N-able Q2 2025 Earnings Report

N-able EPS Results

• Actual EPS: $0.11
• Consensus EPS: $0.09
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: $0.14

N-able Revenue Results

• Actual Revenue: $131.25 million
• Expected Revenue: $125.87 million
• Beat/Miss: Beat by +$5.38 million
• YoY Revenue Growth: +9.90%

N-able Announcement Details

• Quarter: Q2 2025
• Date: 8/7/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, August 7, 2025
• Conference Call Time: 8:30AM ET

N-able (NYSE:NABL) provides cloud-based software solutions for managed service providers in the United States, the United Kingdom, and internationally. The company's solutions enable MSPs to support digital transformation and growth within small and medium-sized enterprises. It provides software platform designed to be an integrated, enterprise-grade solution that serves as an operating system for its MSP partners and scales as their businesses grow. In addition, the company offers remote monitoring and management solutions provide MSP partners with visibility and insights into the availability and performance of their customers' networks, infrastructure, devices and applications through a centralized dashboard; data protection as-a-service solutions, such as backup and disaster recovery for servers, virtual machines, workstations, files, data, and key cloud-based applications, as well as multi-tenant platform and secure remote delivery architecture. Further, it offers security services through patch management, endpoint security, managed detection and response, web protection, e-mail security, and archiving and vulnerability assessment solutions. Additionally, the company engages in professional services automation, automation and scripting management, password management policies and reporting, and analytics. N-able, Inc. was incorporated in 2020 and is headquartered in Burlington, Massachusetts.

N-able Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Enable surpassed $500 million of ARR, achieved 14% year-over-year growth and delivered a 32% adjusted EBITDA margin in Q2.
• Positive Sentiment: Enable’s data protection pillar “Cove” recorded its highest bookings and net new ARR quarter ever, now protecting over 3 million Microsoft 365 users with 25% YoY ARR growth.
• Positive Sentiment: The company raised its full-year outlook, expecting $127M–$128M in Q3 revenue, $525M–$530M in ARR and a full-year adjusted EBITDA margin of 28–29%.
• Positive Sentiment: Enable’s channel expansion gained momentum as its reseller pipeline nearly doubled quarter-over-quarter and secured a key partnership with a leading UK reseller to target the mid-market.
• Positive Sentiment: Management initiated a share repurchase program, signaling confidence in the company’s cash flow generation and growth trajectory.

Presentation

[Operator]

will now hand the floor to Griffin Gier to begin.

[Griffin Gyr, Sr. Manager - Investor Relations at N-Able]

Thank you, operator, and welcome everyone to Enable's second quarter twenty twenty five earnings call. With me today are John Palajuka, Enable's President and CEO and Tim O'Brien, EVP and CFO. Following our prepared remarks, we will open the line for a question and answer session. This call is being simultaneously webcast on our Investor Relations website at investors.enable.com. There, you can also find our earnings press release, which is intended to supplement our prepared remarks during today's call.

[Griffin Gyr, Sr. Manager - Investor Relations at N-Able]

Certain statements made during this call are forward looking statements, including those concerning our financial outlook, our market opportunities and the impact of the global economic environment on our business. These statements are based on currently available information and assumptions, and we undertake no duty to update this information except as required by law. These statements are also subject to a number of risks and uncertainties, including those highlighted in today's earnings release and our filings with the SEC. Additional information concerning these statements and the risks and uncertainties associated with them is highlighted in today's earnings release and in our filings with the SEC. Copies are available from the SEC or on our Investor Relations website.

[Griffin Gyr, Sr. Manager - Investor Relations at N-Able]

Furthermore, we will discuss various non GAAP financial measures on today's call. Unless otherwise specified, when we refer to financial measures, we will be referring to non GAAP financial measures. A reconciliation of certain GAAP to non GAAP financial measures discussed on today's call is available in our earnings press release on our Investor Relations website. And now, I will turn the call over to John.

[John Pagliuca, CEO, President & Director at N-Able]

Thank you, Griffin, and welcome everyone to our call this morning. As we turn the page in the 2025, Enable's mission of protecting businesses from revolving cyber threats matters more than ever. The relentless pace of digitalization, turbocharged by AI and a worsening threat environment are putting growing pressure on businesses to stay safe in an increasingly complex world. Enable is built for this moment. Our cyber resilience platform empowers organizations to manage, secure and recover, delivering the comprehensive protection needed in today's landscape.

