Summary
N-able closed the third quarter of fiscal 2025 with revenue of $131.7 million, up 13.1% from the prior-year quarter. Total ARR reached $528.1 million as of September 30, 2025, up 14.2% year over year, or 12.9% on a constant currency basis. Management credited demand for cybersecurity and the November 20, 2024 acquisition of Adlumin. The customer mix keeps moving upmarket. N-able counted 2,611 customers with ARR above $50,000, up from 2,275 a year earlier, and those accounts represented roughly 61% of total ARR, up from about 57%.
Profitability moved the other way. GAAP operating income fell 51.5% to $11.6 million for the quarter, and GAAP net income dropped 87.1% to $1.4 million, or $0.01 per diluted share. GAAP gross margin was 77.5%, down 5.4 percentage points from the prior-year quarter, and GAAP operating margin was 8.8%, down 11.7 percentage points. The gap between GAAP and non-GAAP results is wide. Non-GAAP gross margin was 81.1%, non-GAAP net income was $25.4 million, or $0.13 per diluted share, and adjusted EBITDA was $41.4 million, a 31.4% margin. The bridge includes $12.2 million of stock-based compensation and related payroll taxes, $4.2 million of amortization of acquired technologies, and $5.5 million of transaction related costs. Total cost of revenue rose 49.0%, driven by cloud hosting and royalties, Adlumin amortization, and headcount. Sales and marketing rose 25.4% and general and administrative rose 40.2%, the latter on higher transaction costs and bad debt expense.
Cash generation held up. Operating cash flow was $24.0 million for the quarter, up 9.2%, and $67.9 million for the nine months, up 27.0%. Capital expenditures of $6.6 million rose 75.9% as the company invested in servers and facilities. Free cash flow was $14.6 million, down from $16.7 million, while unlevered free cash flow was $22.6 million, down from $27.9 million. The balance sheet carried $101.4 million in cash and cash equivalents and $331.7 million of total debt, net of debt issuance costs. Deferred revenue of $21.4 million rose 91.2% year over year and remaining performance obligations of $243.8 million rose 26.1%, both reflecting the shift toward long-term committed contracts. That initiative has a cost. Annual dollar-based net revenue retention for subscription products slipped to approximately 102% from 105%.
For the fourth quarter of 2025, management guided to total revenue growth of approximately 9% year over year on a reported basis and 7% to 8% in constant currency, with adjusted EBITDA of $33.6 million to $34.6 million, about 27% of revenue. For the full year 2025, the company expects total ARR of $530 million to $531 million, 10% growth on a reported basis and about 8% in constant currency, revenue growth of approximately 9% on a reported basis and 8% in constant currency, and adjusted EBITDA of $148.2 million to $149.2 million, roughly 29% of revenue. The full-year ARR outlook was raised.
Risks remain. The effective tax rate jumped to 82.2% for the quarter from 42.3%, mostly on unbenefited U.S. losses, and the nine-month rate reached 293.0%. Interest expense, net, rose 14.5%. The company carries $331.7 million of debt, and its borrowings bear interest at variable rates. Management also points to adverse economic conditions, reduced or delayed information technology spending, foreign exchange swings, the challenge of integrating acquisitions such as Adlumin, and the risk that cyberattacks or security incidents could harm customers and the business. Headcount stood at 1,878 employees, up from 1,635 a year earlier.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2025 | Q2 FY2025 | QoQ | Q3 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $131.7M | $131.2M | +0.4% | $116.4M | +13.1% |
| Gross profit | $102.1M | $102.6M | -0.5% | $96.5M | +5.7% |
| Gross margin | 77.5% | 78.1% | -0.7 pp | 82.9% | -5.4 pp |
| Research & development | $25.2M | $26.3M | -4.4% | $23.0M | +9.5% |
| Sales & marketing | $40.5M | $42.4M | -4.4% | $32.3M | +25.4% |
| General & administrative | $24.3M | $23.2M | +4.6% | $17.3M | +40.2% |
| Total operating expenses | $90.5M | $92.4M | -2.1% | $72.6M | +24.5% |
| Operating income (loss) | $11.6M | $10.1M | +14.6% | $23.9M | -51.5% |
| Operating margin | 8.8% | 7.7% | +1.1 pp | 20.5% | -11.7 pp |
| Net income (loss) | $1.4M | -$4.0M | +134.4% | $10.8M | -87.1% |
| Net margin | 1.1% | -3.1% | +4.1 pp | 9.2% | -8.2 pp |
| Diluted EPS | $0.01 | -$0.02 | +$0.03 | $0.06 | -$0.05 |
| Customers | 2,611 | 2,540 | +2.8% | 25,000 | -89.6% |
Risks
Operating income declined 51.5% to $11.6 million in FY2025 Q3 and 64.5% to $23.5 million year to date, while net income swung to a $9.8 million loss year to date. Operating margin fell 11.7 pp in the quarter and 12.8 pp year to date, and gross margin fell 5.4 pp in the quarter and 6.2 pp year to date.
The November 20, 2024 Adlumin acquisition drove a $3.7 million quarter and $11.3 million year-to-date increase in amortization of acquired technologies and a $5.5 million quarter and $17.4 million year-to-date increase in transaction related costs. Deferred consideration related to Adlumin also raised interest expense, creating integration and earnings pressure.
Sales and marketing expenses rose 25.4% in FY2025 Q3 and 22.1% year to date, general and administrative expenses rose 40.2% in the quarter and 24.4% year to date, and total cost of revenue rose 49.0% in the quarter. Continued expense growth from headcount, salary, stock-based compensation, and transaction costs could outpace revenue growth.
Annual dollar-based net revenue retention rate for subscription products was approximately 102% for the trailing twelve months ended September 30, 2025, down from 105% for the prior-year period. The company attributes the decline to pricing and packaging changes and rationalization related to the Long-Term Contract Initiative, which could constrain recurring revenue growth.
The effective tax rate increased to 82.2% for FY2025 Q3 and 293.0% year to date, primarily due to an increase in the unbenefited loss in the United States. This drove $6.4 million of income tax expense in the quarter and contributed to a $9.8 million net loss year to date.
Interest expense, net increased 14.5% to $8.6 million in FY2025 Q3 and 4.5% to $23.8 million year to date, including increases related to the Adlumin deferred consideration liability. Borrowings under the Credit Agreement bear variable rates, so changes in interest rates affect financial results and cash flows.
Bad debt expense increased $2.1 million in FY2025 Q3 and $1.8 million year to date, contributing to the 40.2% quarter and 24.4% year-to-date increases in general and administrative expenses. This may signal deterioration in customer payment behavior.
The Long-Term Contract Initiative shifts subscriptions to long-term committed contracts, increasing point-in-time subscription revenue and deferred revenue, which rose 91.2% to $21.4 million, and RPO, which rose 26.1% to $243.8 million, versus prior-year quarter. Volume and pricing rationalization and month-to-month fluctuations may add revenue volatility.
Other income, net increased $2.5 million in FY2025 Q3 and $1.6 million year to date primarily due to exchange rate impacts on foreign currency denominated accounts. With $96.2 million of $101.4 million in cash and cash equivalents held by international subsidiaries, currency fluctuations can affect reported results.
SaaS KPIs
All quarters →Adjusted EBITDA Margin
Non-GAAP Operating Margin
Adjusted EBITDA
Non-GAAP Gross Margin
Unlevered Free Cash Flow
Free Cash Flow
Summary, forecast, risks and KPIs are extracted from N-able, Inc.'s SEC filings for Q3 FY2025 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.