N-able, Inc.
For the period ended Jun 30, 2025. Filed Aug 7, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 7, 2025
NABL$4.84-1.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0001834488-25-000108
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-07.
0001834488-25-000152
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 100 previous paragraphs and 114 current paragraphs.
65 unchanged; 27 reworded; 15 added; 8 removed; 0 previous and 7 current paragraphs rearranged.
Tables are not compared: 9 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
Second Quarter Financial Highlights
Current report
Our total revenue was $131.2 million and $119.4 million for the three months ended June 30, 2025 and 2024, respectively.
Current report
Sales and Marketing. Sales and marketing expenses increased $9.5 million, or 29.0%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to an increase in personnel costs of $5.8 million, which includes an increase in stock-based compensation expense of $0.9 million, an increase in transaction related costs of $1.4 million, an increase in travel and event-related costs of $1.2 million, and an increase in advertising expense of $0.9 million.
Current report
General and Administrative. General and administrative expenses increased $0.2 million, or 0.8%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to an increase in contract services costs of $0.5 million, an increase in restructuring and other costs of $0.4 million, and an increase in personnel costs driven by headcount and salary increases of $0.3 million, partially offset by a net decrease in transaction related costs of $1.0 million.
Current report
Other (Expense) Income, Net
Current report
On July 4, 2025, the President signed into law H.R. 1, the “One Big Beautiful Bill Act” (“OBBBA”). Key income tax-related provisions of the OBBBA include the repeal of mandatory capitalization of domestic research and development expenditures under Internal Revenue Code (IRC) Section 174, extension of bonus depreciation, the restoration of an EBITDA-based interest limitation deduction, and revisions to international tax regimes. We are evaluating the financial implications of the OBBBA and will begin reflecting its effects in the third quarter of 2025. We do not anticipate the overall impact to be material. For additional discussion about our income taxes, see Note 10. Income Taxesin the Notes to Consolidated Financial Statements.
Current report
Comparison of the Six Months Ended June 30, 2025 and 2024
Current report
Revenue
Current report
Other Revenue. Other revenue decreased $1.5 million, or 36.2%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to a decrease in maintenance revenue of $1.9 million, partially offset by an increase in professional services revenue of $0.3 million. Other revenue as a percentage of our total revenue was 1.1% for the six months ended June 30, 2025, compared to 1.8% for the six months ended June 30, 2024.
Current report
Research and Development. Research and development expenses increased $5.7 million, or 12.9%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to an increase in personnel costs driven by headcount and salary increases of $7.3 million, which includes an increase in stock-based compensation expense of $0.6 million, an increase in subscription costs of $1.0 million, and an increase in contract services costs of $0.7 million, partially offset by an increase in capitalized internal-use software costs of $3.2 million.
Current report
General and Administrative. General and administrative expenses increased $7.0 million, or 17.6%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to a net increase in transaction related costs of $5.5 million, an increase in contract services costs of $1.0 million, an increase in professional fees of $0.9 million, and an increase in personnel costs driven by headcount and salary increases of $0.5 million, partially offset by a decrease in restructuring and other costs of $0.5 million.
Current report
Amortization of Acquired Intangibles. Amortization of acquired intangibles increased $1.0 million from $29 thousand for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, related to the November 20, 2024 acquisition of Adlumin.
Current report
Interest Expense, Net
Current report
On July 4, 2025, the President signed into law H.R. 1, the “One Big Beautiful Bill Act” (“OBBBA”). Key income tax-related provisions of the OBBBA include the repeal of mandatory capitalization of domestic research and development expenditures under Internal Revenue Code (IRC) Section 174, extension of bonus depreciation, the restoration of an EBITDA-based interest limitation deduction, and revisions to international tax regimes. We are evaluating the financial implications of the OBBBA and will begin reflecting its effects in the third quarter of 2025. We do not anticipate the overall impact to be material. For additional discussion about our income taxes, see Note 10. Income Taxesin the Notes to Consolidated Financial Statements.
