N-Able (NABL) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $119.4 million, up 13% year-over-year, driven by strong demand for IT management, data protection, and security solutions, with a shift to long-term committed contracts and notable performance from MDR and Cove.

• Adjusted EBITDA for Q2 2024 was $46.8 million, with a 39.2% margin, marking the seventh consecutive quarter above the Rule of 45.

• Net income for Q2 2024 was $9.5 million, more than doubling year-over-year, reflecting higher revenue and operating efficiency.

• The company reported a trailing 12-month net retention rate of 108% and a growing MSP partner base of approximately 25,000, with 56% of ARR from partners with over $50,000 ARR.

• Long-term contracts now represent about 40% of revenue, increasing predictability but causing near-term headwinds.

Financial highlights

• Subscription revenue was $117.4 million in Q2 2024, up 13.6% year-over-year, accounting for 98.3% of total revenue.

• Gross margin was 84.7% (non-GAAP), nearly flat year-over-year; GAAP gross margin was 84.0%.

• Unlevered free cash flow for Q2 2024 was $35.5 million; CapEx was $5.1 million (4.3% of revenue).

• Non-GAAP EPS was $0.14, based on 187 million diluted shares; GAAP net income per share was $0.05.

• Ended Q2 2024 with $157.5 million in cash and $334.1 million in debt (net leverage ~1.1x).

Outlook and guidance

• Q3 2024 revenue expected at $114.5–$115 million (6–7% year-over-year growth); Adjusted EBITDA $39.5–$40 million (35% margin).

• Full-year 2024 revenue guidance raised to $463–$465 million (10% year-over-year growth); Adjusted EBITDA outlook raised to $165.5–$167.5 million (36% margin).

• CapEx expected at ~5% of revenue for 2024; Adjusted EBITDA to free cash flow conversion at 64%.

• Non-GAAP tax rate expected at 28% for Q3 and 25% for the full year.

• Management expects continued investment in product development, security enhancements, and international expansion.