[John Pagliuca, CEO, President & Director at N-Able]

The results demonstrate our success. In the quarter, we surpassed $500,000,000 of ARR growing 14% year over year and delivered 32% adjusted EBITDA margin. Enable is delivering profitable growth at scale. Let's take a closer look at why we are a cybersecurity vendor of choice for small to mid market enterprises. It starts with the breadth of our unified end to end platform, which spans three pillars, unified endpoint management, security operations and data protection.

[John Pagliuca, CEO, President & Director at N-Able]

Each delivers critical outcomes. Our UEM solutions act as the command tower providing visibility and control across the entire IT estate. Our security operation solutions monitor the environment actively detecting and stopping threats. And our data protection solutions serve as the final line of defense for data restored data in the event of a breach or data loss. Just as important, our open ecosystem seamlessly integrates with third party tools, empowering customers to tailor their environments to their unique needs, an essential advantage in today's fragmented IT landscape.

[John Pagliuca, CEO, President & Director at N-Able]

Together, these capabilities provide true end to end cyber resilience. This platform approach allows us to deliver more insights, reduce vendor sprawl and close coverage gaps, differentiating Enable from narrow point solution providers. Our end to end value proposition is resonating. We saw healthy year over year growth in our ARR per device as we broaden our presence across our customers' environments. Key to the value of the platform is the strength of the individual pillars.

[John Pagliuca, CEO, President & Director at N-Able]

Our triple pronged approach carries weight. Each pillar is award winning, at meaningful scale and with a proven right to win. This strength shows up in the numbers. Our top 10 new customer deals this quarter included a mix of lands from all three categories. More broadly, our total company's average sales price continues to increase as we gain wallet share.

[John Pagliuca, CEO, President & Director at N-Able]

From an individual category perspective, net new ARR growth this quarter was led by data protection followed by security operation and then UEM. Let's look at the progress in each area. We will start with Cove, our data protection solution where we see sustained momentum and traction. Cove now protects over 3,000,000 Microsoft three sixty five users and in Q2 recorded both its highest bookings quarter and highest net new ARR quarter ever, excluding the impact from annual pricing and packaging changes. Impressive results.

[John Pagliuca, CEO, President & Director at N-Able]

We are pushing forward to sustain momentum. On the product front, the Cove team launched the new smart notification service that monitors all protected devices and proactively flags backup issues in real time. This cuts through the noise, improves visibility and helps make businesses safer. We also advanced our Linux restore capabilities, which are now in public preview. Expanding our workload coverage to include all major operating systems enables our customers to protect more and set the stage for future code growth.

[John Pagliuca, CEO, President & Director at N-Able]

Meanwhile, prior innovations are driving results, highlighted by 25% year over year ARR growth and our AI powered Enhanced Restore capabilities launched in 2024. We also believe that the rising strategic importance of backup and data protection reinforces Cove's relevance and long term growth potential. According to Gartner's latest Magic Quadrant for backup and data protection platforms, by 2029, 75% of enterprises will use a common solution for backup and recovery of data residing on premises and in cloud infrastructure compared with 25% in 2025. With a single control plane and extensive cloud and on premises workload coverage, Cove is perfectly positioned to capitalize on businesses desire for a single solution. We saw this in action during a second quarter win.

[John Pagliuca, CEO, President & Director at N-Able]

Our customer executing an M and A driven growth strategy was evaluating data protection options to deploy on their newly acquired MSP. We won against two well known large scale competitors by offering the critical features our customer needed with simpler management, a superior price point and an overall better return on their TCO. The customer trusted Cove with their entire data protection estate spanning on premises, cloud and SaaS workloads, further validating Cove's strength as an all in one solution. Notably, an industry peer group recommended Cove to the customer, a great testament to our growing market reputation. The result, a nearly $200,000 ARR deal.

[John Pagliuca, CEO, President & Director at N-Able]

Turning to Security operation, we continue to gain traction in this important segment. At Lumen, our differentiated XDR and MDR offering is leading the way with healthy ARR growth, reinforcing our confidence in the sizable opportunity ahead. Industry analysts agree. Canalys recently reported that MDR is one of the fastest growing security service areas projected to grow 16% in 2025. Yet over half of the surveyed MSPs don't yet offer MDR.