Current report
On March 11, 2025, our board of directors approved a share repurchase program (the “Repurchase Program”) authorizing the repurchase of up to $75.0 million of our common stock, par value $0.001 per share (the “Common Stock”). The timing and total amount of stock repurchases will depend upon business, economic, and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations. The Repurchase Program has no expiration date, may be suspended or discontinued at any time without notice, and does not obligate the Company to acquire any specific dollar amount or numbers of shares of Common Stock. During the three months ended June 30, 2025, we repurchased $10.0 million of our common stock under the Repurchase Program. See Part II - Item 2. Unregistered Sales of Equity and Use of Proceedsfor additional information on the Repurchase Program.
Removed paragraphs (8)
Previous report
On December 14, 2020, SolarWinds announced that it had been the victim of a cyberattack (the “Cyber Incident”) on its Orion Software Platform and internal systems. SolarWinds’ investigation revealed that as part of this attack, malicious code (“Sunburst”) was injected into builds of SolarWinds’ Orion Software Platform that it released between March 2020 and June 2020. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, SolarWinds Cyber Incident" in our Annual Report on Form 10-K for the year ended December 31, 2024 for a discussion of the Cyber Incident.
Previous report
First Quarter Financial Highlights
Previous report
Our total revenue was $118.2 million and $113.7 million for the three months ended March 31, 2025 and 2024, respectively.
Previous report
Operating Expenses
Previous report
Income Tax Expense
Previous report
Operating Expenses
Previous report
General and Administrative. General and administrative expenses increased $6.9 million, or 40.2%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to an increase in expense of $2.3 million related to the Adlumin deferred consideration liability, an increase in expense related to contingent consideration of $2.1 million, due to the recognition of $0.7 million of expense on contingent consideration for the three months ended March 31, 2025 related to the acquisition of Adlumin, compared to the recognition of a gain on contingent consideration related to the July 1, 2022 acquisition of Spinpanel of $1.4 million for three months ended March 31, 2024, an increase in transaction related costs of $2.1 million, an increase in professional fees of $1.0 million, an increase in contract services costs of $0.5 million and an increase in allocated facilities and IT costs of $0.3 million, partially offset by a decrease in restructuring and other costs of $0.9 million, which includes a net gain on lease modification of $0.4 million, and a decrease in rent expense of $0.6 million. See Note 3. Acquisitions, Note 6. Fair Value Measurements, and Note 11. Commitments and Contingencies of the Notes to Consolidated Financial Statementsfor further details regarding the acquisitions of Adlumin and Spinpanel.
Previous report
Income Tax Expense
Reworded paragraphs (27)
Previous wording
Total annual recurring revenue (“ARR”) as of March 31, 2025 was $492.7 million, compared to $446.6 million as of March 31, 2024, representing an increase of 10.3%. This increase was primarily due to steady demand for our solutions and the impact of the November 20, 2024 acquisition of Adlumin.
Current wording
Total annual recurring revenue (“ARR”) as of June 30, 2025 was $513.7 million, compared to $448.8 million as of June 30, 2024, representing an increase of 14.5%. This increase was primarily due to steady demand for our solutions and the impact of the November 20, 2024 acquisition of Adlumin.
Previous wording
As of March 31, 2025, we had 2,398 customers with ARR over $50,000 on our platform, up from 2,187 as of March 31, 2024, representing an increase of 9.6%. Over the same period, customers with over $50,000 of ARR on our platform grew from approximately 56% of our total ARR as of March 31, 2024 to approximately 58% of our total ARR as of March 31, 2025.
Current wording
As of June 30, 2025, we had 2,540 customers with ARR over $50,000 on our platform, up from 2,194 as of June 30, 2024, representing an increase of 15.8%. Over the same period, customers with over $50,000 of ARR on our platform grew from approximately 56% of our total ARR as of June 30, 2024 to approximately 60% of our total ARR as of June 30, 2025.
