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What changed in N-able, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of N-able, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+646 added−672 removedSource: 10-K (2025-03-07) vs 10-K (2024-02-29)

Top changes in N-able, Inc.'s 2024 10-K

646 paragraphs added · 672 removed · 440 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

287 edited+37 added−24 removed155 unchanged
Biggest changeOur quarterly results of operations may fluctuate as a result of a variety of factors, including, but not limited to, those listed below, many of which are outside of our control: • our ability to maintain and increase sales to existing MSP partners and to attract new MSP partners, including selling additional subscriptions to our existing MSP partners to deliver services to their SME customers or for their internal use; • changes in SME demand for services provided by our MSP partners, including those related to the number of SME customers serviced by our MSP partners and the reduced amount of services provided by our MSP partners to their SME customers; • declines in subscription renewals and changes in net customer retention; • lack of visibility into our financial position and results of operations in connection with our consumption-based revenue; • our ability to capture a significant volume of qualified sales opportunities; • our ability to convert qualified sales opportunities into new business sales at acceptable conversion rates; • the amount and timing of operating expenses and capital expenditures related to the expansion of our operations and infrastructure and customer acquisition; • our failure to achieve the growth rate that was anticipated by us in setting our operating and capital expense budgets; 19 Table of Contents • potential foreign exchange gains and losses related to expenses and sales denominated in currencies other than the functional currency of an associated entity; • fluctuations in foreign currency exchange rates that may negatively impact our reported results of operations; • the timing of revenue and expenses related to the development or acquisition of technologies, solutions or businesses, or strategic partnerships and their integration; • potential goodwill and intangible asset impairment charges and amortization associated with acquired businesses; • the timing and success of new offerings, enhancements or functionalities introduced by us or our competitors, including potential deferral of orders from our MSP partners in anticipation of new offerings or enhancements announced by us or our competitors; • any other change in the competitive landscape of our industry, including consolidation among our competitors, MSP partners or SMEs and strategic partnerships entered into by us and our competitors; • our ability to obtain, maintain, protect and enforce our intellectual property rights; • changes in our subscription pricing or those of our competitors; • the impact of new accounting pronouncements; • general economic, industry and market conditions that impact expenditures for IT management technology for SMEs in the United States and other countries where we sell our solutions; • significant security breaches, such as the Cyber Incident, technical difficulties or interruptions to our solutions or infrastructure; • changes in tax rates, laws or regulations in jurisdictions in which we operate; and • the impact of a recession, pandemic, or any other adverse global economic conditions on our business, including any future impacts of the COVID-19 pandemic.
Biggest changeOur quarterly results of operations may fluctuate as a result of a variety of factors, including, but not limited to, those listed below, many of which are outside of our control: • our ability to maintain and increase sales to existing customers and to attract new customers, including selling additional subscriptions to our existing customers to deliver services to their SMB and mid-market customers or for their internal use; • changes in SMB and mid-market demand for services provided by our IT services provider customers, including those related to the number of customers serviced by our IT services provider customers and the reduced amount of services provided by our IT services provider customers to their SMB and mid-market customers; • declines in subscription renewals and changes in net customer retention; • lack of visibility into our financial position and results of operations in connection with our consumption-based revenue; • our ability to capture a significant volume of qualified sales opportunities; • our ability to convert qualified sales opportunities into new business sales at acceptable conversion rates; • the amount and timing of operating expenses and capital expenditures related to the expansion of our operations and infrastructure and customer acquisition; • our failure to achieve the growth rate that was anticipated by us in setting our operating and capital expense budgets; • potential foreign exchange gains and losses related to expenses and sales denominated in currencies other than the functional currency of an associated entity; 20 Table of Contents • fluctuations in foreign currency exchange rates that may negatively impact our reported results of operations; • the timing of revenue and expenses related to the development or acquisition of technologies, solutions or businesses, or strategic partnerships and their integration; • potential goodwill and intangible asset impairment charges and amortization associated with acquired businesses; • the timing and success of new offerings, enhancements or functionalities introduced by us or our competitors, including potential deferral of orders from our customers in anticipation of new offerings or enhancements announced by us or our competitors; • any other change in the competitive landscape of our industry, including consolidation among our competitors, customers, SMBs, or mid-market companies, and strategic partnerships entered into by us and our competitors; • our ability to obtain, maintain, protect and enforce our intellectual property rights; • changes in our subscription pricing or those of our competitors; • the impact of new accounting pronouncements; • general economic, industry and market conditions that impact expenditures for IT management technology for SMBs and mid-market companies in the United States and other countries where we sell our solutions; • significant security breaches, such as the Cyber Incident, technical difficulties or interruptions to our solutions or infrastructure; • changes in tax rates, laws or regulations in jurisdictions in which we operate; and • the impact of a recession, pandemic, or any other adverse global economic or political conditions on our business.
After we add an MSP partner, our partner success program is designed to help them better manage their own businesses, offer services enabled by our platform and expand their customer bases and usage of our solutions. Marketing Our marketing efforts are grounded in deep industry expertise and are designed to generate high quality opportunities for our sales organization.
After we add an MSP customer, our partner success program is designed to help them better manage their own businesses, offer services enabled by our platform and expand their customer bases and usage of our solutions. Marketing Our marketing efforts are grounded in deep industry expertise and are designed to generate high quality opportunities for our sales organization.
Furthermore, our combined efforts across marketing, partner success and sales motions drive high-quality opportunities from our existing customer base that advances our expand go-to-market strategy. This approach allows us to cross-sell and expand product penetration within our existing MSP partner base.
Furthermore, our combined efforts across marketing, partner success and sales motions drive high-quality opportunities from our existing customer base that advances our expand go-to-market strategy. This approach allows us to cross-sell and expand product penetration within our existing MSP customer base.
Risk Factors Risks Related to Our Business and Industry Our quarterly revenue and operating results may fluctuate in the future because of a number of factors, which makes our future results difficult to predict or could cause our operating results or the guidance we provide in the future to fall below expectations.
Risk Factors Risks Related to Our Business and Industry Our quarterly revenue and operating results may fluctuate in the future because of a number of factors, which makes our future results difficult to predict or could cause our operating results or the guidance we provide to fall below expectations.
In addition, during 2021, we changed our brand from the “SolarWinds MSP” to “N-able,” which may have resulted in the loss of customer recognition and may have adversely affected our business and profitability. We believe that the importance of brand recognition will increase as we enter new markets and as competition in our existing markets further intensifies.
In addition, during 2021, we changed our brand from “SolarWinds MSP” to “N-able,” which may have resulted in the loss of customer recognition and may have adversely affected our business and profitability. We believe that the importance of brand recognition will increase as we enter new markets and as competition in our existing markets further intensifies.
In light of the foregoing, investors are urged to consider these factors, not to rely exclusively upon information we may provide regarding our financial outlook in making an investment decision regarding our common stock, and to take such information into consideration only in conjunction with other information included in our filings filed with or furnished to the SEC, including the “Risk Factors” sections in such filings.
In light of the foregoing, investors are urged to consider these factors, not to rely exclusively upon information we provide regarding our financial outlook in making an investment decision regarding our common stock, and to take such information into consideration only in conjunction with other information included in our filings filed with or furnished to the SEC, including the “Risk Factors” sections in such filings.
We leverage this framework across our Technology Alliance Program and integrated solution partnerships described below, allowing us to create integrations that deliver embedded user interface experiences. Our Ecosystem Framework enhances our ability to deliver a single point of management across the myriad of solutions, tools and other technologies that MSPs use to manage their customers’ environments.
We leverage this framework across our Technology Alliance Program and integrated solution partnerships described below, allowing us to create integrations that deliver embedded user interface experiences. Our open ecosystem framework enhances our ability to deliver a single point of management across the myriad of solutions, tools and other technologies that MSPs use to manage their customers’ environments.
Our past acquisitions and any mergers and acquisitions that we may undertake in the future involve numerous risks, including, but not limited to, the following: • difficulties in integrating and managing the operations, personnel, systems, technologies and solutions of the companies we acquire; 23 Table of Contents • diversion of our management’s attention from normal daily operations of our business; • our inability to maintain the key business relationships and the reputations of the businesses we acquire; • uncertainty of entry into markets in which we have limited or no prior experience and in which competitors have stronger market positions; • our dependence on unfamiliar affiliates, resellers, distributors and partners of the companies we acquire; • our inability to increase revenue from an acquisition for a number of reasons, including our failure to drive demand in our existing partner base for acquired solutions and our failure to obtain sales from customers of the acquired businesses; • increased costs related to acquired operations and continuing support and development of acquired solutions; • liabilities or adverse operating issues, or both, including potential product errors or defects or security issues or vulnerabilities, of the businesses we acquire that we fail to discover or mitigate through due diligence or the extent of which we underestimate prior to the acquisition; • potential goodwill and intangible asset impairment charges and amortization associated with acquired businesses; • adverse tax consequences associated with acquisitions; • changes in how we are required to account for our acquisitions under U.S. generally accepted accounting principles, including arrangements that we assume from an acquisition; • potential negative perceptions of our acquisitions by MSP partners, financial markets or investors; • failure to obtain required approvals from governmental authorities under competition and antitrust laws on a timely basis, if at all, which could, among other things, delay or prevent us from completing a transaction, or otherwise restrict our ability to realize the expected financial or strategic goals of an acquisition; • potential increases in our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition; • our inability to apply and maintain our internal standards, controls, procedures and policies to acquired businesses; and • potential loss of key employees of the companies we acquire.
Our past acquisitions and any mergers and acquisitions that we may undertake in the future involve numerous risks, including, but not limited to, the following: • difficulties in integrating and managing the operations, personnel, systems, technologies and solutions of the companies we acquire; • diversion of our management’s attention from normal daily operations of our business; • our inability to maintain the key business relationships and the reputations of the businesses we acquire; • uncertainty of entry into markets in which we have limited or no prior experience and in which competitors have stronger market positions; • our dependence on unfamiliar affiliates, resellers, distributors and partners of the companies we acquire; • our inability to increase revenue from an acquisition for a number of reasons, including our failure to drive demand in our existing partner base for acquired solutions and our failure to obtain sales from customers of the acquired businesses; • increased costs related to acquired operations and continuing support and development of acquired solutions; • liabilities or adverse operating issues, or both, including potential product errors or defects or security issues or vulnerabilities, of the businesses we acquire that we fail to discover or mitigate through due diligence or the extent of which we underestimate prior to the acquisition; • potential goodwill and intangible asset impairment charges and amortization associated with acquired businesses; • adverse tax consequences associated with acquisitions; • changes in how we are required to account for our acquisitions under U.S. generally accepted accounting principles, including arrangements that we assume from an acquisition; • potential negative perceptions of our acquisitions by customers, financial markets or investors; • failure to obtain required approvals from governmental authorities under competition and antitrust laws on a timely basis, if at all, which could, among other things, delay or prevent us from completing a transaction, or otherwise restrict our ability to realize the expected financial or strategic goals of an acquisition; • potential increases in our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition; • our inability to apply and maintain our internal standards, controls, procedures and policies to acquired businesses; and • potential loss of key employees of the companies we acquire.
We continue to invest heavily in attracting top talent, training and development initiatives and motivating, engaging and retaining high potential employees. Intellectual Property We rely on a combination of patent, copyright, trademark, trade dress and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect our proprietary rights.
We continue to invest in attracting top talent, training and development initiatives and motivating, engaging and retaining high potential employees. Intellectual Property We rely on a combination of patent, copyright, trademark, trade dress and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect our proprietary rights.
We offer our MSP partners the flexibility to purchase solutions with pricing based on committed volumes or on a “pay-as-you-go” model ranging from monthly to multi-year terms, where our partners pay based on the volume of our solutions they and their customers are committed to or consume on a monthly basis.
We offer our customers the flexibility to purchase solutions with pricing based on committed volumes or on a “pay-as-you-go” model ranging from monthly to multi-year terms, where our partners pay based on the volume of our solutions they and their customers are committed to or consume on a monthly basis.
Our flexible platform allows users to easily extend the built-in functionality with deep integrations to create custom monitoring capabilities in conjunction with a broad range of third-party tools. We built our platform to be extensible through an Ecosystem Framework to enable rapid integration with a broad universe of third-party technologies.
Our flexible platform allows users to easily extend the built-in functionality with deep integrations to create custom monitoring capabilities in conjunction with a broad range of third-party tools. We built our platform to be extensible through an open ecosystem framework to enable rapid integration with a broad universe of third-party technologies.
Our multi-tier, multi-tenant platform allows our MSP partners to efficiently manage multiple customers and sites across cloud, on-premises and hybrid cloud environments from a single pane of glass. Our multi-tenancy extends beyond our MSP partners and is able to power seamless integration with key distributors.
Our multi-tier, multi-tenant platform allows our MSP customers to efficiently manage multiple customers and sites across cloud, on-premises and hybrid cloud environments from a single pane of glass. Our multi-tenancy extends beyond our MSP customers and is able to power seamless integration with key distributors.
Partner Success We provide numerous partner success strategies that help MSPs leverage our platform to expand their customer bases and service offerings and become more efficient business operators. Our partner success teams are categorized into onboarding, post-sales engineering, and partner success management.
Partner Success We provide numerous partner success strategies that help MSPs and SMBs leverage our platform to expand their customer bases and service offerings and become more efficient business operators. Our partner success teams are categorized into onboarding, post-sales engineering, and partner success management.
We have made significant investments in our operations to support additional growth, such as hiring substantial numbers of new personnel, investing in new facilities, acquiring other companies or their assets and establishing and broadening our international operations in order to expand our business.
We have made significant investments in our operations to support growth, such as hiring substantial numbers of new personnel, investing in new facilities, acquiring other companies or their assets and establishing and broadening our international operations in order to expand our business.
Our operating income could fluctuate as we make future expenditures to expand our operations in order to support additional growth in our business, or if we fail to see the expected benefits of prior expenditures.
Our operating income could fluctuate as we make future expenditures to expand our operations in order to support growth in our business, or if we fail to see the expected benefits of prior expenditures.
Our professional services automation and ticketing system can be used by our MSP partners to manage their businesses in the following ways: • organize their workforces by routing tickets and scheduling technical support personnel; • share knowledge throughout their organizations by archiving customer contact and password information, process and task knowledge and ticket history; • increase visibility and transparency with customer, ticket and technical support dashboards; and • streamline the billing process with flexible billing based on their customers’ needs.
Our professional services automation and ticketing system can be used by our MSP customers to manage their businesses in the following ways: • organize their workforces by routing tickets and scheduling technical support personnel; • share knowledge throughout their organizations by archiving customer contact and password information, process and task knowledge and ticket history; • increase visibility and transparency with customer, ticket and technical support dashboards; and • streamline the billing process with flexible billing based on their customers’ needs.
We are subject to risks associated with international sales and operations including, but not limited to: • fluctuations in currency exchange rates in the markets where we do business, including the recently strengthened U.S. dollar, and other controls, regulations, and orders that might restrict our ability to repatriate cash; • volatility, uncertainties, and recessionary pressures in the global economy or in the economies of the countries in which we operate; • the complexity of, or changes in, foreign regulatory requirements, including more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal data, particularly in Europe; • localization by our channel partners, including translation of our materials; • difficulties in managing the staffing of international operations, including compliance with local labor and employment laws and regulations; • difficulties hiring local staff, differing employer/employee relationships, and the potential need for country-specific benefits, programs, and systems; • potentially adverse tax consequences, including the complexities of foreign value added tax systems, overlapping tax regimes, restrictions on the repatriation of earnings and changes in tax rates; • the burdens of complying with a wide variety of foreign laws and different legal standards; • increased financial accounting and reporting burdens and complexities; • longer payment cycles and difficulties in collecting accounts receivable; • longer sales cycles; • social, economic and political instability; • epidemics and pandemics, terrorist attacks, wars, geopolitical conflicts, disputes and security concerns in general; • reduced or varied protection for intellectual property rights in some countries and the risk of increased exposure to potential cyber attacks, theft or compromise of our systems, security, data, proprietary or confidential information or intellectual 25 Table of Contents property as a result of our international operations, whether by state-sponsored malfeasance or other foreign entities or individuals; • laws and policies of the U.S. and other jurisdictions affecting international trade (including import and export control laws, tariffs and trade barriers); • the risk of U.S. regulation of foreign operations; and • other factors beyond our control such as natural disasters and pandemics.
We are subject to risks associated with international sales and operations including, but not limited to: • fluctuations in currency exchange rates in the markets where we do business, including the recently strengthened U.S. dollar, and as well as controls, regulations, and orders that might restrict our ability to repatriate cash; • volatility, uncertainties, and recessionary pressures in the global economy or in the economies of the countries in which we operate; 26 Table of Contents • the complexity of, or changes in, foreign regulatory requirements, including more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal data, particularly in Europe; • localization by our channel partners, including translation of our materials; • difficulties in managing the staffing of international operations, including compliance with local labor and employment laws and regulations; • difficulties hiring local staff, differing employer/employee relationships, and the potential need for country-specific benefits, programs, and systems; • potentially adverse tax consequences, including the complexities of foreign value added tax systems, overlapping tax regimes, restrictions on the repatriation of earnings and changes in tax rates; • the burdens of complying with a wide variety of foreign laws and different legal standards; • increased financial accounting and reporting burdens and complexities; • longer payment cycles and difficulties in collecting accounts receivable; • longer sales cycles; • social, economic and political instability; • epidemics and pandemics, terrorist attacks, wars, geopolitical conflicts, disputes and security concerns in general; • reduced or varied protection for intellectual property rights in some countries; • the risk of increased exposure to potential cyber attacks, theft or compromise of our systems, security, data, proprietary or confidential information or intellectual property as a result of our international operations, whether by state-sponsored malfeasance or other foreign entities or individuals; • laws and policies of the U.S. and other jurisdictions affecting international trade (including import and export control laws, tariffs and trade barriers), such as tariff schemes recently imposed or proposed by the U.S.; • the risk of U.S. regulation of foreign operations; and • other factors beyond our control such as natural disasters.
Business Management. Our business management solutions include professional services automation, automation and scripting management, password management policies and reporting and analytics. Our MSP partners use our business management solutions to manage their own IT and business environments and to service their customers.
Business Management. Our business management solutions include professional services automation, automation and scripting management, password management policies, and reporting and analytics. Our MSP customers use our business management solutions to manage their own IT and business environments and to service their customers.
Our solutions are designed to secure emails by providing our MSP partners with: • a web-based dashboard to enable customers to continue sending and receiving email if their primary email service has an outage; • an email archive to store and retrieve email; and • additional protection against spam, malware, ransomware and other email-borne threats based on data collected from our MSP partners and their customers around the world.
Our solutions are designed to secure emails by providing customers with: • a web-based dashboard to enable customers to continue sending and receiving email if their primary email service has an outage; • an email archive to store and retrieve email; and • additional protection against spam, malware, ransomware and other email-borne threats based on data collected from our customers and their customers around the world.
MSPs utilize software agents to collect data and facilitate connections to their customers’ endpoints. It can be time-consuming and burdensome to deploy and update these agents, particularly in a distributed or mobile workforce. We have a unified agent management system that helps our MSP partners deploy agent capabilities and update new features across multiple customer environments.
MSPs utilize software agents to collect data and facilitate connections to their customers’ endpoints. It can be time-consuming and burdensome to deploy and update these agents, particularly in a distributed or mobile workforce. We have a unified agent management system that helps our MSP customers deploy agent capabilities and update new features across multiple customer environments.
If we are unable to hire, integrate, train, manage, and retain a sufficient number of effective sales personnel, or the sales personnel we hire are not successful in obtaining new customers or increasing sales to our existing customer base, our business, operating results and financial condition will be adversely affected. Our business depends on MSP partners renewing their subscription agreements.
If we are unable to hire, integrate, train, manage, and retain a sufficient number of effective sales personnel, or the sales personnel we hire are not successful in obtaining new customers or increasing sales to our existing customer base, our business, operating results and financial condition will be adversely affected. Our business depends on customers renewing their subscription agreements.
