N-able, Inc.

Hello everyone and welcome to the Enable second quarter 2021 earnings call. We will begin shortly. If you would like to register a question ready for the Q&A session, please press star followed by one on your telephone keypads. Thank you for your patience. Thank you. Hello, everyone, and welcome to the Enable second quarter 2021's earnings call. My name is Daisy, and I'll be coordinating this call. You will have the opportunity to ask a question at the end of the presentation. If you would like to register a question, please press star followed by one on your telephone keypad. I will now hand over to your host, Howard Marr, the Senior Director of Investor Relations from Enable, to begin. So, Howard, please go ahead.

Great. Thank you, Daisy. And welcome, everyone, to Enable's second quarter 2021 earnings call. With me today are John Pagliuca, Enable's president and CEO, and Tim O'Brien, EVP and chief financial officer. 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.n-able.com. On our investor relations website, you can also find our earnings press release, which is intended to supplement our prepared remarks during today's call. Certain statements made during this call are forward-looking statements, including those concerning our financial outlook, our market opportunities, our expectations following the recently completed spinoff of our business from SolarWinds, 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 risks related to the spin-off transaction. 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. 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 the non-GAAP financial measure. A reconciliation of the differences between GAAP and non-GAAP financial measures discussed on today's call are available in our earnings press release on our investor relations website. Finally, please note that the spinoff transaction was completed on July 19th after the end of our second quarter. Throughout our second quarter, we operated as part of SolarWinds. and our financial results for the period have been prepared from SolarWinds' historical accounting records and presented on a standalone basis as if our business operations had been conducted independently from SolarWinds. While the allocations and estimates in these carve-out financials are based on assumptions that Enable's management believes are reasonable, the financial results presented for our second quarter may not be indicative of the financial position, results of operations, and cash flows of Enable in the future, or if Enable had been a separate standalone publicly traded entity during the periods presented. And now I will turn the call over to John.