[John Pagliuca, CEO, President & Director at N-Able]

We see this as significant greenfield potential. We made meaningful strides this quarter as we move quickly to capture demand. We expanded our Lumen's integrations with leading ITSM vendors to better support business workflows and enhance our threat detection capabilities to improve response speed and precision. These updates help customers operate more efficiently while empowering their security teams to counter threats with greater speed and confidence. We believe that our modern approach sets us apart.

[John Pagliuca, CEO, President & Director at N-Able]

At the core is our cloud native AI powered SOC, purpose built to scale. With advanced machine learning delivering strong automation rates, we enable faster, more accurate detection and response. Technology does our heavy lifting, freeing up people for the most strategic work. As a result, threat hunting activity has increased over a hundredfold demonstrating the strength of our approach. It's a stark contrast to solutions that rely on manual effort and can't match the speed, automation or accuracy we deliver.

[John Pagliuca, CEO, President & Director at N-Able]

Our endpoint protection response solution also delivered steady performance and is a natural complement to our XDR MDR capabilities. This combination is especially important for customers seeking to unify EDR, XDR and MDR under a single vendor, a common customer preference. We also made progress in unified endpoint management, highlighted by further development of the new vulnerability management capability we launched in April. Identifying and remediating vulnerabilities is a vexing problem plaguing IT and security teams. The 2025 Verizon data breach report showcases the scale of the issue.

[John Pagliuca, CEO, President & Director at N-Able]

Vulnerability exploitation is now the second most common breach factor responsible for 20% of breaches, a 34% increase from last year. Verizon further found that only 54% of Edge devices were fully remediated with a median time to remediate of thirty two days, showcasing the practical difficulty fixing vulnerabilities presents even once discovered. The bottom line is vulnerabilities create risk and consume time and security teams are struggling to find an answer. This is where Enable comes in. By placing vulnerability management into our unified endpoint management solution, we enable a single workflow from detection to remediation seamlessly bridging the gap between vulnerability insight and patch execution, an elegant solution to a painful problem.

[John Pagliuca, CEO, President & Director at N-Able]

Our solution is already deployed across millions of devices and resonating with force in the market. While Vulnerability Management is a meaningful addition, it's just one part of our broader feature rich UEM offerings. Businesses are under pressure to do more with less and our UEM solution is built for this AI driven era, automating routine tasks and improving efficiency. A standout customer win demonstrates this well. Our prospect launching an Endpoint Management business line shows Enable for our deep UEM capabilities and robust integration ecosystem.

[John Pagliuca, CEO, President & Director at N-Able]

Leveraging our integration with ServiceNow, they built an AI powered chatbot that reflects a significant amount of level one technician tickets. This drives real operational savings. This deal reflects the strength of our UEM solution and the value of our open ecosystem. Let's now switch gears and discuss our go to market motion. Expanding into the broader channel is a key growth initiative for Enable and critical to delivering cyber resilience at scale. We aim to ensure Enable is a top of mind vendor not just for MSPs, but also for resellers, system integrators, distributors and the full ecosystem of channel providers, small and mid market companies rely on to guide their cybersecurity journeys. With MSPs controlling only a quarter of the $2,100,000,000,000 small to mid market companies spend on IT, we believe our channel strategy unlocks new markets for Enable and holds a lot of promise. In the second quarter, we built momentum behind this initiative, adding more resellers, strengthening relationships and enhancing system capabilities. As part of our new channel initiative, earlier this year, we engaged one of the largest and most respected resellers in The UK, a publicly traded firm that works with a broad portfolio of leading technology vendors. Following the sizable deal to kick start a relationship, they expressed appreciation for our partner first approach and how our cyber resilience platform uniquely addresses mid market customer technology needs.

[John Pagliuca, CEO, President & Director at N-Able]

Their feedback reflects the differentiated value we bring to the channel and reinforces our conviction that the mid market can become a meaningful customer segment for Enable. We're excited to deepen this relationship and replicate the success with resellers globally. We expect the foundational work we did this quarter to set the stage for long term growth. And with our reseller pipeline having nearly doubled quarter over quarter, we are confident in our ability to deliver on this company growth pillar. We paired this foundational work with high impact presence at RSA and Infosec Europe, bringing our cyber resilience message to over 56,000 attendees.