This is further powered by our low-friction, free-trial approach that allows prospective MSP partners to trial a fully functional version of our platform. When these prospective partners realize the value of our platform, they can then purchase solutions on our platform at the size and level of functionality appropriate for their and their customers’ IT environments.
This is further powered by our low-friction, free-trial approach that allows prospective MSP customers to trial a fully functional version of our platform. When these prospective customers realize the value of our platform, they can then purchase solutions on our platform at the size and level of functionality appropriate for their and their customers’ IT environments.
Modern infrastructures, applications and devices require teams with expertise across a variety of technical disciplines such as security, database administration, IT, development operations and network administration. Despite being increasingly dependent on technology solutions, many SMEs lack the requisite time, resources and expertise. 2) Companies face growing cyber-threats.
Modern infrastructures, applications and devices require teams with expertise across a variety of technical disciplines such as security, database administration, IT, development operations and network administration. Despite being increasingly dependent on technology solutions, many businesses lack the requisite time, resources and expertise. 2) Companies face growing cyber-threats.
We utilize numerous partner success strategies to help our MSP partners expand their customer bases by educating them on how to introduce deeper and broader sets of service offerings. In this manner, our MSP partners serve as an extension of our sales footprint while requiring minimal incremental sales efforts by us.
We utilize numerous partner success strategies to help our MSP customers expand their customer bases by educating them on how to introduce deeper and broader sets of service offerings. In this manner, our MSP customers serve as an extension of our sales footprint while requiring minimal incremental sales efforts by us.
Our solutions integrate with third-party professional services automation tools, IT service management products and other key technologies utilized by MSPs. Professional Services Automation and Ticketing.
Our solutions integrate with third-party professional services automation tools, IT services management products and other key technologies utilized by MSPs. Professional Services Automation and Ticketing.
This solution is designed to enable our MSP partners to: • employ a multi-layered detection approach utilizing advanced threat assessment techniques and a 24x7 Security Operations Center to detect and resolve emerging attacks across diverse client infrastructures; • demonstrate full visibility into actions taken to confirm and respond to security events, including detection and investigations custom reports and situational reporting on current cybersecurity posture; and • receive comprehensive compliance insights across hybrid infrastructures with visibility into at-risk systems and compliance readiness.
This solution is designed to enable our customers to: • employ a multi-layered detection approach utilizing advanced threat assessment techniques and a 24x7 Security Operations Center to detect and resolve emerging attacks across diverse client infrastructures; • demonstrate full visibility into actions taken to confirm and respond to security events, including detection and investigations custom reports and situational reporting on current cybersecurity posture; and • receive comprehensive compliance insights across hybrid infrastructures with visibility into at-risk systems and compliance readiness.
Our partner acquisition model is driven by us adding new MSP partners that develop and deliver services powered by our platform to their SME customers. We focus on adding MSP partners that have the opportunity to grow their businesses alongside us and increase consumption of solutions on our platform. 2) Facilitate partner-enabled growth.
Our partner acquisition model is driven by us adding new customers that develop and deliver services powered by our platform. We focus on adding customers that have the opportunity to grow their businesses alongside us and increase consumption of solutions on our platform. 2) Facilitate MSP-enabled growth.
Whether in these countries or in others in which we operate, civil unrest, political instability or uncertainty, military activities, or broad-based sanctions, should they continue for the long term or escalate, could expose us to the risks noted above, as well as numerous other risks, and require us to re-balance our geographic concentrations, any or all of which could have an adverse effect on our operations, business and financial condition.
Whether in these countries or in others in which we operate, civil unrest, political instability or uncertainty, military activities, or broad-based sanctions, should they continue for the long term or escalate, could expose us to the risks noted above, as well as numerous 27 Table of Contents other risks, and require us to re-balance our geographic concentrations, any or all of which could have an adverse effect on our operations, business and financial condition.
Any failure to maintain high-quality partner support, or a market perception that we do not maintain high-quality support, could adversely affect our reputation, our ability to sell our solutions to existing and prospective customers, and our business, operating results and financial condition. If we fail to maintain or grow our brand, our financial condition and operating results might suffer.
Any failure to maintain high-quality partner support, or a market perception that we do not maintain high-quality support, could adversely affect our reputation, our ability to sell our solutions to existing and prospective customers, and our business, operating results and financial condition. If we fail to maintain or grow our brands, our financial condition and operating results might suffer.
All such filings are available free of charge. In addition, the SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 17 Table of Contents ITEM 1A.
All such filings are available free of charge. In addition, the SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 18 Table of Contents ITEM 1A.
We also engage third party contractors that have a limited number of employees that reside in the Ukraine. In addition, we generated a de minimis amount of revenue from customers located in Ukraine during the year ended December 31, 2023, and Russia and Ukraine during the years ended December 31, 2022 and 2021.
We also engage third party contractors that have a limited number of employees that reside in the Ukraine. In addition, we generated a de minimis amount of revenue from customers located in Ukraine during the years ended December 31, 2024 and 2023, and Russia and Ukraine during the year ended December 31, 2022.
Our RMM solutions include a fulsome set of remote monitoring capabilities across devices, endpoints and infrastructures designed to allow our MSP partners to: • support thousands of device types across major device categories, including Windows, macOS and Linux endpoints as well as network infrastructure components such as switches, routers, firewalls and wireless access points; • utilize a robust set of out-of-the-box features including network topology mapping and network path analysis; • enable remote access and support for IT systems and devices to quickly identify and resolve issues; • automate policies and tasks, power active device discovery and utilize automated alerts and customizable performance checks; • enable technical support personnel to perform maintenance and troubleshoot a wide array of issues, whether attended or unattended by end users; • manage their business through dashboards and reports that track the activities of their technical support personnel, demonstrate value to their customers and identify opportunities for operational improvement; and • monitor, manage, secure, standardize and automate Microsoft 365 users, Azure resources, and Intune devices.
Our UEM solutions include a fulsome set of remote monitoring capabilities across devices, endpoints and infrastructures designed to allow our IT services provider customers to: • support thousands of device types across major device categories, including Windows, macOS and Linux endpoints as well as network infrastructure components such as switches, routers, firewalls and wireless access points; • utilize a robust set of out-of-the-box features including network topology mapping and network path analysis; • enable remote access and support for IT systems and devices to quickly identify and resolve issues; • automate policies and tasks, power active device discovery and utilize automated alerts and customizable performance checks; • enable technical support personnel to perform maintenance and troubleshoot a wide array of issues, whether attended or unattended by end users; • manage their business through dashboards and reports that track the activities of their technical support personnel, demonstrate value to their customers and identify opportunities for operational improvement; and • monitor, manage, secure, standardize and automate Microsoft 365 users, Azure resources, and Intune devices.
We grow with our MSP partners as they expand their customer bases, deliver new services powered by our solutions and when their customers add devices and services. Our partner success strategies further enhance our model’s efficiency by empowering our MSP partners to grow their businesses and expand their customer bases and consumption of solutions on our platform.
We grow with our customers as they expand their customer bases, deliver new services powered by our solutions and when their customers add devices and services. Our partner success strategies further enhance our model’s efficiency by empowering our customers to grow their businesses and expand their customer bases and consumption of solutions on our platform.
We hire based on our values, recognize each other based on our values, and strive to uphold our values in all of our interactions - every day. 15 Table of Contents • N-rich Lives: We use our talents to find meaning and purpose in all that we do. • N-spire Others: We unlock potential and help bring out the best in others. • N-joy the Journey: We are passionate about what we do and have fun along the way.
We hire based on our values, recognize each other based on our values, and strive to uphold our values in all of our interactions - every day. • N-rich Lives: We use our talents to find meaning and purpose in all that we do. • N-spire Others: We unlock potential and help bring out the best in others. • N-joy the Journey: We are passionate about what we do and have fun along the way.
Several jurisdictions have proposed or adopted laws that restrict or prohibit unsolicited email or “spam” or regulate the use of cookies, including the European Union’s General Data Protection Regulation. These new laws and regulations may impose significant monetary penalties for violations and complex and often burdensome requirements in connection with sending commercial email or other data-driven marketing practices.
Many jurisdictions have proposed or adopted laws that restrict or prohibit unsolicited email or “spam” or regulate the use of cookies, including the European Union’s General Data Protection Regulation. These laws and regulations may impose significant monetary penalties for violations and complex and often burdensome requirements in connection with sending commercial email or other data-driven marketing practices.
Additionally, through our MSP Institute, MSP partners gain access to business, sales, marketing and technical training from industry experts and leaders. This is supplemented by our Head Nerds program, which delivers expert training and consultation on how our partners can optimize their businesses for the most important growth areas such as security, backup, automation and operations.
Additionally, through our MSP Institute, MSP customers gain access to business, sales, marketing and technical training from industry experts and leaders. This is supplemented by our Head Nerds program, which delivers expert training and consultation on how our customers can optimize their businesses for their most important growth areas such as security, backup, automation and operations.
Leveraging our deep industry expertise, we provide a range of community-based resources for our MSP partners including peer-to-peer webinars, online and in-person events, and content resources that are designed to help them better realize the value of our platform. Sales We deploy a highly effective and disciplined approach to sales that has foundations in the “selling from the inside” culture.
Leveraging our deep industry expertise, we provide a range of community-based resources for our customers, including peer-to-peer webinars, online and in-person events, and content resources that are designed to help them better realize the value of our platform. Sales We deploy a highly effective and disciplined approach to sales that has foundations in the “selling from the inside” culture.
Our no code visual workflow builder and over 600 design elements make it possible for technical and non-technical personnel at our MSP partners to create and customize powerful automated processes for both proactive and reactive workflows. Our MSP partners can easily manage automation policies and track change configurations via detailed reporting within our platform. Unified agent management .
Our no code visual workflow builder and over 600 design elements make it possible for technical and non-technical personnel at our customers to create and customize powerful automated processes for both proactive and reactive workflows. Our customers can easily manage automation policies and track change configurations via detailed reporting within our platform. Unified agent management .
If our subscription-based business model fails to yield the benefits that we expect, our results of operations could be negatively impacted. • We operate in highly competitive markets, which could make it difficult for us to acquire and retain MSP partners at our historic rates. • Our success depends on our ability to adapt to the rapidly changing needs of MSP partners and their SME customers. • If we fail to integrate our solutions with a variety of operating systems, software applications, platforms and hardware that are developed by others or ourselves, our solutions may become less competitive or obsolete and our results of operations would be harmed. • Acquisitions present many risks that could have an adverse effect on our business and results of operations. • We may not be able to achieve or sustain the same level of cash flows in the future. • Because our long-term success depends on our ability to operate our business internationally and increase sales of our solutions to our MSP partners located outside of the United States, our business is susceptible to risks associated with international operations. • We resell third-party software and integrate third-party software into our solutions that may be difficult to replace or cause errors or failures of our solutions that could lead to a loss of MSP partners or harm to our reputation and our operating results. • Material defects, errors or vulnerabilities in our solutions, the failure of our solutions to block malware or prevent a security breach, misuse of our solutions, or risks of product liability claims could harm our reputation, result in significant costs to us and impair our ability to sell our solutions.
If our subscription-based business model fails to yield the benefits that we expect, our results of operations could be negatively impacted. • We operate in highly competitive markets, which could make it difficult for us to acquire and retain customers at our historic rates. • Our success depends on our ability to adapt to the rapidly changing needs of IT services providers, MSPs, and their SMB mid-market customers. • If we fail to integrate our solutions with a variety of operating systems, software applications, platforms and hardware that are developed by others or ourselves, our solutions may become less competitive or obsolete and our results of operations would be harmed. • Acquisitions present many risks that could have an adverse effect on our business and results of operations. • We may not be able to achieve or sustain the same level of cash flows in the future. • Because our long-term success depends on our ability to operate our business internationally and increase sales of our solutions to our customers located outside of the United States, our business is susceptible to risks associated with international operations. • We resell third-party software and integrate third-party software into our solutions that may be difficult to replace or that could cause errors or failures of our solutions and lead to a loss of customers or harm to our reputation and our operating results. • Material defects, errors or vulnerabilities in our solutions, the failure of our solutions to block malware or prevent a security breach, misuse of our solutions, or risks of product liability claims could harm our reputation, result in significant costs to us and impair our ability to sell our solutions.
Due to the growing number of networked, highly distributed and diverse endpoints, the burden faced by SMEs to manage, provision and secure these endpoints across cloud, on-premises and hybrid cloud infrastructures is becoming increasingly complex. 5) Expectations for always-on, always-available IT environments compound pressures. Customers, employees and other stakeholders increasingly expect always-on, always-available access to digital resources.
Due to the growing number of networked, highly distributed and diverse endpoints, the burden to manage, provision and secure these endpoints across cloud, on-premises and hybrid cloud infrastructures is becoming increasingly complex. 5) Expectations for always-on, always-available IT environments compound pressures. Customers, employees and other stakeholders increasingly expect always-on, always-available access to digital resources.
MSPs also may work in collaboration with SMEs’ internal IT departments in a co-managed model to deliver specific expertise and share responsibilities. We see a growing number of IT service providers, such as value-added resellers, systems integrators, IT consultants and data center operators, adopting a managed services model as demand for these services increases.
MSPs also may work in collaboration with companies’ internal IT departments in a co-managed model to deliver specific expertise and share responsibilities. We see a growing number of IT services providers, such as value-added resellers, systems integrators, IT consultants and data center operators, adopting a managed services model as demand for these services increases.
Our MSP partners are able to easily define business roles and processes and then leverage our automation capabilities to deploy those policies across their customers’ IT environments to manage and maintain consistent standards of service. The automation in our platform is also designed to help our MSP partners scale their customer base with fewer technical support personnel.
Our customers are able to easily define business roles and processes and then leverage our automation capabilities to deploy those policies across their customers’ IT environments to manage and maintain consistent standards of service. The automation in our platform is also designed to help our customers scale their customer base with fewer technical support personnel.
We deploy a highly flexible and analytics-driven direct marketing approach through broad use of digital 13 Table of Contents marketing techniques including search engine optimization, paid search, social media marketing, events, targeted email campaigns, localized websites, free resources and content marketing, display advertising, affinity groups and webinars. We target our marketing efforts through a segment specific approach.
We deploy a highly flexible and analytics-driven direct marketing approach through broad use of digital marketing techniques including search engine optimization, paid search, social media marketing, events, targeted email campaigns, localized websites, free resources and content marketing, display advertising, affinity groups and webinars. We target our marketing efforts through a segment specific approach.
In addition, many of our current and potential competitors enjoy substantial competitive advantages over us, such as greater brand awareness and longer operating history, broader distribution and established relationships with MSPs, larger sales and marketing budgets and resources, greater customer support resources, greater resources to make strategic acquisitions or enter into strategic partnerships, lower labor and development costs, larger and more mature intellectual property portfolios and substantially greater financial, technical and other resources.
In addition, many of our current and potential competitors enjoy substantial competitive advantages over us, such as greater brand awareness and longer operating history, broader distribution and established relationships with IT services providers, larger sales and marketing budgets and resources, greater customer support resources, greater resources to make strategic acquisitions or enter into strategic partnerships, lower labor and development costs, larger and more mature intellectual property portfolios and substantially greater financial, technical and other resources.
Because our long-term success depends on our ability to operate our business internationally and increase sales of our solutions to our MSP partners located outside of the United States, our business is susceptible to risks associated with international operations. We have international operations in Australia, Austria, Belarus, Canada, the Netherlands, the Philippines, Poland, Portugal, Romania and the United Kingdom.
Because our long-term success depends on our ability to operate our business internationally and increase sales of our solutions to our customers located outside of the United States, our business is susceptible to risks associated with international operations. We have international operations in Australia, Austria, Belarus, Canada, the Netherlands, the Philippines, Poland, Portugal, Romania and the United Kingdom.
For potential MSP partners that have less complex IT needs, we typically deploy a low-cost, low-touch strategy. For potential MSP partners that have more complex IT needs, we leverage a cost-efficient, account-based marketing model to target and educate them. Internationally, we partner in specific regions with our global network of distributors to drive a localized marketing strategy.
For potential customers that have less complex IT needs, we typically deploy a low-cost, low-touch strategy. For potential customers that have more complex IT needs, we leverage a cost-efficient, account-based marketing model to target and educate them. Internationally, we partner in specific regions with our global network of distributors to drive a localized marketing strategy.
Risks Related to Our Intellectual Property • The success of our business depends on our ability to obtain, maintain, protect and enforce our intellectual property rights. • Our solutions use third-party software that may be difficult to replace or cause errors or failures of our solutions that could lead to a loss of MSP partners or harm to our reputation and our operating results.
Risks Related to Our Intellectual Property • The success of our business depends on our ability to obtain, maintain, protect and enforce our intellectual property rights. • Our solutions use third-party software that may be difficult to replace or cause errors or failures of our solutions that could lead to a loss of customers or harm to our reputation and our operating results.
In some instances, we may not be able to identify the cause or causes of these 27 Table of Contents website performance problems within an acceptable period of time. It may become increasingly difficult to maintain and improve our website performance, especially during peak usage times and as our user traffic increases.
In some instances, we may not be able to identify the cause or causes of these website performance problems within an acceptable period of time. It may become increasingly difficult to maintain and improve our website performance, especially during peak usage times and as our user traffic increases.
Additionally, we offer flexible deployment models across cloud, on-premises and hybrid cloud infrastructures that accommodate the IT environment preferences and needs of our MSP partners and their customers. 6) Efficient deployment and scale. Our platform is designed to be quickly configured and deployed by our MSP partners and enable efficient delivery of services to their customers.
Additionally, we offer flexible deployment models across cloud, on-premises and hybrid cloud infrastructures that accommodate the IT environment preferences and needs of our customers. 6) Efficient deployment and scale. Our platform is designed to be quickly configured and deployed by our IT services provider customers and enable efficient delivery of services to their customers.
We use ARR, and in particular, ARR attributable to MSP partners with over $50,000 of ARR, to enhance the understanding of our business performance and the growth of our relationships with our MSP partners. Marketing, Sales, Partner Success and Support Our marketing, sales and partner success organizations serve as the engine that powers our multi-dimensional land and expand go-to-market strategy.
We use ARR, and in particular ARR attributable to customers with over $50,000 of ARR, to enhance the understanding of our business performance and the growth of our relationships with our customers. Marketing, Sales, Partner Success and Support Our marketing, sales and partner success organizations serve as the engine that powers our multi-dimensional land and expand go-to-market strategy.
Through these strategic partnerships and our multi-tier, multi-tenant architecture, we are able to offer our MSP partners a unified platform that includes offerings from these vendors such as integration with Microsoft Intune, deep support for Mac, and robust monitoring for cloud services such as Meraki.
Through these strategic partnerships and our multi-tier, multi-tenant architecture, we are able to offer our customers a unified platform that includes offerings from these vendors such as integration with Microsoft Intune, deep support for Mac, and robust monitoring for cloud services such as Meraki.
This approach is rooted in having our sales organization selling online or over the phone, using a structured approach to managing opportunities, and adhering to standardized pricing and contract terms. Our sales team handles MSP partner accounts of all sizes and across geographies through our selling from the inside approach.
This approach is rooted in having our sales organization selling online or over the phone, using a structured approach to managing opportunities, and adhering to standardized pricing and contract terms. Our sales team handles customer accounts of all sizes and across geographies through our selling from the inside approach.
However, as discussed in greater detail below, we are subject to a wide variety of data privacy and security laws and regulations in the United States and internationally that affect our ability to collect and use customer data and communicate with MSP partners through email and phone calls.
However, as discussed in greater detail below, we are subject to a wide variety of data privacy and security laws and regulations in the United States and internationally that affect our ability to collect and use customer data and communicate with customers through email and phone calls.
Our new internal Wellness site provides access to resources and new ways to stay healthy - whether it’s physical, mental, financial or social. We also offer wellness focused programs virtually and at our hubs, such as employee-led meditation sessions, healthy meal education, and financial wellness workshops.
Our internal site provides access to resources and new ways to stay healthy - whether it’s physical, mental, financial or social. We also offer wellness-focused programs virtually and at our hubs, such as Global Wellness Fairs at our Collaboration Hubs, employee-led meditation sessions, healthy meal education, and financial wellness workshops.
