N-able, Inc.

Ladies and gentlemen, thank you for joining us, and welcome to the Enable First Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Griffin Gere, Investor Relations. Please go ahead.

Thanks, Operator. And welcome, everyone, to Enable's first quarter 2026 earnings call. With me today are John Pagliuca, 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 and investors on 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, 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. 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.

Thank you, Griffin, and welcome everyone to our call this morning. Today, we'll review our first quarter results, discuss key trends we're seeing through recent industry engagements, and highlight how AI innovations is tangibly expanding our software opportunity. We will focus particularly on our AI innovation, where we're automating work historically delivered through labor-intensive services, helping organizations operate more efficiently and securely while also growing our TAM. This progress matters now as advancements in frontier models are fundamentally rewriting the threat landscape, compressing response times for defenders, and empowering attackers to exploit vulnerabilities at unprecedented speed and scale. We believe our end-to-end cyber resilience platform is purpose-built for this moment, positioning and able to lead as cybersecurity reaches an inflection point. Let's jump right in. Starting with the quarter, our results were strong. First quarter ARR was $548 million, growing 8% year-over-year in constant currency. An adjusted EBITDA margin was 27%. Quarterly gross and net revenue dollar retention both improved quarter over quarter and year over year, with trailing 12-month net retention now at 106%. Let's walk through the drivers of that performance. First, we continue to see momentum upmarket. The number of customers with over $50,000 of ARR grew by 13% year over year, and this cohort now represents 62% of Enable's total ARR. In addition, Customers with over $100,000 of ARR represent 41% of our annual recurring revenue. This upmarket progress is further exemplified by our selection as Manchester City Football Club's official cybersecurity partner. As the club operates at global scale on the field, Enable protects its critical data and systems, securing its digital environment off the field. The partnership underscores our ability to serve complex, high-profile organizations. More broadly, Given the stronger retention in our upmarket cohorts, we believe our success in this segment provides a solid foundation for future growth. Second, our channel expansion strategy is working. Four of our top five new customer lands in the quarter, including the Manchester City deal, were through value-added resellers or bar channel. With an established MSP motion that counts 25% of CRN's top 150 MSPs as customers and our scaling bar presence, our broad channel footprint enables us to capture demand across the market. Third, the depth and breadth of our platform is resonating. Strength in cross-sell and up-sell underpin improvement in both gross and net retention, as customers realize value in expanding and consolidating with Enable. From a category perspective, security operations and data protection continue to outpace total company growth, as customers prioritize advanced remediation and recovery capabilities in the face of rising cyber risk. Reflecting on the quarter, the business executed well, and our strategy delivered strong results. Let's now switch gears and discuss key observations from recent industry engagements. During the quarter, we engaged across the ecosystem through our annual customer conference in power, a major industry event such as RSA, and ongoing dialogue with third-party research firms. One major takeaway is that we believe cybersecurity continues to experience strong secular chill winds. We are consistently hearing from customers that the worsening threat environment and rising IP complexity are driving increased need for stronger cybersecurity solutions. This sentiment is reinforced by our internal data and third-party research. In our 2026 State of the Sock Report, which is informed by telemetry and frontline response data from Enable Sock, we observed an alert every 30 seconds. We also saw a dramatic rise in perimeter-based attack. with 50% of attacks bypassing endpoint controls entirely. Manual triage approaches are not able to keep pace with this scope and velocity, emphasizing the need for modern machine-driven defense. Industry research firm Futurum reported a similarly challenging attack environment. In their 2025 cybersecurity global enterprise decision-making survey report, Futurum highlighted that 46% of organizations surveyed experienced more than three significant security incidents over the past year. We do not see these dynamics abating, particularly as advances in AI continue to lower the barrier to entry for increasingly sophisticated cyber attacks. Together, these factors give us confidence that our mission to protect businesses from evolving cyber threats is underpinned by strong market demand. Another takeaway is that customers are struggling to balance the need for powerful, layered defense with practical constraints. such as managing vendor sprawl, staffing challenges, and budget limitations. This pain point validates our platform strategy. Spanning unified endpoint management, security operations, and data protection, our platform enables customers to efficiently manage complex IT environments, detect and stop threats in real time, and safeguard and recover critical data. We deliver coverage across the entire lifecycle, before, during, and after an incident, helping customers stay secure, while operating efficiently. We are also hearing strong conviction that AI is a meaningful growth driver for MSPs. Our conversations at our customer conference in power reflected a broadly bullish sentiment to improve efficiency and create new revenue streams for MSPs. While adoption is still early, customers are clear they want a trusted partner to help them navigate the technological wave so they can focus on operating their businesses. In summary, Our industry engagements reinforce our view that industry demand is strong and increasingly favors AI-powered, integrated platform-based approach. This brings us to our innovation and how our software is expanding our opportunity by automating work historically delivered through services. Our platform is rapidly evolving from a system of record to a system of action, increasingly completing tasks previously handled by technicians. This evolution unlocks significant economic opportunity. Industry analysts such as Omdia estimate annual security services spend at about $200 billion, roughly twice the size of security software spend. We see a similar labor-heavy cost structure within our MSP customer base. Our fieldwork indicates MSPs operate at approximately 10% EBITDA margins, with a