[John Pagliuca, CEO, President & Director at N-Able]

We also published the 2025 State of the Soft Report, highlighting our unique insights from the front lines of cyber defense. These events and thought leadership pieces reinforce our commitment to protecting businesses everywhere and showcase the strength of our platform to a global audience. That commitment is also reflected in our leadership. We recently appointed Vikram Ramesh as our Chief Marketing Officer. With more than twenty five years of cybersecurity experience including leadership roles at Mandiant, Google and AdLumen, Vikram brings a proven track record of building high impact cybersecurity brands and scaling channel market motions.

[John Pagliuca, CEO, President & Director at N-Able]

He is exceptionally well positioned to advance our mission, execute our strategy and amplify our message globally. So bringing it all together, we made considerable progress this quarter as we work to accelerate growth and advance toward our 2020 ARR target of $750,000,000 Our growth strategy rests on three key pillars: first, driving security success second, scaling our go to market and third, boosting customer expansion. We are making solid headway across all three. Our Cyber Resilience platform is resonating, our channel motion is gaining traction and our footprint within customer environments continues to grow. And with that, I will turn it over to our CFO, Tim O'Brien and then I will circle back for closing remarks.

[John Pagliuca, CEO, President & Director at N-Able]

Tim? Thank you, John and thank you all for joining us today. Q2 was another strong quarter for Enable as we surpassed $500,000,000 of ARR and delivered top and bottom line results above guidance. We executed well against our operational priorities, integrating AdLumen into our cyber resilience platform, establishing our new development center in India and continuing to build momentum behind our expanded channel motion to unlock the mid market. As part of our capital allocation strategy, we began executing on our share repurchase program reflecting our confidence in the business and the opportunity ahead.

[John Pagliuca, CEO, President & Director at N-Able]

As we advance our mission to deliver cyber resiliency at scale, we remain focused on growth oriented investments and disciplined execution. Let's now discuss our results for the second quarter and our outlook for the third quarter and full year. For our second quarter results, total ARR was $513,700,000 growing at 14% year over year on a reported basis and 12% on a constant currency basis. Total revenue was $131,200,000 $4,700,000 above the high end of our guidance, representing approximately 10% year over year growth on a reported basis and 8% on a constant currency basis. Subscription revenue was $129,900,000 representing approximately 11% year over year growth on a reported basis and 9% on a constant currency basis.

[John Pagliuca, CEO, President & Director at N-Able]

We ended the quarter with 2,540 customers that contributed $50,000 or more of ARR which is up approximately 16% year over year. Customers with over $50,000 of ARR now represent approximately 60% of our total ARR, up from approximately 56% a year ago. Dollar based net revenue retention, which is calculated on a trailing twelve month basis, was approximately 102% on a reported basis and 101% on a constant currency basis. Turning to profit and margin. Note that unless otherwise stated, all references to profit measures and expenses are calculated on a non GAAP basis and exclude the items outlined in the GAAP to non GAAP reconciliations provided in today's press release.

[John Pagliuca, CEO, President & Director at N-Able]

Second quarter gross margin was 81.8% compared to 84.7% in the same period in 2024. Second quarter adjusted EBITDA was $41,600,000 $6,600,000 above the high end of our guidance, representing approximately 31.7% adjusted EBITDA margin. Unlevered free cash flow was $33,300,000 in the second quarter. CapEx inclusive of $3,000,000 of capitalized software development costs was $6,800,000 or 5.2% of revenue. Non GAAP earnings per share was $0.11 in the quarter based on 189,300,000.0 weighted average diluted shares.

[John Pagliuca, CEO, President & Director at N-Able]

We ended the quarter with approximately $94,000,000 of cash and an outstanding loan principal balance of approximately $337,000,000 representing net leverage of approximately 1.6 times. Approximately 45% of our revenue was outside of North America in the quarter. To briefly dissect the quarter, roughly half of our revenue outperformance versus guidance was attributable to the positive impact of higher than forecasted foreign exchange rate. The remaining revenue outperformance was largely attributable to strong operations with Cove delivering record bookings and our newly acquired AdLumens security operation solution being meaningful adoption across our MSP customer base. Our beat against adjusted EBITDA guidance primarily reflects the flow through of the revenue beat.

