightly improved gross retention, new SKUs like AI-powered XDR, Disaster Recovery as a Service, Google Workspace gaining traction, and continued acceleration in VAR community reach.

Q: Is N-zo product to be released in coming year and value to customers?

A: N-zo is in limited preview, an in-product AI workflow assistant for UEM. Allows MSPs to assess environments and take action in minutes using natural language, part of 3-pronged AI strategy including AI infused in products, in-product AI agents, and AI-specific SKUs.

Q: Cross-sell to existing customer base for Adlumin ahead of plan. What's driving it?

A: AI solution was top need in MSP community, Adlumin's technology stack, agnostic nature allowing ingestion of various logs, ability to assess and take action quickly, separating software and service so MSPs can see what AI SOC analysts see, compliance and ongoing cyber threats driving demand, and broader MSP base adopting it.

Q: Constant currency growth in Q1 vs full year. Seasonality and new products impact?

A: 2025 saw seasonality with more growth in second half. 2026 expected similar seasonality with newer product initiatives having heavier weight in second half, some customer preview products planned to go GA in first half with more impact on net new ARR in second half.

Q: How do 3 pillars benefit from customer AI adoption?

A: All pillars benefit as they relate to security and efficiency. Data protection with Disaster Recovery as a Service and AI to drive efficient backups, XDR with AI for quick threat containment, UEM with AI for compliance and posture management. AI unlocks labor bottleneck for MSPs.

Q: Capital allocation in 2026?

A: Balanced approach with flexibility from new debt, including potential share buybacks, and evaluating M&A or organic investments to complement offerings and meet customer needs.