N-Able, Inc. ((NABL)) has held its Q3 earnings call. Read on for the main highlights of the call.
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N-Able, Inc. recently held its third-quarter earnings call, revealing a generally positive sentiment driven by strong financial performance. The company reported significant growth in Annual Recurring Revenue (ARR) and a high adjusted EBITDA margin, showcasing strategic advancements in AI integration and market expansion. However, challenges were noted, including decreased gross margin and foreign exchange impacts on revenue, alongside the effects of the Adlumin acquisition on growth rates.
Strong ARR Growth
N-Able reported a robust third-quarter ARR of $528 million, marking a 14% increase year-over-year. This growth was particularly notable as it represented an acceleration in constant currency year-over-year ARR growth for the second consecutive quarter, highlighting the company’s successful strategies in maintaining revenue momentum.
High Adjusted EBITDA Margin
The company achieved an impressive adjusted EBITDA margin of 31%, with adjusted EBITDA reaching $41.4 million, surpassing the high end of its guidance by $4 million. This performance underscores N-Able’s effective cost management and operational efficiency.
Significant AI Integration
N-Able is making strides in AI integration across its platform, introducing innovative capabilities such as a new industry standard for shared AI language (CANI), AI-driven automation in Unified Endpoint Management (UEM), and AI-powered Security Operations Center (SOC) capabilities. These advancements are expected to enhance the company’s competitive edge in the tech industry.
Expansion in Data Protection
The launch of Anomaly Detection as a Service marks a significant expansion in N-Able’s data protection offerings. This service has successfully reduced customer backup management time from 60 hours to just 1 hour per week, demonstrating its efficiency and value to clients.
Channel and Market Expansion
N-Able has increased its presence in the U.K., establishing active relationships with a substantial number of the top 25 U.K. partners listed in the CRN 2025. This expansion is part of the company’s strategy to broaden its market reach and strengthen its channel partnerships.
Decreased Gross Margin
Despite positive growth metrics, N-Able experienced a decrease in its gross margin, which fell to 81.1% from 83.7% in the same period last year. This decline poses a challenge that the company will need to address moving forward.
FX Impact on Revenue
The company anticipates that revenue growth will be affected by foreign exchange rates, with specific rates set at 1.13 for the euro and 1.29 for the pound for the remainder of 2025. This impact highlights the challenges of operating in a global market with fluctuating currency values.
Impact of Adlumin Acquisition on Growth Rates
The acquisition of Adlumin has impacted N-Able’s growth rates, with a 4% to 5% effect on sequential growth on a constant currency basis. This acquisition, while strategic, presents a temporary challenge in maintaining growth momentum.
Forward-Looking Guidance
Looking ahead, N-Able provided optimistic guidance, projecting a 14% year-over-year increase in ARR and a 31% adjusted EBITDA margin. The company emphasized its focus on cybersecurity demand and AI integration to enhance its platform. With improved gross and net retention rates, N-Able projects fourth-quarter revenue to range between $126.5 million and $127.5 million, translating to approximately 9% year-over-year growth. For the full year 2025, the revenue outlook has been raised to $507.7 million to $508.7 million, with an increased adjusted EBITDA outlook of $148.2 million to $149.2 million. The company remains committed to achieving a 30% adjusted EBITDA margin in fiscal year 2026.
In summary, N-Able’s third-quarter earnings call highlighted strong financial performance and strategic advancements, particularly in AI integration and market expansion. Despite challenges such as decreased gross margin and FX impacts, the company’s forward-looking guidance remains optimistic, with a focus on balancing profitability and growth in the evolving AI landscape.