N-able, Inc. (NABL)

Executive Summary / Key Takeaways

• Platform Transformation Thesis: N-able is executing a strategic evolution from a traditional MSP tools vendor into a comprehensive cyber resilience platform, integrating endpoint management, security operations, and data protection. The Adlumin acquisition and AI-native product launches create a multi-dimensional moat that addresses the convergence of IT and security operations for SMBs and mid-market enterprises.

• Go-to-Market Multiplier: Beyond its 11.4% RMM market share, N-able is systematically expanding beyond the MSP channel into resellers, system integrators, and distributors. This move targets the 75% of SMB/mid-market IT spend that MSPs don't control, potentially widening N-able's addressable market by 3-4x while the reseller pipeline nearly doubles quarter-over-quarter.

• Financial Inflection with Discipline: ARR reached $528.1 million in Q3 2025, up 14% year-over-year, while the company maintains an 81% gross margin and 31.4% adjusted EBITDA margin. Management's explicit commitment to return to 30%+ EBITDA margins in 2026 demonstrates a balanced approach between growth investment and profitability, distinguishing N-able from cash-burning competitors.

• AI as Competitive Weapon: N-able's AI strategy leverages proprietary data from 11 million IT assets across its platform, embedding automation that cuts manual work from hours to minutes. The AI-powered SOC automates 70% of incident remediation, while new features like Anomaly Detection as a Service and vulnerability management built into UEM create differentiation that justifies premium pricing and drives 102% net revenue retention.

• Critical Execution Variables: The thesis hinges on two factors: successful integration of Adlumin's enterprise-grade security operations into the MSP base (where 55-70% lack MDR solutions), and effective scaling of the reseller channel beyond the initial U.K. expansion. Failure to execute either could limit growth to single digits, while success could accelerate ARR toward the $750 million 2028 target.

Setting the Scene: The MSP Channel's Security Imperative

N-able, Inc., incorporated in Delaware in 2020 and headquartered in Burlington, Massachusetts, emerged from SolarWinds (SWI)' MSP business spin-off in July 2021. This origin is crucial: unlike venture-funded startups, N-able inherited two decades of MSP relationships, 11 million managed IT assets, and deep workflow knowledge. The company operates in a fragmented RMM market where MSPs manage endpoints for small and medium businesses, yet face an existential threat from AI-powered cyberattacks that have surged 1,200% since 2022.

The industry structure reveals a paradox. MSPs control only 25% of the $2.1 trillion SMB/mid-market IT spend, yet they remain the trusted advisors for cybersecurity. According to Canalys, over half of surveyed MSPs don't yet offer MDR services, creating a greenfield opportunity. Meanwhile, cybercriminals leverage generative AI to mimic real-world communications, making phishing and ransomware harder to detect. The World Economic Forum's 2025 Global Cybersecurity Outlook highlights that 35% of small organizations feel their cyber resilience is insufficient—five times the rate of larger organizations. This creates a mandate: MSPs must evolve from break-fix technicians to security-first partners.

N-able's competitive positioning reflects this transition. With 11.4% RMM market share, it trails Kaseya (15-18%) and ConnectWise (12-15%) but leads in cloud-native architecture and AI integration. The company's three-pillar strategy—Unified Endpoint Management (UEM), Security Operations (XDR/MDR), and Data Protection (Cove)—addresses the convergence of IT and security operations. This convergence is significant because SMBs face enterprise-level threats without enterprise resources, creating demand for integrated platforms that eliminate software sprawl.

Technology, Products, and Strategic Differentiation

N-able's core technology isn't merely a collection of tools; it's an integrated cyber resilience platform designed for the AI-driven era. The UEM pillar serves as a "command tower," providing visibility across entire IT estates while automating routine tasks. The recent launch of vulnerability management as a built-in feature represents a major industry differentiator. Customers can now identify and remediate vulnerabilities within a single solution, reducing software sprawl and improving efficiency. Management notes this helps customers avoid purchasing separate vulnerability scanning and patch management tools, directly impacting their total cost of ownership.

The Security Operations pillar, supercharged by the November 2024 Adlumin acquisition, provides cloud-native, AI-powered XDR and MDR capabilities. At acquisition, Adlumin contributed $21 million in ARR growing above market rates. The platform's endpoint-agnostic design is a critical moat: unlike CrowdStrike (CRWD) or SentinelOne (S), Adlumin ingests data from any endpoint security provider. This endpoint-agnostic design is particularly beneficial for MSPs managing heterogeneous client environments. Additionally, the ability to separate software from service—offering XDR-only, MDR-only, or hybrid deployments—provides flexibility that "black box" competitors like Arctic Wolf cannot match. The AI-powered SOC analyzes billions of security events monthly, automating 70% of incident remediation across thousands of end customers.

