N-able, Inc.

Hello, everyone. Thank you for joining us and welcome to the N-able Second 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 Gyr, Director of Investor Relations. Please go ahead.

Thanks, Operator. and welcome everyone to N-able's second quarter 2026 earnings call. With me today are John Pagliuca, N-able'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.n-able.com. There you can also find our earnings press release, Thank you. Thank you. 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. Thank you, Griffin. Thank you all for joining us today.

At N-able, we believe every business deserves enterprise-grade cybersecurity, and we're working to democratize cyber defense at a moment when the stakes have never been higher. That mission has continued to translate into disciplined growth and profitability. Second quarter ARR was $544 million, growing 6% year-over-year in constant currency. And adjusted IPTA was $40 million, representing a margin of 29%. are grounded in what we believe is a compelling cybersecurity and AI opportunity. Recent advances in frontier AI models are accelerating both the volume and velocity of cyber risk. Vulnerabilities are being discovered faster, exploit timelines are compressing, and customers need to move from threat detection to remediation with far greater urgency. The data underscores this shift. CVE.org shows the number of vulnerabilities more than tripled between the second quarter of 2022 and the second quarter of 2026. In Anthropix, recent research shows how a loan operator can turn a month's worth of patches into working exploits in a single afternoon for only a few thousand dollars and with no specialized expertise. The recent Hugging Face security incident, where an agent broke out of its test environment and autonomously attacked business infrastructure, makes this AI risk even more concrete. At the same time, businesses are deploying agents and continue to digitize their operations, expanding the amount of data and IT assets that need to be protected. This creates a compounding challenge. As adversaries' offensive capabilities grow more powerful, the attack surface they can target is growing right alongside them. We believe this backdrop reinforces the strategic relevance of N-able's end-to-end portfolio. From patch management and vulnerability remediation and unified endpoint management, to threat detection and response and security operations, to fast, efficient restore capabilities and data protection. With a base of 500,000 businesses and a platform that spans a full attack lifecycle, we believe N-able is well positioned to capture the large and growing opportunity and deliver growth and profitability over the long term. While we remain excited about the opportunity ahead, we are updating our 2026 top-line guidance, and I want to address this directly. Our update reflects two primary factors. First, the impact from a transition in go-to-market leadership, and second, shifting dynamics in the evolving UEM and EDR markets. While we believe N-able is performing well and strategically positioned for long-term durable growth and profit, these items are creating near-term financial pressures. Let's assess both. On the go-to-market side, we welcomed Russell Rosa as our new Chief Revenue Officer in July, and his priorities are clear. First, accelerating our full channel strategy to better target partner segments where our platform can deliver value. Second, deepening our upmarket motion, particularly as our portfolio increasingly addresses more complex customer needs across security, data protection, AI, and compliance. And third, driving operational excellence across the revenue organization with a focus on durable productivity and long-term efficiency. Russell brings more than 25 years building and scaling channel organizations. Most recently, he was CRO at Sumo Logic, where he helped deliver constant double-digit security growth. And before that, at Cisco and Actifio, where he built global channel and go-to-market programs from the ground up. That combination of channel DNA and enterprise scale is exactly what this next phase of growth for N-able calls for. Given the significance of the leadership transition, we expect some near-term variability in our go-to-market execution, which is reflected in our adjusted 2026 guidance. We are making this change now to build a stronger, more enduring growth engine as we look to 2027 and beyond. Turning to UEM and EDR. Managing and securing endpoints remains foundational to IT management and security. But as AI reshapes the landscape, customers now expect greater capabilities on top of these core outcomes. While we're moving fast to meet these needs, this shift is pressuring near-term growth in both categories, which is also reflected in our updated guidance. As it relates to UEM, we're executing a roadmap to govern and secure AI agents, deliver more comprehensive exposure management capabilities, and drive value from our AI workflow assistant, Enzo. In an EDR, our portfolio expansion plans include AI security for emerging AI-driven threats, FedRAMP-certified We're also adding Managed EDR. This serves customers who do not want the full breadth of our security operation solution, but still want a higher level of protection than EDR alone provides. This lower entry point helps us cover the full range of customer preferences and can serve as a platform wedge for broader estate expansion over time. As agents get deployed, and many more. and driving high levels of productivity have always been a part of that focus. We are acting with discipline on all three. With that in mind, we plan to implement a series of organizational changes in the second half of the year that will reduce our total headcount by about 6%. Let me explain what's driving this. We see a widening opportunity and more pronounced customer demand in data protection, security operations and the full channel. Success requires relentless customer focus and as customers needs shift, It's imperative that N-able's resource allocation shift too. Our changes aim to realign our resources with these opportunities while preserving