sizable portion of their cost structure composed of labor. As our intelligent software completes workflows historically owned by labor, we help our customers operate more efficiently and improve margins, while expanding our monetization surface from software budgets into a much larger labor-driven services opportunity. A concrete example helps illustrate the opportunity we are driving. Technicians are the revenue engine for MSPs. The more IT assets, including AI, that each MSP technician can manage, the more revenue an MSP can generate. The challenge is that technicians have practical limits. A common industry benchmark is roughly one technician for every 200 devices. This creates a growth ceiling in the structurally tight IT labor market and pressures MSP's profitability, as they must continually hire additional technicians to support more customers. Our aim is for our software to improve that ratio, empowering a single technician to manage 500, 1,000, or even more IT assets. Delivering this creates a win-win for our customers and enables. Our customers can scale their businesses without linear increase in labor costs, and we can gain market share as MSPs consolidate around platforms that can help them grow their businesses more efficiently. Importantly, this is not a future state. We are delivering progress today. In UEM, we recently introduced Enzo, our AI workflow assistant, and our custom model context protocol, or MCP server. These advancements mark an important step forward in AI-driven IT operations. For certain tasks, Enzo delivers up to 70% faster IT operations by enabling teams to interact with their environments using natural language and agentic workflows. Our MCP server goes a step further, securely connecting external AI tools like Cloud, ChatGPT, and Microsoft Copilot directly to live operational data Insight enables UEMs. This means AI no longer just tells customers what's wrong. It helps fix it real-time with the control and governance our partners require. Together, these capabilities are empowering IT teams to move faster, reduce manual effort, and act directly within the environments where they already work. This progress directly improves the technician-to-manage-device ratio we discussed earlier. UEM's value proposition is showing clearly in executions. six of our top ten new customer lands flowed through our UEM solution. A standout example is one of the fastest-growing quick-service UK restaurant brands that was looking for a trusted partner to ensure that digital operations work seamlessly. They deployed our UEM in late 2025 across 100 locations, gaining real-time visibility into the devices, automating routine fixes, and significantly reducing downtime. We recently built on that success, signing the U.S. group and expanding the relationship significantly. We're also automating historically manual intensive work in data protection, where we recently introduced disaster recovery as a service, or DRAS. We are eliminating the need for customers to manage backup infrastructure themselves, reducing cost, time, risk, and operational headache. This shifts backup management from a labor-intensive activity to a software-led capability. Beyond efficiency, Drafts meaningfully strengthens customer security posture. In the event of data loss, businesses can there instantly recover critical systems, minimizing their downtime and maintaining their operations. We also expanded our anomaly detection capabilities, which help identify changes to backup environments. With threat actors increasingly using identity-based attacks to steal credentials and target backups from inside the organization, including altering retention policies or deleting servers, this advancement has real impact. Building on that momentum, we are excited about the planned addition of Google Workspace backup coverage later this year. From a broader perspective, we continue to see durable demand drivers for data protection. With time to exploit turning negative and adversaries exploiting vulnerabilities before patches exist, the criticality of our ability to protect and restore data is heightened. And as we look ahead to a world with agents owning more workloads for businesses, the possibility of agents making costly mistakes also rises. We see the need to effectively undo agent mistakes and restore operations to a clean prior state as a potential demand catalyst for a data protection solution. Our execution and value are showing up in the numbers. Data protection has now surpassed 3.5 million Microsoft 365 users and led our net new ARR growth in the quarter. Finally, in security operations, we are extending the same system of action approach into one of the most labor-intensive areas, the cybersecurity. Businesses are facing more complex attacks, and Enable is helping them operate, contain, and scale security without standing up their own stock. Our security operations solution is a system of action at its core, as AI handles the bulk of our threats automatically. This is a critical differentiator. With breakout time shortening to minutes, The ability to neutralize threats in real time can be the difference between a contained event and a successful breach. Customer count has nearly doubled since the second quarter of 2025, reflecting our traction here. A recent customer win demonstrates the solution in action. A compliance-focused MSP serving regulated industries was facing challenges managing a fragmented security stack spanning multiple EDR, MDR, and SEM tools. We standardized the security operations, replacing multiple legacy providers with a unified, scalable model, driving ARR of nearly $500,000. Importantly, AI reinforces the role our platform plays in the Gemtech world. From an operating standpoint, AI is embedded into our platform, and we are deeply embedded in our customer environments and workflows. This positions us to serve as a control plane, to govern and secure agents as they become more prevalent across their IT and security environments. Customers can access AI where they already operate. We pair that accessibility with a technical experience built on proven infrastructure, extensive data, deterministic workflows, domain context, and rigorous compliance standards. From a demand perspective, we see AI increasing both the volume and severity of threats, while also expanding the amount and criticality of data that must be protected. These forces directly drive the need for our solutions. And our trusted brand and established go-to-market further positions us to translate innovation and demand into real-world adoption. To close, we're executing with discipline as we pursue the large and compelling cybersecurity opportunity. We believe AI is expanding our software opportunity by enabling us to automate more workflows and reinforcing the critical role we play in helping customers navigate a more complex and hostile digital environment. With that, I'll turn it over to Tim and then circle back for closing remarks.