10-Q: N-able Reports Q1 2026 Results: Revenue Up, Net Loss Narrows

N-able, Inc. announced its first quarter 2026 financial results, showing a 13.1% increase in total revenue to $133.7 million and a reduced net loss of $0.6 million.

Summary

• Total revenue for the first quarter of 2026 reached $133.7 million, a 13.1% increase compared to $118.2 million in the same period of 2025.
• Subscription revenue grew by 13.4% to $132.5 million, driven by increased traction across the cybersecurity platform.
• The company reported an operating income of $12.5 million, a significant improvement from $1.8 million in Q1 2025.
• Net loss for the quarter narrowed to $0.6 million, compared to a net loss of $7.2 million in the prior year's first quarter.
• Adjusted EBITDA increased to $36.7 million from $31.6 million in the prior year's comparable period.
• Cash flow from operations was $17.5 million, a slight decrease from $19.7 million in Q1 2025.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report with solid revenue growth and a significantly reduced net loss, indicating improving operational performance and strong customer retention, though the presence of a net loss and slight decrease in operating cash flow temper an even higher score.

Positives

• Total revenue increased by 13.1% to $133.7 million in Q1 2026.
• Subscription revenue, the primary revenue driver, grew by 13.4% to $132.5 million.
• Operating income improved substantially to $12.5 million from $1.8 million year-over-year.
• Net loss significantly decreased to $0.6 million from $7.2 million in Q1 2025.
• Annual Recurring Revenue (ARR) increased by 11.2% to $548.0 million.
• Customers with ARR over $50,000 increased by 13.0% to 2,710, representing a larger share (62%) of total ARR.
• Dollar-based net revenue retention rate for subscription products was strong at 106% for the trailing twelve months ended March 31, 2026.
• Adjusted EBITDA rose to $36.7 million, indicating improved operational profitability.
• The company maintained compliance with all covenants under its Credit Agreement.

Negatives

• Net loss, though narrowed, was still present at $0.6 million for the quarter.
• Cash flow from operations decreased slightly to $17.5 million from $19.7 million in the prior year.
• Other revenue (maintenance and professional services) decreased by 9.8% to $1.2 million.
• Total cost of revenue increased by 14.7% to $31.8 million, outpacing revenue growth in percentage terms.
• Foreign currency translation adjustments resulted in a comprehensive loss of $13.0 million for the quarter.

Risks

• A continued and sustained decline in stock price could indicate a reduction in fair value below the carrying value of the reporting unit and require an interim goodwill impairment analysis, which could materially adversely impact results of operations.
• Adverse economic conditions, including inflation, rising interest rates, and geopolitical events, could reduce IT spending or delay purchasing decisions.
• The company faces risks related to its ability to sell subscriptions to new and existing customers, retain customer loyalty, and sell through distributors and resellers.
• Declines in renewal or net retention rates could negatively impact revenue.
• Risks associated with the successful incorporation and market acceptance of AI-powered features and tools.
• Cyberattacks and security incidents pose a significant threat to the company, its customers, and their end-users, potentially leading to operational disruptions, liabilities, and reputational harm.
• The company's international operations are subject to various risks, including foreign exchange fluctuations.
• Indebtedness could lead to increased borrowing costs and potential restrictions on operations.
• The company's status as a controlled company may have implications for corporate governance.

Future Outlook

The company expects to continue growing its sales and marketing and research and development organizations to drive new customer acquisition, retain and expand with existing customers, and bring new product offerings to market. Management believes that existing cash, cash equivalents, and cash flows from operating activities will be sufficient to fund operations and meet capital expenditure commitments for at least the next twelve months. The company will continue to monitor changes to its stock price and other qualitative factors to determine if an interim goodwill impairment test is required.

Management Comments

• Our total revenue was $133.7 million and $118.2 million for the three months ended March 31, 2026 and 2025, respectively.
• Our operating income for the three months ended March 31, 2026 was $12.5 million, compared to operating income of $1.8 million for the three months ended March 31, 2025.
• Our net loss for the three months ended March 31, 2026 was $0.6 million, compared to net loss of $7.2 million for the three months ended March 31, 2025.
• We expect stock-based compensation expense to continue to decrease during the remainder of the year ending December 31, 2026.

Industry Context

StockSavvy.ai notes that N-able's Q1 2026 results reflect continued growth in the cybersecurity market, particularly in the SaaS and AI-driven solutions segment. The increase in ARR and net revenue retention rate indicates strong customer demand and successful upselling/cross-selling strategies, aligning with broader industry trends of increasing IT security investments.

Comparison to Industry Standards

• N-able's revenue growth of 13.1% for Q1 2026 is robust compared to the average SaaS company growth rates, which can vary significantly but often fall in the 15-30% range for established players.
• The dollar-based net revenue retention rate of 106% is considered strong within the SaaS industry, indicating effective customer retention and expansion, with benchmarks often aiming for over 100%.
• The company's Adjusted EBITDA margin of 27.5% is healthy and competitive within the cybersecurity SaaS sector, where margins can range widely but often aim for 20-30% for profitable companies.
• Competitors in the cybersecurity space include companies like CrowdStrike, SentinelOne, and Palo Alto Networks, which also focus on recurring revenue models and advanced threat detection, though their scale and specific market focus may differ.

Legal Proceedings

• From time to time, involved in various legal proceedings arising in the ordinary course of business. Management does not expect the resolution of any pending claims to have a material adverse impact, but acknowledges the inherent uncertainty and potential for material impact from unfavorable resolutions.

Related Party Transactions

• Agreements with SolarWinds Corporation (Parent) govern the relationship post-Separation, including Separation and Distribution Agreement, Tax Matters Agreement, Software OEM Agreements, Employee Matters Agreement, Intellectual Property Matters Agreement, Trademark License Agreement, Software Cross License Agreement, and a Sublease Agreement for office space in Austin, Texas.

Stakeholder Impact

• Shareholders: Improved financial performance with increased revenue and reduced net loss may positively impact shareholder value. The share repurchase program offers potential returns to shareholders.
• Employees: Continued investment in R&D and sales/marketing suggests potential for growth and new opportunities. Stock-based compensation expense is expected to decrease.
• Customers: Continued focus on AI-powered cybersecurity solutions and partner-first approach aims to enhance business resilience and security outcomes.
• Creditors: The company is in compliance with its debt covenants, indicating financial stability from a credit perspective.

Next Steps

• Continue to grow sales and marketing and research and development organizations.
• Monitor stock price and other qualitative factors for potential interim goodwill impairment analysis.
• Continue to evaluate the impact of market and economic conditions on the business.
• Potentially enter into agreements for investments in or acquisitions of complementary businesses, applications, or technologies.

Key Dates

Recommendation

The company demonstrates solid revenue growth and significant improvement in profitability metrics, including a narrowed net loss and increased Adjusted EBITDA. The strong net revenue retention rate is a positive indicator. However, the continued net loss, slight decrease in operating cash flow, and ongoing risks related to market conditions and potential goodwill impairment suggest a 'hold' recommendation, pending further evidence of sustained profitability and de-risking.

Keywords

N-able, Form 10-Q, Quarterly Report, Cybersecurity, SaaS, Subscription Revenue, ARR, Adjusted EBITDA, Financial Results, Adlumin Acquisition