Summary
N-able closed fiscal 2021 with fourth-quarter total revenue of $89.5 million, up 12.0% from the prior-year quarter. Full-year revenue reached $346.5 million, up 14.4%. Gross profit was $76.2 million in the quarter, up 20.7%, and $294.0 million for the full year, up 22.7%. Gross margin expanded to 85.1% in the quarter, up 6.1 percentage points, and to 84.9% for the full year, up 5.7 percentage points. Operating income was $8.5 million in the quarter, up 1582.8% from the prior-year quarter, while full-year operating income was $33.3 million, down 1.3%. Operating margin was 9.5% in the quarter, up 8.9 percentage points, but 9.6% for the full year, down 1.5 percentage points. Net income was $2.1 million in the quarter, swinging to a profit from a net loss in the prior-year quarter. Full-year net income was $0.1 million, also swinging to a profit from a net loss in the prior-year period. Diluted EPS for the full year was $0.00, up $0.05.
Cash generation and balance sheet items showed mixed trends. Operating cash flow was $19.2 million in the quarter, up 18.8%, but $45.3 million for the full year, down 47.1%. Capital expenditures were $11.3 million in the quarter, up 104.6%, and $30.7 million for the full year, up 157.3%. Deferred revenue was $10.9 million, up 12.7% from the prior-year quarter. Remaining performance obligations were $10.9 million. The company reported non-GAAP gross margin of 86.6% in the quarter and 86.8% for the full year. Non-GAAP net income was $13.4 million, or $0.07 per diluted share, in the quarter, and $59.0 million, or $0.35 per diluted share, for the full year. Adjusted EBITDA was $27.8 million in the quarter, a 31.0% margin, and $113.3 million for the full year, a 32.7% margin.
Operational highlights centered on partner expansion and security products. The trailing twelve months dollar-based net retention rate remained consistent at 110%. The fourth quarter had the highest level of new bookings in 2021. Performance was driven by security and data protection solutions, particularly N-able EDR and N-able Microsoft 365 cloud-to-cloud backup. The Technology Alliance Program added more than 25 partners in 2021, with more than half focused on security, bringing total partners to 65. Named partners include Cisco, Sophos, Webroot, Liongard, and Zomentum. N-able was named Service Provider of the Year at the European IT Software Excellence Awards 2021. The company had approximately 25,000 customers as of December 31, 2021. MSP partners with ARR over $50,000 grew to 1,678 from 1,473, an increase of 14%, and represented approximately 47% of total ARR, up from approximately 42%.
Guidance points to continued growth but with foreign exchange pressure. For the first quarter of 2022, management expects revenue in a range of $90.1 million to $90.6 million, roughly 9% year-over-year growth, or approximately 11% on a constant currency basis. Adjusted EBITDA is expected in a range of $26.5 million to $27.0 million, approximately 30% of total revenue. For full-year 2022, revenue guidance is $384 million to $388 million, 11% to 12% year-over-year growth, or 13% to 14% in constant currency. Adjusted EBITDA guidance is $118 million to $122 million, approximately 31% of total revenue. The outlook includes updated expectations of increased FX headwinds. Management expects revenue acceleration throughout the year and margin improvement in the back half of 2022. Risks include the spin-off from SolarWinds, with carve-out financials through July 19, 2021 and stand-alone results after. The SolarWinds Cyber Incident caused reputational harm and adversely affected new subscription sales and net retention rates in 2021. N-able temporarily reduced demand generation through January 2021, and some MSP partners delayed purchasing decisions. COVID-19 continues to create uncertainty. The company also carries debt under a Credit Agreement and faces foreign exchange exposure.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2021 | Q3 FY2021 | QoQ | Q4 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $89.5M | $88.4M | +1.2% | — | — |
| Gross profit | $76.2M | $76.1M | +0.1% | — | — |
| Gross margin | 85.1% | 86.1% | -1.0 pp | — | — |
| Research & development | $14.8M | $14.6M | +0.8% | — | — |
| Sales & marketing | $32.3M | $30.2M | +7.0% | — | — |
| General & administrative | $19.1M | $19.9M | -4.0% | — | — |
| Total operating expenses | $67.7M | $66.4M | +2.0% | — | — |
| Operating income (loss) | $8.5M | $9.8M | -13.0% | — | — |
| Operating margin | 9.5% | 11.1% | -1.6 pp | — | — |
| Net income (loss) | $2.1M | $1.9M | +9.8% | — | — |
| Net margin | 2.3% | 2.1% | +0.2 pp | — | — |
| Diluted EPS | $0.01 | $0.01 | ±$0.00 | — | — |
| Customers | 25,000 | 25,000 | ±0.0% | — | — |
Risks
The SolarWinds Cyber Incident has had and may continue to have an adverse effect on N-able's business, reputation, MSP partner and employee relations, results of operations, financial condition or cash flows. MD&A states the incident caused reputational harm and an adverse impact on new subscription sales and net retention rates, and that 2021 new subscription sales and expansion rates were adversely affected relative to historical levels.
N-able has limited operating history as a stand-alone public company, and its historical carve-out financial information may not be representative of future results. The filing highlights risks in transitioning assets, resources, and business strategies from SolarWinds, and MD&A notes the company incurred spin-off costs and increased general and administrative expenses associated with the Separation and Distribution.
Substantial indebtedness could adversely affect financial health and the ability to obtain financing, react to changes, and meet obligations. The Credit Agreement provides first lien secured credit facilities, and the company is committed to significant cash interest payments over the term.
Long-term success depends on international operations, including research and development facilities in Belarus and third-party contractors in Ukraine. The region has experienced civil unrest, economic sanctions, and the developing Russia-Ukraine conflict, which could disrupt product development, require shifting R&D, and increase costs.
N-able operates in highly competitive markets with competitors such as Datto and Kaseya, and MSP partners have limited switching barriers. The 2021 brand change from SolarWinds MSP to N-able may have caused loss of customer recognition and could adversely affect business and profitability.
A portion of revenue is consumption-based, particularly for remote monitoring and management and backup, recovery and disaster recovery solutions. N-able lacks visibility into the timing of usage and revenue recognition, so actual results may differ from forecasts if MSP partners consume less or more slowly than expected.
Revenue growth depends on selling subscriptions to new MSP partners, expanding existing MSP partners, and renewals. MD&A reports annual dollar-based net revenue retention of approximately 110% for 2021, but the Cyber Incident adversely affected new subscription sales and expansion rates relative to historical levels.
The global COVID-19 pandemic has adversely affected and may continue to adversely affect business, results of operations, and financial condition. MD&A states subscription revenue growth decelerated in the second quarter of 2020 due to increased churn and downgrades and slower MSP partner adds, though improvement continued through the fourth quarter of 2021.
The Sponsors collectively owned approximately 62.3% of the voting power of common stock as of December 31, 2021 and can exert significant influence over board composition and stockholder votes. This concentration may delay or prevent transactions and creates potential conflicts of interest.
Failure to maintain proper and effective internal controls could have a material adverse effect. As an emerging growth company, N-able is not required to provide an auditor's attestation report on management's assessment of internal control over financial reporting, which may reduce information available to investors.
SaaS KPIs
All quarters →Adjusted EBITDA Margin
Non-GAAP Operating Margin
Adjusted EBITDA
Total customers
Unlevered Free Cash Flow
MSP partners with ARR over $50,000
Free Cash Flow
MSP partners with over $50,000 ARR as % of total ARR
Summary, forecast, risks and KPIs are extracted from N-able, Inc.'s SEC filings for Q4 FY2021 (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 1, 2026.