Previous wording
Our operating income for the three months ended March 31, 2025 was $1.8 million, compared to operating income of $20.5 million for the three months ended March 31, 2024. Our net loss for the three months ended March 31, 2025 was $7.2 million compared to net income of $7.5 million for the three months ended March 31, 2024. The decrease in net income for the three months ended March 31, 2025 was primarily due to an increase in general and administrative expense, an increase in cost of revenue, an increase in sales and marketing expense, an increase in amortization of acquired technologies, an increase in research and development expense, and an increase in amortization of acquired intangibles, partially offset by an increase in revenue, a decrease in income tax expense, a decrease in interest expense, net, and an increase in other income, net. Our Adjusted EBITDA, calculated as net (loss) income of $(7.2) million and $7.5 million for the three months ended March 31, 2025 and 2024, respectively, excluding amortization of acquired intangible assets and developed technology of $6.2 million and $1.9 million, respectively, depreciation expense of $4.2 million and $4.0 million, respectively, income tax expense of $3.3 million and $5.7 million, respectively, interest expense, net of $7.1 million and $7.6 million, respectively, unrealized foreign currency (gains) losses of $(0.8) million and $0.8 million, respectively, transaction related costs of $6.3 million and $(1.4) 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 $12.7 million and $13.0 million, respectively, and restructuring costs and other of $(0.1) million and $0.6 million, respectively, was $31.6 million and $39.6 million for the three months ended March 31, 2025 and 2024, respectively. For a description and reconciliation of the non-GAAP measures discussed in this section, see Non-GAAP Financial Measures below.
Current wording
Our operating income for the three months ended June 30, 2025 was $10.1 million, compared to operating income of $22.0 million for the three months ended June 30, 2024. Our net loss for the three months ended June 30, 2025 was $4.0 million compared to net income of $9.5 million for the three months ended June 30, 2024. The decrease in net income for the three months ended June 30, 2024 was primarily due to an increase in sales and marketing expense, an increase in cost of revenue, an increase in research and development expense, an increase in amortization of acquired technologies, an increase in other (expense) income, net, an increase in amortization of acquired intangibles, an increase in interest expense, net, and an increase in general and administrative expense, partially offset by an increase in revenue and a decrease in income tax expense. Our Adjusted EBITDA, calculated as net (loss) income of $(4.0) million and $9.5 million for the three months ended June 30, 2025 and 2024, respectively, excluding amortization of acquired intangibles and developed technology of $6.3 million and $1.9 million, respectively, depreciation expense of $4.6 million and $4.0 million, respectively, income tax expense of $5.2 million and $6.1 million, respectively, interest expense, net of $8.1 million and $7.6 million, respectively, unrealized foreign currency (gains) losses of $2.4 million and $0.4 million, respectively, transaction related costs of $5.6 million and $4.9 million, respectively, stock-based compensation expense and related employer-paid payroll taxes of $13.2 million and $12.2 million, respectively, and restructuring costs and other of $0.4 million and $0.3 million, respectively, was $41.6 million and $46.8 million for the three months ended June 30, 2025 and 2024, respectively. For a description and reconciliation of the non-GAAP measures discussed in this section, see Non-GAAP Financial Measures below.
Previous wording
We have built our business to generate strong cash flow over the long term. For the three months ended March 31, 2025 and 2024, cash flows from operations were $19.7 million and $4.2 million, respectively. Our cash flows from operations were reduced by cash payments for interest of $6.4 million and $7.3 million for the three months ended March 31, 2025 and 2024, respectively, and cash payments for income taxes of $2.2 million and $1.8 million for the three months ended March 31, 2025 and 2024, respectively.
Current wording
We have built our business to generate strong cash flow over the long term. For the three months ended June 30, 2025 and 2024, cash flows from operations were $24.2 million and $27.3 million, respectively. Our cash flows from operations were reduced by cash payments for interest of $6.3 million and $7.3 million for the three months ended June 30, 2025 and 2024, respectively, and cash payments for income taxes of $3.7 million and $4.2 million for the three months ended June 30, 2025 and 2024, respectively.
Previous wording
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. We had total employees of 1,800, 1,773, and 1,598 as of March 31, 2025, December 31, 2024, and March 31, 2024, respectively. Our stock-based compensation expense increased during the three months ended March 31, 2025 as compared to the corresponding period of the prior fiscal year primarily due to the impact of new equity awards that were granted to employees through March 31, 2025, and we expect stock-based compensation expense to continue to increase during the year ending December 31, 2025.