A subscription generally entitles a customer to, among other things, support, as well as security updates, fixes, functionality enhancements and upgrades to the technologies, each, if and when available. To increase our revenue, we must regularly add new MSP partners and expand our relationships with our existing MSP partners.
A subscription generally entitles a customer to, among other things, support, as well as security updates, fixes, functionality enhancements and upgrades to the technologies, each, if and when available. To increase our revenue, we must regularly add new customers and expand our relationships with our existing customers.
We may not be able to remedy any problems caused by hackers or other similar actors in a timely manner, or at all. When faced with defects or errors, we will need to provide high-quality support to our MSP partners during remediation efforts.
We may not be able to remedy any problems caused by hackers or other similar actors in a timely manner, or at all. When faced with defects or errors, we will need to provide high-quality support to our customers during remediation efforts.
Any of these situations could result in negative publicity to us, damage our reputation and increase expenses and customer relations issues, and expose us to investigations, liabilities and other costs and negative consequences, all of which would adversely affect our business, financial condition, and operating results.
Any of these situations could result in negative publicity to us, damage our reputation and 29 Table of Contents increase expenses and customer relations issues, and expose us to investigations, liabilities and other costs and negative consequences, all of which would adversely affect our business, financial condition, and operating results.
Any of these results would have a negative effect on our business and operating results. Any intellectual property rights claim against us or our MSP partners, with or without merit, could be time-consuming and expensive to litigate or settle and could divert management resources and attention.
Any of these results would have a negative effect on our business and operating results. Any intellectual property rights claim against us or our customers, with or without merit, could be time-consuming and expensive to litigate or settle and could divert management resources and attention.
With over 100 out-of-the-box automated tasks and a no-code drag-and-drop editor to easily build additional automation policies, our MSP partners have eliminated common, repetitive tasks and freed up technicians to take on higher-value activities.
With over 100 out-of-the-box automated tasks and a no-code drag-and-drop editor to easily build additional automation policies, our customers have eliminated common, repetitive tasks and freed up technicians to take on higher-value activities.
Third parties may make infringement and similar or related claims after we have acquired technology that had not been asserted prior to our acquisition. Our actual operating results may differ significantly from information we may provide in the future regarding our financial outlook.
Third parties may make infringement and similar or related claims after we have acquired technology that had not been asserted prior to our acquisition. Our actual operating results may differ significantly from information we may provide regarding our financial outlook.
We provide various partner success strategies aimed at helping our MSP partners expand their customer bases and service offerings through our platform and to grow and operate their businesses more effectively. Our dedicated partner success teams assist with onboarding, post-sales engineering and partner management.
We provide various partner success strategies aimed at helping our customers expand their customer bases and service offerings through our platform and to grow and operate their businesses more effectively. Our dedicated partner success teams assist with onboarding, post-sales engineering and partner management.
Many of these providers attempt to impose limitations on their liability for such errors, defects or failures, and if enforceable, we may have additional liability to our MSP partners or third-party providers that could harm our reputation and increase our operating costs.
Many of these providers attempt to impose limitations on their liability for such errors, defects or failures, and if enforceable, we may have additional liability to our customers or third-party providers that could harm our reputation and increase our operating costs.
Any failure to replace this traffic could reduce our revenue. In addition, the success of our digital marketing initiatives depends in part on our ability to collect customer data and communicate with existing and potential MSP partners online and through phone calls.
Any failure to replace this traffic could reduce our revenue. In addition, the success of our digital marketing initiatives depends in part on our ability to collect customer data and communicate with existing and potential customers online and through phone calls.
As part of the solution evaluation trial process and during our sales process, most of our MSP partners agree to receive emails and other communications from us. We also use tracking technologies, including cookies and related technologies, to help us track the activities of the visitors to our websites.
As part of the solution evaluation trial process and during our sales process, most of our customers agree to receive emails and other communications from us. We also use tracking technologies, including cookies and related technologies, to help us track the activities of the visitors to our websites.
New solutions and enhancements that we develop or acquire may not sufficiently address the evolving needs of our existing and potential MSP partners and their SME customers, may not be introduced in a timely or cost-effective manner and may not achieve the broad market acceptance necessary to generate the amount of revenue necessary to realize returns on our investments in developing or acquiring such solutions or enhancements.
New solutions and enhancements that we develop or acquire may not sufficiently address the evolving needs of our existing and potential customers, may not be introduced in a timely or cost-effective manner and may not achieve the broad market acceptance necessary to generate the amount of revenue necessary to realize returns on our investments in developing or acquiring such solutions or enhancements.
These MSP partners rely on our platform to deploy, manage and secure the IT environments of over 500,000 SMEs around the world. Technology is becoming increasingly mission critical for SMEs as a means to improve productivity, work remotely, manage, and monitor their businesses, run operations and engage with customers and other key stakeholders.
These customers rely on our platform to deploy, manage and secure the IT environments of over 500,000 businesses around the world. Technology is becoming increasingly mission critical for companies as a means to improve productivity, work remotely, manage, and monitor their businesses, run operations and engage with customers and other key stakeholders.
Unlike our subscription revenue, which is recognized ratably over the term of the subscription, we generally recognize consumption revenue as the services are delivered. Because our MSP partners have flexibility in the timing of their consumption, we do not have the visibility into the timing of revenue recognition that we have with our subscription revenue.
Unlike our subscription revenue, which is recognized ratably over the term of the subscription, we generally recognize consumption revenue as the services are delivered. Because our customers have flexibility in the timing of their consumption, we do not have the visibility into the timing of revenue recognition that we have with our subscription revenue.
To add new MSP partners, we employ an efficient low-touch, high-velocity “selling from the inside” motion. Our sales motion is rooted in selling online or over the phone to MSPs of all sizes across any location through a prescriptive approach that adheres to standardized pricing and agreements.
To add new customers, we employ an efficient low-touch, high-velocity “selling from the inside” motion. Our sales motion is rooted in selling online or over the phone to customers of all sizes across any location through a prescriptive approach that adheres to standardized pricing and agreements.
This solution is designed to enable our MSP partners to: • protect against the latest threats without waiting for recurring scans or updates to signature definitions; • reverse the effects of an attack through remediation and rollback to restore endpoints to their pre-attack state and minimize customer downtime; • enhance network visibility, identify endpoints, and reduce and control customer attack surfaces; • proactively hunt for threats and offload the operational burden of endpoint management to security specialists; and 10 Table of Contents • view summaries or detailed information about threats from the centralized dashboard of our platform.
This solution is designed to enable our customers to: • protect against the latest threats without waiting for recurring scans or updates to signature definitions; • reverse the effects of an attack through remediation and rollback to restore endpoints to their pre-attack state and minimize customer downtime; • enhance network visibility, identify endpoints, and reduce and control customer attack surfaces; • proactively hunt for threats and offload the operational burden of endpoint management to security specialists; and • view summaries or detailed information about threats from the centralized dashboard of our platform.
There is a risk that our MSP partners will not use portions of our platform that provide consumption-based revenue at all or more slowly than we expect, and our actual results may differ from our forecasts.
There is a risk that our customers will not use portions of our platform that provide consumption-based revenue at all or more slowly than we expect, and our actual results may differ from our forecasts.
Any failure by us to achieve or sustain cash flows on a consistent basis could cause us to 24 Table of Contents halt our expansion, not pursue strategic business combinations, default on payments due on existing contracts, fail to continue developing our platform, solutions and services or experience other negative changes in our business.
Any failure by us to achieve or sustain cash flows on a consistent basis could cause us to halt our expansion, not pursue strategic business combinations, default on payments due on existing contracts, fail to continue developing our platform, solutions and services or experience other negative changes in our business.
We support our MSP partners by offering partner success strategies designed to help them better manage their own businesses, deliver service offerings powered by our platform and grow their customer bases. These partner success strategies help drive both retention and expansion as the resources we provide are designed to help MSPs better assess and pursue growth opportunities.
We support our customers by offering partner success strategies designed to help them better manage their own businesses, deliver service offerings powered by our platform and grow their customer bases. These partner success strategies help drive both retention and expansion as the resources we provide are designed to help our customers better assess and pursue growth opportunities.
In order to meet the needs of our MSP partners, our solutions must integrate with a variety of network, hardware and software platforms, and we need to continuously modify and enhance our solutions to adapt to changes in hardware, software, networking, browser and database technologies.
In order to meet the needs of our customers, our solutions must integrate with a variety of network, hardware and software platforms, and we need to continuously modify and enhance our solutions to adapt to changes in hardware, software, networking, browser and database technologies.
SMEs are not exempt from compliance obligations and can be disproportionately burdened due to limited resources and expertise. Laws, regulations, rules and standards governing IT, privacy, security, personnel and industries are complex, constantly changing and varied across geographies and sectors, with many obligations carrying criminal penalties for non-compliance. 4) Proliferation of connected endpoints is driving increased complexity.
SMBs and mid-market companies are not exempt from compliance obligations and can be disproportionately burdened due to limited resources and expertise. Laws, regulations, rules and standards governing IT, privacy, security, personnel and industries are complex, constantly changing and varied across geographies and sectors, with many obligations carrying criminal penalties for non-compliance. 4) Proliferation of connected endpoints is driving increased complexity.
For example, although our presence in Belarus has been substantially reduced over the prior year, we have research and development facilities located in Belarus, which has experienced numerous public protest activities and civil unrest since the presidential election in early August 2020, with active government and police-force intervention.
For example, although our presence in Belarus has been substantially reduced since 2022, we have research and development facilities located in Belarus, which has experienced numerous public protest activities and civil unrest since the presidential election in early August 2020, with active government and police-force intervention.
Some of our competitors have made acquisitions or entered into strategic relationships with one another to offer more competitive, bundled or integrated solution offerings and to adapt more quickly to new technologies and MSP or SME needs.
Some of our competitors have made acquisitions or entered into strategic relationships with one another to offer more competitive, bundled or integrated solution offerings and to adapt more quickly to new technologies and customer needs.
We believe that developing, maintaining and growing awareness and integrity of our brand in a cost-effective manner are important to achieving widespread acceptance of our existing and future offerings and are important elements in attracting new MSP partners.
We believe that developing, maintaining and growing awareness and integrity of our brand in a cost-effective manner are important to achieving widespread acceptance of our existing and future offerings and are important elements in attracting new customers.
Our remote monitoring and management capabilities span both on-premises and cloud-native systems and workloads, while our fully cloud-based data protection capabilities similarly enable continuous backup and high-speed data restoration regardless of where the data resides. 4) Out-of-the-box automation for higher service efficacy and capacity.
Our unified endpoint management capabilities span both on-premises and cloud-native systems and workloads, while our fully cloud-based data protection capabilities similarly enable continuous backup and high-speed data restoration regardless of where the data resides. 4) Out-of-the-box automation for higher service efficacy and capacity.
Our ability to expand within our partner base is demonstrated by our dollar-based net revenue retention rate, which was 110%, 103% and 110% for each of the trailing twelve-month periods ended December 31, 2023, 2022 and 2021, respectively. 3) Widen our surface area.
Our ability to expand within our customer base is demonstrated by our dollar-based net revenue retention rate, which was 103%, 110% and 103% for each of the trailing twelve-month periods ended December 31, 2024, 2023 and 2022, respectively. 3) Widen our surface area.
Accordingly, these organizations may continue allocating their IT budgets for such legacy tools and services and may not adopt our offerings. Further, many organizations have invested substantial personnel and financial resources to design and operate their networks and have established deep relationships with other competitive providers.
Accordingly, these organizations may continue allocating their IT budgets for such legacy tools and services and may not adopt our offerings. Further, many organizations have invested substantial personnel and financial resources to design and operate their networks and have established deep 23 Table of Contents relationships with other competitive providers.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Cybersecurity Cyberattacks, including the Cyber Incident, and other security incidents have resulted, and in the future may result, in compromises or breaches of our, our MSP partners’, or their SME customers’ systems, the insertion of malicious code, malware, ransomware or other vulnerabilities into our, our MSP partners’, or their SME customers’ systems, the exploitation of vulnerabilities in our, our MSP partners’, or their SME customers’ environments, the theft or misappropriation of our, our MSP partners’, or their SME customers’ proprietary and confidential information, and interference with our, our MSP partners’, or their SME customers’ operations, exposure to legal and other liabilities, higher MSP partner and employee attrition and the loss of key personnel, negative impacts to our sales, renewals and upgrades and reputational harm and other serious negative consequences, any or all of which could materially harm our business.
Biggest changeAny of these risks could be difficult to eliminate or manage, and if not addressed, could have a negative effect on our business, operating results and financial condition. 37 Table of Contents Risks Related to Cybersecurity Cyberattacks, including the Cyber Incident, and other security incidents have resulted, and in the future may result, in compromises or breaches of our, our IT services provider customers’, or their SMB and mid-market customers’ systems, the insertion of malicious code, malware, ransomware or other vulnerabilities into our, our IT services provider customers’, or their SMB and mid-market customers’ systems, the exploitation of vulnerabilities in our, our T services provider customers’, or their SMB and mid-market customers’ environments, the theft or misappropriation of our, our IT services provider customers’, or their SMB and mid-market customers’ proprietary and confidential information, and interference with our, our IT services provider customers’, or their SMB and mid-market customers’ operations, exposure to legal and other liabilities, higher customer and employee attrition and the loss of key personnel, negative impacts to our sales, renewals and upgrades and reputational harm and other serious negative consequences, any or all of which could materially harm our business.
SolarWinds has informed us that it has notified the applicable regulators in the European Union and the United States, as well as the impacted individuals where required, with respect to the personal information contained in the email accounts of certain current and former employees and customers to which the threat actor gained access.
SolarWinds has informed us that it notified the applicable regulators in the European Union and the United States, as well as the impacted individuals where required, with respect to the personal information contained in the email accounts of certain current and former employees and customers to which the threat actor gained access.
Under the NYSE rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a controlled company and may elect not to comply with certain NYSE corporate governance requirements, including the requirements that: • a majority of the board of directors consist of independent directors as defined under the rules of the NYSE; • the nominating and governance committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and • the compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
Under the NYSE rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a controlled company and may elect not to comply with certain NYSE corporate governance requirements, including the requirements that: • a majority of the board of directors consist of independent directors as defined under the rules of the NYSE; and • the nominating and governance committee and compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
Additionally, the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Act”), which was enacted on December 22, 2017, requires complex computations to be performed, significant judgments to be made in the interpretation of the provisions of the Tax Act, significant estimates in calculations and the preparation and analysis of information not previously relevant or regularly produced. The U.S.
Tax Cuts and Jobs Act of 2017 (the “Tax Act”), which was enacted on December 22, 2017, requires complex computations to be performed, significant judgments to be made in the interpretation of the provisions of the Tax Act, significant estimates in calculations and the preparation and analysis of information not previously relevant or regularly produced. The U.S.
Our substantial indebtedness incurred under the credit agreement, combined with our other financial obligations and contractual commitments could have important consequences, including: • requiring us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness, thereby reducing the funds available for operations, working capital, capital expenditures, acquisitions, product development and other purposes; • increasing our vulnerability to adverse economic and industry conditions, which could place us at a competitive disadvantage compared to our competitors that have relatively less indebtedness; • limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate; • restricting us from making investments or strategic acquisitions or causing us to make non-strategic divestitures; • requiring us under certain circumstances to repatriate earnings from our international operations in order to make payments on our indebtedness, which could subject us to local country income and withholding taxes and/or state income taxes that are not currently accrued in our financial statements; 33 Table of Contents • requiring us to liquidate short-term or long-term investments in order to make payments on our indebtedness, which could generate losses; • exposing us to the risk of increased interest rates as borrowings under the credit agreement are subject to variable rates of interest; and • limiting our ability to borrow additional funds, or to dispose of assets to raise funds, if needed, for working capital, capital expenditures, acquisitions, product development and other corporate purposes.
Our substantial indebtedness incurred under the credit agreement, combined with our other financial obligations and contractual commitments could have important consequences, including: • requiring us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness, thereby reducing the funds available for operations, working capital, capital expenditures, acquisitions, product development and other purposes; • increasing our vulnerability to adverse economic and industry conditions, which could place us at a competitive disadvantage compared to our competitors that have relatively less indebtedness; • limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate; • restricting us from making investments or strategic acquisitions or causing us to make non-strategic divestitures; • requiring us under certain circumstances to repatriate earnings from our international operations in order to make payments on our indebtedness, which could subject us to local country income and withholding taxes and/or state income taxes that are not currently accrued in our financial statements; • requiring us to liquidate short-term or long-term investments in order to make payments on our indebtedness, which could generate losses; • exposing us to the risk of increased interest rates as borrowings under the credit agreement are subject to variable rates of interest; and • limiting our ability to borrow additional funds, or to dispose of assets to raise funds, if needed, for working capital, capital expenditures, acquisitions, product development and other corporate purposes.
Furthermore, because we have ceased to be an emerging growth company as of December 31, 2023, we are now required to have our independent registered public accounting firm attest to the effectiveness of our internal controls.
Furthermore, because we ceased to be an emerging growth company as of December 31, 2023, we are required to have our independent registered public accounting firm attest to the effectiveness of our internal controls.
Moreover, because many of the features of our offerings use, store and report on SME data, which may contain personal data, any inability to adequately address privacy concerns, to honor a data subject request, to delete stored data at the relevant times, or to comply with applicable privacy laws, regulations and policies could, even if unfounded, result in liability to us and, damage to our reputation, loss of sales and harm to our business.
Moreover, because many of the features of our offerings use, store and report on SMB data, which may contain personal data, any inability to adequately address privacy concerns, to honor a data subject request, to delete stored data at the relevant times, or to comply with applicable privacy laws, regulations and policies could, even if unfounded, result in liability to us and, damage to our reputation, loss of sales and harm to our business.
The discovery of new or different information regarding the Cyber Incident, including with respect to its scope, the activities of the threat actor within the shared SolarWinds environment and the related impact on any of our systems, solutions, current or former employees and MSP partners, could increase our costs and liabilities related to the Cyber Incident and expose us to claims, investigations by U.S. federal and state and foreign governmental officials and agencies, civil and criminal litigation, including securities class action and other lawsuits, and other liability, resulting in material remedial and other expenses which may not be covered by insurance, including fines and further damage to our business, reputation, intellectual property, results of operations and financial condition.
The discovery of new or different information regarding the Cyber Incident, including with respect to its scope, the activities of the threat actor within the shared SolarWinds environment and the related impact on any of our systems, solutions, current or former employees and customers, could increase our costs and liabilities related to the Cyber Incident and expose us to claims, investigations by U.S. federal and state and foreign governmental officials and agencies, civil and criminal litigation, including securities class action and other lawsuits, and other liability, resulting in material remedial and other expenses which may not be covered by insurance, including fines and further damage to our business, reputation, intellectual property, results of operations and financial condition.
The covenants, among other things, limit our and certain of our subsidiaries’ abilities to: • incur additional indebtedness; • create or incur liens; • engage in mergers, consolidations, amalgamations, liquidations, dissolutions or dispositions; • make investments, acquisitions, loans (including guarantees), advances or capital contributions; • sell, transfer or otherwise dispose of assets, including capital stock of subsidiaries; • conduct, transact or otherwise engage in certain business or operations; • create negative pledges or restrictions on the payment of dividends or payment of other amounts owed from subsidiaries; • make prepayments or repurchases of debt that is subordinated with respect to right of payment; • modify certain documents governing debt that is subordinated with respect to right of payment; • pay dividends and distributions on, or redeem, repurchase or retire our capital stock; and • engage in certain transactions with affiliates.
The covenants, among other things, limit our and certain of our subsidiaries’ abilities to: • incur additional indebtedness; • create or incur liens; • engage in mergers, consolidations, amalgamations, liquidations, dissolutions or dispositions; • make investments, acquisitions, loans (including guarantees), advances or capital contributions; • sell, transfer or otherwise dispose of assets, including capital stock of subsidiaries; • conduct, transact or otherwise engage in certain business or operations; • create negative pledges or restrictions on the payment of dividends or payment of other amounts owed from subsidiaries; • make prepayments or repurchases of debt that is subordinated with respect to right of payment; • modify certain documents governing debt that is subordinated with respect to right of payment; • pay dividends and distributions on, or redeem, repurchase or retire our capital stock; and 35 Table of Contents • engage in certain transactions with affiliates.