The Data Protection pillar, anchored by Cove, protects over 3 million Microsoft (MSFT) 365 users across 180,000 businesses. In Q2 2025, Cove achieved its highest bookings and net new ARR quarter ever. The strategic shift from reactive backup to proactive resilience is exemplified by Anomaly Detection as a Service (ADaaS), which flags unauthorized access in backup environments. This transforms Cove from a recovery tool into a threat detection layer. A customer reported reducing backup management time from 60 hours per week to just one hour after adoption, demonstrating tangible ROI that supports pricing power.

AI integration across all three pillars creates network effects. The CANI framework standardizes AI language across the MSP ecosystem, while AI agents in UEM cut manual scripting from hours to minutes. In security, AI automates threat hunting at 100x the scale of manual efforts. In data protection, AI-based scanning continuously monitors backup data flows for unusual patterns. This embedded AI strategy leverages proprietary data from 11 million IT assets, creating a feedback loop where more data improves AI accuracy, which drives customer expansion, which generates more data.

Financial Performance as Strategy Validation

N-able's Q3 2025 results provide concrete evidence that the platform transformation is working. Total revenue of $131.7 million grew 13.1% year-over-year, while ARR reached $528.1 million, up 14% reported and 13% constant currency. The acceleration from 9% ARR growth in 2024 to 14% in 2025 reflects the successful integration of Adlumin and the market's appetite for integrated security solutions. Subscription revenue grew 13.5%, driven by data protection, security operations, and the net positive impact from long-term committed contracts.

The shift to committed contracts represents a fundamental improvement in revenue quality. In 2024, N-able increased its proportion of subscriptions under long-term committed contracts from less than 10% to over 50%. This shift is significant as it improves predictability, reduces churn, and increases gross retention. Management reports that renewal rates on these longer-term contracts are around 90%, up from historical levels. While this creates a 4% revenue growth headwind in 2025 due to ASC 606 recognition dynamics, it builds a more durable ARR base that will support sustained growth.

Customer metrics validate the land-and-expand strategy. Customers with ARR over $50,000 grew 14.8% year-over-year to 2,611, representing 61% of total ARR, up from 57% a year prior. The largest deal in Q3 2025 was a cross-sell to a security operations mid-market customer at nearly $0.5 million ARR. Forty-three percent of new UEM wins included an additional solution, demonstrating that the end-to-end platform resonates. The company's average sales price continues to increase as it gains wallet share, with management estimating a $2.5 billion cross-sell opportunity within the existing customer base.

Profitability metrics show disciplined investment. Adjusted EBITDA of $41.4 million in Q3 delivered a 31.4% margin, down from the 36.3% full-year 2024 level but consistent with the investment phase narrative. The gross margin of 81% provides ample room to fund R&D and go-to-market expansion while maintaining target profitability. Management's commitment to return to 30%+ EBITDA margins in 2026 signals confidence that current investments will yield operating leverage as revenue scales.

Go-to-Market Expansion: The Reseller Multiplier

N-able's most significant strategic shift is expanding beyond the MSP channel into resellers, system integrators, and distributors. This expansion is crucial because MSPs control only $525 billion of the $2.1 trillion SMB/mid-market IT spend. The remaining 75% represents a massive greenfield opportunity. The Adlumin acquisition provided the enterprise-grade credibility and reseller relationships to pursue this market.

Execution is accelerating. The reseller pipeline nearly doubled quarter-over-quarter in Q2 2025. In the U.K., N-able now has active relationships with a sizable number of the top 25 CRN partners, up from virtually no presence at the beginning of 2025. The largest new deal in Q3 was a six-figure ARR win with a consortium of school systems through a value-added reseller. This demonstrates that the geo-specific expansion approach—starting in the U.K. before broader rollout—is gaining traction.

The appointment of Vikram Ramesh as Chief Marketing Officer in June 2025 signals management's commitment to accelerating this transformation. The strategy leverages N-able's existing 25,000+ MSP partners as a reference base while building new routes to market. Management expects the reseller portion of the business to outpace MSP growth in coming years, considerably widening N-able's "strike zone." This channel diversification reduces dependency on any single go-to-market motion and provides multiple paths to the $750 million ARR target by 2028.

Outlook, Guidance, and Execution Risk

Management's guidance for Q4 2025 and full-year 2025 reflects confidence in the strategy. Q4 revenue is projected at $126.5-127.5 million (9% growth), with full-year revenue of $507.7-508.7 million (9% reported, 8% constant currency). The full-year ARR target of $530-531 million implies 10% growth, with management noting that Q4 net new ARR dollar growth should be slightly higher than the year-to-date average.

The 2026 margin commitment is explicit: "We remain committed to returning adjusted EBITDA margin to 30% in FY '26." This assumes that investments in Adlumin integration, the new India development site, and reseller channel expansion will begin to yield operating leverage. The guidance assumes FX rates of 1.13 EUR/USD and 1.29 GBP/USD, with a 21% non-GAAP tax rate.

Key execution variables will determine whether N-able achieves its targets. First, the Adlumin integration must continue to drive cross-sell success. With 55-70% of MSPs not yet offering MDR, the greenfield opportunity is large, but conversion requires demonstrating clear ROI. Second, the reseller expansion must scale beyond the initial U.K. success. Building relationships with enterprise-focused VARs requires different sales motions and proof points than the MSP channel.

