MSP platform company N-able today released its Q1 2023 results, beating its previous guidance and raising its full year forecast for revenue growth.
Because it’s the only publicly held MSP platform company, N-able’s quarterly performance provides insight into how remote monitoring and management (RMM) and professional services automation (PSA) companies are performing. (ConnectWise and Kaseya, N-able’s two biggest rivals, are both owned by private equity and are not required to release their financial results.)
Judging by N-able’s Q1 results, the economic headwinds that many tech companies cite these days are not hitting managed service platform companies.
N-able acknowledged in its earnings call that the timing of its annual price increase impacted its increased forecast for Q2. But before we get into the pricing, here are the financial highlights.
N-able Q1 Highlights
Here are some of the highlights from N-able’s Q1 earnings release:
- Total revenue of $99.8 million, representing approximately 10% year-over-year growth, or approximately 13% year-over-year growth on a constant currency basis.
- Subscription revenue of $97.4 million, representing approximately 10% year-over-year growth, or approximately 13% year-over-year growth on a constant currency basis.
- Adjusted EBITDA of $32.7 million, representing an adjusted EBITDA margin of 32.8%.
N-able’s Financial Outlook for Q2 and the Full-Year 2023
Q2 Outlook:
- Total revenue in the range of $102.5 to $103.0 million, representing approximately 12% year-over-year growth, or approximately 14% growth on a constant currency basis.
- Adjusted EBITDA in the range of $32.0 to $32.5 million, representing approximately 31% to 32% of total revenue.
Full Year 2023 Outlook:
- Total revenue in the range of $414 to $417 million, representing 11% to 12% year-over-year growth, or 12% to 13% year-over-year growth on a constant currency basis.
- Adjusted EBITDA in the range of $127 to $130 million, representing approximately 31% of total revenue.
N-able CEO John Pagliuca commented on the market and N-able’s results during a quarterly earnings call with analysts:
“The MSP market we serve remains healthy, driven by persistent tailwinds. IT management continues to increase in complexity. Cyber threats are escalating and becoming more insidious. And it remains the case that small and medium sized businesses are challenged to hire technicians and a tight IT labor market. These dynamics push SMEs to use outsourced IT providers such as our MSP partners”
Timing and Scope of N-able Price Increases
During the conference call, N-able CFO Tim O’Brien said, “historically, we’ve done our price increases in the March timeframe, and through COVID and other circumstances that has gotten pushed out to June for the last year or two. We pulled those back into the April timeframe this year to get back towards more of our regular cadence.” O’Brien also acknowledged that this year’s price increases “were a little bit higher than we’ve done historically, more acutely due to some of the inflationary environment that we’ve seen over the past 12 to 18 months.”
Market Share for N-able vs. Other MSP Platform Providers?
An analyst on the call asked the executives whether N-able was gaining market share against its big rivals and also some of the upstart platform providers in the market. Pagliuca said that the company’s Cove Data Protection customer acquisition is on the rise.
“We are definitely taking market share from some of the bigger players, both traditional MSP vendors, but also backup and disaster recovery vendors that are not focused on the MSP,” he said.
Pagliuca added that about 18 months ago N-able was seeing a slowdown in new customer acquisition at the low end of the market. It repackaged its offerings with N-sight RMM, improving workflows and consolidating solutions and repricing the whole thing.
“We actually saw a pretty immediate reversal and we’re now winning market share in the low end. On the high end we continue to do well with our N-central platform services,” Pugliuca said.
N-able’s Hiring Activities
The layoffs of bigger technology companies seem to be having a positive impact on companies such as N-able. Pugliuca said N-able has had more success in R&D hiring than it has in the last 18 to 24 months, which has helped “as we look to lean in and invest heavier in engineering and dev throughout 2023.”