Cyberattacks, including the Cyber Incident, and other security incidents have resulted, and in the future may result, in numerous risks and adverse consequences to our business, including that (a) our prevention, mitigation and remediation efforts may not be successful or sufficient, (b) our confidential and proprietary information, including our source code, as well as personal information related to current or former employees and MSP partners, may be accessed, exfiltrated, misappropriated, compromised or corrupted, (c) we incur significant financial, legal, reputational and other harms to our business, including, loss of business, decreased sales, severe reputational damage adversely affecting current and prospective customer, employee or vendor relations and investor confidence, U.S. or foreign regulatory investigations and enforcement actions, litigation, indemnity obligations, damages for contractual breach, penalties for violation of applicable laws or regulations, including laws and regulations in the United States and other jurisdictions relating to the collection, use and security of user and other personally identifiable information and data, significant costs for remediation, impairment of our ability to protect our intellectual property, stock price volatility and other significant liabilities, (d) our insurance coverage, including coverage relating to certain security and privacy damages and claim expenses, may not be available or sufficient to compensate for all liabilities we incur related to these matters or that we may face increased costs to obtain and maintain insurance in the future, and (e) our steps to secure our internal environment, adapt and enhance our software development and build environments and ensure the security and integrity of the solutions that we deliver to our MSP partners may not be successful or sufficient to protect against future threat actors or cyberattacks.
Cyberattacks, including the Cyber Incident, and other security incidents have resulted, and in the future may result, in numerous risks and adverse consequences to our business, including that (a) our prevention, mitigation and remediation efforts may not be successful or sufficient, (b) our confidential and proprietary information, including our source code, as well as personal information related to current or former employees and customers, may be accessed, exfiltrated, misappropriated, compromised or corrupted, (c) we incur significant financial, legal, reputational and other harms to our business, including, loss of business, decreased sales, severe reputational damage adversely affecting current and prospective customer, employee or vendor relations and investor confidence, U.S. or foreign regulatory investigations and enforcement actions, litigation, indemnity obligations, damages for contractual breach, penalties for violation of applicable laws or regulations, including laws and regulations in the United States and other jurisdictions relating to the collection, use and security of user and other personally identifiable information and data, significant costs for remediation, impairment of our ability to protect our intellectual property, stock price volatility and other significant liabilities, (d) our insurance coverage, including coverage relating to certain security and privacy damages and claim expenses, may not be available or sufficient to compensate for all 38 Table of Contents liabilities we incur related to these matters or that we may face increased costs to obtain and maintain insurance in the future, and (e) our steps to secure our internal environment, adapt and enhance our software development and build environments and ensure the security and integrity of the solutions that we deliver to our customers may not be successful or sufficient to protect against future threat actors or cyberattacks.
As a part of SolarWinds and our prior branding as “SolarWinds MSP,” the Cyber Incident has harmed, and may continue to harm, our reputation, our MSP partner and employee relations and our operations and business as a result of both the impact it has had on our relationships with existing and prospective customers and the significant time and resources that our personnel have had and may have to devote to investigating and responding to the Cyber Incident.
As a part of SolarWinds and our prior branding as “SolarWinds MSP,” the Cyber Incident has harmed, and may continue to harm, our reputation, our customer and employee relations and our operations and business as a result of both the impact it has had on our relationships with existing and prospective customers and the significant time and resources that our personnel have had and may have to devote to investigating and responding to the Cyber Incident.
We expect that there will continue to be new proposed laws, regulations and industry standards concerning privacy, data protection and information security in the United States, the European Union and other jurisdictions, and we cannot yet determine the impact such future laws, regulations and standards will have on our business or the businesses of our MSP partners, including, but not limited to the European Union’s General Data Protection Regulation, the UK’s General Data Protection Regulation and U.S. state privacy laws, which created a range of new compliance obligations, and significantly increased financial penalties for noncompliance.
We expect that there will continue to be new proposed laws, regulations and industry standards concerning privacy, data protection and information security in the United States, the European Union and other jurisdictions, and we cannot yet determine the impact such future laws, regulations and standards will have on our business or the businesses of our customers, including, but not limited to the European Union’s General Data Protection Regulation, the UK’s General Data Protection Regulation and U.S. state privacy laws, which created a range of new compliance obligations, and significantly increased financial penalties for noncompliance.
Our restated charter also contains a provision that provides us with protections similar to Section 203 of the Delaware General Corporation Law (the “DGCL”), and prevents us from engaging in a business combination, such as a merger, with an 47 Table of Contents interested stockholder (i.e., a person or group that acquires at least 15% of our voting stock) for a period of three years from the date such person became an interested stockholder, unless (with certain exceptions) the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner.
Our restated charter also contains a provision that provides us with protections similar to Section 203 of the Delaware General Corporation Law (the “DGCL”), and prevents us from engaging in a business combination, such as a merger, with an interested stockholder (i.e., a person or group that acquires at least 15% of our voting stock) for a period of three years from the date such person became an interested stockholder, unless (with certain exceptions) the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner.
As of December 31, 2023, the Sponsors collectively owned in the aggregate approximately 111,564,512 shares of our common stock. We granted registration rights to the Sponsors with respect to shares of our common stock. Any shares registered pursuant to the registration rights agreement will be freely tradable in the public market, subject to compliance with applicable restrictions.
As of December 31, 2024, the Sponsors collectively owned in the aggregate approximately 111,564,512 shares of our common stock. We granted registration rights to the Sponsors with respect to shares of our common stock. Any shares registered pursuant to the registration rights agreement will be freely tradable in the public market, subject to compliance with applicable restrictions.
We are a controlled company within the meaning of the NYSE rules and, as a result, qualify for and may rely on exemptions from certain corporate governance requirements. As of December 31, 2023, the Sponsors beneficially owned a majority of the combined voting power of all classes of our outstanding voting stock.
We are a controlled company within the meaning of the NYSE rules and, as a result, qualify for and may rely on exemptions from certain corporate governance requirements. As of December 31, 2024, the Sponsors beneficially owned a majority of the combined voting power of all classes of our outstanding voting stock.
In doing so, they have been, and may in the future be, able to breach or compromise our IT systems, including those which we use to design, develop, deploy and support our products, and access and misappropriate our, our current and former employees’ and our MSP partners’ proprietary and confidential information, including our software source code, introduce malware, ransomware or vulnerabilities into our products and systems and create system disruptions or shutdowns.
In doing so, they have been, and may in the future be, able to breach or compromise our IT systems, including those which we use to design, develop, deploy and support our products, and access and misappropriate our, our current and former employees’ and our customers’ proprietary and confidential information, including our software source code, introduce malware, ransomware or vulnerabilities into our products and systems and create system disruptions or shutdowns.
If we were required to pay any significant amount of money in satisfaction of claims under these laws, or any similar laws enacted by other jurisdictions, or if we were forced to cease our business operations for any length of time as a result of our inability to comply fully with any of these laws, our business, operating results and financial condition could be 41 Table of Contents adversely affected.
If we were required to pay any significant amount of money in satisfaction of claims under these laws, or any similar laws enacted by other jurisdictions, or if we were forced to cease our business operations for any length of time as a result of our inability to comply fully with any of these laws, our business, operating results and financial condition could be adversely affected.
Although we take precautions to prevent violations of these laws, our exposure for violating these laws increases as our international presence expands and as we increase sales and operations in foreign jurisdictions. Government regulation of the Internet and e-commerce is evolving, and unfavorable changes or our failure to comply with regulations could harm our operating results.
Although we take precautions to prevent violations of these laws, our exposure for violating these laws increases as our international presence expands and as we increase sales and operations in foreign jurisdictions. 43 Table of Contents Government regulation of the Internet and e-commerce is evolving, and unfavorable changes or our failure to comply with regulations could harm our operating results.
The threat actor also created and moved additional files, including files that may have contained data about our MSP partners and files that may have contained data relating to trial and product activation of our N-central On Demand solution.
The threat actor also created and moved additional files, including files that may have contained data about our customers partners and files that may have contained data relating to trial and product activation of our N-central On Demand solution.
Despite our implementation of security measures and controls, our systems, the systems of our third-party service providers upon which we rely, the systems of our MSP partners and the virtualized systems of our MSP partners, as well as the information that those systems store and process are vulnerable to attack from numerous threat actors, including sophisticated nation-state and nation-state-supported actors (including advanced persistent threat intrusions).
Despite our implementation of security measures and controls, our systems, the systems of our third-party service providers upon which we rely, the systems of our customers and the virtualized systems of our customers, as well as the information that those systems store and process are vulnerable to attack from numerous threat actors, including sophisticated nation-state and nation-state-supported actors (including advanced persistent threat intrusions).
In addition, the legal standards, both in the United States and in foreign countries, relating to the validity, enforceability and scope of protection of intellectual 35 Table of Contents property rights are uncertain and still evolving. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property.
In addition, the legal standards, both in the United States and in foreign countries, relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain and still evolving. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property.
With respect to the files that may have contained data relating to trial and product activation of our N-central On Demand solutions, although we are unable to determine the actual content of such files, the information included in such files could have contained MSP partner usernames and N-central On Demand initial passwords generated by N-able.
With respect to the files that may have contained data relating to trial and product activation of our N-central On Demand solutions, although we are unable to determine the actual content of such files, the information included in such files could have contained customer usernames and N-central On Demand initial passwords generated by N-able.
In addition, we could suffer adverse publicity and loss of customer confidence were it alleged or found that we did not take adequate measures to assure the confidentiality of the personal data that our MSP partners had given to us. This could result in a loss of MSP partners and revenue that could jeopardize our success.
In addition, we could suffer adverse publicity and loss of customer confidence were it alleged or found that we did not take adequate measures to assure the confidentiality of the personal data that our customers had given to us. This could result in a loss of customers and revenue that could jeopardize our success.
Further, complying with the applicable notice requirements in the event of a security breach could result in significant costs. Additionally, our business efficiencies and economies of scale depend on generally uniform solutions offerings and uniform treatment of MSP partners across all jurisdictions in which we operate.
Further, complying with the applicable notice requirements in the event of a security breach could result in significant costs. Additionally, our business efficiencies and economies of scale depend on generally uniform solutions offerings and uniform treatment of customers across all jurisdictions in which we operate.
Factors that could cause fluctuations in the trading price of our common stock include the following: • announcements of new solutions or technologies, commercial relationships, acquisitions or other events by us or our competitors; • changes in how MSP partners perceive the benefits of our offerings; • changes in subscription revenue from quarter to quarter; • departures of key personnel; • price and volume fluctuations in the overall stock market from time to time; • fluctuations in the trading volume of our shares or the size of our public float; • sales of large blocks of our common stock, including sales by our Sponsors; • actual or anticipated changes or fluctuations in our operating results; • whether our operating results meet the expectations of securities analysts or investors; • changes in actual or future expectations of investors or securities analysts; • litigation involving us, our industry or both; • cybersecurity incidents; • regulatory developments in the United States, foreign countries or both; • general macroeconomic conditions and trends, including market impacts related to the wars in Ukraine and the Middle East, geopolitical tensions in China, inflation, changes in interest rates and the COVID-19 pandemic; • major catastrophic events in our domestic and foreign markets; and • “flash crashes,” “freeze flashes” or other glitches that disrupt trading on the securities exchange on which we are listed.
Factors that could cause fluctuations in the trading price of our common stock include the following: • announcements of new solutions or technologies, commercial relationships, acquisitions or other events by us or our competitors; • changes in how customers perceive the benefits of our offerings; • changes in subscription revenue from quarter to quarter; • departures of key personnel; • price and volume fluctuations in the overall stock market from time to time; • fluctuations in the trading volume of our shares or the size of our public float; 46 Table of Contents • sales of large blocks of our common stock, including sales by our Sponsors; • actual or anticipated changes or fluctuations in our operating results; • whether our operating results meet the expectations of securities analysts or investors; • changes in actual or future expectations of investors or securities analysts; • litigation involving us, our industry or both; • cybersecurity incidents; • regulatory developments in the United States, foreign countries or both; • general macroeconomic conditions and trends, including market impacts related to the wars in Ukraine and the Middle East, geopolitical tensions in China, inflation, and changes in interest rates; • major catastrophic events in our domestic and foreign markets; and • “flash crashes,” “freeze flashes” or other glitches that disrupt trading on the securities exchange on which we are listed.
The Sponsors and their affiliated funds are in the business of making or advising on investments in companies and hold (and may from time to time in the future acquire) interests in or provide advice to businesses that directly or indirectly compete with certain portions of our business or are suppliers or MSP partners of ours.
The Sponsors and their affiliated funds are in the business of making or advising on investments in companies and hold (and may from time to time in the future acquire) interests in or provide advice to businesses that directly or indirectly compete with certain portions of our business or are suppliers or customers of ours.
We have incurred and expect to continue to incur significant expenses related to our cybersecurity initiatives. The Cyber Incident has had and may continue to have an adverse effect on our business, reputation, MSP partner and employee relations, results of operations, financial condition or cash flows.
We have incurred and expect to continue to incur significant expenses related to our cybersecurity initiatives. The Cyber Incident has had and may continue to have an adverse effect on our business, reputation, customer and employee relations, results of operations, financial condition or cash flows.
Although we are unable to determine the actual contents of these files, with respect to the files that may have contained data about our MSP partners, we believe the information included in such files would not have contained highly sensitive personal information, such as credit card, social security, passport or bank account numbers, but could have contained other information such as MSP partner IDs, business email addresses and encrypted MSP partner portal login credentials.
Although we are unable to determine the actual contents of these files, with respect to the files that may have contained data about our customers, we believe the information included in such files would not have contained highly sensitive personal information, such as credit card, social security, passport or bank account numbers, but could have contained other information such as customer IDs, business email addresses and encrypted customer portal login credentials.
The allocation of intellectual property rights and data between SolarWinds and us as part of the Separation and Distribution, the shared use of certain intellectual property rights and data following the Separation and Distribution and 44 Table of Contents restrictions on the use of intellectual property rights, could adversely impact our reputation, our ability to enforce certain intellectual property rights and our competitive position.
The allocation of intellectual property rights and data between SolarWinds and us as part of the Separation and Distribution, the shared use of certain intellectual property rights and data following the Separation and Distribution and restrictions on the use of intellectual property rights, could adversely impact our reputation, our ability to enforce certain intellectual property rights and our competitive position.
We have expended significant costs and expenses related to the Cyber Incident including in connection with investigations, our remediation efforts, our compliance with applicable laws and regulations in connection with the threat actor’s access to and exfiltration of information related to our current or former employees and MSP partners, and our measures to address the damage to our reputation and MSP partner and employee relations.
We have expended significant costs and expenses related to the Cyber Incident including in connection with investigations, our remediation efforts, our compliance with applicable laws and regulations in connection with the threat actor’s access to and exfiltration of information related to our current or former employees and customers, and our measures to address the damage to our reputation and customers and employee relations.
We rely primarily on a combination of patent, copyright, trademark, trade dress, unfair competition and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect our proprietary rights. These laws, procedures and restrictions provide only limited protection. As of December 31, 2023, we had six issued patents.
We rely primarily on a combination of patent, copyright, trademark, trade dress, unfair competition and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect our proprietary rights. These laws, procedures and restrictions provide only limited protection. As of December 31, 2024, we had ten issued patents.
Additionally, these events could require us or our MSP partners to pay additional tax amounts on a prospective or retroactive basis, as well as require us or our MSP partners to pay fines and/or penalties and interest for past amounts deemed to be due.
Additionally, these events could require us or our customers to pay additional tax amounts on a prospective or retroactive basis, as well as require us or our customers to pay fines and/or penalties and interest for past amounts deemed to be due.
Customers have and may in the future defer purchasing or choose to cancel 37 Table of Contents or not renew their agreements or subscriptions with us as a result of the Cyber Incident.
Customers have and may in the future defer purchasing or choose to cancel or not renew their agreements or subscriptions with us as a result of the Cyber Incident.
In some instances, we could reasonably use different estimates and assumptions, and changes in estimates are likely to occur from period to period. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates-Revenue Recognition” included in Part II, Item 7 of this Annual Report.
In some instances, we could reasonably use different estimates and assumptions, and changes in estimates are likely to occur from period to period. See the section titled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates-Revenue Recognition ” included in Part II, Item 7 of this Annual Report.
If we are unable to maintain the trust of our current and prospective MSP partners and their SME customers, negative publicity continues and/or our personnel continue to have to devote significant time to the Cyber Incident, our business, market share, results of operations and financial condition will be negatively affected.
If we are unable to maintain the trust of our current and prospective customers and their SMB and mid-market customers, negative publicity continues and/or our personnel continue to have to devote significant time to the Cyber Incident, our business, market share, results of operations and financial condition will be negatively affected.
In connection with the Cyber Incident, SolarWinds’ investigations have revealed that the threat actor accessed the email accounts of certain of our personnel, some of which contained information related to current or former employees and MSP partners.
In connection with the Cyber Incident, SolarWinds’ investigations revealed that the threat actor accessed the email accounts of certain of our personnel, some of which contained information related to current or former employees and customers.
Any such indemnity obligations could be material and could materially affect our business and financial statements. We may not be able to engage in desirable strategic or capital-raising transactions following the Distribution.
Any such indemnity obligations could be material and could materially affect our business and financial statements. 44 Table of Contents We may not be able to engage in desirable strategic or capital-raising transactions following the Distribution.
In addition, although our premiums for the current year decreased, being a public company subject to these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.
In addition, being a public company subject to these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.
We attributed this deceleration primarily to increased churn and downgrades from existing MSP partners and slower MSP partner adds. Future pandemics or health epidemics may also adversely affect our productivity, employee morale, future sales, operating results, and overall financial performance.
We attributed this deceleration primarily to increased churn and downgrades from existing customers and slower customer adds. Future pandemics or health epidemics may also adversely affect our productivity, employee morale, future sales, operating results, and overall financial performance.
Failure to comply with laws concerning privacy, data protection and information security could result in enforcement action against us, including fines, imprisonment of company officials and public censure, claims for damages by our MSP partners, their SME customers, and other affected individuals, damage to our reputation and loss of goodwill (both in relation to existing MSP partners and their SME customers and prospective MSP partners and their SME customers), any of which could have a material adverse effect on our operations, financial performance and business.
Failure to comply with laws concerning privacy, data protection and information security could result in enforcement action against us, including fines, imprisonment of company officials and public censure, claims for damages by our customers, their SMB and mid-market customers, and other affected individuals, damage to our reputation and loss of goodwill (both in relation to existing IT services provider customers and their SMB and mid-market customers and prospective IT services provider customers and their SMB and mid-market customers), any of which could have a material adverse effect on our operations, financial performance and business.
It is possible that the decision will restrict the ability to transfer personal data from the European Union to the United States, and we may, in addition to other impacts, experience additional costs associated with increased compliance burdens, and we, our MSP partners, and their SME customers face the potential for regulators in the EEA to apply different standards to the transfer of personal data from the EEA to the United States, and to block, or require ad hoc verification of measures taken with respect to, certain data flows from the EEA to the United States.
It is possible that the decision will restrict the ability to transfer personal data from the European Union to the United States, and we may, in addition to other impacts, experience additional costs associated with increased compliance burdens, and we, our customers, and their 42 Table of Contents SMB and mid-market customers face the potential for regulators in the EEA to apply different standards to the transfer of personal data from the EEA to the United States, and to block, or require ad hoc verification of measures taken with respect to, certain data flows from the EEA to the United States.
As of December 31, 2023, Silver Lake and Thoma Bravo, together with their respective funds and, as applicable, their co-investors (collectively, the “Sponsors”) collectively owned in the aggregate approximately 111,564,512 shares of our common stock, representing approximately 60.9% of the voting power of our common stock as of such time.
