N-Able, Inc. 10-Q Summary: Quarter Ended September 30, 2025
Business Context and Reporting Period
This is the Quarterly Report on Form 10-Q for N-Able, Inc. (NABL), a global provider of cloud-based security, data protection, and unified endpoint management software for IT service providers. The report covers the three and nine months ended September 30, 2025. The company operates as a single reportable segment and is a large accelerated filer.
Key Financial Metrics
| Metric | Q3 2025 | Q3 2024 | YTD 9M 2025 | YTD 9M 2024 |
|---|---|---|---|---|
| Total Revenue | $131.7 million | $116.4 million | $381.2 million | $349.6 million |
| Net Income (Loss) | $1.4 million | $10.8 million | $(9.8) million | $27.7 million |
| Operating Income | $11.6 million | $23.9 million | $23.5 million | $66.4 million |
| Adjusted EBITDA | $41.4 million | $44.8 million | $114.7 million | $131.3 million |
| Cash from Operations (9M) | $67.9 million (2025) vs $53.5 million (2024) | |||
| Cash & Equivalents (Sep 30, 2025) | $101.4 million | |||
| Total Debt (Net) | $331.7 million |
Material Changes vs. Prior Period
- Revenue Growth: Q3 revenue increased 13.1% year-over-year, driven by growth in data protection and security solutions and the inclusion of the Adlumin acquisition. Annual Recurring Revenue (ARR) reached $528.1 million, a 14.2% increase.
- Profitability Decline: GAAP Net Income dropped significantly to a loss of $9.8 million for the nine months ended September 30, 2025, compared to a profit of $27.7 million in the prior year. This was primarily due to increased operating expenses and amortization.
- Expense Increases:
- Cost of Revenue: Increased 50.0% YTD, largely due to $11.3 million in amortization of acquired technologies from the Adlumin acquisition and higher cloud infrastructure costs.
- Operating Expenses: Increased 20.2% YTD, driven by higher personnel costs (headcount and salary increases), transaction-related costs, and bad debt expense.
- Tax Rate Volatility: The effective tax rate for the nine months ended September 30, 2025, was 293.0%, compared to 41.5% in the prior year, primarily due to an increase in unbenefited losses in the United States.
Guidance, Outlook, and Risks
- Acquisition Impact: The November 2024 acquisition of Adlumin is a key growth driver but has significantly increased amortization and transaction-related costs in the short term. Deferred consideration for Adlumin totaled $109.5 million as of September 30, 2025.
- Long-Term Contract Initiative: The company is shifting toward long-term committed contracts, which impacts revenue recognition timing (more point-in-time revenue) and has affected net revenue retention metrics.
- Share Repurchases: The company repurchased $20.0 million of common stock during the first nine months of 2025 under a $75.0 million program approved in March 2025. Approximately $55.0 million remains available.
- Risks: Key risks include the impact of rising interest rates on variable-rate debt, foreign currency exchange fluctuations, cybersecurity threats, and the ability to successfully integrate acquisitions. The company is also subject to ongoing tax audits in the U.S. and internationally.
Investor Verification Checklist
- Amortization Impact: Verify the sustainability of operating margins given the $12.6 million in amortization of acquired technologies for the nine months ended September 30, 2025.
- Deferred Consideration: Review the $109.5 million deferred consideration liability related to Adlumin and the potential for future cash outflows or expense recognition based on performance metrics.
- Effective Tax Rate: Assess the long-term implications of the 293.0% effective tax rate and the specific drivers regarding unbenefited U.S. losses.
- Net Revenue Retention: Monitor the dollar-based net revenue retention rate (102% for the trailing twelve months) in the context of the "Long-Term Contract Initiative" and pricing changes.
- Debt Covenants: Confirm continued compliance with the Credit Agreement covenants, specifically the maximum first lien net leverage ratio of 7.50 to 1.00.