Management acknowledges macro uncertainty, noting that some deals are taking longer with a "measure twice" approach. However, they emphasize that cyber threats don't pause, and demand remains strong. The $75 million share repurchase program, with $55 million remaining as of Q3, underscores management's confidence in long-term value creation.

Risks and Asymmetries: What Can Break the Thesis

The most material risk is execution failure in either the Adlumin integration or reseller expansion. If cross-sell rates stall and MSPs remain slow to adopt MDR, ARR growth could decelerate to high-single digits, making the $750 million 2028 target unreachable. The 102% net revenue retention, while stable, reflects pricing and packaging changes that may have pulled forward some expansion. If gross retention doesn't maintain its recent improvement, NRR could dip below 100%.

Competitive pressure from well-funded rivals threatens the platform strategy. NinjaOne's $500 million Series C funding at a $5 billion valuation enables aggressive AI feature development and pricing competition. Kaseya's acquisition-driven scale (15-18% market share) and ConnectWise's PSA dominance create bundling pressure. If N-able's integrated platform can't demonstrate superior TCO, it risks losing deals to best-of-breed point solutions or all-in-one suites.

The long-term contract initiative, while improving retention, creates revenue recognition headwinds. The 4% growth headwind in 2025 could persist if contract terms become even more committed, masking underlying demand strength. Conversely, if customers resist long-term commitments, gross retention could suffer, particularly in a recession where SMBs cut discretionary IT spending.

AI-driven disruption cuts both ways. While N-able leverages AI for automation, competitors could develop similar capabilities, eroding the differentiation moat. Open-source security tools or generative AI that democratates scripting could reduce switching costs and commoditize parts of the platform. The 70% automation rate is impressive today but may become table stakes.

Valuation Context: Pricing the Platform Transition

At $7.62 per share, N-able trades at a $1.43 billion market cap and $1.69 billion enterprise value. The stock trades at 2.86x TTM sales and 22.48x TTM free cash flow, with an EV/EBITDA multiple of 23.52. These multiples place N-able in the mid-range of SaaS peers, below high-growth security pure-plays but above mature RMM vendors.

The 81% gross margin and 13% operating margin demonstrate scalable software economics, while the 0.61 beta reflects lower volatility than typical growth software stocks. The debt-to-equity ratio of 0.45 is conservative, with $331.7 million in net debt against $101.4 million in cash. However, management's confidence in funding operations internally and the $75 million buyback program suggest the balance sheet is viewed as a source of flexibility, not constraint.

Peer comparisons highlight N-able's positioning. SolarWinds trades at 5.30x sales with slower 6% growth and faces trust issues from its 2020 breach. NinjaOne, at an estimated $5 billion valuation with $300-400 million revenue, trades at 12-16x sales but remains unprofitable. Kaseya's estimated $800 million revenue and mid-20s EBITDA margins suggest a valuation of 4-5x sales. N-able's 2.86x sales multiple appears conservative relative to its 14% ARR growth and 31.4% EBITDA margin, particularly given the platform transformation and go-to-market expansion.

The key valuation driver is whether N-able can sustain double-digit ARR growth while expanding margins. If the reseller channel and Adlumin cross-sell deliver as expected, revenue could compound at 12-15% annually, supporting multiple expansion. If execution falters and growth decelerates to 8-10%, the current multiple may be fair but upside limited. The 30% EBITDA margin target for 2026, if achieved, would generate approximately $150 million in EBITDA, making the 23.5x EV/EBITDA multiple more reasonable for a platform with durable recurring revenue.

Conclusion: The Platform Bet

N-able's investment case rests on a clear thesis: the company is transforming from an MSP tools provider into a comprehensive cyber resilience platform while simultaneously expanding its go-to-market reach beyond the traditional MSP channel. The Adlumin acquisition, AI-native product development, and early success in the reseller market provide evidence that this strategy is gaining traction. Financial metrics support the narrative—14% ARR growth, 81% gross margins, and a commitment to 30%+ EBITDA margins in 2026 demonstrate both growth and discipline.

The story's success hinges on execution velocity. Can N-able convert the 55-70% of MSPs without MDR solutions? Can the reseller channel scale from U.K. success to global presence? These variables will determine whether N-able achieves its $750 million ARR target by 2028 or stalls in the mid-$500 million range. The competitive landscape is unforgiving, with well-funded rivals and AI-driven disruption threatening to commoditize features.

For investors, the asymmetry is clear: successful execution could drive 15%+ ARR growth with margin expansion, supporting a re-rating toward 4-5x sales. Execution failure could see growth decelerate to 8-10% with margin pressure, making the current 2.86x sales multiple fair but unexciting. The share repurchase program and management's explicit 2026 margin target provide near-term catalysts to watch. In a market where cybersecurity has become table stakes for business resilience, N-able's platform approach and channel expansion may be the right strategy at the right time—but only flawless execution will deliver the promised returns.