As of December 31, 2024, Silver Lake and Thoma Bravo, together with their respective funds and, as applicable, their co-investors (collectively, the “Sponsors”) collectively owned in the aggregate approximately 111,564,512 shares of our common stock, representing approximately 59.5% of the voting power of our common stock as of such time.
If material weaknesses in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results, which could materially and adversely affect our business, results of operations, and financial condition, restrict our ability to access the capital markets, require us to expend significant resources to correct the material weakness, subject us to fines, penalties or judgments, harm our reputation, or otherwise cause a decline in investor confidence.
If material weaknesses in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results, which could materially and adversely affect our business, results of operations, and financial condition, restrict our ability to access the capital markets, require us to expend significant resources to correct the material weakness, subject us to fines, penalties or judgments, harm our reputation, or otherwise cause a decline in investor confidence. 40 Table of Contents Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported results of operations.
In addition, in connection with the private placement completed just prior to the Separation and Distribution, we granted registration rights to certain investors with respect to the 20,623,282 aggregate shares of our common stock purchased by them in the Private Placement, of which 8,314,146 remain unsold by the selling stockholders as of December 31, 2023.
In addition, in connection with the private placement completed just prior to the Separation and Distribution, we granted registration rights to certain investors with respect to the 20,623,282 aggregate shares of our common stock purchased by them in the Private Placement, of which 4,837,521 remain unsold by the selling stockholders as of December 31, 2024.
We are heavily dependent on our technology infrastructure to operate our business, and our MSP partners rely on our solutions to help manage and secure their IT infrastructure and environments, and that of their SME customers, including the protection of confidential information.
We are heavily dependent on our technology infrastructure to operate our business, and our customers rely on our solutions to help manage and secure their IT infrastructure and environments, and that of their SMB and mid-market customers, including the protection of confidential information.
Likewise, even once a vulnerability has been addressed, for certain of our products, the fix will only be effective once an MSP partner has updated the impacted product with the latest release, and MSP partners that do not install and run the remediated versions of our products, and their SME customers, may remain vulnerable to attack.
Likewise, even once a vulnerability has been addressed, for certain of our products, the fix will only be effective once a customer has updated the impacted product with the latest release, and customers that do not install and run the remediated versions of our products, and their SMB and mid-market customers, may remain vulnerable to attack.
The COVID-19 pandemic and policies and regulations implemented by governments in response to the COVID-19 pandemic, most of which have been lifted, have had a significant impact, both directly and indirectly, on global businesses and commerce and indirect effects such as worker shortages and supply chain constraints continue to impact segments of the economy.
The COVID-19 pandemic and policies and regulations implemented by governments in response to the COVID-19 pandemic had a significant impact, both directly and indirectly, on global businesses and commerce and indirect effects such as worker shortages and supply chain constraints.
We have experienced, and may in the future experience, security breaches that may remain undetected for an extended period and, therefore, have a greater impact on our solutions, our proprietary data or the data of our MSP partners or their SME customers, and ultimately on our business.
We have experienced, and may in the future experience, security breaches that may remain undetected for an extended period and, therefore, have a greater impact on our solutions, our proprietary data or the data of our IT services provider customers or their SMB and mid-market customers, and ultimately on our business.
We do not believe that any information of the customers of our MSP Partners would have been included in the files that were created by the threat actor.
We do not believe that any information of the SMB and mid-market customers of our customers would have been included in the files that were created by the threat actor.
The Sponsors have entered into a stockholders’ agreement whereby they each agreed, among other things, to vote the shares each beneficially owns in favor of the director nominees designated by Silver Lake and Thoma Bravo, respectively.
The Sponsors have entered into a stockholders’ agreement whereby they each agreed, among other things, to vote the shares each beneficially owns in favor of the director nominees designated by Silver Lake and Thoma Bravo, respectively. Notwithstanding the decision of the Court of Chancery of the State of Delaware, discussed in Note 15.
The Sponsors and their affiliated funds may also pursue acquisitions that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. 48 Table of Contents Our restated charter provides that no officer or director of the Company who is also an officer, director, employee, partner, managing director, principal, independent contractor or other affiliate of either of the Sponsors will be liable to us or our stockholders for breach of any fiduciary duty by reason of the fact that any such individual pursues or acquires a corporate opportunity for its own account or the account of an affiliate, as applicable, instead of us, directs a corporate opportunity to any other person instead of us or does not communicate information regarding a corporate opportunity to us.
Our restated charter provides that no officer or director of the Company who is also an officer, director, employee, partner, managing director, principal, independent contractor or other affiliate of either of the Sponsors will be liable to us or our stockholders for breach of any fiduciary duty by reason of the fact that any such individual pursues or acquires a corporate opportunity for its own account or the account of an affiliate, as applicable, instead of us, directs a corporate opportunity to any other person instead of us or does not communicate information regarding a corporate opportunity to us.
These restrictions could limit our ability to pursue certain strategic transactions, equity issuances or repurchases or other transactions that we believe may be in the best interests of our stockholders or that might increase the value of our business.
These restrictions could limit our ability to pursue certain strategic transactions, equity issuances or repurchases or other transactions that we believe may be in the best interests of our stockholders or that might increase the value of our business. SolarWinds has agreed to indemnify us, and we have agreed to indemnify SolarWinds, for certain liabilities.
We cannot assure that our internal control over financial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which we had previously believed that internal controls were effective.
While we believe these controls are effective, they rely substantially on manual processes. We cannot assure that our internal control over financial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which we had previously believed that internal controls were effective.
However, our restated charter also provides that the Sponsors, including the Silver Lake Funds and the Thoma Bravo Funds and any persons to whom any Silver Lake Fund or Thoma Bravo Fund or any of their respective affiliates sells its common stock, will not constitute “interested stockholders” for purposes of this provision.
However, our restated charter also provides that the Sponsors, including the Silver Lake Funds and the Thoma Bravo Funds and any persons to whom any Silver Lake Fund or Thoma Bravo Fund or any of their respective affiliates sells its common stock, will not constitute “interested stockholders” for purposes of this provision. 48 Table of Contents The Sponsors have a controlling influence over matters requiring stockholder approval.
It is possible that the decision will restrict the ability to transfer personal data from the European Union to the United States and we may, in addition to other impacts, experience additional costs associated with increased compliance burdens, and we, our MSP partners and their SME customers face the potential for regulators in the European Economic Area (the “EEA”) to apply different standards to the transfer of personal data from the EEA to the United States, and to block, or require ad hoc verification of measures taken with respect to, certain data flows from the EEA to the United States.
We may, in addition to other impacts, experience additional costs associated with increased compliance burdens relative to transfers of personal data from the European Union to the United States, and we, our customers and their SMB and mid-market customers face the potential for regulators in the European Economic Area (the “EEA”) to apply different standards to the transfer of personal data from the EEA to the United States, and to block, or require ad hoc verification of measures taken with respect to, certain data flows from the EEA to the United States.
These requirements will not apply to us as long as we remain a controlled company. We may take advantage of these exemptions. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE. 49 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
These requirements will not apply to us as long as we remain a controlled company. Although we do not currently take advantage of these exemptions, we may do so in the future. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE. ITEM 1B.
In October 2023, the SEC filed a complaint against SolarWinds and its chief information officer alleging violations of the Exchange Act and Securities Act relating to SolarWinds’ cybersecurity disclosures and public statements, as well as its internal controls and disclosure controls and procedures. This brought renewed attention to the Cyber Incident and questions from some of our MSP partners.
In October 2023, the SEC filed a complaint against SolarWinds and its chief information officer alleging violations of the Exchange Act and Securities Act relating to SolarWinds’ cybersecurity disclosures and public statements, as well as its internal controls and disclosure controls and procedures.
Given the foregoing factors, our actual results could differ significantly from our estimates, comparing our revenue and operating results on a period-to-period basis may not be meaningful, and our past results may not be indicative of our future performance.
Given the foregoing factors, our actual results could differ significantly from our estimates, comparing our revenue and operating results on a period-to-period basis may not be meaningful, and our past results may not be indicative of our future performance. Our business and financial performance could be negatively impacted by changes in tax laws or regulations.
Our restated charter and restated bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that stockholders may consider favorable. Our amended and restated certificate of incorporation, or our restated charter, and our amended and restated bylaws, or our restated bylaws, contain provisions that could delay or prevent a change in control of our company.
Our amended and restated certificate of incorporation, or our restated charter, and our amended and restated bylaws, or our restated bylaws, contain provisions that could delay or prevent a change in control of our company.
Risks Related to Ownership of Our Common Stock and Our Organizational Structure The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act, the requirements of the Sarbanes-Oxley Act and the requirements of the NYSE, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.
These circumstances could adversely affect our ability to protect our competitive position in the industry and otherwise adversely affect our business, financial condition and results of operations. 45 Table of Contents Risks Related to Ownership of Our Common Stock and Our Organizational Structure The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act, the requirements of the Sarbanes-Oxley Act and the requirements of the NYSE, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.
The market price of our common stock may be higher or lower than the price you pay for our common stock, depending on many factors, some of which are beyond our control and may not be related 45 Table of Contents to our operating performance.
The market price of our common stock may be higher or lower than the price you pay for our common stock, depending on many factors, some of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our common stock.
Our restated charter designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock could affect the residual value of our common stock. 49 Table of Contents Our restated charter designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which would harm our operating results. Based on our current corporate structure, we are subject to taxation in several jurisdictions around the world with increasingly complex tax laws, the application of which can be uncertain.
Based on our current corporate structure, we are subject to taxation in several jurisdictions around the world with increasingly complex tax laws, the application of which can be uncertain.
Although we have and expect to continue to deploy significant resources as part of our security infrastructure, we cannot ensure that our steps to secure our internal environment, improve our software development and build environments and protect the security and integrity of the solutions that we deliver will be successful or sufficient to protect against future threat actors or cyberattacks or perceived by existing and prospective MSP partners as sufficient to address the harm caused by the Cyber Incident. 38 Table of Contents Risks Related to Accounting and Taxation Failure to maintain proper and effective internal controls could have a material adverse effect on our business, operating results and stock price.
Although we have and expect to continue to deploy significant resources as part of our security infrastructure, we cannot ensure that our steps to secure our internal environment, improve our software development and build environments and protect the security and integrity of the solutions that we deliver will be successful or sufficient to protect against future threat actors or cyberattacks or perceived by existing and prospective customers partners as sufficient to address the harm caused by the Cyber Incident.
Even if our credit agreement is terminated, any additional debt that we incur in the future could subject us to similar or additional covenants. 34 Table of Contents The credit agreement includes customary events of default, including, among others, failure to pay principal, interest or other amounts; material inaccuracy of representations and warranties; violation of covenants; specified cross-default and cross-acceleration to other material indebtedness; certain bankruptcy and insolvency events; certain ERISA events; certain undischarged judgments; material invalidity of guarantees or grant of security interest; and change of control.
The credit agreement includes customary events of default, including, among others, failure to pay principal, interest or other amounts; material inaccuracy of representations and warranties; violation of covenants; specified cross-default and cross-acceleration to other material indebtedness; certain bankruptcy and insolvency events; certain ERISA events; certain undischarged judgments; material invalidity of guarantees or grant of security interest; and change of control.
Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported results of operations. A change in accounting standards or practices can have a significant effect on our reported results and may even affect our reporting of transactions completed before the change is effective.
A change in accounting standards or practices can have a significant effect on our reported results and may even affect our reporting of transactions completed before the change is effective. New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and may occur in the future.
Our business and financial performance could be negatively impacted by changes in tax laws or regulations. 39 Table of Contents New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us.
New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us.
As a result, Silver Lake and Thoma Bravo could exert significant influence over our operations and business strategy and would together have sufficient voting power to effectively control the outcome of matters requiring stockholder approval.
Commitments and Contingencies in the Notes to Consolidated Financial Statements wherein the Court invalidated certain provisions of the stockholders’ agreement, Silver Lake and Thoma Bravo could exert significant influence over our operations and business strategy and would together have sufficient voting power to effectively control the outcome of matters requiring stockholder approval.
We may issue additional capital stock in the future that will result in dilution to all other stockholders. We may also raise capital through equity financings in the future. As part of our business strategy, we may acquire or make investments in complementary companies, solutions or technologies and issue equity securities to pay for any such acquisition or investment.
As part of our business strategy, we may acquire or make investments in complementary companies, solutions or technologies and issue equity securities to pay for any such acquisition or investment.
If these tax benefits are changed, terminated, not extended or comparable new tax incentives are not introduced, we expect that our effective income tax rate and/or our operating expenses could increase significantly, which could materially adversely affect our financial condition and results of operations. 40 Table of Contents Risks Related to Governmental Regulation We are subject to various global data privacy and security regulations, which could result in additional costs and liabilities to us.
If these tax benefits are changed, terminated, not extended or comparable new tax incentives are not introduced, we expect that our effective income tax rate and/or our operating expenses could increase significantly, which could materially adversely affect our financial condition and results of operations.
Our business is subject to a wide variety of local, state, national and international laws, directives and regulations that apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal data.
Risks Related to Governmental Regulation We are subject to various global data privacy and security regulations, which could result in additional costs and liabilities to us. Our business is subject to a wide variety of local, state, national and international laws, directives and regulations that apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal data.
We intend to retain any earnings to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future. As a result, you may receive a return on your investment in our common stock only if the market price of our common stock increases.
We currently do not intend to pay dividends on our common stock. We intend to retain any earnings to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future.
Tax authorities could challenge our tax positions we historically have taken, or intend to take in the future, or may audit the tax filings we have made and assess additional taxes. Tax authorities may also assess taxes in jurisdictions where we have not made tax filings.
The taxing rules of the various jurisdictions in which we operate or do business are often complex and subject to differing interpretations. Tax authorities could challenge our tax positions we historically have taken, or intend to take in the future, or may audit the tax filings we have made and assess additional taxes.
Any assessments incurred could be material, and may also involve the imposition of substantial penalties and interest. Significant judgment is required in evaluating our tax positions and in establishing appropriate reserves, and the resolutions of our tax positions are unpredictable. The payment of additional taxes, penalties or interest resulting from any assessments could adversely impact our business and financial performance.
Tax authorities may also assess taxes in 41 Table of Contents jurisdictions where we have not made tax filings. Any assessments incurred could be material, and may also involve the imposition of substantial penalties and interest. Significant judgment is required in evaluating our tax positions and in establishing appropriate reserves, and the resolutions of our tax positions are unpredictable.
We endeavor to enter into agreements with our employees and contractors and with parties with which we do business in order to limit access to and disclosure of our trade secrets and other proprietary information. We cannot be certain that the steps we have taken will prevent unauthorized use, misappropriation or reverse engineering of our technology.
We cannot be certain that third parties do not have blocking patents that could be used to prevent us from marketing or practicing our patented software or technology. 36 Table of Contents We endeavor to enter into agreements with our employees and contractors and with parties with which we do business in order to limit access to and disclosure of our trade secrets and other proprietary information.
The threat actor also moved files to a jump server, which SolarWinds believes was intended to facilitate exfiltration of the files out of the shared environment. Investigations to date have also revealed that the threat actor accessed the email accounts of certain of our personnel, some of which contained information related to current or former employees and MSP partners.
Investigations to date have also revealed that the threat actor accessed the email accounts of certain of our personnel, some of which contained information related to current 39 Table of Contents or former employees and customers.
For term-based licenses bundled with coterminous support, we recognize revenue when the distinct license is made available to the customer, and support revenue is recognized ratably over the contract period.
For term-based licenses bundled with coterminous support, we recognize revenue when the distinct license is made available to the customer, and support revenue is recognized ratably over the contract period. During the year ended December 31, 2024, we began increasing the proportion of our subscriptions that are long-term committed contracts, as compared to month-to-month contracts.
If we fail to achieve some or all of the benefits that we expect to achieve as an independent company, or do not achieve them in the time we expect, our business, financial condition and results of operations could be adversely affected. 42 Table of Contents We could incur significant liability if the Separation and Distribution is determined to be a taxable transaction, and, in certain circumstances, we could be required to indemnify SolarWinds for material taxes and other related amounts pursuant to indemnification obligations under the tax matters agreement.
We could incur significant liability if the Separation and Distribution is determined to be a taxable transaction, and, in certain circumstances, we could be required to indemnify SolarWinds for material taxes and other related amounts pursuant to indemnification obligations under the tax matters agreement.
In addition, the Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal controls and procedures for financial reporting and disclosure purposes.
In addition, the Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal controls and procedures for financial reporting and disclosure purposes. We are also required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.
Internal control over financial reporting is complex and may be revised over time to adapt to changes in our business, or changes in applicable accounting rules.
Internal control over financial reporting is complex and may be revised over time to adapt to changes in our business, or changes in applicable accounting rules. As we increased the number of contracts that have terms of one or more years, we developed controls around the accounting for these contracts.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have described whether and how risks from identified cybersecurity threats, including as a result of any previous cybersecurity incidents, including the Cyber Incident, have affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition in the risk factors titled “Cyberattacks, including the Cyber Incident, and other security incidents have resulted, and in the future may result, in compromises or breaches of our, our MSP partners’, or their SME customers’ systems, the insertion of malicious code, malware, ransomware or other vulnerabilities into our, our MSP partners’, or their SME customers’ systems, the exploitation of vulnerabilities in our, our MSP partners’, or their SME customers’ environments, the theft or misappropriation of our, our MSP partners’, or their SME customers’ proprietary and confidential information, and interference with our, our MSP partners’, or their SME customers’ operations, exposure to legal and other liabilities, higher MSP partner and employee attrition and the loss of key personnel, negative impacts to our sales, renewals and upgrades and reputational harm and other serious negative consequences, any or all of which could materially harm our business” and “The Cyber Incident has had and may continue to have an adverse effect on our business, 50 Table of Contents reputation, MSP partner and employee relations, results of operations, financial condition or cash flows” in “Item 1A.
Biggest changeWe have described whether and how risks from identified cybersecurity threats, including as a result of any previous cybersecurity incidents, including the Cyber Incident, have affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition in the risk factors titled “Cyberattacks, including the Cyber Incident, and other security incidents have resulted, and in the future may result, in compromises or breaches of our, our IT services provider customers’, or their SMB and mid-market customers’ systems, the insertion of malicious code, malware, ransomware or other vulnerabilities into our, our IT services provider customers’, or their SMB and mid-market customers’ systems, the exploitation of vulnerabilities in our, our IT services provider customers’, or their SMB and mid-market customers’ environments, the theft or misappropriation of our, our IT services provider customers’, or their SMB and mid-market customers’ proprietary and confidential information, and interference with our, our IT services provider customers’, or their SMB and mid-market customers’ operations, exposure to legal and other liabilities, higher customer and employee attrition and the loss of key personnel, negative impacts to our sales, renewals and upgrades and reputational harm and other serious negative consequences, any or all of which could materially harm our business” and “The Cyber Incident has had and may continue to have an adverse effect on our business, reputation, customer and employee relations, results of operations, financial condition or cash flows” in “Item 1A.
Our CISO works with the SRC to employ a cybersecurity program designed to protect the Company’s information systems from cybersecurity threats and to respond to incidents in accordance with the Company’s incident response plan and other policies and procedures. The CSO manages a team that is responsible for day-to-day tracking, assessing and management of threats.
Our CSO works with the SRC to employ a cybersecurity program designed to protect the Company’s information systems from cybersecurity threats and to respond to incidents in accordance with the Company’s incident response plan and other policies and procedures. The CSO manages a team that is responsible for day-to-day tracking, assessing and management of threats.
The Cybersecurity Committee is informed of the Company’s cybersecurity risk management and receives an overview of its cybersecurity program from management at least quarterly, which covers topics including, among others, recent cybersecurity risk landscape and trends, data security posture, results from third-party assessments, training and vulnerability testing, our cybersecurity and compliance program, critical cybersecurity risks, as well as the steps management has taken to respond to such risks, emerging cybersecurity regulations, technologies and best practices.
The Cybersecurity Committee is informed of the Company’s cybersecurity risk management and receives an overview of its cybersecurity program from management at least quarterly, which covers topics including, among others, recent cybersecurity risk landscape and trends, data security posture, results from third-party assessments, training and vulnerability 51 Table of Contents testing, our cybersecurity and compliance program, critical cybersecurity risks, as well as the steps management has taken to respond to such risks, emerging cybersecurity regulations, technologies and best practices.