Current wording
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. We had total employees of 1,882, 1,773, and 1,623 as of June 30, 2025, December 31, 2024, and June 30, 2024, respectively. Our stock-based compensation expense increased during the three and six months ended June 30, 2025 as compared to the corresponding period of the prior fiscal year primarily due to the impact of new equity awards that were granted to employees through June 30, 2025, and we expect stock-based compensation expense to continue to increase during the year ending December 31, 2025.
Previous wording
Total revenue increased $4.4 million, or 3.9%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. We base revenue by geography on the billing address of each customer. Based on customer location, revenue from the United States was approximately 51.2% and 47.9% of total revenue for the three months ended March 31, 2025 and 2024, respectively. Revenue from the United Kingdom was approximately 10.0% and 10.4% of total revenue for the three months ended March 31, 2025 and 2024, 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.
Current wording
Total revenue increased $11.8 million, or 9.9%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. We base revenue by geography on the billing address of each customer. Based on customer location, revenue from the United States was approximately 49.2% and 48.0% of total revenue for the three months ended June 30, 2025 and 2024, respectively. Revenue from the United Kingdom was approximately 10.4% and 10.3% of total revenue for the three months ended June 30, 2025 and 2024, 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.
Previous wording
Subscription Revenue. Subscription revenue increased $5.3 million, or 4.8%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. 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, and includes revenue attributable to the recently acquired Adlumin business. See First Quarter Financial Highlightsfor further details regarding the impact of long-term committed contracts during the three months ended March 31, 2025. Subscription revenue as a percentage of our total revenue was 98.9% for the three months ended March 31, 2025, compared to 98.0% for the three months ended March 31, 2024.
Current wording
Subscription Revenue. Subscription revenue increased $12.5 million, or 10.6%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. 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, and includes revenue attributable to the recently acquired Adlumin business. See Second Quarter Financial Highlightsfor further details regarding the impact of long-term committed contracts during the three months ended June 30, 2025. Subscription revenue as a percentage of our total revenue was 99.0% for the three months ended June 30, 2025, compared to 98.3% for the three months ended June 30, 2024.
Previous wording
Our annual dollar-based net revenue retention rate for our subscription products was approximately 101% and 111% for the trailing twelve-month periods ended March 31, 2025 and 2024, respectively. The 101% 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. 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. 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. 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. 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.
Current wording
Our annual dollar-based net revenue retention rate for our subscription products was approximately 102% and 108% for the trailing twelve-month periods ended June 30, 2025 and 2024, respectively. The 102% dollar-based net revenue retention rate reflects the impact 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. 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. 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. 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. 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.
Previous wording
Other Revenue. Other revenue decreased $0.9 million, or 39.6%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to a decrease in maintenance and professional services revenue. Other revenue as a percentage of our total revenue was 1.1% for the three months ended March 31, 2025, compared to 2.0% for the three months ended March 31, 2024.
Current wording
Other Revenue. Other revenue decreased $0.7 million, or 32.4%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to a decrease in maintenance revenue of $0.8 million, partially offset by an increase in professional services revenue of $0.1 million. Other revenue as a percentage of our total revenue was 1.0% for the three months ended June 30, 2025, compared to 1.7% for the three months ended June 30, 2024.
Previous wording
Total cost of revenue increased $9.4 million, or 51.3%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to an increase in amortization of acquired technologies of $3.7 million related to the November 20, 2024 acquisition of Adlumin, an increase in public cloud infrastructure and hosting fees and royalties related to our subscription products of $3.5 million, an increase in personnel costs driven by headcount and salary increases of $0.8 million, which includes an increase in stock-based compensation expense of $0.1 million, an increase in depreciation of servers and amortization of capitalized internal-use software costs of $0.6 million and an increase in contract services costs of $0.6 million.
Current wording
Total cost of revenue increased $9.5 million, or 49.7%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to an increase in amortization of acquired technologies of $3.8 million related to the November 20, 2024 acquisition of Adlumin, an increase in public cloud infrastructure and hosting fees and royalties related to our subscription products of $3.2 million, an increase in personnel costs driven by headcount and salary increases of $1.4 million, an increase in depreciation of servers and amortization of capitalized internal-use software costs of $0.8 million, and an increase in contract services costs of $0.2 million.
