N-able, Inc. (NABL) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance with 13% revenue growth and improved net retention. The company is well-positioned with AI-driven solutions and expanding product offerings, like DRaaS, which are receiving positive feedback. While there are concerns over lengthening sales cycles, the company remains optimistic about its TCO benefits. The market strategy is robust, with no significant macroeconomic impact observed. The Q&A section reinforced the positive outlook, with management addressing concerns effectively. Given the market cap, the stock is likely to see a positive movement of 2% to 8%.
Key Financial Performance
Annual Recurring Revenue (ARR) $548 million, growing 8% year-over-year in constant currency. Growth attributed to upmarket momentum, channel expansion, and platform adoption.
Adjusted EBITDA Margin 27%, consistent with prior performance. Reflects strong operational execution and cost management.
Trailing 12-month Net Retention 106%, improved year-over-year. Driven by strong retention in upmarket cohorts and cross-sell/upsell activities.
Revenue $134 million, representing 13% year-over-year growth on a reported basis and 8% on a constant currency basis. Growth driven by subscription revenue and customer expansion.
Subscription Revenue $132 million, representing 13% year-over-year growth on a reported basis and 9% on a constant currency basis. Growth supported by platform adoption and customer retention.
Gross Margin 80%, slightly down from 81% in the same period in 2025. Reflects investments in platform capabilities.
Unlevered Free Cash Flow $22 million in the first quarter. Reflects disciplined capital allocation and operational efficiency.
CapEx $4 million or 3% of revenue in the first quarter, including $3 million of capitalized software development costs.
Customer Base with ARR over $50,000 2,710 customers, up 13% year-over-year. This cohort now represents 62% of total ARR, up from 58% a year ago.
Customer Base with ARR over $100,000 41% of total ARR. Reflects success in upmarket segments and strong retention.
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Operating Highlights
AI Innovation: N-able is automating work historically delivered through labor-intensive services, helping organizations operate more efficiently and securely. They introduced N-zo, an AI workflow assistant, and MCP server, which connects external AI tools to live operational data, enabling faster IT operations and real-time issue resolution.
Disaster Recovery as a Service (DRaaS): Introduced DRaaS to eliminate the need for customers to manage backup infrastructure, reducing costs and operational risks. It strengthens security posture by enabling instant recovery of critical systems in case of data loss.
Upmarket Momentum: The number of customers with over $50,000 of ARR grew by 13% year-over-year, now representing 62% of total ARR. Customers with over $100,000 of ARR represent 41% of ARR. N-able was selected as Manchester City Football Club's official cybersecurity partner, showcasing its ability to serve high-profile organizations.
Channel Expansion: Four of the top five new customer wins in the quarter were through value-added resellers (VARs), demonstrating the success of the channel expansion strategy.
Operational Efficiency: AI-driven solutions like N-zo and DRaaS are reducing manual effort and improving technician-to-device ratios, enabling MSPs to scale without proportional increases in labor costs.
Financial Performance: First quarter ARR was $548 million, growing 8% year-over-year in constant currency. Adjusted EBITDA margin was 27%, and net retention was 106%.
AI and Cybersecurity Integration: N-able is focusing on AI-powered integrated platforms to address rising cyber threats and IT complexity. Their platform spans unified endpoint management, security operations, and data protection, enabling efficient management of IT environments.
Labor Cost Optimization: By automating workflows traditionally handled by technicians, N-able is helping MSPs improve margins and scale operations more efficiently.
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Risk or Challenges
Cybersecurity Threat Landscape: Advancements in AI are enabling attackers to exploit vulnerabilities at unprecedented speed and scale, increasing the risk of cyberattacks. The worsening threat environment and rising IT complexity are driving the need for stronger cybersecurity solutions.
Customer Challenges: Customers are struggling to balance the need for powerful layered defense with practical constraints such as managing vendor sprawl, staffing challenges, and budget limitations.
IT Labor Market Constraints: The structurally tight IT labor market creates growth ceilings for MSPs, as technicians have practical limits on the number of IT assets they can manage, pressuring profitability.
AI-Driven Threats: AI is increasing both the volume and severity of cyber threats, expanding the amount and criticality of data that must be protected.
Backup and Data Protection Risks: Threat actors are increasingly using identity-based attacks to target backups, altering retention policies or deleting servers, which heightens the need for robust data protection solutions.
Economic and Budgetary Constraints: Budget limitations among customers may impact their ability to adopt advanced cybersecurity and IT solutions, potentially affecting revenue growth.
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Guidance & Outlook
Revenue Growth: For the second quarter of 2026, total revenue is expected to range between $137.5 million and $138.5 million, representing 5% to 6% year-over-year growth on a reported basis and 4% on a constant currency basis. For the full year 2026, total revenue is projected to be between $554 million and $559 million, representing 8% to 9% year-over-year growth on a reported basis and 7% to 8% on a constant currency basis.
Annual Recurring Revenue (ARR): Full year ARR is expected to range between $581 million and $586 million, representing 8% to 9% year-over-year growth on both a reported and constant currency basis.
Adjusted EBITDA: Second quarter adjusted EBITDA is projected to be between $39.5 million and $40.5 million, with a margin of approximately 29%. Full year adjusted EBITDA is expected to range between $167 million and $171 million, representing a margin of 30% to 31%.
Unlevered Free Cash Flow: The company has raised its unlevered free cash flow outlook to approximately $116 million to $120 million for the full year 2026.
Capital Expenditures: CapEx, including capitalized software development costs, is expected to be approximately 5% of total revenue for 2026.
Market Trends and Demand: The company anticipates strong secular tailwinds in cybersecurity, driven by worsening threat environments, rising IT complexity, and increased adoption of AI-powered solutions. AI is expected to expand the company's software opportunity by automating workflows and addressing labor-intensive tasks.