In designing these processes, the Company takes into account industry frameworks such as the National Institute of Standards and Technology (NIST), Committee of Sponsoring Organizations (COSO), and International Organization for Standardization (ISO) 27001, and other industry standards.
In designing these processes, the Company takes into account industry frameworks such as the National Institute of Standards and Technology (NIST), Committee of Sponsoring 50 Table of Contents Organizations (COSO), and International Organization for Standardization (ISO) 27001, and other industry standards.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe lease office space domestically and internationally in various locations for our operations, including facilities located in Austin, Texas; Bucharest, Romania; Dundee, United Kingdom; Edinburgh, United Kingdom; Emmeloord, Netherlands; Lisbon, Portugal; Manila, Philippines; Minsk, Belarus; Morrisville, North Carolina; Ottawa, Canada; Sydney, Australia; Utrecht, Netherlands; Warsaw, Poland; Uster, Switzerland; and Vienna, Austria.
Biggest changeWe lease office space domestically and internationally in various locations for our operations, including facilities located in Austin, Texas; Bucharest, Romania; Dundee, United Kingdom; Edinburgh, United Kingdom; Emmeloord, Netherlands; Lisbon, Portugal; Manila, Philippines; Minsk, Belarus; Morrisville, North Carolina; Ottawa, Canada; Sydney, Australia; Utrecht, Netherlands; Warsaw, Poland; Washington, D.C.; Uster, Switzerland; and Vienna, Austria.
Our leases are all classified as operating and have remaining terms of less than one year to 8.4 years. We believe the facilities that we are leasing are adequate for the foreseeable future. If we require additional or substitute space, we believe that we will be able to obtain such space on acceptable, commercially reasonable terms.
Our leases are all classified as operating and have remaining terms of less than one year to 7.4 years. We believe the facilities that we are leasing are adequate for the foreseeable future. If we require additional or substitute space, we believe that we will be able to obtain such space on acceptable, commercially reasonable terms.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAt this time, neither we nor any of our subsidiaries is a party to, and none of our respective property is the subject of, any legal proceeding that, if determined adversely to us, would have a material adverse effect on us. 51 Table of Contents
Biggest changeAt this time, neither we nor any of our subsidiaries is a party to, and none of our respective property is the subject of, any legal proceeding that, if determined adversely to us, we believe would have a material adverse effect on us.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe information contained in the Stock Performance Graph shall not be deemed to be soliciting material or to be filed with the SEC nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Exchange Act, except to the extent we specifically incorporate it by reference into such filing. 53 Table of Contents
Biggest changeThe information contained in the Stock Performance Graph shall not be deemed to be soliciting material or to be filed with the SEC nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Exchange Act, except to the extent we specifically incorporate it by reference into such filing. 53 Table of Contents Recent Sales of Unregistered Securities As previously reported in our Current Report on Form 8-K filed with the SEC on November 20, 2024, in connection with our acquisition of Adlumin, Inc. and in reliance on the exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, on November 20, 2024, we agreed to issue up to an aggregate of 1,570,762 shares of our common stock as consideration in the acquisition, of which 1,433,729 were issued as of December 31, 2024.
Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock for the period between July 20, 2021 (our first day as a publicly traded company) and December 31, 2023, with the cumulative total return of (i) the S&P 500 Index and (ii) the S&P 500 Software & Services Index.
Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock for the period between July 20, 2021 (our first day as a publicly traded company) and December 31, 2024, with the cumulative total return of (i) the S&P 500 Index and (ii) the S&P 500 Software & Services Index.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDERS MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock has been listed on the New York Stock Exchange, or NYSE, under the symbol “NABL” since July 20, 2021. Prior to that date, there was no public trading market for our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDERS MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock has been listed on the New York Stock Exchange, or NYSE, under the symbol “NABL” since July 20, 2021.
Our initial public offering, or IPO, was priced at $16.00 per share on July 19, 2021. On February 22, 2024, the last reported sales price of our common stock on the NYSE was $12.92 per share and, as of February 22, 2024, there were 38 holders of record of our common stock.
On February 28, 2025, the last reported sales price of our common stock on the NYSE was $10.03 per share and, as of February 28, 2025, there were 80 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe increase in net income for the three months ended December 31, 2023 was primarily due to an increase in revenue, a decrease in amortization of acquired intangibles, a decrease in general and administrative expense and an increase in other income, net, partially offset by an increase in income tax expense, an increase in research and development expense, an increase in cost of revenue, an increase in sales and marketing expense, and an increase in interest expense, net.
Biggest changeThe decrease in net income for the three months ended December 31, 2024 was due to increases in research and development expense, other expense, net, cost of revenue, amortization of acquired technologies, sales and marketing expense, amortization of acquired intangibles, and general and administrative expense, partially offset by an increase in revenue and a decrease in income tax expense.
In such event, subject to the terms of the Separation and Distribution Agreement, SolarWinds would indemnify us for costs we may incur. We believe the Cyber Incident has caused reputational harm to SolarWinds and also had an adverse impact on our reputation, new subscription sales and net retention rates.
In such event, subject to the terms of the Separation and Distribution Agreement, SolarWinds would indemnify us for costs we may incur. We believe the Cyber Incident caused reputational harm to SolarWinds and also had an adverse impact on our reputation, new subscription sales and net retention rates.
Separation from SolarWinds On August 6, 2020, SolarWinds Corporation (“SolarWinds” or “Parent”) announced that its board of directors had authorized management to explore a potential spin-off of its MSP business into our company, a newly created and separately traded public company, and separate into two distinct, publicly traded companies (the “Separation”).
On August 6, 2020, SolarWinds Corporation (“SolarWinds” or “Parent”) announced that its board of directors had authorized management to explore a potential spin-off of its MSP business into our company, a newly created and separately traded public company, and separate into two distinct, publicly traded companies (the “Separation”).
General and administrative expenses primarily consist of personnel costs for executives, finance, legal, human resources, business applications and other administrative personnel, general restructuring charges and other acquisition-related costs, professional fees and other general corporate expenses, as well as an allocation of our facilities, depreciation, IT and benefits costs.
General and administrative expenses primarily consist of personnel costs for executives, finance, legal, human resources, business applications and other administrative personnel, general restructuring charges and other transaction related costs, professional fees and other general corporate expenses, as well as an allocation of our facilities, depreciation, IT and benefits costs.
In addition, as a result of the Cyber Incident, SolarWinds is subject to numerous lawsuits and governmental investigations or inquiries. To date, we have not been separately named in such lawsuits and investigations, but in the future we may become subject to lawsuits, investigations or inquiries related to the Cyber Incident.
In addition, as a result of the Cyber Incident, SolarWinds has been subject to numerous lawsuits and governmental investigations or inquiries. To date, we have not been separately named in such lawsuits and investigations, but in the future we may become subject to lawsuits, investigations or inquiries related to the Cyber Incident.
On July 19, 2021, SolarWinds completed the Separation through a pro-rata distribution (the “Distribution”) of all the outstanding shares of our common stock it held to the stockholders of record of SolarWinds as of the close of business on July 12, 2021 (the “Record Date”).
On July 19, 2021, SolarWinds completed the Separation through a pro-rata distribution (the “Distribution”) of all the outstanding shares of our common stock it held to the stockholders of record of SolarWinds as of the close of business on July 12, 2021.
We generally invoice subscription agreements monthly based on usage or in advance over the subscription period on either a monthly or annual basis. • Other Revenue. Other revenue consists primarily of revenue from the sale of our maintenance services associated with the historical sales of perpetual licenses and revenue from professional services.
We generally invoice 57 Table of Contents subscription agreements monthly based on usage or in advance over the subscription period on either a monthly or annual basis. • Other Revenue. Other revenue consists primarily of revenue from the sale of our maintenance services associated with the historical sales of perpetual licenses and revenue from professional services.
Of the expenses SolarWinds recorded related to the Cyber Incident through the Separation and Distribution date of July 19, 2021, none have been allocated to the N-able business and, as a result of the indemnification provisions under the Separation and Distribution Agreement entered into in connection with the Separation and Distribution (the “Separation and Distribution Agreement”), we have not recorded any contingent liabilities with respect to the Cyber Incident as of December 31, 2023 and 2022, respectively.
Of the expenses SolarWinds recorded related to the Cyber Incident through the Separation and Distribution date of July 19, 2021, none were allocated to the N-able business and, as a result of the indemnification provisions under the Separation and Distribution Agreement entered into in connection with the Separation and Distribution (the “Separation and Distribution Agreement”), we have not recorded any contingent liabilities with respect to the Cyber Incident as of December 31, 2024 and 2023, respectively.
Cost of revenue consists of public cloud infrastructure and hosting fees, an allocation of overhead costs for our subscription revenue and maintenance services, royalty fees and technical support personnel costs. We allocate facilities, depreciation, IT and benefits costs based on headcount. • Amortization of Acquired Technologies.
Cost of revenue consists of public cloud infrastructure and hosting fees, an allocation of overhead costs for our subscription revenue and maintenance services, royalty fees, and personnel costs for technical support and our security operations center. We allocate facilities, depreciation, IT and benefits costs based on headcount. • Amortization of Acquired Technologies.
Our Adjusted EBITDA, calculated as net income of $9.4 million and $7.0 million for the three months ended December 31, 2023 and 2022, respectively, excluding amortization of acquired intangible assets and developed technology of $1.6 million and $2.6 million, respectively, depreciation expense of $3.9 million and $3.5 million, respectively, income tax expense of $7.4 million and $3.4 million, respectively, interest expense, net of $7.7 million and $6.4 million, respectively, unrealized foreign currency gains of $(1.8) million and $(2.1) million, respectively, acquisition related costs of $(0.5) million and $(0.2) million, respectively, spin-off costs of $0.1 million and $0.3 million, respectively, stock-based compensation expense and related employer-paid payroll taxes of $10.9 million and $8.7 million, respectively, and restructuring costs and other of $0.5 million and $1.7 million, respectively, was $39.2 million and $31.2 million for the three months ended December 31, 2023 and 2022, respectively.
Our Adjusted EBITDA, calculated as net income of $3.3 million and $9.4 million for the three months ended December 31, 2024 and 2023, respectively, excluding amortization of acquired intangible assets and developed technology of $3.9 million and $1.6 million, respectively, depreciation expense of $4.0 million and $3.9 million, respectively, income tax expense of $3.7 million and $7.4 million, respectively, interest expense, net of $7.3 million and $7.7 million, respectively, unrealized foreign currency losses (gains) of $2.0 million and $(1.8) million, respectively, transaction related costs of $2.4 million and $(0.5) million, respectively, spin-off costs of $0.0 million and $0.1 million, respectively, stock-based compensation expense and related employer-paid payroll taxes of $10.8 million and $10.9 million, respectively, and restructuring costs and other of $0.7 million and $0.5 million, respectively, was $38.1 million and $39.2 million for the three months ended December 31, 2024 and 2023, respectively.
Subscription revenue for our SaaS solutions is generally recognized ratably over the subscription term once the service is made available to the MSP partner or when we have the right to invoice for services performed. In addition, our subscription revenue includes sales of our self-managed solutions, which are hosted and managed by our MSP partners.
Subscription revenue for our SaaS solutions is generally recognized ratably over the subscription term once the service is made available to the customer or when we have the right to invoice for services performed. In addition, our subscription revenue includes sales of our self-managed solutions, which are hosted and managed by our customers.
MSP partners with maintenance 57 Table of Contents agreements are entitled to receive technical support and unspecified upgrades or enhancements to new versions of their solutions on a when-and-if-available basis for the specified agreement period. Cost of Revenue • Cost of Revenue.
MSP customers with maintenance agreements are entitled to receive technical support and unspecified upgrades or enhancements to new versions of their solutions on a when-and-if-available basis for the specified agreement period. Cost of Revenue • Cost of Revenue.
We expect to continue to grow our sales and marketing organization over time to drive new MSP partner adds, retain and expand with existing MSP partners and pursue initiatives designed to help our MSP partners succeed and grow. • Research and Development.
We expect to continue to grow our sales and marketing organization over time to drive new customer adds, retain and expand with existing customers and pursue initiatives designed to help our customers succeed and grow. • Research and Development.
Cash Flow We have built our business to generate strong cash flow over the long term. For the three months ended December 31, 2023 and 2022, cash flows from operations were $31.2 million and $18.4 million, respectively.
Cash Flow We have built our business to generate strong cash flow over the long term. For the three months ended December 31, 2024 and 2023, cash flows from operations were $26.0 million and $31.2 million, respectively.
Our cash flows from operations were reduced by cash payments for interest of $7.3 million and $5.3 million for the three months ended December 31, 2023 and 2022, respectively, and cash payments for income taxes of $3.9 million and $3.1 million for the three months ended December 31, 2023 and 2022, respectively.
Our cash flows from operations were reduced by cash payments for interest of $6.9 million and $7.3 million for the three months ended December 31, 2024 and 2023, respectively, and cash payments for income taxes of $4.6 million and $3.9 million for the three months ended December 31, 2024 and 2023, respectively.
In general, our sales cycles and time from contract to revenue recognition are primarily short in nature and based on trends through the fiscal year ended December 31, 2023, we believe that the adverse impacts of the Cyber Incident on our financial results have diminished.
In general, our sales cycles and time from contract to revenue recognition are primarily short in nature, and we believe that the adverse impacts of the Cyber Incident on our financial results have diminished.
We calculate ARR by multiplying the recurring revenue and related usage revenue, excluding the impacts of credits and reserves, recognized during the final month of the reporting period from both long-term and month-to-month subscriptions by twelve.
We calculate ARR by annualizing the recurring revenue and related usage revenue inclusive of discounts, excluding the impacts of credits and reserves, recognized during the last day of the reporting period from both long-term and month-to-month subscriptions.
Our stock-based compensation expense increased during the year ended December 31, 2023 as compared to the prior fiscal year primarily due to the impact of new equity awards that were granted to employees following the Separation and Distribution through December 31, 2023. • Sales and Marketing.
Our stock-based compensation expense increased during the year ended December 31, 2024 as compared to the prior fiscal year primarily due to the impact of new equity awards that were granted to employees through December 31, 2024, and we expect stock-based compensation expense to continue to increase during the year ended December 31, 2025. • Sales and Marketing.
Sales and marketing expenses primarily consist of related personnel costs, including our sales, marketing, partner success and product management teams, as well as an allocation of our facilities, depreciation, IT and benefits costs.
Sales and marketing expenses primarily consist of related personnel costs, including our sales, marketing, partner success and product management teams, net of capitalized commissions related to long-term committed contracts, as well as an allocation of our facilities, depreciation, IT and benefits costs.
Fluctuations in foreign currencies impact the amount of total assets, liabilities, revenue, operating expenses and cash flows that we report for our foreign subsidiaries upon the translation of these amounts into U.S. dollars. See Item 1A. Risk Factors and Item 7A. Quantitative and Qualitative Disclosures About Market Risk for additional information on how foreign currency impacts our financial results.
Fluctuations in foreign currencies impact the amount of total assets, liabilities, revenue, operating expenses and cash flows that we report for our foreign subsidiaries upon the translation of these amounts into U.S. dollars. See Item 1A. Risk Factors and
We amortize to cost of revenue capitalized costs of technologies acquired in connection with the take private transaction of SolarWinds in early 2016 and subsequent business combinations, including the July 1, 2022 acquisition of Spinpanel B.V. (“Spinpanel”). Amortization related to the take private transaction of SolarWinds concluded during the three months ended March 31, 2023.
We amortize to cost of revenue capitalized costs of technologies acquired in connection with the take private transaction of SolarWinds in early 2016 and subsequent business combinations, including the July 1, 2022 acquisition of Spinpanel B.V. (“Spinpanel”) and November 20, 2024 acquisition of Adlumin.
We amortize to operating expenses capitalized costs of intangible assets primarily acquired in connection with the take private transaction of SolarWinds in early 2016 and subsequent business combinations, including the July 1, 2022 acquisition of Spinpanel. Amortization related to the take private transaction of SolarWinds concluded during the three months ended March 31, 2023.
We amortize to operating expenses capitalized costs of intangible assets primarily acquired in connection with the take private transaction of SolarWinds in early 2016 and subsequent business combinations, including the July 1, 2022 acquisition of Spinpanel and the November 20, 2024 acquisition of Adlumin.
Nevertheless, there is risk that the Cyber Incident may continue to have an adverse impact on our business in future periods, and to the extent such impact continues, including as a result of new discoveries or events, it could have an adverse effect on our business, results of operations, cash flows or financial position.
Nevertheless, there is risk that the Cyber Incident may continue to have an adverse impact on our business in future periods, and to the extent such impact continues, including as a result of new discoveries or events, it could have an adverse effect on our business, results of operations, cash flows or financial position. 55 Table of Contents Fourth Quarter Financial Highlights Revenue Our total revenue was $116.5 million and $108.4 million for the three months ended December 31, 2024 and 2023, respectively.
Operating Expenses Operating expenses consist of sales and marketing, research and development and general and administrative expenses as well as amortization of acquired intangibles. Generally, personnel costs are the most significant component of operating expenses and include salaries, bonuses and stock-based compensation and related employer-paid payroll taxes, as well as an allocation of our facilities, depreciation, IT and benefits costs.
Generally, personnel costs are the most significant component of operating expenses and include salaries, bonuses and stock-based compensation and related employer-paid payroll taxes, as well as an allocation of our facilities, depreciation, IT and benefits costs. We had total employees of 1,773 and 1,584 as of December 31, 2024 and 2023, respectively.
SolarWinds has not identified SUNBURST in any of its more than 70 non-Orion products and tools, including, as previously disclosed, any of our N-able solutions. SolarWinds, together with its partners, have undertaken extensive measures to investigate, contain, eradicate, and remediate the Cyber Incident.
SolarWinds concluded its internal investigations related to the Cyber Incident and did not identify SUNBURST in any of its more than 70 non-Orion products and tools, including, as previously disclosed, any of our N-able solutions.
Over the same period, MSP partners with over $50,000 of ARR on our platform grew from approximately 51% of our total ARR as of December 31, 2022 to approximately 56% of our total ARR as of December 31, 2023. We determine ARR as the annualized recurring revenue as of the last month of a given period.
Over the same period, customers with over $50,000 of ARR on our platform grew from approximately 56% of our total ARR as of December 31, 2023 to approximately 57% of our total ARR as of December 31, 2024.
Specifically, we have implemented in-product security enhancements to the N-able portfolio of products, including, multi-factor authentication, unified single sign-on services, and 55 Table of Contents secure secret vaults. We have also introduced new identity and access controls, scanning and remediation technologies and standards and monitoring tooling across our enterprise IT and production environments.
In response to the Cyber Incident and in connection with the Separation and Distribution, we continue to work to further enhance security, monitoring and authentication of our solutions. Specifically, we have implemented in-product security enhancements to the N-able portfolio of products, including, multi-factor authentication, unified single sign-on services and secure secret vaults.
We expect to incur additional expenses in future periods related to continued enhancements to our security measures across our solutions.
We have also introduced new identity and access controls, scanning and remediation technologies and standards and monitoring tooling across our businesses IT and production environments. We expect to incur additional expenses in future periods related to continued enhancements to our security measures across our solutions.
In addition, we provide extensive, proactive support—through enriching partner programs, hands-on training, and growth resources—to help MSPs deliver exceptional value and achieve success at scale. Through our multi-dimensional land and expand model and global presence, we are able to drive strong recurring revenue growth and profitability.
Our growing portfolio of management, security, automation, and data protection solutions is built for IT services management professionals. In addition, we provide extensive, proactive support—through enriching partner programs, hands-on training, and growth resources—to help our customers deliver exceptional value and achieve success at scale.
We use ARR, and in particular, ARR attributable to MSP partners with over $50,000 of ARR, to enhance the understanding of our business performance and the growth of our relationships with our MSP partners. Profitability We have grown while maintaining high levels of operating efficiency.