Previous wording
Research and Development. Research and development expenses increased $1.8 million, or 8.2%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to an increase in personnel costs driven by headcount and salary increases of $3.5 million, which includes an increase in stock-based compensation expense of $0.3 million, and an increase in subscription costs of $0.5 million, partially offset by an increase in capitalized internal-use software costs of $2.0 million and a decrease in allocated facilities and IT costs of $0.3 million.
Current wording
Research and Development. Research and development expenses increased $3.9 million, or 17.6%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to an increase in personnel costs driven by headcount and salary increases of $3.7 million, which includes an increase in stock-based compensation expense of $0.3 million, an increase in contract services costs of $0.6 million, and an increase in subscription costs of $0.5 million, partially offset by an increase in capitalized internal-use software costs of $1.2 million.
Previous wording
Amortization of Acquired Intangibles. Amortization of acquired intangibles increased $0.5 million, or 3,464.3%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, related to the November 20, 2024 acquisition of Adlumin.
Current wording
Amortization of Acquired Intangibles. Amortization of acquired intangibles increased $0.5 million from $15 thousand for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, related to the November 20, 2024 acquisition of Adlumin.
Previous wording
Interest expense, net decreased by $0.6 million, or 7.2%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to an increase in interest income on recoverable taxes of $1.0 million and a decrease in interest expense of $0.9 million due to the impact of decreased interest rates and lower outstanding borrowings under the Credit Agreement, partially offset by an increase in expense of $1.4 million related to the Adlumin deferred consideration liability. 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 8. Debt in the Notes to Consolidated Financial Statementsfor further details regarding the Credit Agreement and Note 3. Acquisitions, Note 6. Fair Value Measurements, and Note 11. Commitments and Contingencies for further details regarding the acquisition of Adlumin.
Current wording
Interest expense, net increased by $0.5 million, or 6.4%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to an increase in expense of $1.4 million related to the Adlumin deferred consideration liability, partially offset by a decrease in interest expense of $1.0 million due to the impact of decreased interest rates and lower outstanding borrowings under the Credit Agreement. 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 8. Debt in the Notes to Consolidated Financial Statementsfor further details regarding the Credit Agreement and Note 3. Acquisitions, Note 6. Fair Value Measurements, and Note 11. Commitments and Contingencies for further details regarding the acquisition of Adlumin.
Previous wording
Our income tax expense for the three months ended March 31, 2025 decreased by $2.4 million as compared to the three months ended March 31, 2024. The effective tax rate increased to (85.4)% for the same period primarily due to an increase in the amount of the unbenefited loss in the United States, partially offset by a decrease in income taxes on income outside of the United States. For additional discussion about our income taxes, see Note 10. Income Taxesin the Notes to Consolidated Financial Statements.
Current wording
Our income tax expense for the three months ended June 30, 2025 decreased by $0.9 million as compared to the three months ended June 30, 2024. The effective tax rate increased to 441.4% for the same period primarily due to an increase in the amount of the unbenefited loss in the United States, partially offset by a decrease in income taxes on income outside of the United States.
Previous wording
Sales and Marketing. Sales and marketing expenses increased $4.6 million, or 12.8%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to an increase in personnel costs of $3.8 million, which includes an increase in stock-based compensation expense of $0.3 million, an increase in transaction related costs of $1.0 million, an increase in contract services costs of $0.3 million and an increase in travel and event-related costs of $0.2 million, partially offset by a decrease in advertising expense of $0.5 million and an increase in commissions related to long-term committed contracts that were capitalized from sales and marketing expenses to the Consolidated Balance Sheets of $0.2 million.
Current wording
Sales and Marketing. Sales and marketing expenses increased $14.1 million, or 20.5%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to an increase in personnel costs of $9.7 million, which includes an increase in stock-based compensation expense of $1.0 million, an increase in transaction related costs of $2.3 million, an increase in travel and event-related costs of $1.4 million, an increase in subscription costs of $0.8 million, and an increase in advertising expense of $0.3 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 $0.6 million.
