N-able, Inc. Q2 FY2026 earnings call

Market Context & Strategic Mission

• Advances in frontier AI have drastically increased the volume and velocity of cyber risk, with the number of publicly disclosed vulnerabilities tripling between Q2 2022 and Q2 2026, and AI now enables bad actors to develop working exploits from public patches in hours for minimal cost.
• Businesses are rapidly expanding digitization and AI agent deployment, increasing the overall attack surface for adversaries while also raising customer demand for more advanced, AI-native security capabilities.
• Enable's mission is to democratize enterprise-grade cybersecurity for 500,000 global businesses, with an end-to-end platform covering the full attack lifecycle from patch management to remediation, data protection, and disaster recovery.

Leadership & Organizational Changes

• Russell Rosa joined as the new Chief Revenue Officer in July 2026, bringing 25+ years of experience building and scaling channel and go-to-market organizations from Cisco, Actifio, and Sumo Logic.
• Rosa's three core priorities are: accelerating the full channel strategy to target high-value partner segments, deepening upmarket sales motion for complex enterprise customer needs, and driving operational excellence across the revenue organization.
• Enable will implement a 6% total headcount reduction in the second half of 2026 to realign resources toward high-growth opportunities in data protection, security operations, and channel sales. This is expected to reduce annualized operating expenses by $11 to $13 million, with $4 to $6 million in one-time restructuring charges.
• AI adoption is driving major productivity gains across the business: 47% of all committed engineering code in Q2 was AI-generated, and some new features are shipping 10 to 12 times faster than prior roadmap estimates.

Product Updates & Milestones

• Data Protection: Disaster Recovery as a Service (DRaaS) launched commercially in July 2026, enabling full business restoration in minutes without on-premise hardware, avoiding capex costs and supply chain delays. Omdia named Enable its backup and disaster recovery champion for the third consecutive year. Google Workspace backup coverage remains on track to launch later in 2026.
• UEM: Progress was delivered on core roadmap priorities including AI agent governance, expanded exposure management, and AI workflow capabilities via the Enzo assistant. Shadow AI visibility was launched across UEM and SecOps to address the growing blind spot of unregulated AI tool usage. UEM is Gartner-recognized and remains a core cross-sell anchor for the business.
• SecOps/EDR: Extended incident response capabilities were added for automated threat containment and hands-on escalation support. FedRAMP-certified and Managed EDR offerings are launching to expand addressable market, with Managed EDR serving as a lower entry point to drive future estate expansion. Enable closed one of its largest new enterprise deals in the segment during Q2.

Enable reports three core business product segments: 1) Data Protection: Total ARR for this segment is above $200 million, and it grew faster than the overall company in Q2 2026, leading net new ARR growth for the quarter. It contributes approximately 37% of total company ARR. 2) Unified Endpoint Management (UEM): UEM cross-sell to data protection and security customers grew 27% year-over-year in Q2, and targeted competitor displacement migrations increased 60% year-over-year. The segment represents a large share of Enable's customer base, but Q2 2026 renewal rates came in below expectations, driving near-term headwinds. 3) Security Operations/Endpoint Detection and Response (SecOps/EDR): The segment saw strong traction in Q2 2026, including one of the company's largest new deals ever, and management believes Enable is gaining market share in this category. It protects over 3 million identities, with half of modern cyberattacks targeting identity vectors. Like UEM, Q2 2026 EDR renewal rates were below expectations due to pricing pressure. Overall company Q2 2026 total ARR was $544 million (6% YoY growth), total revenue was $138 million (6% YoY reported growth), adjusted EBITDA was $40 million (29% margin), and unlevered free cash flow was $23 million.

• Full year 2026 total revenue guidance is lowered to $539 to $542 million, representing 6% to 7% YoY reported growth and 5% YoY constant currency growth, down from prior guidance.
• Full year 2026 total ARR guidance is lowered to $562 to $565 million, representing 4% to 5% YoY reported growth and 5% YoY constant currency growth.
• Full year 2026 adjusted EBITDA guidance is $158 to $161 million, for an adjusted EBITDA margin of 29% to 30% at the midpoint, maintaining profitability expectations despite the top-line downward revision.
• Full year 2026 unlevered free cash flow is expected to be $116 to $120 million, with CapEx expected to equal 6% of total revenue.
• Q3 2026 total revenue guidance is $134.5 to $135.5 million, representing ~3% YoY reported growth and 3% to 4% constant currency growth. Q3 adjusted EBITDA is expected to be $41 to $42 million, for a 30% to 31% margin.
• Foreign exchange rate changes are expected to create a $2.5 million negative impact to full-year revenue and a $5 million negative impact to full-year ARR, based on assumed rates of 1.13 for the euro and 1.33 for the pound.
• The guidance does not embed assumptions of improved execution in the second half, only reflects the structural dynamic that the first half 2026 renewal cohort is ~40% larger than the second half cohort, reducing second half churn exposure. New product launches are expected to contribute less than 1 percentage point of additional revenue in 2026.
• Management expects accelerated growth to return in 2027, driven by new product introductions, expanded AI capabilities, and go-to-market changes implemented in the second half of 2026. Planned 2027 launches include identity coverage, expanded security operations platform capabilities, and agent monetization.
• Enable maintains an active share repurchase program with $45 million in remaining authorization, reflecting management confidence in the company's long-term value.