We use ARR, and in particular ARR attributable to customers with over $50,000 of ARR, to enhance the understanding of our business performance and the growth of our relationships with our customers. Profitability Our net income for the three months ended December 31, 2024 and 2023 was $3.3 million and $9.4 million, respectively.
As a result of the Distribution, we became an independent public company and our common stock is listed under the symbol “NABL” on the New York Stock Exchange. Our financial statements for the periods through the Separation and Distribution date of July 19, 2021 are Consolidated Financial Statements prepared on a “carve-out” basis.
As a result of the Distribution, we became an independent public company and our common stock is listed under the symbol “NABL” on the New York Stock Exchange. SolarWinds Cyber Incident As previously disclosed, in 2020, SolarWinds was the victim of a cyberattack on its Orion Software Platform and internal systems, or the Cyber Incident.
Additionally, as of December 31, 2023, we had 2,196 MSP partners with annualized recurring revenue, or ARR, over $50,000 on our platform, up from 1,898 as of December 31, 2022, representing an increase of approximately 16%.
This increase was primarily due to steady demand for our solutions, including the impact of the November 20, 2024 acquisition of Adlumin. 56 Table of Contents As of December 31, 2024, we had 2,349 customers with ARR over $50,000 on our platform, up from 2,196 as of December 31, 2023, representing an increase of approximately 7%.
Overview N-able, Inc., a Delaware corporation, and its subsidiaries (“Company”, “we,” “us” and “our”) is a leading global provider of cloud-based software solutions for managed service providers (“MSPs”), enabling them to support digital transformation and growth for small and medium-sized enterprises (“SMEs”), which we define as those enterprises having less than 1,000 employees.
Overview N-able, Inc., a Delaware corporation, together with its subsidiaries, is a leading global provider of cloud-based security, data protection, and unified endpoint management software solutions for IT services providers, including managed service providers (“MSPs”).
Amortization of acquired intangibles decreased $5.3 million, or 89.8%, primarily due to the conclusion of amortization of intangible assets acquired in connection with the take private transaction of SolarWinds in early 2016 during the three months ended March 31, 2023.
Amortization related to the take private transaction of SolarWinds concluded during the three months ended March 31, 2023. Operating Expenses Operating expenses consist of sales and marketing, research and development and general and administrative expenses as well as amortization of acquired intangibles.
Removed
With a flexible technology platform and powerful integrations, N-able makes it easy for MSPs to monitor, manage, and protect their end-customer systems, data, and networks. Our growing portfolio of security, automation, and backup and recovery solutions is built for IT services management professionals. N-able simplifies complex ecosystems and enables customers to solve their most pressing challenges.
Added
Our powerful technology enables them to support digital transformation and growth for small and medium-sized businesses (“SMBs”) and mid-market businesses, which we define as those businesses having fewer than 2,500 employees. With a flexible technology platform and powerful integrations, N-able makes it easy for our customers to monitor, manage, and protect systems, data, and networks.
Removed
Each SolarWinds stockholder of record received one share of our common stock, $0.001 par value, for every two shares of SolarWinds common stock, $0.001 par value, held by such stockholder as of the close of business on the Record Date.
Added
Through our multi-dimensional land and expand model and global presence, we have been able to drive strong recurring revenue growth and profitability.
Removed
SolarWinds distributed 158,020,156 shares of our common stock in the Distribution, which was effective at 11:59 p.m., Eastern Time, on July 19, 2021. The Distribution reflected 316,040,312 shares of SolarWinds common stock outstanding on July 12, 2021 at a distribution ratio of one share of our common stock for every two shares of SolarWinds common stock.
Added
During the year ended December 31, 2024 , we began increasing the proportion of our subscriptions that are long-term committed contracts, as compared to month-to-month contracts (the “Long-Term Contract Initiative”).
Removed
In addition, on July 19, 2021, and prior to completion of the Distribution, we issued 20,623,282 newly-issued shares of our common stock in connection with a private placement of N-able’s common stock (the “Private Placement”).
Added
Under Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (“Topic 606”),” we recognize revenue for long-term subscriptions when the distinct license is made available to the customer, and support revenue is recognized ratably over the contract term.
Removed
Our financial statements for the period from July 20, 2021 forward are Consolidated Financial Statements based on our reported results as a standalone company.
Added
Point in time subscription revenue decreased from $14.7 million during the three months ended December 31, 2023 to $10.8 million during the three months ended December 31, 2024, and increased from $56.4 million during the year ended December 31, 2023 to $62.3 million during the year ended December 31, 2024.
Removed
The financial information included herein should be read in conjunction with the audited Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2022, referred to as our “2022 Annual Report.” See Note 2. Summary of Significant Accounting Policies and Note 13.
Added
The increase in point in time subscription revenue during the year ended December 31, 2024 was primarily due to the impact of revenue recognition for long-term committed contracts under Topic 606, net of any volume and pricing rationalization when committing to long-term subscriptions and any fluctuations in month-to-month contracts. See Note 2.
Removed
Relationship with Parent and Related Entities in the Notes to Consolidated Financial Statements for further details. SolarWinds Cyber Incident As previously disclosed, SolarWinds was the victim of a cyberattack on its Orion Software Platform and internal systems, or the Cyber Incident. SolarWinds has confirmed to us that it has concluded its internal investigations related to the Cyber Incident.
Added
Summary of Significant Accounting Policies in the Notes to Cons olidated Financial Statements for further details regarding revenue recognized from subscription and other services at a point in time and over time. Acquisitions On November 20, 2024, we acquired Adlumin, Inc. (“Adlumin”), a Washington, D.C. based enterprise-grade security operations platform provider.
Removed
As SolarWinds previously disclosed in its investigatory updates, it has substantially completed this process and believes the threat actor is no longer active in its environments. In response to the Cyber Incident and in connection with the Separation and Distribution, we continue to work to further enhance security, monitoring and authentication of our solutions.
Added
The acquisition was structured as a merger transaction pursuant to which Adlumin became our indirect wholly owned subsidiary. The aggregate consideration payable at closing of the transaction included $98.7 million in cash, subject to customary adjustments and funded with cash on hand, and the issuance of up to 1,570,762 shares of our common stock.
Removed
In 2021, we experienced an adverse impact to new subscription sales and expansion rates relative to historical levels.
Added
Additionally, the former Adlumin shareholders have the right to receive $120.0 million in cash in installments of $52.5 million and $67.5 million on the first and second anniversaries of the closing date, respectively, and up to an aggregate of $30.0 million in potential cash earn-out payments payable in 2025 and 2026 based upon the achievement of certain performance metrics against defined targets for the 2024 and 2025 fiscal years.
Removed
We believe this was due in part to our decision in response to the Cyber Incident to temporarily reduce investments in demand generation activities through January 2021, as well as a result of certain MSP partners delaying their purchasing decisions as they assessed the potential impact of the Cyber Incident.
Added
The acquisition is intended to build upon our prior partnership with Adlumin providing extended detection and response (“XDR”) capabilities and managed detection and response (“MDR”) services, and allow us to incorporate Adlumin’s innovative technology with our industry-leading platform that combines security, unified endpoint management, and data protection solutions.
Removed
In October 2023, the SEC filed a complaint against SolarWinds and its chief information officer alleging violations of the Exchange Act and Securities Act relating to SolarWinds’ cybersecurity disclosures and public statements, as well as its internal controls and disclosure controls and procedures. This brought renewed attention to the Cyber Incident and questions from some of our MSP partners.
Added
We incurred net transaction related costs of $2.9 million during the year ended December 31, 2024, which are included in general and administrative expense. Goodwill and acquired identifiable intangible assets for this acquisition are not deductible for tax purposes.
Removed
However, we also have seen consistency among renewal rates with our larger MSP partners and have not observed material adverse trends with respect to the usage of our solutions. In addition, following our resumption of regular demand generation activities in February 2021, we were encouraged by engagements with both prospective and existing MSP partners.
Added
The results of operations related to Adlumin since the acquisition date are included in our Consolidated Financial Statements for the three and twelve months ended December 31, 2024.
Removed
Results of Operations Our financial statements for the periods through the Separation and Distribution date of July 19, 2021 are Consolidated Financial Statements prepared on a “carve-out” basis. Our financial statements for the period from July 20, 2021 forward are Consolidated Financial Statements based on our reported results as a standalone company.
Added
As noted above, total consideration includes up to $30.0 million in potential cash earn-out payments payable in 2025 and 2026 based upon the achievement of certain performance metrics against defined targets for the 2024 and 2025 fiscal years.
Removed
Through the Separation and Distribution date of July 19, 2021, we operated as a part of SolarWinds. Therefore, stand-alone financial statements were not historically prepared for us. The accompanying historical Consolidated Financial Statements have been prepared from SolarWinds’ historical accounting records and are presented on a stand-alone basis as if our business’ operations had been conducted independently from SolarWinds.
Added
The contingent consideration liabilities will be re-evaluated periodically, but at least quarterly, with the resulting gains and losses recognized within general and administrative expense in our Consolidated Statements of Operations. At the date of acquisition, the fair value of this contingent consideration was $16.6 million.
Removed
The Consolidated Financial Statements present our historical results of operations in accordance with GAAP. Prior to the Separation and Distribution, N-able comprised certain stand-alone legal entities for which discrete financial information was available.
Added
As of December 31, 2024, the fair value of this contingent consideration is $14.1 million, resulting in the recognition of a gain of $2.6 million for the year ended December 31, 2024.
Removed
As SolarWinds recorded transactions at the legal entity level, for the legal entities which were shared between the N-able business and other SolarWinds operations for which discrete financial information was not available, allocation methodologies were applied to certain accounts to allocate amounts to us as discussed in Note 1.
Added
The current portion of the contingent consideration of $5.5 million is included in “accrued liabilities and other” and the non-current portion of $8.6 million is included in “other long-term liabilities” in our Consolidated Balance Sheets as of December 31, 2024. See Note 3. Acquisitions , Note 7. Fair Value Measurements , Note 8. Accrued Liabilities and Other and Note 15.
Removed
Organization and Nature of Operations in the Notes to Consolidated Financial Statements . The Consolidated Statements of Operations include all revenue and costs directly attributable to N-able as well as an allocation of expenses related to facilities, functions and services provided by SolarWinds prior to the Separation and Distribution.
Added
Commitments and Contingencies in the Notes to Cons olidated Financial Statements for additional information regarding the Adlumin acquisition and contingent consideration liabilities. Annual Recurring Revenue Total annual recurring revenue (“ARR”) as of December 31, 2024 was $482.5 million, compared to $444.3 million as of December 31, 2023, representing an increase of 8.6%.
Removed
These corporate expenses have been allocated to our business based on direct usage or benefit, where identifiable, with the remainder allocated based on headcount where appropriate. These allocations are primarily reflected within operating expenses in our Consolidated Statements of Operations.
Added
Revenue from the license performance obligation of our self-managed solutions is recognized at a point in time upon delivery of the access to the licenses and revenue from the performance obligation related to the technical support and unspecified software upgrades of our subscription-based license arrangements is recognized ratably over the agreement period.
Removed
We believe the basis on which the expenses have been allocated to be a reasonable reflection of the utilization of services provided to, or the benefit received by, us during the periods presented.
Removed
However, these allocations may not be indicative of the actual expenses we would have incurred as a stand-alone company during the periods prior to the Separation and Distribution or of the costs we will incur in the future. See Note 13.
Removed
Relationship with Parent and Related Entities in the Notes to Consolidated Financial Statements for further details of the allocated costs. 56 Table of Contents Fourth Quarter Financial Highlights Revenue We deliver a platform of integrated solutions that enables our MSP partners to manage and secure the IT environments and assets for their SME end customers, as well as more efficiently manage their own businesses.
Removed
Our total revenue was $108.4 million and $95.8 million for the three months ended December 31, 2023 and 2022, respectively. As of December 31, 2023, we had approximately 25,000 customers.
Removed
Our net income for the three months ended December 31, 2023 and 2022 was $9.4 million and $7.0 million, respectively.
Removed
For the periods through the Separation and Distribution date of July 19, 2021, SolarWinds provided facilities, information technology services and certain corporate and administrative services to us. Expenses relating to these services have been allocated to N‑able and are reflected in the Consolidated Financial Statements.
Removed
We had total employees of 1,584 and 1,462 as of December 31, 2023 and 2022, respectively.
Removed
Income Tax Expense Income tax expense consists of domestic and foreign corporate income taxes related to the sale of subscriptions.
Removed
Our effective tax rate will be affected by many factors including changes in tax laws, regulations or rates, new interpretations of existing laws or regulations, valuation allowance, uncertain tax positions, stock-based compensation, permanent nondeductible book and tax differences, shifts in the allocation of income earned throughout the world and changes in overall levels of income before tax.
Removed
Comparison of the Years Ended December 31, 2023 and 2022 Revenue Year Ended December 31, 2023 2022 Amount Percentage of Revenue Amount Percentage of Revenue Change (in thousands, except percentages) Subscription revenue $ 412,072 97.7 % $ 362,609 97.5 % $ 49,463 Other revenue 9,808 2.3 9,160 2.5 648 Total subscription and other revenue $ 421,880 100.0 % $ 371,769 100.0 % $ 50,111 Total revenue increased $50.1 million or 13.5%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

15 edited+137 added−9 removed11 unchanged
Biggest changeEach margin is subject to reductions to 2.75% and 1.75%, respectively, based on our first lien net leverage ratio. 71 Table of Contents On June 26, 2023, the parties entered into Amendment No. 1 (“Amendment No. 1”) to the Credit Agreement.
Biggest changeEach margin is subject to reductions to 2.75% and 1.75%, respectively, based on our first lien net leverage ratio. As of December 31, 2024 and 2023, the annual weighted-average interest rate on borrowings was 7.53% and 8.40%, respectively.
Debt of the Notes to Consolidated Financial Statements for further details regarding the Credit Agreement and Interest Expense, Net of Management's Discussion and Analysis of Financial Condition and Results of Operations - Comparison for the years ended December 31, 2023, 2022 and 2021 for further details on the current and expected continued impact of interest rates on borrowings under the Credit Agreement.
Debt of the Notes to Consolidated Financial Statements for further details regarding the Credit Agreement and Interest Expense, Net of Management's Discussion and Analysis of Financial Condition and Results of Operations - Comparison for the years ended December 31, 2024, 2023 and 2022 for further details on the current and expected continued impact of interest rates on borrowings under the Credit Agreement.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is incorporated by reference to the Consolidated Financial Statements set forth on pages F-1 through F-40 hereof. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no changes in or disagreements with our accountants on accounting and financial disclosure matters.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is incorporated by reference to the Consolidated Financial Statements set forth on pages F-1 through F-43 hereof. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no changes in or disagreements with our accountants on accounting and financial disclosure matters.
We do not have material exposure to market risk with respect to our cash and cash equivalents, as these consist primarily of highly liquid investments purchased with original maturities of three months or less as of December 31, 2023 and 2022, respectively. See Note 13.
We do not have material exposure to market risk with respect to our cash and cash equivalents, as these consist primarily of highly liquid investments purchased with original maturities of three months or less as of December 31, 2024 and 2023, respectively. See Note 13.
This hypothetical change in interest expense has been calculated based on the variable rate borrowings outstanding as of December 31, 2023 and 2022 and a 100 basis point per annum change in interest rate applied over a one-year period.
This hypothetical change in interest expense has been calculated based on the variable rate borrowings outstanding as of December 31, 2024 and 2023 and a 100 basis point per annum change in interest rate applied over a one-year period.
The conversion of the foreign subsidiaries’ financial statements into U.S. dollars will also lead to remeasurement gains and losses recorded in income, or translation gains or losses that are recorded as a component of accumulated other comprehensive income (loss).
The conversion of the foreign subsidiaries’ financial statements into U.S. dollars will also lead to remeasurement gains and losses recorded in income, or translation gains or losses that are recorded as a component of accumulated other comprehensive income (loss). ITEM 8.
If there is a change in foreign currency exchange rates, the amounts of assets, liabilities, revenue, operating expenses and cash flows that we report in U.S. dollars for foreign subsidiaries that transact in international currencies may be higher or lower to what we would have reported 72 Table of Contents if using a constant currency rate.
If there is a change in foreign currency exchange rates, the amounts of assets, liabilities, revenue, operating expenses and cash flows that we report in U.S. dollars for foreign subsidiaries that transact in international currencies may be higher or lower to what we would have reported if using a constant currency rate.
These exposures may change over time as business practices evolve and economic conditions change, including as a result of the impact on the global economy of, or governmental actions taken in response to, the Russia-Ukraine conflict or escalating conflicts in the Middle East.
These exposures may change over time as business practices evolve and economic conditions change, including as a result of the impact on the global economy of, or governmental actions taken in response to, the Russia-Ukraine conflict or 71 Table of Contents escalating conflicts in the Middle East.
If there was a hypothetical 100 basis point increase in interest rates, the annual impact to interest expense would be approximately $3.4 million and $3.5 million as of December 31, 2023 and 2022, respectively.
If there was a hypothetical 100 basis point increase in interest rates, the annual impact to interest expense would be approximately $3.4 million as of December 31, 2024 and 2023, respectively.
Foreign Currency Exchange Risk As a global company, we face exposure to adverse movements in foreign currency exchange rates. We primarily conduct business in the following locations: the United States, United Kingdom, Europe and Canada.
Foreign Currency Exchange Risk As a global company, we face exposure to adverse movements in foreign currency exchange rates. We primarily conduct business in the following locations: the United States, United Kingdom, European Union and Canada.
We hold cash and cash equivalents for working capital purposes. Our investments are made for capital preservation purposes, and we do not enter into investments for trading or speculative purposes. We had total borrowings under the Credit Agreement, net of debt issuance costs, of $335.0 million and $337.0 million as of December 31, 2023 and 2022, respectively.
We hold cash and cash equivalents for working capital purposes. Our investments are made for capital preservation purposes, and we do not enter into investments for trading or speculative purposes. We had total borrowings under the Credit Agreement, net of debt issuance costs, of $333.1 million and $335.0 million as of December 31, 2024 and 2023, respectively.
Under the Credit Agreement, borrowings under the Term Loan bore interest at a floating rate of an Adjusted LIBOR rate (subject to a “floor” of 0.5%) for a specified interest period plus an applicable margin of 3.00%, until the LIBOR-based rate was replaced, as described below.
Under the Credit Agreement, borrowings under the Term Loan bore interest at a floating rate of an Adjusted LIBOR rate (subject to a “floor” of 0.5%) for a specified interest period plus an applicable margin of 3.00%, until the LIBOR-based rate was replaced pursuant to the amendment.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk We had cash and cash equivalents of $153.0 million and $98.8 million as of December 31, 2023 and 2022, respectively. Our cash and cash equivalents consist of bank demand deposits and money market funds and do not have material exposure to market risk.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk We had cash and cash equivalents of $85.2 million and $153.0 million as of December 31, 2024 and 2023, respectively. Our cash and cash equivalents consist of bank demand deposits and money market funds and do not have material exposure to market risk.
Under the Credit Agreement, borrowings denominated in U.S. dollars under the Revolving Facility bore interest at a floating rate of an Adjusted LIBOR rate (subject to a “floor” of 0.0%) for a specified interest period plus an applicable margin of 3.00%, until the LIBOR-based rate was replaced, as described below.
Under the Credit Agreement, borrowings denominated in U.S. dollars under the Revolving Facility bore interest at a floating rate of an Adjusted LIBOR rate (subject to a “floor” of 0.0%) for a specified interest period plus an applicable margin of 3.00%, until the LIBOR-based rate was replaced pursuant to an amendment to the Credit Agreement, effective August 31, 2023.
In connection with the Separation and Distribution, as defined in Note 1. Organization and Nature of Operations in the Notes to Consolidated Financial Statements , our United Kingdom legal entity changed its functional currency from the British Pound Sterling to the US dollar.
In connection with the Separation and Distribution, our United Kingdom legal entity changed its functional currency from the British Pound Sterling to the US dollar.
Removed
Amendment No. 1 amended the Credit Agreement to, among other things, replace the LIBOR-based rate included in the Credit Agreement with a SOFR-based rate, as an interest rate benchmark. Other than the foregoing, the material terms of the Credit Agreement described herein remain unchanged.