Previous wording
Other income, net increased by $1.1 million, or 386.0%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to an increase in the impact of changes in foreign currency exchange rates of $2.0 million related to various accounts for the period, partially offset by a decrease in dividend income from our money market fund financial assets of $0.8 million.
Current wording
Other income, net decreased by $0.9 million, or 62.8%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to a decrease in dividend income from our money market fund financial assets of $1.7 million, partially offset by an increase in the impact of changes in foreign currency exchange rates of $0.9 million related to various accounts for the period.
Previous wording
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. 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. 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.
Current wording
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. 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. Items such as the amortization of intangible assets, stock-based compensation expense and related employer-paid payroll taxes, transaction related costs, 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.
Previous wording
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 costs, spin-off costs and restructuring costs and other. 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:
Current wording
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 intangibles, transaction related costs, spin-off costs and restructuring costs and other. 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:
Previous wording
We regularly monitor adjusted EBITDA and adjusted EBITDA margin, as they are measures we use to assess our operating performance. We define adjusted EBITDA as net income or loss, excluding amortization of acquired intangible assets and developed technology, depreciation expense, income tax expense (benefit), interest expense, net, unrealized foreign currency losses (gains), transaction related costs, spin-off costs, stock-based compensation expense and related employer-paid payroll taxes and restructuring and other costs. We define adjusted EBITDA margin as adjusted EBITDA divided by total revenue. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include:
Current wording
We regularly monitor adjusted EBITDA and adjusted EBITDA margin, as they are measures we use to assess our operating performance. We define adjusted EBITDA as net income or loss, excluding amortization of acquired intangibles and developed technology, depreciation expense, income tax expense (benefit), interest expense, net, unrealized foreign currency losses (gains), transaction related costs, spin-off costs, stock-based compensation expense and related employer-paid payroll taxes and restructuring and other costs. We define adjusted EBITDA margin as adjusted EBITDA divided by total revenue. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include:
Previous wording
Cash and cash equivalents were $94.1 million as of March 31, 2025. As our sales and operating cash flows are primarily generated by international entities in the United Kingdom and Canada, our international subsidiaries held approximately $86.7 million of cash and cash equivalents, of which 73.8%, 18.0% and 2.6% were held in United States Dollars, Euros and British Pound Sterling, respectively. We intend either to invest our foreign earnings permanently into foreign operations or to remit these earnings to our United States entities in a tax-efficient manner. The U.S. Tax Cuts and Jobs Act of 2017 imposed a mandatory transition tax on accumulated foreign earnings and eliminates United States federal income taxes on foreign subsidiary distributions. As a result, our earnings in foreign jurisdictions are generally available for distribution to the United States without significant U.S. tax consequences.
Current wording
Cash and cash equivalents were $93.9 million as of June 30, 2025. As our sales and operating cash flows are primarily generated by international entities in the United Kingdom and Canada, our international subsidiaries held approximately $86.2 million of cash and cash equivalents, of which 68.0%, 19.4% and 2.9% were held in United States Dollars, Euros and British Pound Sterling, respectively. We intend either to invest our foreign earnings permanently into foreign operations or to remit these earnings to our United States entities in a tax-efficient manner. The U.S. Tax Cuts and Jobs Act of 2017 imposed a mandatory transition tax on accumulated foreign earnings and eliminates United States federal income taxes on foreign subsidiary distributions. As a result, our earnings in foreign jurisdictions are generally available for distribution to the United States without significant U.S. tax consequences.
Previous wording
In connection with the Separation and Distribution, on July 19, 2021, certain subsidiaries of the Company entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase, Bank, N.A. as administrative agent and collateral agent and the lenders from time to time party thereto. The Credit Agreement provides for $410.0 million of first lien secured credit facilities (the “Credit Facilities”), consisting of a $60.0 million revolving credit facility (the “Revolving Facility”), and a $350.0 million term loan facility (the “Term Loan”). On July 19, 2021, prior to the completion of the Distribution, the Company distributed approximately $16.5 million, representing the proceeds from the Term Loan, net of the repayment of related party debt due to SolarWinds Holdings, Inc., payment of intercompany trade payables, and fees and other transaction related expenses, to SolarWinds. The Revolving Facility is primarily available for general corporate purposes. We had total borrowings of $332.6 million and $333.1 million as of March 31, 2025 and December 31, 2024, respectively, net of debt issuance costs of $5.1 million and $5.5 million, respectively. See Note 8. Debtin the Notes to Consolidated Financial Statements for further details regarding the Credit Agreement.