Thanks, Howard. I want to thank everyone for joining today's call and for your interest in Enable. Given that this is our first earnings call as an independent company, I want to start off by highlighting some of the differentiated aspects of our business model before touching on second quarter performance and then turning it over to Tim for more detail on our financial results and outlook. One year ago, SolarWinds announced the intent to spin off SolarWinds MSP, which we have rebranded as Enable. I'm delighted to say that we completed the spinoff and began trading as a standalone public company on July 20th. This marks a significant milestone for our entire Enable organization, which is over 1,300 employees strong and services MSP partners in approximately 150 countries worldwide. I want to express my admiration for and gratitude to both the internal and external teams for their tremendous dedication, hard work, and perseverance during the separation process. This has been a dynamic journey filled with valuable learnings that we believe enhances our ability to execute on our strategic initiatives and build a brand identity that aligns with our partner-centric mission. As we begin to write the next chapter at Enable, there are many factors that give me confidence in executing on our commitment to be the trusted partner for MSPs and deliver reliable IT management and security solutions for millions of small and medium enterprises around the world. For clarity, what other companies may refer to as their customers, we refer to as our partners, as their success drives our success, creating a unique and powerful business model. First, it all starts with our people. We added key members to the senior leadership team over the last year, including a chief technology and product officer, chief customer officer, chief marketing officer, chief security officer, general counsel, and finally, our chief people officer. I often refer to Enable's extended leadership team as a quilt, one comprised of industry veterans and new thought leaders. Having the right team in place has allowed us to increase our organizational focus and begin executing on initiatives across product, go-to-market, and partner success. Second, we have re-energized our strategy. We continue to improve our platform and strive to be the one-stop shop for integrated monitoring and management security, data protection, and business management tools for MSPs at all stages of their business lifecycle. Third, We believe we have set ourselves up to be a growth-oriented, Rule of 50 company over the long term that can appeal to a wider range of investors who appreciate a balanced mix of growth and profit. With increased flexibility and capital allocation as a standalone company, we can pursue targeted investments, partnerships, and opportunistic acquisitions with the goal of accelerating growth over time while maintaining high profit margins and We believe we are still in the early stages of a large and growing opportunity for MSPs to further support the increasing demand by SMEs for fully managed IT. According to Frost and Sullivan, our addressable market was approximately $23 billion globally in 2020 and expected to grow at a compounded annual growth rate of 14% to approximately $44 billion by 2025. While IT outsourcing has been around for decades, the complexity and sophistication of cyber threats that SMEs face every day have reached record heights. Unlike larger enterprises, SMEs often don't have the resources and talent to navigate mission-critical IT issues that can directly impact their operations and productivity. For SMEs of all sizes and across all industry verticals and geographies, MSPs are increasingly their trusted partner for IT management and security, and we are a trusted partner for MSPs, providing them with a purpose-built solution and resources and education to help our partners grow their businesses. Our partners are at the center of a distinctive aspect of our business model, which we call partner-enabled growth. There are multiple levers to partner-enabled growth. We grow when we acquire new MSP partners. We grow when our partners add new end customers, and we grow when partners leverage additional services powered by our platform to manage and secure their end customers. In this manner, our partners act as an extension of our sales force and facilitate standardization on the enabled platform. This allows us to access the SME market efficiently and profitably. To accelerate this growth, we've been making significant investments in our partner success organization, which is dedicated to help our MSP partners drive and expand their sales and marketing strategies, train them in pricing and packaging best practices, and use automation to streamline their operations so that they can build successful businesses. There are three key pillars that make us a platform of choice. The first is the breadth and depth of our remote monitoring and management capabilities. Given our origins in remote monitoring and management, we offer what we believe is unparalleled scalability, reliability, and support for MSPs and end customers of all sizes. We have continued to expand the breadth of our monitoring coverage, including through native integrations and partnerships with leading enterprise tech vendors like Microsoft, Apple, and Cisco. And we continue to deepen our capabilities across remote control, patch management, and reporting and analytics. Second, security is deeply ingrained in Enable's culture. We are well aware of recent cyber attacks in our industry. We understand that purpose-built technologies for MSPs, if used for malicious purposes, could potentially expose end users and their devices to attack. But we also understand, more importantly, that such technologies enable MSPs to efficiently manage and secure their end customers. Therefore, Given where we sit in the industry supply chain, we believe the processes required to be a leading provider of IT security need to span multiple levels. At the product portfolio level, our MSP partners depend on us for a comprehensive set of security solutions across endpoint, mail, web, patch, and data protection used to protect their end customers. But equally as important, we actively enforce security principles designed to ensure that our platform and our internal protocols are secure. At Enable, security is part of our core. We have a layered approach to security, following a NIST framework and leveraging CIS benchmarks to protect our company, employees, MSP partners, and their customers. We've invested in our people, processes, and technology as it relates to effective security management. This includes numerous controls like MFA, privileged access management, centralized logging, 24 by 7 remote monitoring operations, vulnerability identification and remediation, employee training, and much more. We want security to be top of mind for all employees and believe that our focus on security is a critical piece of our culture. Our third key pillar, which I mentioned earlier, is our focus on partner success. Our partner success organizations consist of non-quota-bearing reps whose sole purpose is to facilitate the best possible partner journey, which we believe leads to greater partner satisfaction, reduced churn, and expanded utilization of our platform. To that end, we have a number of initiatives, including hands-on training and free resources through our MSP Institute, consultations and boot camps with our head nerds, sales and marketing training programs, a variety of peer-to-peer groups, and partner-focused events, all of which are designed to help partners drive both retention and expansion. We will continue to invest in our platform, security, and partner success as a standalone company. Turning to the second quarter, we are pleased with our performance, delivering 16% year-over-year revenue growth that exceeded the outlook we gave in mid-April. We continue to expand the number of devices managed and secured on the platform, while our partners continue to deploy or cross-sell more services powered by our platform. Demand for data protection solutions remained robust, led by our SaaS cloud-to-cloud backup solution. We have one of the leading fully cloud-based data protection offerings in the market, which continues to outpace our overall company growth. Demand for security solutions has also been a consistent source of strength, led by our Enable EDR offering powered by Sentinel-1. Further broadening our security portfolio, during the second quarter, we announced a partnership with DNS Filter to integrate its cloud-based web and content filtering solution into the Enable platform. We expect the integration will be made generally available later in the year. In addition, we saw solid traction with partners leveraging our integration with Microsoft Intune, which was launched at the end of the first quarter. MSPs now have the ability to perform in-tune device management functions directly within the enabled platform. We continue to expand our Apple device management capabilities with deeper performance monitoring, web, and TCP service checks as we prepare to support the upcoming macOS Monterey release. Lastly, we continue to add our partner success resources and platform flexibility. We launched Market Builder, which provides MSPs with complete campaigns they can quickly and easily brand and use in their own sales and marketing programs. And in addition, we now have over 50 active technology providers in our Technology Alliance program, which is a testament to the flexibility we offer to our partners via our open ecosystem framework. This is aligned with our goal to be the industry leader in platform functionality and extensibility and to maximize choice for our partners. With our security, data protection, business management, and TAP solutions all integrated with our leading RMM capabilities within a single pane of glass, we believe we matter the most where it's the messiest for MSPs. With that, I will hand over the call to Tim to recap our Q2 results and provide a financial outlook.