N-able Earnings Call Highlights Profitable, AI-Fueled Growth

N-Able, Inc. ((NABL)) has held its Q1 earnings call. Read on for the main highlights of the call.

N-able’s latest earnings call painted a largely upbeat picture, with steady subscription and ARR growth, firmer margins and stronger cash generation outweighing near-term growing pains. Management leaned on durable cybersecurity demand and early AI traction to argue that the business is compounding, even as revenue guidance moderates and sales cycles lengthen as the company pushes further upmarket.

Robust ARR and Subscription Expansion

Total annual recurring revenue climbed to $548 million, up 11% year over year on a reported basis and 8% in constant currency, underscoring solid underlying demand. Subscription revenue reached $132 million, rising roughly 13% reported and 9% in constant currency, giving investors comfort that the core SaaS engine remains healthy despite macro noise.

Retention Metrics Strengthen Further

Trailing 12‑month net revenue retention landed around 106%, or 103% in constant currency, showing existing customers are expanding their spend. Both gross and net dollar retention improved versus the prior quarter and year, signaling that N‑able is not only keeping clients on the platform but deepening wallet share across its installed base.

Upmarket Push Delivers Larger Customers

Customers generating more than $50,000 in ARR grew about 13% year over year to 2,710 and now account for roughly 62% of total ARR, up from about 58% a year ago. Clients above $100,000 in ARR represent 41% of ARR, highlighting continued success in winning and scaling larger accounts even as this shift introduces more complex enterprise-level buying dynamics.

Margins, Cash Flow and Balance Sheet Improve

Adjusted EBITDA reached $37 million in the quarter, translating to a 27% margin that reflects disciplined expense control and operating leverage. Unlevered free cash flow came in at $22 million, with cash on hand around $118 million and net leverage near 1.8x, and management lifted full‑year unlevered free cash flow guidance to a range of $116 million to $120 million.

Revenue Beat and ARR-Led Guidance Framework

Quarterly revenue of $134 million exceeded the top end of guidance by roughly $2 million, reinforcing credibility in management’s ARR‑anchored outlook. The company framed its Q2 revenue range of $137.5 million to $138.5 million and full‑year outlook of $554 million to $559 million, or about 7% to 9% growth depending on FX, as consistent with its focus on recurring revenue health over short-term fluctuations.

AI and Automation Sharpen Operational Efficiency

New AI initiatives such as the N‑zo workflow assistant and the MCP server, which connects securely to external models, are designed to convert human-intensive IT tasks into automated software outcomes. Management cited examples of certain operations running up to 70% faster, positioning AI as both a customer productivity tool and a lever to enhance N‑able’s own service delivery economics over time.

Platform Wins and Brand-Enhancing Partnerships

The company reported that six of its top ten new customer wins originated from its unified endpoint management offering, signaling strong platform pull. Four of the top five new deals came through the value-added reseller channel, and a high-profile cybersecurity partnership with Manchester City Football Club showcased N‑able’s ability to support sophisticated, globally recognized organizations.

Data Protection Drives Net New ARR

Data protection has become a key growth vector, now covering more than 3.5 million Microsoft 365 users and leading net new ARR gains during the quarter. Management plans to broaden the addressable market with Google Workspace backup later this year, while disaster recovery as a service remains in limited preview as N‑able refines the product and go-to-market approach.

Security Operations Gain Cross-Sell Momentum

Security operations customers have nearly doubled since the second quarter of 2025, underscoring rising demand for managed detection and response capabilities. Cross-selling MDR into the existing customer base has meaningfully supported retention and expansion, bolstering N‑able’s pitch as a one‑stop security and IT operations partner for managed service providers.

Growth Moderation and Sales Cycle Friction

Despite the beat, management’s Q2 guidance implies slower revenue growth of about 5% to 6% year over year, or roughly 4% in constant currency, versus recent trends. As N‑able targets more six‑ and seven‑figure contracts, leaders noted that sales cycles are lengthening and return‑on‑investment scrutiny is rising, which can delay deal closings and smooth near-term revenue trajectories.

Margin Pressure, Early Monetization and Timing Noise

Gross margin slipped modestly to 80% from 81% a year ago, suggesting slight pressure on unit economics as the company invests in newer capabilities. AI features like N‑zo and offerings such as disaster recovery as a service are still in early monetization phases, and management emphasized that revenue recognition timing, especially for on-premise elements, can introduce quarter‑to‑quarter volatility on top of foreign exchange exposure and roughly $27 million in expected annual cash interest costs.

Guidance Underscores Profitable Growth Focus

For the second quarter of 2026, N‑able expects revenue between $137.5 million and $138.5 million and adjusted EBITDA of $39.5 million to $40.5 million, implying margins near 29%. For the full year, management is targeting revenue of $554 million to $559 million, ARR of $581 million to $586 million, adjusted EBITDA margins of 30% to 31% and unlevered free cash flow of about $116 million to $120 million, signaling a clear priority on profitable growth even as FX and tax assumptions remain part of the backdrop.

N‑able’s earnings call delivered a story of steady, cash-generative growth backed by rising enterprise traction and expanding security and data protection capabilities, albeit with some caution on the pace of near-term revenue. For investors, the blend of improving retention, strong free cash flow and early AI leverage suggests a durable model, provided management continues to navigate longer upmarket sales cycles and modest margin pressures with discipline.