Product and Innovation Outlook: The company plans to introduce Google Workspace backup coverage later in 2026 and continue enhancing AI-driven capabilities, such as N-zo and MCP server, to improve operational efficiency and expand market share.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you explain the modest revenue beat and its impact on EBITDA margin and full-year guidance?
A:The CEO, John Pagliuca, explained that as the company moves upmarket, sales cycles are lengthening and there is increased scrutiny on ROI. This is due to larger deals requiring higher-level approvals, such as CEO or Board sign-offs. Despite this, the company believes it is well-positioned due to its strong TCO and ability to help MSPs maximize their dollar through software and labor efficiencies.
Q:Have you seen an uptick in demand or conversations following incidents like the Rogue PocketOS agent?
A:John Pagliuca noted that such incidents have made business resilience and continuity more top of mind. He emphasized the importance of DRaaS for immediate failover and recovery, which is becoming increasingly relevant as agents proliferate in IT environments.
Q:Has the macro environment, including geopolitical issues, impacted the business?
A:John Pagliuca stated that there has been no slowdown due to geopolitical issues, including the situation in the Middle East. The company has not observed any significant macroeconomic impact.
Q:What is driving the 2-point NDR improvement over the last several quarters?
A:Tim O'Brien attributed the improvement to successful cross-selling of MDR into the customer base and some benefit from FX on the NRR rate.
Q:What is the #1 takeaway from this earnings report?
A:John Pagliuca emphasized that the company is well-positioned in the 'agentic era' with its AI assistant, N-zo, which reduces operational workload for technicians. The company aims to enhance efficiency and profitability for MSPs through AI-driven solutions.
Q:Are frontier cyber developments like Mythos and GPT 5.5 changing customer urgency around core products?
A:John Pagliuca mentioned that these developments are making patching and vulnerability management more top of mind. While it has not significantly impacted the pipeline, it has driven more conversations and awareness about the importance of layered security and business resilience.
Q:What is the outlook for net new ARR for the remainder of the year?
A:Tim O'Brien indicated that net new ARR will be more back-half weighted due to new offerings like DRaaS and Google Backup being launched later in the year.
Q:Has the threat landscape influenced customer behavior regarding patch management?
A:John Pagliuca stated that the evolving threat landscape has made patching and vulnerability management more central to customer strategies. The company is focused on providing AI-led solutions to help customers address these challenges efficiently.
Q:What are the adoption trends for new products like DRaaS and N-zo?
A:John Pagliuca reported positive early feedback for DRaaS, which is in limited preview, and N-zo, which is not directly monetized in its initial phase but has shown significant labor savings for MSPs. Google Workspace Backup is also in limited preview, with broader adoption expected later in the year.
Q:Are there any updates on packaging and pricing changes?
A:John Pagliuca confirmed that the company expects a slight benefit from pricing and packaging changes, closer to 1 point for FY '26.
Q:Review of Unclear Management Responses
A:Management avoided providing specific numerical details or timelines for certain topics, such as the exact impact of geopolitical issues on business performance, the precise adoption rates of new products like DRaaS and N-zo, and the detailed financial impact of pricing and packaging changes. Additionally, while they emphasized the importance of AI and resilience, they did not provide concrete metrics to quantify these benefits.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI platform
AI software
MCP server
Manchester City
VAR
agent mistake
attack
challenge
conference power
control
cost structure
criticality
customer conference
event
field
industry engagement
labor market
labor service
monetization
opportunity work
partner
party research
ratio
research firm
sentiment
server advancement
software opportunity
state
step AI
system action
technician device
upmarket
win
work service
workflow
NABL Transcript
N-able, Inc. (NABL) Q1 2026 Earnings Call Transcript
Positive5-8
The earnings call highlights strong financial performance with 13% revenue growth and improved net retention. The company is well-positioned with AI-driven solutions and expanding product offerings, like DRaaS, which are receiving positive feedback. While there are concerns over lengthening sales cycles, the company remains optimistic about its TCO benefits. The market strategy is robust, with no significant macroeconomic impact observed. The Q&A section reinforced the positive outlook, with management addressing concerns effectively. Given the market cap, the stock is likely to see a positive movement of 2% to 8%.
N-able, Inc. (NABL) Q4 2025 Earnings Call Transcript
Positive2-19
The earnings call shows strong financial performance with 9% revenue growth, 8% ARR growth, and a 30% EBITDA margin. Despite a slight gross margin decline, the company demonstrates strong cash flow and customer growth. The Q&A highlights positive sentiment towards AI initiatives and cross-sell success. However, management's avoidance of specific AI monetization details slightly tempers optimism. Considering the market cap, the stock is likely to react positively within the 2% to 8% range over the next two weeks.
N-able, Inc. (NABL) Q3 2025 Earnings Call Transcript
Positive11-6
The earnings call reflects positive sentiment with strong subscription revenue growth, increased customer base, and healthy cash flow. While gross margins declined slightly, the company is investing in AI and operations, indicating future growth potential. The Q&A section highlights confidence in ARR growth, successful acquisitions, and strategic product launches, all contributing to an optimistic outlook. The market cap suggests moderate stock price movement, leading to a positive prediction.
N-able, Inc. (NABL) Q2 2025 Earnings Call Transcript
Positive8-8
The earnings call indicates strong financial performance with a 14% ARR growth and a 10% revenue increase. Despite a slight decline in gross margin, the company maintains a high adjusted EBITDA margin and positive free cash flow. The Q&A section reveals positive market reception and strategic focus, with promising growth in MSP markets and new product bundles. The share repurchase program further boosts confidence. Given the market cap, the stock is expected to react positively, likely within the 2% to 8% range, reflecting the overall strong financial and strategic outlook.
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