the organizational focus and speed that cybersecurity leadership demands. From a productivity perspective, we are driving real gains from incorporating the latest technologies, including AI, into the way we work. From AI-N-abled SDRs and accelerated content marketing and go-to-market to faster resolutions and customer support to shipping more code and engineering, New tools are helping drive step-change progress across the business. We are seeing particular effectiveness in engineering, with AI-generated code accounting for 47% of all committed code in the second quarter, and some features shipping 10 to 12 times faster than prior roadmap estimates. These results give us confidence to move decisively rather than incrementally. While this is a difficult decision, it reflects our commitment to continuing to strengthen N-able for the long term. We firmly believe our changes will make us better positioned to deliver for our customers, partners, and all stakeholders. Let's now look at our progress throughout the company in the second quarter. These updates share a common thread. Customers are getting faster outcomes and stronger protection with less operational burden. Let's walk through each. In data protection, we launched Disaster Recovery as a Service, or DRAS, earlier this year. With N-abled DRAS, customers can restore full operations in minutes rather than days, and there's no separate infrastructure or hardware needed. This means faster restores, less complexity, and execution against our mission to democratize cyber defense. The timing of our launch is notable. DRAS lets customers avoid capex costs, supply delays, and maintenance that comes with owning hardware, an increasingly relevant value proposition. Drass has already helped a number of businesses avoid costly downtime, a real proof of the value this capability delivers. We also added automated backup ticketing to streamline backup-related workflows for customers. And looking ahead, our plan to extend coverage to Google Workspace later this year remains on track. The industry is taking notice. Omdia, one of the most respected channel-focused research firms, named N-able its backup and disaster recovery champion for the third year running. Customers are telling us the same story. Our data protection solution, which is above $200 million in ARR, continues to grow faster than the total company and once again led our net new ARR growth this quarter. Stepping back, we see AI driving a paradigm shift in data protection. As AI agents operate inside businesses, traditional perimeter-oriented defenses such as the endpoint and network no longer suffice to keep organizations protected. When an agent makes a mistake or gets compromised, a strong data protection solution can be the difference between a business extinction event or routine recovery. We need our solution, Cove Data Protection, to invoke the calm protected waters a cove provides. As AI makes the seas choppier than ever, this commitment to safety has never been more relevant. We're excited to continue investing in this market and extend the capabilities of our fast scaling solution. In UEM, we made progress on our priority roadmap items to govern and secure AI agents, deliver more comprehensive exposure management capabilities, and drive value from our AI-assisted ENSO. We are seeing indications that our vulnerability management capabilities are resonating as we uncovered billions of vulnerabilities across our customer base. On the commercial front, UEM cross-sell to data protection and security customers was up 27% in the quarter, and our targeted displacement campaign increased migrations against a top competitor by 60%. These data points support our confidence in the strategic importance and competitiveness of our Gartner-recognized UEM solution. We also launched shadow AI visibility in both UEM and security operations, giving customers insight into where AI tools are being used across their environment. This addresses a blind spot that affects many organizations and addresses a need that we anticipate will only grow over time. This brings us to our AI-powered security operation solution, where we continue to see strong traction for enterprise-grade security delivered in an accessible way. This is driven by several factors. Chief among them is the sheer intensity of the threat environment. Our own research found that the average SOC analyst faces an alert every 30 seconds, a volume no human analyst can realistically absorb. We empower customers to cut through all this noise by utilizing a vendor-agnostic approach that ingests signals across the endpoint, network, cloud, identity layer, and SaaS application. We give customers a view no single point solution can match. And our AI capabilities enable customers to act on risk faster than a fragmented stack could. and for the threats that do escalate beyond automated containment, we are extending management incident response capabilities, giving customers hands-on investigation and response exactly when they need it. Identity in particular has emerged as a leading attack vector as attackers increasingly target credentials rather than endpoints directly. In fact, we see half of attacks now bypassing endpoint controls entirely, a clear signal that attackers are finding new ways in and identity has become one of their new favorite paths. We protect over 3 million identities, helping stem this growing tide. That value is showing up in our results. This quarter featured one of our largest new deals ever, and we believe we are gaining market share in this category. Each of these updates point to what we believe is a broader shift. DRAS allows customers to walk away from hardware and manual disaster recovery. UEM is moving from simply surfacing vulnerabilities to helping remediate them. and our security operations platform has increasingly handled threat responses automatically. In each case, software is taking on work that has historically required dedicated labor. We see this as a meaningful expansion of our opportunity. And with that, I'll turn it over to Tim before circling back for closing remarks. Tim. Thank you, John.