Added
Item 7A. Quantitative and Qualitative Disclosures About Market Risk for additional information on how foreign currency impacts our financial results. Income Tax Expense Income tax expense consists of domestic and foreign corporate income taxes related to the sale of subscriptions.
Removed
The effective interest rate on our outstanding debt remained as a LIBOR-based rate until August 31, 2023, at which point it transitioned to a SOFR-based rate. As of December 31, 2023 and 2022, the annual weighted-average interest rate on borrowings was 8.40% and 7.73%, respectively.
Added
Our effective tax rate will be affected by many factors including changes in tax laws, regulations or rates, new interpretations of existing laws or regulations, valuation allowance, uncertain tax positions, stock-based compensation, permanent nondeductible book and tax differences, shifts in the allocation of income earned throughout the world and changes in overall levels of income before tax.
Removed
The impact of this change is reflected in the foreign currency translation adjustment for the period of July 20, 2021 through December 31, 2021.
Added
Comparison of the Years Ended December 31, 2024 and 2023 Revenue Year Ended December 31, 2024 2023 Amount Percentage of Revenue Amount Percentage of Revenue Change (in thousands, except percentages) Subscription revenue $ 458,961 98.5 % $ 412,072 97.7 % $ 46,889 Other revenue 7,186 1.5 9,808 2.3 (2,622) Total subscription and other revenue $ 466,147 100.0 % $ 421,880 100.0 % $ 44,267 Total revenue increased $44.3 million or 10.5%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Removed
Emerging Growth Company We historically qualified as an “emerging growth company” (“EGC”) as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
Added
We base revenue by geography on the billing address of each customer. Based on customer location, revenue from the United States was approximately 48.2% and 48.8% of total revenue for the years ended December 31, 2024 and 2023, respectively.
Removed
The JOBS Act allows EGCs to delay the adoption of new or revised accounting standards until such time as those standards apply to private companies.
Added
Revenue from the United Kingdom was approximately 10.5% and 10.2% of total revenue for the years ended December 31, 2024 and 2023, respectively. Other than the United States and the United Kingdom, no single country accounted for 10% or more of our total revenue during these periods. Subscription Revenue.
Removed
For so long as we qualified as an EGC, we utilized these transition periods, which may make it difficult to compare our financial statements for applicable periods to those of non-emerging growth companies and other emerging growth companies that have opted out of the transition periods afforded under the JOBS Act.
Added
Subscription revenue increased $46.9 million, or 11.4%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase in subscription revenue was primarily driven by growth in sales of our data protection, security and unified endpoint management solutions, inclusive of the net positive impact from long-term committed contracts.
Removed
Based on the market value of our common stock held by non-affiliates as of June 30, 2023 (the last business day of the most recently completed second fiscal quarter), we ceased to qualify as an EGC as of the end of the fiscal year ending December 31, 2023.
Added
See Fourth Quarter Financial Highlights for further details regarding the impact of long-term committed contracts d uring the year ended December 31, 2024. Subscription revenue increased slightly as a percentage of total revenue for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Removed
As a result, we are no longer able to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not EGCs including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Added
Our annual dollar-based net revenue retention rate for our subscription products was approximately 103% and 110% for the years ended December 31, 2024 and 2023, respectively.
Removed
In addition, we are no longer able to use the extended transition period for complying with new or revised accounting standards available to emerging growth companies and will be required to adopt new or revised accounting standards as of the effective dates for public companies. ITEM 8.
Added
The 103% dollar-based net revenue retention rate reflects the pressure from our pricing and packaging changes, coupled with rationalization related to our Long-Term Contract Initiative, which began materially impacting net revenue retention during the three months ended June 30, 2024.
Added
Our calculation includes any expansion revenue and is net of any contraction or cancellation, but excludes credits and revenue attributable to any customer who was not a customer with a paid subscription in the prior period.
Added
To calculate our annual dollar-based net revenue retention rate, we first identify the customers with active paid subscriptions in the last month of the prior-year period, or the base customers.
Added
We then divide the subscription revenue in the last month of the current-year period attributable to the base customers by the revenue attributable to those base customers in the last month of the prior-year period.
Added
Our dollar-based net revenue retention rate for a particular period is then obtained by averaging the rates from that particular period with the results from each of the prior eleven months. Other Revenue .
Added
Other revenue decreased $2.6 million, or 26.7%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to a decrease in maintenance and professional services revenue.
Added
Other revenue decreased slightly as a percentage of total revenue for the year ended December 31, 2024 compared to the year ended December 31, 2023. 59 Table of Contents Cost of Revenue Year Ended December 31, 2024 2023 Amount Percentage of Revenue Amount Percentage of Revenue Change (in thousands, except percentages) Cost of revenue $ 77,159 16.6 % $ 66,369 15.7 % $ 10,790 Amortization of acquired technologies 3,520 0.8 1,839 0.4 1,681 Total cost of revenue $ 80,679 17.4 % $ 68,208 16.1 % $ 12,471 Total cost of revenue increased $12.5 million, or 18.3%, in the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to an increase in public cloud infrastructure and hosting fees and royalties related to our subscription products of $7.0 million, an increase in depreciation of servers and amortization of capitalized internal-use software costs of $3.0 million, an increase in amortization of intangible assets acquired in connection with business combinations of $1.7 million, an increase in personnel costs driven by headcount and salary increases of $0.4 million, which includes an increase in stock-based compensation expense of $0.2 million, an increase in contract services costs of $0.3 million, and an increase in allocated facilities and IT costs of $0.1 million.
Added
Operating Expenses Year Ended December 31, 2024 2023 Amount Percentage of Revenue Amount Percentage of Revenue Change (in thousands, except percentages) Sales and marketing $ 135,592 29.1 % $ 134,691 31.9 % $ 901 Research and development 90,714 19.5 78,180 18.5 12,534 General and administrative 76,514 16.4 69,885 16.6 6,629 Amortization of acquired intangibles 278 0.1 597 0.1 (319) Total operating expenses $ 303,098 65.1 % $ 283,353 67.1 % $ 19,745 Sales and Marketing.
Added
Sales and marketing expenses increased $0.9 million, or 0.7%, primarily due to an increase in personnel costs driven by headcount and salary increases of $7.4 million, which includes an increase in stock-based compensation expense of $0.3 million, an increase in travel and event-related costs of $1.7 million, an increase in allocated facilities and IT costs of $0.3 million, an increase in restructuring and other costs of $0.3 million, and an increase in transaction related costs of $0.2 million, partially offset by an increase in commissions related to long-term committed contracts that were capitalized from sales and marketing expenses to the Consolidated Balance Sheets of $7.4 million, which is net of the recognition of $0.4 million of amortization expense for capitalized commissions, and a decrease in advertising expense of $1.6 million.
Added
Research and development expenses increased $12.5 million, or 16.0%, primarily due to an increase in personnel costs driven by headcount and salary increases of $6.5 million, which includes an increase in stock-based compensation expense of $1.6 million, an increase in subscription costs of $2.1 million, an increase in allocated facilities and IT costs of $1.9 million, a decrease in capitalized internal-use software costs of $1.4 million, an increase in contract services costs of $0.2 million, and an increase in amortization expense of $0.2 million.
Added
General and administrative expenses increased $6.6 million, or 9.5%, primarily due to an increase in transaction related costs of $4.7 million, which includes gains on contingent consideration related to the July 1, 2022 acquisition of Spinpanel of $3.7 million and the November 20, 2024 acquisition of Adlumin of $2.6 million, respectively, and an increase in expense of $1.8 million related to the Adlumin deferred consideration liability, an increase in rent expense of $2.4 million, an increase in restructuring and other costs of $2.0 million, and an increase in professional fees of $1.2 million, partially offset by a decrease in allocated facilities and IT costs of $2.2 million, a decrease in costs associated with our separation from SolarWinds of $0.7 million, and a decrease in director and officer liability insurance costs of $0.6 million.
Added
See Note 3. Acquisitions , Note 7. Fair Value Measurements , and Note 15. Commitments and Contingencies in the Notes to Consolidated Financial Statements for additional information regarding the acquisitions of Spinpanel and Adlumin. Amortization of Acquired Intangibles.
Added
Amortization of acquired intangibles decreased $0.3 million, or 53.4%, primarily due a decrease in expense of $0.6 million related to the conclusion of amortization of intangible assets acquired in connection 60 Table of Contents with the take private transaction of SolarWinds in early 2016 during the three months ended March 31, 2023, partially offset by an increase in expense of $0.2 million related to the November 20, 2024 acquisition of Adlumin.
Added
Interest Expense, Net Year Ended December 31, 2024 2023 Amount Percentage of Revenue Amount Percentage of Revenue Change (in thousands, except percentages) Interest expense, net $ (30,031) (6.4) % $ (30,252) (7.2) % $ 221 Interest expense, net decreased by $0.2 million, or 0.7%, in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to the impact of decreased interest rates and lower outstanding borrowings under the Credit Agreement.
Added
Outstanding borrowings under the Credit Agreement bear interest at variable rates, and therefore changes in interest rates will have an impact on our financial results and cash flows. See Note 9. Debt in the Notes to Consolidated Financial Statements for additional information regarding the Credit Agreement.
Added
Other Income, Net Year Ended December 31, 2024 2023 Amount Percentage of Revenue Amount Percentage of Revenue Change (in thousands, except percentages) Other income, net $ 1,931 0.4 % $ 4,259 1.0 % $ (2,328) Other income, net decreased by $2.3 million, or 54.7%, in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to a decrease in the impact of changes in foreign currency exchange rates of $3.8 million related to various accounts for the period, partially offset by an increase in dividend income from our money market fund financial assets of $1.9 million.
Added
Income Tax Expense Year Ended December 31, 2024 2023 Amount Percentage of Revenue Amount Percentage of Revenue Change (in thousands, except percentages) Income before income taxes $ 54,270 11.6 % $ 44,326 10.5 % $ 9,944 Income tax expense 23,312 5.0 20,914 5.0 2,398 Effective tax rate 43.0 % 47.2 % (4.2) % Our income tax expense for the year ended December 31, 2024 increased by $2.4 million as compared to the year ended December 31, 2023.
Added
The effective tax rate decreased to 43.0% for the year ended December 31, 2024 primarily due to a decrease in income taxes on income outside of the United States, partially offset by an increase in the amount of the unbenefited loss in the United States. For additional discussion about our income taxes, see Note 14.
Added
Income Taxes in the Notes to Consolidated Financial Statements . 61 Table of Contents Comparison of the Years Ended December 31, 2023 and 2022 Revenue Year Ended December 31, 2023 2022 Amount Percentage of Revenue Amount Percentage of Revenue Change (in thousands, except percentages) Subscription Revenue $ 412,072 97.7 % $ 362,609 97.5 % $ 49,463 Other revenue 9,808 2.3 9,160 2.5 648 Total subscription and other revenue $ 421,880 100.0 % $ 371,769 100.0 % $ 50,111 Total revenue increased $50.1 million, or 13.5%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Added
We base revenue by geography on the billing address of each customer. Based on customer location, revenue from the United States was approximately 48.8% and 48.7% of total revenue for the years ended December 31, 2023 and 2022, respectively.
Added
Revenue from the United Kingdom was approximately 10.2% and 10.3% of total revenue for the years ended December 31, 2023 and 2022, respectively. Other than the United States and the United Kingdom, no single country accounted for 10% or more of our total revenue during these periods. Subscription Revenue.
Added
Subscription revenue increased $49.5 million, or 13.6%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase in subscription revenue was primarily driven by growth in sales of our data protection, security, and unified endpoint management solutions.
Added
Our subscription revenue increased slightly as a percentage of our total revenue for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Added
Our annual dollar-based net revenue retention rate for our subscription products was approximately 110% and 103% for the years ended December 31, 2023 and 2022, respectively, and was driven primarily by strong customer retention and expansion in our MSP products, in addition to favorable movements in foreign currency exchange rates. Other Revenue .
Added
Other revenue increased $0.6 million, or 7.1%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to an increase in professional services revenue.
Added
Cost of Revenue Year Ended December 31, 2023 2022 Amount Percentage of Revenue Amount Percentage of Revenue Change (in thousands, except percentages) Cost of revenue $ 66,369 15.7 % $ 56,133 15.1 % $ 10,236 Amortization of acquired technologies 1,839 0.4 2,477 0.7 (638) Total cost of revenue $ 68,208 16.1 % $ 58,610 15.8 % $ 9,598 Total cost of revenue increased $9.6 million, or 16.4%, in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to an increase in public cloud infrastructure and hosting fees and royalties related to our subscription products of $6.5 million, an increase in personnel costs driven by headcount and salary increases of $0.9 million, which includes an increase in stock-based compensation expense of $0.2 million, and an increase in depreciation of servers and amortization of capitalized internal-use software costs of $3.1 million, partially offset by a decrease in amortization of intangible assets acquired in connection with the take private transaction of SolarWinds in early 2016 and subsequent business combinations of $0.7 million and a decrease in allocated facilities and IT costs of $0.3 million.
Added
Amortization related to the take private transaction of SolarWinds concluded during the three months ended March 31, 2023. 62 Table of Contents Operating Expenses Year Ended December 31, 2023 2022 Amount Percentage of Revenue Amount Percentage of Revenue Change (in thousands, except percentages) Sales and marketing $ 134,691 31.9 % $ 125,301 33.7 % $ 9,390 Research and development 78,180 18.5 63,484 17.1 14,696 General and administrative 69,885 16.6 71,125 19.1 (1,240) Amortization of acquired intangibles 597 0.1 5,853 1.6 (5,256) Total operating expenses $ 283,353 67.1 % $ 265,763 71.5 % $ 17,590 Sales and Marketing.
Added
Sales and marketing expenses increased $9.4 million, or 7.5%, primarily due to an increase in personnel costs driven by headcount and salary increases of $8.0 million, which includes an increase in stock-based compensation expense of $2.0 million, an increase in marketing program costs of $1.4 million, and an increase in subscription costs of $0.8 million, partially offset by a decrease in contract services costs of $0.3 million, a decrease in restructuring costs of $0.2 million, and a decrease in allocated facilities and IT costs of $0.1 million.
Added
We expect to continue to grow our sales and marketing organization over time to drive new customer adds, retain and expand with existing customers and pursue initiatives designed to help our customers succeed and grow. Research and Development.
Added
Research and development expenses increased $14.7 million, or 23.1%, primarily due to an increase in personnel costs driven by headcount and salary increases of $14.6 million, which includes an increase in stock-based compensation expense of $1.8 million, an increase in contract services costs of $1.1 million, an increase in subscription costs of $0.8 million, and an increase in allocated facilities and IT costs of $0.4 million, partially offset by an increase in capitalized internal-use software costs of $2.3 million and a decrease in restructuring costs of $0.1 million.
Added
We expect to continue to grow our research and development organization over time and also to incur additional expenses associated with bringing new product offerings to market and our enhancements of security, monitoring and authentication of our solutions. General and Administrative .
Added
General and administrative expenses decreased $1.2 million, or 1.7%, primarily due a decrease in contract services costs of $1.5 million, gains on contingent consideration related to the July 1, 2022 acquisition of Spinpanel of $1.4 million, a decrease in costs associated with our separation from SolarWinds of $1.0 million, a decrease in director and officer liability insurance costs of $0.9 million, and a decrease in rent expense of $0.5 million, partially offset by an increase in personnel costs driven by headcount and salary increases of $3.3 million, which includes an increase in stock-based compensation expense of $1.8 million, and an increase in bad debt expense of $0.8 million.
Added
See Note 3. Acquisitions , Note 7. Fair Value Measurements , and Note 15. Commitments and Contingencies in the Notes to Consolidated Financial Statements for additional information regarding the acquisition of Spinpanel. Amortization of Acquired Intangibles.
Added
Amortization of acquired intangibles decreased $5.3 million, or 89.8%, primarily due to the conclusion of amortization of intangible assets acquired in connection with the take private transaction of SolarWinds in early 2016 during the three months ended March 31, 2023.
Added
Interest Expense, Net Year Ended December 31, 2023 2022 Amount Percentage of Revenue Amount Percentage of Revenue Change (in thousands, except percentages) Interest expense, net $ (30,252) (7.2) % $ (18,852) (5.1) % $ (11,400) 63 Table of Contents Interest expense, net decreased by $(11.4) million, or 60.5%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to the impact of increased interest rates on borrowings under the Credit Agreement.
Added
Changes in interest rates have had and could continue to have an adverse impact on our financial results and cash flows since outstanding borrowings under the Credit Agreement bear interest at variable rates. See Note 13. Relationship with Parent and Related Entities and Note 9.
Added
Debt in the Notes to Consolidated Financial Statements for additional information regarding our related party debt and Credit Agreement, respectively.
Added
Other Income, Net Year Ended December 31, 2023 2022 Amount Percentage of Revenue Amount Percentage of Revenue Change (in thousands, except percentages) Other income, net $ 4,259 1.0 % $ 1,881 0.5 % $ 2,378 Other income, net increased by $2.4 million, or 126.4%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to an increase in dividend income from our money market fund financial assets of $3.1 million, partially offset by an increase in the impact of changes in foreign currency exchange rates of $0.7 million related to various accounts for the period.
Added
Income Tax Expense Year Ended December 31, 2023 2022 Amount Percentage of Revenue Amount Percentage of Revenue Change (in thousands, except percentages) Income before income taxes $ 44,326 10.5 % $ 30,425 8.2 % $ 13,901 Income tax expense 20,914 5.0 13,718 3.7 7,196 Effective tax rate 47.2 % 45.1 % 2.1 % Our income tax expense for the year ended December 31, 2023 increased by $7.2 million as compared to the year ended December 31, 2022.
Added
The effective tax rate increased to 47.2% for the year ended December 31, 2023, primarily due to changes in the UK statutory tax rate, changes in income before income taxes by jurisdiction, the valuation allowance recognized on the deferred tax assets in the U.S. and non-deductible stock-based compensation. For additional discussion about our income taxes, see Note 14.
Added
Income Taxes in the Notes to Consolidated Financial Statements . Non-GAAP Financial Measures In addition to financial measures prepared in accordance with GAAP, we use certain non-GAAP financial measures to clarify and enhance our understanding, and aid in the period-to-period comparison, of our performance.
Added
We believe that these non-GAAP financial measures provide supplemental information that is meaningful when assessing our operating performance because they exclude the impact of certain amounts that our management and Board of Directors do not consider part of core operating results when assessing our operational performance, allocating resources, preparing annual budgets and determining compensation.
Added
Accordingly, these non-GAAP financial measures may provide insight to investors into the motivation and decision-making of management in operating the business. Investors are encouraged to review the reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure included below.
Added
While we believe that these non-GAAP financial measures provide useful supplemental information, non-GAAP financial measures have limitations and should not be considered in isolation from, or as a substitute for, their most comparable GAAP measures.
Added
These non-GAAP financial measures are not prepared in accordance with GAAP, do not reflect a comprehensive system of accounting and may not be comparable to similarly titled measures of other companies due to potential differences in their financing and accounting methods, the book value of their assets, their capital structures, the method by which their assets were acquired and the manner in which they define non-GAAP measures.
Added
Items such as the amortization of intangible assets, stock-based compensation expense and related employer-paid payroll taxes, transaction related adjustments, spin-off costs related to the Separation and Distribution, as well as the related tax impacts of these items can have a material impact on our GAAP financial results.
Added
Non-GAAP Operating Income and Non-GAAP Operating Margin We provide non-GAAP operating income and related non-GAAP operating margins excluding such items as stock-based compensation expense and related employer-paid payroll taxes, amortization of acquired intangible assets, transaction related 64 Table of Contents costs, spin-off costs and restructuring costs and other.
Added
We define non-GAAP operating margin as non-GAAP operating income divided by total revenue. Management believes these measures are useful for the following reasons: • Stock-Based Compensation Expense and Related Employer-Paid Payroll Taxes. We provide non-GAAP information that excludes expenses related to stock-based compensation and related employer-paid payroll taxes associated with our employees’ participation in N-able's stock-based incentive compensation plans.

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