Current wording
In connection with the Separation and Distribution, on July 19, 2021, certain subsidiaries of the Company entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase, Bank, N.A. as administrative agent and collateral agent and the lenders from time to time party thereto. The Credit Agreement provides for $410.0 million of first lien secured credit facilities (the “Credit Facilities”), consisting of a $60.0 million revolving credit facility (the “Revolving Facility”), and a $350.0 million term loan facility (the “Term Loan”). On July 19, 2021, prior to the completion of the Distribution, the Company distributed approximately $16.5 million, representing the proceeds from the Term Loan, net of the repayment of related party debt due to SolarWinds Holdings, Inc., payment of intercompany trade payables, and fees and other transaction related costs, to SolarWinds. The Revolving Facility is primarily available for general corporate purposes. We had total borrowings of $332.1 million and $333.1 million as of June 30, 2025 and December 31, 2024, respectively, net of debt issuance costs of $4.7 million and $5.5 million, respectively. See Note 8. Debtin the Notes to Consolidated Financial Statements for further details regarding the Credit Agreement.
Previous wording
During the three months ended March 31, 2025 and 2024, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Current wording
During the three and six months ended June 30, 2025 and 2024, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Previous wording
Cash provided by operating activities increased for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to a net cash inflow resulting from changes in our operating assets and liabilities and an increase in non-cash items within net income, partially offset by a decrease in net income. The net cash inflow resulting from changes in our operating assets and liabilities was primarily due to a decrease in recoverable taxes, an increase in accrued liabilities and other, a decrease in current contract assets, a decrease in income taxes receivable, a decrease in other long-term assets, a decrease in accounts receivable and an increase in other long-term liabilities, partially offset by an increase in income taxes payable, an increase in prepaid expenses and other assets, a decrease in accounts payable, a decrease in deferred revenue and an increase in operating lease right-of-use assets, net. The net cash inflow of $1.0 million and outflow of $20.6 million resulting from changes in our operating assets and liabilities for the three months ended March 31, 2025 and 2024, respectively, excluding the changes noted above, was primarily due to the timing of sales, cash payments and receipts.
Current wording
Cash provided by operating activities increased for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to an increase in non-cash items within net income and a net cash inflow resulting from changes in our operating assets and liabilities, partially offset by a decrease in net income. The net cash inflow resulting from changes in our operating assets and liabilities was primarily due to a decrease in recoverable taxes, a decrease in current contract assets, a decrease in income taxes receivable, a decrease in other long-term assets, and an increase in other long-term liabilities, partially offset by a decrease in income taxes payable, an increase in accounts receivable, a decrease in accrued liabilities and other, a decrease in deferred revenue, an increase in prepaid expenses and other assets, an increase in operating lease right-of-use assets, net, and a decrease in accounts payable. The net cash outflows of $2.7 million and $21.4 million resulting from changes in our operating assets and liabilities for the six months ended June 30, 2025 and 2024, respectively, excluding the changes noted above, was primarily due to the timing of sales, cash payments and receipts.
Previous wording
Investing cash flows consist of cash used for capital expenditures and intangible assets. Our capital expenditures principally relate to purchases of servers for cloud infrastructure primarily to support our data protection solutions, as well as leasehold improvements, computers and equipment to support our domestic and international office locations. Purchases of intangible assets consist of capitalized research and development costs.
Current wording
Investing cash flows consist of cash used for capital expenditures and intangible assets and cash provided by the return of deposits in escrow. Our capital expenditures principally relate to purchases of servers for cloud infrastructure primarily to support our data protection solutions, as well as leasehold improvements, computers and equipment to support our domestic and international office locations. Purchases of intangible assets consist of capitalized research and development costs.
Previous wording
Net cash used in investing activities increased for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to an increase in capitalized research and development costs related to internal-use software, partially offset by a decrease in capital expenditures to support our domestic and international office locations.