[John Pagliuca, CEO, President & Director at N-Able]

Turning to our financial outlook, our guidance accounts for the following elements. First, we are assuming FX rates of 1.1 for the euro and 1.31 for the pound for the remainder of 2025 along with updates to other currencies. Second, we continue to see a disciplined but healthy spending environment and traction with our top company growth pillars. With that in mind, for the 2025, we expect total revenue in the range of $127,000,000 to $128,000,000 representing approximately 9% to 10% year over year growth on a reported and constant currency basis. We expect third quarter adjusted EBITDA in the range of $36,000,000 to $37,000,000 representing an adjusted EBITDA margin of approximately 28% to 29%.

[John Pagliuca, CEO, President & Director at N-Able]

For the full year 2025, we are raising our total revenue outlook to 500,000,000 to $5.00 $3,000,000 representing approximately 7 percent to 8% year over year growth on a reported and constant currency basis. We are raising our full year ARR outlook to $525,000,000 to $530,000,000 representing 9% to 10% year over year growth or 7% to 9% on a constant currency basis. As a reminder, our full year ARR outlook is on a like for like basis as AdLumen was included in our year end 2024 ARR. We are raising our adjusted EBITDA outlook and expect full year adjusted EBITDA of $141,000,000 to $144,000,000 representing 28% to 29% adjusted EBITDA margin. We reiterate that we expect CapEx which includes capitalized software development costs will be approximately 6% of total revenue for 2025.

[John Pagliuca, CEO, President & Director at N-Able]

We also expect our adjusted EBITDA to unlevered free cash flow conversion percentage to be approximately 68% for the full year. We expect total weighted average diluted shares outstanding of approximately $188,000,000 to $189,000,000 for the third quarter and the full year. Finally, we expect our non GAAP tax rate to be approximately 19% to 20% for the third quarter and 20% to 21% for the full year. Now I'll turn it over to John for closing remarks. Thank you, Tim.

[John Pagliuca, CEO, President & Director at N-Able]

Amidst the threat landscape growing more complex by the day, we are delivering the security outcomes that small and mid market businesses depend on. Our cyber resilience platform is built to win and our model is proving it, balancing durable growth with strong profitability. We remain confident in our ability to execute and create long term value. And with that operator, we'll open it up for questions.

[Operator]

Thank you. The first question is from Mike Sikos from Needham. Please go ahead.

[Matthew Calitri, Equity Research Associate at Needham & Company]

Hey, good morning guys. This is Matt Colitri on for Mike Sikos over at Needham. Thanks for taking our questions. Can you provide some more color on the go to market traction you're seeing with resellers? And what has been top of mind for Vikram in his first couple of weeks in the CMO seat?

[John Pagliuca, CEO, President & Director at N-Able]

Yes. Great questions and good morning to everyone. So look our go to market teams are finding a nice rhythm. It's with the XDR platform now, the bigger one of the bigger business model transformations is now we have three pillars to go to market with. And so I think that's accelerating the strike zone.

[John Pagliuca, CEO, President & Director at N-Able]

It's And accelerating the strike zone or widening the strike zone both in our markets that we're direct but also in the resellers. And so now we have an opportunity when we're talking to a mid market company, a CIO at a mid market company or an owner of an MSP business, there's three pillars that we can talk to them about. And that's actually showing a nice bit both on the NCA motion, our new customer acquisition motion, but also on the cross sell. So, we're seeing nice bookings. We saw it last quarter.

[John Pagliuca, CEO, President & Director at N-Able]

We continue to see it so far in Q3. And then so we gave you an anecdote on one of the resellers and I'll share with you another. We're now having conversations and we're now having joint sessions in markets like Germany where we're having dozens of CIOs in Germany attend and listen to our Cove data protection story or XDR story and we're leaving those meetings with real opportunities from the personas that are going to make the decisions. And so it's a brand new lever or a brand new avenue for revenue for us. So we're pretty excited about it.

[John Pagliuca, CEO, President & Director at N-Able]

I think we referenced the quarter over quarter doubling of the pipeline. Reminder, we're on average at $20,000 ASP business. So, it's good. We're building it. It's 6 figures.

