N-able, Inc.

Hello and welcome to the Enable First Quarter 2023 Earnings Call. My name is Lauren and I'll be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing Start, loaded by 1, on your telephone keypad. I will now hand you over to your host, Griffin Gere, Investor Relations Lead to Begin. Please go ahead.

Thanks, Operator, and welcome everyone to Enable's First Quarter 2023 Earnings Call. With me today are John Faliuca, 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. Certain statements made during this call are forward-looking statements, including those concerning our financial outlook, our market opportunities, our continued expectations following the spin-off of our business in July 2021, 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 related to the spinoff transaction completed in July 2021. 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 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.

Thank you, Griffin. And thank you all for joining us today. Our Q1 results resonated with clear takeaways. Demand for our purpose-built solutions is strong. Our business model, which we believe is both durable and differentiated, continues to deliver growth and profit. And we are executing our strategic initiatives that drive value for our customers. We solidly beat our Q1 expectations on both the top and bottom line. with revenue of $99.8 million, or 13% year-over-year growth on a constant currency basis. An adjusted EBITDA of $32.7 million, representing an adjusted EBITDA margin of approximately 33%. Our constant currency net revenue retention held steady at 108%. And as Tim will tell you shortly, we are raising revenue and adjusted EBITDA guidance for the year. 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 in a tight IT labor market. These dynamics push SMEs to use outsourced IT providers, such as our MSP partners. MSPs use enabled software to manage and monitor the SMEs IT environments, protect them against cyber attacks, and backup and restore their data in the event of a cyber attack or some other disaster. With a business model aimed at delivering enterprise-grade software to the underserved SME market, we believe we are uniquely positioned to benefit from the long-term secular growth of SME IT spending and the trend of outsourcing IT needs to our MSP partners. Earlier today, I gave a keynote address on stage at our annual customer event in Prague called Empower, attended by MSPs, distributors, and vendors from across the globe. The Empower Conference is an event full of educational content, expert speakers, and programming tracks geared toward helping MSPs scale and grow their business. During my keynote, I reminded the audience that the rate of innovation is accelerating. And as technologists, MSPs must turn uncertainty and change into assurance for their customers by keeping them informed and equipped, not merely to survive the rapid pace of change, but to make new technologies a competitive differentiator in their markets. Now more than ever, Small and medium businesses look to MSPs to be that trusted technology and business advisor. And while changes become constant with the right strategy and focus, I reminded our MSP partners that the opportunities are massive. I also stressed to our MSP partners that managing and securing the cloud is no longer optional. SME spending in the cloud is rising and market analysts are forecasting continued demand growth. According to Gartner projections, 95% of new digital workloads will be deployed on cloud-native platforms by 2025, and we are making significant investments to enable our partners to address this growing demand. We do this in several ways. First, we deliver our solutions in the cloud. For example, our RMM solutions in Central and Insight scale with our MSP partners and allow device management across several operating systems. from one dashboard delivered seamlessly through the cloud. For Cove, our cloud-first data protection as a service solution, we just announced that we are strengthening disaster recovery as a service by combining a highly efficient cloud-first multi-tenant architecture with the convenience of recovery directly into Azure, further standardizing business continuity for our partners, and allowing MSPs to utilize their Azure instances versus investing in infrastructure or private cloud offerings. The benefit of this near-instant approach on Restore, combined with the benefits of the public cloud, including availability, scalability, cyber resilience, and geo-redundance. As of the end of the first quarter, our cloud-based Microsoft 365 backup offering was deployed for over 1.4 million unique users. from about 900,000 in the first quarter of 2022. And on the layered security front, our EDR solution, also cloud-based, is gaining traction in the market with approximately 1.4 million devices protected. Second, we deliver solutions that help our partners manage the cloud. Our cloud user hub enables our partners to automate and manage their Microsoft 365, and Azure licenses in a consolidated platform. We continue to evolve our cloud monitoring and management capabilities across our portfolio. And as SMEs demand for the cloud grows, Enable is committed to providing the solutions our MSP partners need to help satisfy that demand. Meeting with partners today at Empower, they echoed that they value the way we go beyond technology. We are not just in the software business. We are in the relationship business. And our relationship does not end when we complete a sale to our MSP partners. It begins. To name but a few of our partner programs, we have a dedicated global partner success team and our head nerds who collectively spend hundreds of hours a month in one-on-one sessions with our partners. In addition, we host events like Empower, focused on peer-to-peer networking