• Near-term financial performance is pressured by two core factors: a leadership transition in the go-to-market organization, which is expected to create near-term execution variability as new strategies and processes are implemented, and shifting customer demand dynamics in the UEM and EDR markets as customers expect new AI-native capabilities that Enable is still rolling out.
• Q2 2026 UEM and EDR renewal rates came in below expectations, driven by pricing pressure in both segments, minor quantity degradation among MSP customers, and lower dollar-based net retention even for retained customers. This was the primary driver of the full-year guidance downward revision.
• MSP customers are currently pausing purchasing decisions for UEM (the core operational tooling for MSP technician workflows) while they evaluate vendor AI strategies to align with their own workforce automation plans, creating near-term demand headwinds.
• AI-driven cyber threats are evolving faster than legacy defenses, creating growing market demand but also requiring continuous product investment and roadmap updates to meet new customer requirements.
• The 6% headcount reduction carries one-time restructuring charges of $4 to $6 million in the second half of 2026, and any implementation missteps could create short-term operational disruption.
• Pricing competition in EDR and UEM has pressured margins and retention, with some customers leaving for lower-priced offerings from competitors including SentinelOne and other established market players.

Q: When did the below-expected UEM/EDR renewal dynamic emerge in Q2, and where do non-renewing or downsizing customers go? / A: Q2 has Enable's largest annual renewal cohort by far due to historical contracting dynamics. Renewal rates trended down through the quarter, settling in the mid-80% range down from the high 80% range, and management has assumed similar rates for the rest of the year. Most impacts are pricing-driven rather than full customer churn: retained customers often renew at lower price points or lower quantities, especially among MSP customers that see end-user quantity declines. When full churn occurs, EDR customers often move to competitors like SentinelOne, while UEM churn is with the same set of long-time competitors with no recent major shift in dynamics. (398 characters)

Q: What is the current pre-layoff headcount, when will DRAS contribute revenue, and what changed with the SentinelOne partnership? / A: Total pre-layoff headcount was approximately 2,000 employees as of Q2 end. DRAS reached general availability in July 2026, so it generated no Q2 revenue, though it was tested with customers during the quarter and saw very positive early market reception. Management is bullish DRAS will become one of Enable's fastest-growing products, and it addresses new AI-driven recovery use cases in addition to traditional disaster recovery. The amended SentinelOne agreement added pricing protection for Enable and expanded available SKUs, including FedRAMP-certified options, which addresses a common gap that previously caused customer churn. (472 characters)

Q: Is the strategic shift toward VAR channels for mid-market sales driven by MSP market headwinds? / A: The upmarket push does not reflect broad MSP headwinds: sell-through demand for data protection and security offerings from MSPs remains strong. The shift is driven by MSPs themselves moving upmarket to serve larger enterprise customers, which requires a more sophisticated go-to-market motion that new CRO Russell Rosa (with deep enterprise channel experience) is hired to build. Mid-market CIOs are increasingly attracted to Enable's all-in-one UEM platform that can replace 4-6 separate tools, and VARs are the optimal route to reach this mid-market segment. Management expects new product launches in the second half of 2026 will drive accelerating growth starting in 2027. (451 characters)

Q: How much of the current demand slowdown is driven by SMB/MSP AI strategy indecision, and when can growth return to market TAM growth rates (14%)? / A: There is clear demand caution driven by AI strategy evaluation, but this is isolated to the UEM segment (the core operational tool for MSP technicians) rather than security offerings. Sell-through demand for data protection and security operations remains strong, matching the industry trend of rising pipeline from increasing cyber threats. MSPs are re-evaluating vendor AI roadmaps to understand how automation will improve technician productivity, which has created a short-term evaluation pause. Management expects improved retention and growth to start in the second half of 2026 as operational changes take effect, with a full return to accelerated market-aligned growth in 2027 driven by new product launches. (468 characters)