[John Pagliuca, CEO, President & Director at N-Able]

We're building it into it. But and a little bit over time as we extend both from a market point of view I. E. More countries, more markets and then just from a reseller point of view adding more active resellers, we believe it will have a nice virality kind of coefficient here and really start to drive a significant part of the business. It'll take a couple of quarters but we're seeing it already and we're pretty excited about that especially now where we have the three areas that we can talk to resellers and MSPs about.

[John Pagliuca, CEO, President & Director at N-Able]

On the Vikram front, Vikram is at Black Hat today which is it's a good indicator as to where his focus is. He's a cybersecurity expert and he's really excited because he's able to tell a complete cyber resilience story. And so educating the mid market about who Enable is. We're well known in the MSP market. We're considered a leader in the MSP market, lesser known in the mid market.

[John Pagliuca, CEO, President & Director at N-Able]

And he's out at Black Hat right now really promoting that story. We see others in the data protection space partnering with cybersecurity companies. Here at Enable, it's all of our tech, right? So XDR and data protection, we have the complete cyber resilience platform story for the mid market and it's all under one house. That gives us an advantage that makes them more efficient, that makes them more secure and he's out there really promoting that story and making sure that the mid market understands where we play, why we have three best in class pillars to go into the mid market.

[John Pagliuca, CEO, President & Director at N-Able]

So he's really focusing on building that CyberResilience brand and he's out there right now at Black Hat doing so.

[Matthew Calitri, Equity Research Associate at Needham & Company]

That's all great to hear. Thank you. And can you remind us where we're at with the optimization and the ASC six zero six headwinds associated with moving the annual contracts? Are we getting close to seeing a baseline growth emerge here? And as customers are coming up for renewals, are they happy to sign another upfront commitment?

[John Pagliuca, CEO, President & Director at N-Able]

Yes. I would say, if you look at our kind of full year ARR outlook, I would say that that quells any of the six zero six or optimization noise that we went through in 2024. So I think that's probably the best marker to look at kind of I'll call it the best velocity metric for the business would be kind of exit 2025 ARR that calls any six zero six optimization or any inorganic impact noise from the Ablumin acquisition as well. And then sorry, remind me the second part of the question? Renewals on.

[John Pagliuca, CEO, President & Director at N-Able]

Renewals. Yeah. So, yeah, customers are renewing at a very healthy clip, would say, coming through kind of the first log of renewals in the first half of the year here in 2025 with the commitment that we put in place last year in 2024. So very willing to recommit and renewing at a clip around 90% or so.

[Matthew Calitri, Equity Research Associate at Needham & Company]

Awesome. Thanks so much.

[Operator]

Your next question is from Matthew Hedberg, RBC Capital Markets. Please go ahead.

[Michael Richards, Equity Research Senior Associate at RBC Capital Markets]

Hey, guys. This is Mike Richards on for Matt. Thanks for taking the question here. Strong results across the board and ARR accelerated on a constant currency basis. Maybe I was just looking for more detail on the ARR guidance.

[Michael Richards, Equity Research Senior Associate at RBC Capital Markets]

Was there anything pulled in this quarter that made results look strong? Are we just kind of looking in a conservative back half? Like is there anything you guys are seeing in the back half that would kind of leave the constant currency guide untouched? And then I have a follow-up. Thanks.

[John Pagliuca, CEO, President & Director at N-Able]

Yeah. I can help unpack it. I would say there's definitely some FX dynamics at play with Q2 and the full year. If you neutralize any of the FX impact for between the full year outlook and Q2, The second half is from a gross standpoint on ARR is slightly above where it was in the first half of the year. So I know it looks a little bit wonky just due to some of the FX dynamics.

[John Pagliuca, CEO, President & Director at N-Able]

But, if you neutralize some of that FX impact, second half implies more growth in the first half of the year in our constant currency outlook.

[Michael Richards, Equity Research Senior Associate at RBC Capital Markets]

Got you. And then, yes, at Investor Day we talked about new pricing and packaging bundles coming in the second half. I was just wondering if you guys could give an update there and how you guys are looking at that driving more cross sell across the three pillars? Thanks.