and education. We constantly work with our partners to help them automate their business, so they can be efficient with their technician time. And we train them in best practices and give them materials to help them price, package, and market their services. We do this because our MSP success is our success. Our MSPs are effectively an extension of our sales force. This intertwined relationship is a critical component of our profitable business model. By enabling MSPs to grow, we efficiently penetrate the fragmented SME market, which helps us grow our 30-plus percent adjusted EBITDA margins. Enable is committed to being the partner of choice for MSPs of all sizes around the world, and we will continue to raise the bar in 2023 by delivering purpose-built solutions that meet the growing needs of MSPs to keep them ahead of the technology curve. And though we believe demand is healthy and the trends point in our favor, That alone does not guarantee our success. We must also continue to execute and earn more fans. During our Q4 earnings call, we spoke about our key focus areas for the year. Number one, manage everything. Number two, protect and secure. And number three, operational efficiency. And I wanted to share updates on these strategic initiatives. Looking first at our Manage Everything initiative, in the first quarter, we began rolling out updates to our management platform to offer MSPs the ability to manage Windows, Linux, and Apple devices from one dashboard. We believe the addition of these powerful new Apple management capabilities is a strategic differentiator that can expand our TAM and put us side by side in competition with pure play Mac vendors. An example of our value proposition for integrated management capabilities is a first quarter new customer deal for more than $140,000 of ARR. The initial conversation centered around this MSP's existing RMM product, which they felt lacked the automation, customization, and flexibility they needed. After showing them that Incentral could more than satisfy what they were missing from their legacy RMM, the conversation turned to Cove and EDR. They realized they could both save money and gain functionality by switching to Cove, and were impressed by the upgraded protection EDR offered compared to legacy antivirus. Our customer service capabilities sealed the deal, and we completed a sale of Incentral, Cove, and EDR. We're pleased to see continued traction in new customer logos in our RMM platforms. We also made progress in our second focus area, protect and secure. A number of market factors are driving our focus in this initiative, including evolving compliance and regulatory standards. Companies of all sizes face growing regulatory pressure to ensure data is adequately protected from bad actors, putting MSPs squarely in the compliance business. On top of that, we are seeing insurance providers effectively mandate that SMEs must have qualifying cybersecurity solutions in place before they underwrite a policy. along with a growing sophistication of attacks has helped shift security from a nice to have to a must have for the small and medium enterprise. We saw this firsthand during the security roadshows we did this past quarter across four countries and three continents. The message from our partners was clear. They need security software that can effectively protect them and their customers from attacks and be easily deployed across the endpoints they manage. and we believe that our security offerings meet these market needs. MSP conversion from legacy antivirus to EDR production, including our recently launched managed EDR offering, is a significant opportunity for us to help our partners who want to ensure ongoing endpoint monitoring and immediate mitigation of malicious events. On the data protection front, our new capability to utilize Cove Standby Image for Restore in the Azure public cloud across multiple regions is an elegant approach for service providers to deliver enterprise-grade disaster recovery as a service to their customers flexibly and affordably. And our security and data protection offerings continue to outpace Enable's total company revenue growth. And our last focus area, operational efficiency. We continue to improve our partners' efficiency through automation and standardization. You can see the evidence of our success here in our trailing 12-month dollar-based constant currency net retention, which remains strong at 108%. And in fact, the partners are layering more solutions across our product suite. One great example of partners seeking to standardize in the Enable tech stack is an EDR deal of more than $300,000 of ARR we signed in the first quarter. The MSP started its relationship with Enable using RN Central product in early 2022. After working with us for the past year, they understood how more products from Enable could benefit their operational efficiency. As a result, we landed their EDR business. Notably, over 50% of this deal was from the managed EDR solution I mentioned a minute ago. This deal is one of the largest single deals in Enable company history, and it perfectly represents the value proposition we can offer partners who standardize their tech stack with us. It is important to emphasize that none of this happens without the effort of Enablites across the globe. In the first quarter, we were delighted to receive recognition by a great place to work in the U.S. for the second year in a row, a comparably global cultural award, and we were included on Built In's 2023 Best Places to Work. We are also proud to note that we recently published our inaugural ESG report and look forward to discussing our ESG efforts in the future. With that, I would like to turn the call over to Tim to discuss our financial results and outlook. Then I'll circle back for some closing remarks. Tim?