Current wording
Net cash used in investing activities increased for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to an increase in capitalized research and development costs related to internal-use software and an increase in capital expenditures to support our domestic and international office locations, partially offset by an increase in the return of deposits in escrow.
Previous wording
Financing cash flows consist of payments of tax withholding obligations related to restricted stock, the exercise of stock options, proceeds from the issuance of common stock under the Employee Stock Purchase Plan and repayments of borrowings from the Credit Agreement.
Current wording
Financing cash flows consist of repurchases of our common stock, payments of tax withholding obligations related to restricted stock, deferred acquisition payments, the exercise of stock options, proceeds from the issuance of common stock under the Employee Stock Purchase Plan and repayments of borrowings from the Credit Agreement.
Previous wording
Net cash used in financing activities decreased for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to a decrease in payments of tax withholding obligations related to restricted stock, an increase in proceeds from the issuance of common stock under the Employee Stock Purchase Plan and an increase in proceeds from exercises of stock options.
Current wording
Net cash used in financing activities increased for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to an increase in repurchases of our common stock, an increase in deferred acquisition payments, and a decrease in proceeds from exercises of stock options, partially offset by a decrease in payments of tax withholding obligations related to restricted stock and an increase in proceeds from the issuance of common stock under the Employee Stock Purchase Plan.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
Other (expense) income, net decreased by $2.0 million, or 174.8%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to a decrease in the impact of changes in foreign currency exchange rates of $1.2 million related to various accounts for the period and a decrease in dividend income from our money market fund financial assets of $0.9 million.
Current report — wording carried from elsewhere
Total revenue increased $16.3 million, or 7.0%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. We base revenue by geography on the billing address of each customer. Based on customer location, revenue from the United States was approximately 50.1% and 47.9% of total revenue for the six months ended June 30, 2025 and 2024, respectively. Revenue from the United Kingdom was approximately 10.2% and 10.4% of total revenue for the six months ended June 30, 2025 and 2024, 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.
Current report — wording carried from elsewhere
Subscription Revenue. Subscription revenue increased $17.8 million, or 7.8%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase in subscription revenue was primarily driven by growth in sales of our data protection, security and remote monitoring and management solutions, inclusive of the impact from long-term committed contracts. See Second Quarter Financial Highlightsfor further details regarding the impact of long-term committed contracts during the six months ended June 30, 2025. Subscription revenue as a percentage of our total revenue was 98.9% for the six months ended June 30, 2025, compared to 98.2% for the six months ended June 30, 2024.
Current report — wording carried from elsewhere
Our annual dollar-based net revenue retention rate for our subscription products was approximately 102% and 108% for the trailing twelve-month periods ended June 30, 2025 and 2024, respectively. The 102% dollar-based net revenue retention rate reflects the impact 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.
Current report — wording carried from elsewhere
Total cost of revenue increased $18.9 million, or 50.5%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to an increase in amortization of acquired technologies of $7.5 million related to the November 20, 2024 acquisition of Adlumin, an increase in public cloud infrastructure and hosting fees and royalties related to our subscription products of $6.7 million, an increase in personnel costs driven by headcount and salary increases of $2.3 million, an increase in depreciation of servers and amortization of capitalized internal-use software costs of $1.5 million, and an increase in contract services costs of $0.8 million.
Current report — wording carried from elsewhere
Interest expense, net decreased by $0.1 million, or 0.4%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to a decrease in interest expense of $1.9 million due to the impact of decreased interest rates and lower outstanding borrowings under the Credit Agreement and an increase in interest income on recoverable taxes of $1.0 million, partially offset by an increase in expense of $2.8 million related to the Adlumin deferred consideration liability. 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 8. Debt in the Notes to Consolidated Financial Statementsfor further details regarding the Credit Agreement.
Current report — wording carried from elsewhere
Our income tax expense for the six months ended June 30, 2025 decreased by $(3.3) million as compared to the six months ended June 30, 2024. The effective tax rate increased to (316.7)% for the same period primarily due to an increase in the amount of the unbenefited loss in the United States, partially offset by a decrease in income taxes on income outside of the United States.