[John Pagliuca, CEO, President & Director at N-Able]

Sure. Yes. The market our customer base continues to tell us that as they look through they have tech stack fatigue, right? And especially some of the smaller shops navigating a vendor sprawl where they might have 16 or 17 different vendors is suboptimal. And so where we can bundle that up with a well, one, the best in kind of class type of solution and then help them with their vendors for all.

[John Pagliuca, CEO, President & Director at N-Able]

Inevitably when you parse it apart, it's better economics for them as well. So the bundling continues to resonate. I'd categorize it still an experimental phase, right? We're experimenting. We're getting good traction and we continue to lean in a little bit more as we go through the back half of this year and continue into 2026. So all positive from that front.

[Operator]

So the next question is from Joe Vandrich at Scotiabank. Please go ahead.

[Joe Vandrick, Associate Director - Equity Research at Scotiabank]

Thanks for taking my question. John, I think you mentioned half of MSPs aren't offering MDR. Is that true for your customer base? And how are you educating your MSP customers on the opportunity?

[John Pagliuca, CEO, President & Director at N-Able]

Directionally, we're finding it true for our customer base as well, yes. So but you bring up a good point. Part heritage of here is that we do a good job evangelizing and educating both the mid market and the managed service providers as to what they need for their customers to make sure that they're protecting their businesses every day. But the key part of that is doing it efficiently. And so what we're preaching is to augment, right?

[John Pagliuca, CEO, President & Director at N-Able]

A lot of it some of the MSPs maybe some of the bigger shops they've tried to potentially build a SOC themselves and most have found it to be an upside down business proposition. And so by leveraging our XDR technology, we're doing a lot of the our technology is doing a lot of the heavy lifting for these MSPs. We're providing that line of monitoring and defense. And then they can focus on some more of the strategic initiatives. So, the guidance of MSPs out there is hey augment leverage a technology provider that can handle the threats and the detection for you and go back to what you're good at and advising your customers.

[John Pagliuca, CEO, President & Director at N-Able]

And so then there's a whole spectrum, right? In the XDR MDR space, there's a bunch of players that have been around for quite a bit that are not necessarily built in the modern with modern cloud architecture leveraging AI. We're very proud of the level of automation and artificial intelligence that we have in our SOC that the way that we're detecting but also responding and giving customers the guidance that they need. What used to take hours to get back to a customer is now taking minutes. And as we know when you're dealing with threat actors time essential, right?

[John Pagliuca, CEO, President & Director at N-Able]

And so we're finding the MSPs are really resonating with the offering one because of the AI that's infused but also because we give them the ability to have eyes on glass. In our solution, which is different than other folks, other folks they look at MDR XDR as like a black box service. They can't see what's going on inside. Ours is software and software first. So the MSPs can look at the same things that our security experts are looking at giving them the comfort and confidence that they need.

[John Pagliuca, CEO, President & Director at N-Able]

And so the story is resonating. The tech is differentiated. And we continue to evangelize. And we're seeing more and more opportunities. It's by far one our faster growing SKUs from a pipeline and bookings perspective.

[Joe Vandrick, Associate Director - Equity Research at Scotiabank]

That's really helpful. And maybe one for Tim. Really impressive strength in the 50 ks customer adds number. What do you attribute that strength to? Is it at Lumen?

[Joe Vandrick, Associate Director - Equity Research at Scotiabank]

Or maybe you called out Cove at the beginning of the call. Are you landing larger there? I'm I'm just curious what what do you attribute that strength to?

[John Pagliuca, CEO, President & Director at N-Able]

I I I would probably attribute it to a few different things. We've made a focus in the MSP market to focus on larger MSPs from bringing new customers in. And I would say we're starting to see some of the return on those investments that we made over the last twelve to eighteen months or so. Also the ability for us to cross sell the portfolio into the base as we execute on that whether it be through bringing AdLumen into our MSP customer base continuing to cross Bell Cove into our customer base, landing new Cove customers again in that upmarket focus in the MSP segment are all key drivers to that. And then same thing on the AdLumen mid market front.

[John Pagliuca, CEO, President & Director at N-Able]

They I would say they land deals above and below that kind of 50 ks threshold. And I would say it's just been normal course from an ad lumen perspective. So I would attribute it more to probably success in the MSP market for the Q2 results, but I expect mid market to have impact in this category as well as we build out the channel and continue to bring the full portfolio into the mid market as we progress through the 2025 and into 2026.

[Operator]

Next question is from Jason Ader from William Blair. Please go ahead.

[Jason Ader, Co-Group Head - Technology, Media & Communications at William Blair]

Yeah. Thank you. Good morning, guys. I just wanted to ask just about the overall health of the SMB IP market. What trends are you seeing to kind of give you a sense of, you know, just that that macro element?

[Jason Ader, Co-Group Head - Technology, Media & Communications at William Blair]

Do you feel like things are stable? Are they getting any better or worse? That would my that would be my first question.

[John Pagliuca, CEO, President & Director at N-Able]

Sure. Hey, Jason. It's John. So look, I think the trends that we've been referring to the last couple of quarters continue to be those same solid trends in that data protection and security are top of mind. It's a big part of the MSP's growth algorithm and it's very much top of mind for CIOs and CISOs of mid market businesses.

[John Pagliuca, CEO, President & Director at N-Able]

And so and then you couple that with a boost in productivity that mid market companies and MSPs are getting and leveraging another wave of technology in AI. And IT spend appears to be I'd say pretty healthy in our base and what we're seeing based on our pipeline talking to CIOs and talking to MSPs are continuing to grow. They're continuing to add more services. The need for not just IT operations, automation, but also security and security operations continues to be strong. From our lens, it seems the demand seems to be as healthy as before.

[John Pagliuca, CEO, President & Director at N-Able]

And then frankly as I mentioned before our go to market teams are building healthier pipeline than they have been in the past couple quarters. So we're optimistic about the demand there.

[Jason Ader, Co-Group Head - Technology, Media & Communications at William Blair]

Any commentary on the device side, the R and M side?

[John Pagliuca, CEO, President & Director at N-Able]

Yes. I'd say it's been consistent. Like so physical the physical devices so by the way, we manage and secure and recover a bunch of things, right? So on the device side, I'd say it's consistent. It's relatively what it's been the last couple of quarters, I'd say more flattish.

[John Pagliuca, CEO, President & Director at N-Able]

But we are seeing a nice uptick in a lot of the other digital assets M365 users, users in general, virtual machines, right? These are all assets that we manage that there's data on that we're making sure that people are protected and recovering. So, in the VM world and in the M365 and SaaS world, more growth there. And in the physical devices, that's more of a flattish type of trend.

[Jason Ader, Co-Group Head - Technology, Media & Communications at William Blair]

Okay, great. And then Tim for you, could you give us any comments on the ad lumin contribution? Or if you don't want to give us a specific number, can you just talk about organic year over year growth like kind of whether that trended up or is stable?

[John Pagliuca, CEO, President & Director at N-Able]

Yes. Would say the color is consistent with what we've given historically. We expect to have Lumin to have about a point of impact on exit twenty twenty five ARR growth. And then kind of mid period here, we disclosed the size of the Albumin Business Fund acquisition in the low $20,000,000 of ARR. So that equates to about 4% or so of impact on overall growth.

[John Pagliuca, CEO, President & Director at N-Able]

So I think that should help you kind of guide you on inorganic impact from AdLumen in quarter two here and quarter three and then year end quarter four from an AR perspective. Just due to the velocity of the AdLumen business upon acquisition, it's adding about a point of growth to the overall equation for the year.

[Jason Ader, Co-Group Head - Technology, Media & Communications at William Blair]

Okay. Thank you very much.

[John Pagliuca, CEO, President & Director at N-Able]

You got

[Operator]

it. We have no further questions on the call at this time. So I'll hand back to management for any closing remarks.

[John Pagliuca, CEO, President & Director at N-Able]

Thank you all for joining us today and your continued interest in Enable. Enjoy the balance of your summer.

[Operator]

This concludes today's conference call. Thank you all very much for joining, and you may now disconnect.

Participants

Executives

• John Pagliuca, CEO, President & Director

Analysts

• Griffin Gyr, Sr. Manager - Investor Relations at N-Able
• Matthew Calitri, Equity Research Associate at Needham & Company
• Michael Richards, Equity Research Senior Associate at RBC Capital Markets
• Joe Vandrick, Associate Director - Equity Research at Scotiabank
• Jason Ader, Co-Group Head - Technology, Media & Communications at William Blair