N-able, Inc.

Previous wording

During theyear 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”). 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. 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. 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. 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. Summary of Significant Accounting Policies in the Notes to Cons olidated Financial Statementsfor further details regarding revenue recognized from subscription and other services at a point in time and over time.

Current wording

During theyear 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”). 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. 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. The Long-Term Contract Initiative results in an increase in point in time subscription revenue, 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. Summary of Significant Accounting Policies in the Notes to Cons olidated Financial Statementsfor further details regarding revenue recognized from subscription and other services at a point in time and over time.

Previous wording

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%. This increase was primarily due to steady demand for our solutions, including the impact of the November 20, 2024 acquisition of Adlumin.

Current wording

Total annual recurring revenue (“ARR”) as of December 31, 2025 was $539.7 million, compared to $482.5 million as of December 31, 2024, representing an increase of 11.9%. This increase was primarily due to steady demand for our solutions, including the impact of the November 20, 2024 acquisition of Adlumin.

Previous wording

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%. 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.

Current wording

As of December 31, 2025, we had 2,671 customers with ARR over $50,000 on our platform, up from 2,349 as of December 31, 2024, representing an increase of approximately 14%. Over the same period, customers with over $50,000 of ARR on our platform grew from approximately 57% of our total ARR as of December 31, 2024 to approximately 61% of our total ARR as of December 31, 2025.

Previous wording

Our net income for the three months ended December 31, 2024 and 2023 was $3.3 million and $9.4 million, respectively. The 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. 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.

Current wording

Our net (loss) income for the three months ended December 31, 2025 and 2024 was $(7.2) million and $3.3 million, respectively. The decrease in net income for the three months ended December 31, 2025 was due to increases in cost of revenue, sales and marketing expense, interest expense, net, amortization of acquired technologies, research and development expense, other expense, net, general and administrative expense, income tax expense, and amortization of acquired intangibles, partially offset by an increase in revenue. Our Adjusted EBITDA, calculated as net (loss) income of $(7.2) million and $3.3 million for the three months ended December 31, 2025 and 2024, respectively, excluding amortization of acquired intangible assets and developed technology of $6.9 million and $3.9 million, respectively, depreciation expense of $4.8 million and $4.0 million, respectively, income tax expense of $4.5 million and $3.7 million, respectively, interest expense, net of $12.2 million and $7.3 million, respectively, unrealized foreign currency losses of $4.2 million and $2.0 million, respectively, transaction related costs of $0.9 million and $2.4 million, respectively, stock-based compensation expense and related employer-paid payroll taxes of $10.4 million and $10.8 million, respectively, and restructuring costs and other of $2.0 million and $0.7 million, respectively, was $38.6 million and $38.1 million for the three months ended December 31, 2025 and 2024, respectively.

Previous wording

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 $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.

Current wording

We have built our business to generate strong cash flow over the long term. For the three months ended December 31, 2025 and 2024, cash flows from operations were $25.3 million and $26.0 million, respectively. Our cash flows from operations were reduced by cash payments for interest of $6.0 million and $6.9 million for the three months ended December 31, 2025 and 2024, respectively, and cash payments for income taxes of $6.5 million and $4.6 million for the three months ended December 31, 2025 and 2024, respectively.

Previous wording

•Amortization of Acquired Technologies. 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. Amortization related to the take private transaction of SolarWinds concluded during the three months ended March 31, 2023.

Current wording

•Amortization of Acquired Technologies. We amortize to cost of revenue capitalized costs of technologies acquired in connection with business combinations, including the July 1, 2022 acquisition of Spinpanel B.V. (“Spinpanel”) and November 20, 2024 acquisition of Adlumin.

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 1,773 and 1,584 as of December 31, 2024 and 2023, respectively. 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.

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 1,852 and 1,773 as of December 31,

Previous wording

Total revenue increased $50.1 million, or 13.5%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. 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. 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.

Current wording

Total revenue increased $45.3 million, or 9.7%, for the year ended December 31, 2025 compared to the year ended December 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 49.6% and 48.2% of total revenue for the years ended December 31, 2025 and 2024, respectively. Revenue from the United Kingdom was approximately 10.2% and 10.5% of total revenue for the years ended December 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.

Previous wording

Subscription Revenue. 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. See Fourth Quarter Financial Highlightsfor further details regarding the impact of long-term committed contracts during theyear 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.

Current wording

Subscription Revenue. Subscription revenue increased $47.3 million, or 10.3%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. The increase in subscription revenue was primarily driven by growth in sales of our data protection, security and UEM solutions, inclusive of the impact from long-term committed contracts. See Fourth Quarter Financial Highlightsfor further details regarding the impact of long-term committed contracts during theyear ended December 31, 2025. Subscription revenue increased slightly as a percentage of total revenue for the year ended December 31, 2025 compared to the year ended December 31, 2024.

Previous wording

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. 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. 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 103% for the years ended December 31, 2025 and 2024, respectively. The 103% 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

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. Amortization related to the take private transaction of SolarWinds concluded during the three months ended March 31, 2023.

Current wording

Total cost of revenue increased $36.4 million, or 45.1%, in the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to an increase in public cloud infrastructure and hosting fees and royalties related to our subscription products of $14.4 million, an increase in amortization of acquired technologies of $13.4 million, related to the November 20, 2024 acquisition of Adlumin, 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 $0.1 million, an increase in depreciation of servers and amortization of capitalized internal-use software costs of $3.5 million, and an increase in contract services costs of $1.0 million.

Previous wording

Research and Development. 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. 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.

Current wording

Research and Development. Research and development expenses increased $10.0 million, or 11.0%, primarily due to an increase in personnel costs driven by headcount and salary increases of $12.1 million, which includes an increase in stock-based compensation expense of $1.0 million, an increase in contract services costs of $1.9 million, and an increase in subscription costs of $1.4 million, partially offset by an increase in capitalized internal-use software costs of $5.2 million.

Previous wording

General and Administrative. 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. 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.

Current wording

General and Administrative. General and administrative expenses increased $15.2 million, or 19.9%, primarily due to a net increase in transaction related costs of $10.2 million, an increase in bad debt expense of $3.0 million, an increase in contract services costs of $1.6 million, an increase in professional fees of $1.1 million, an increase in personnel costs driven by headcount and salary increases of $0.9 million, which is net of a decrease in stock-based compensation expense of $1.2 million, and an increase in property, penalty, and franchise taxes of $0.8 million, partially offset by a decrease in restructuring and other costs of $2.2 million. 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.

Previous wording

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. 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. Debt in the Notes to Consolidated Financial Statementsfor additional information regarding our related party debt and Credit Agreement, respectively.

Current wording

Interest expense, net increased by $6.0 million, or 19.9%, in the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to an increase in expense of $5.4 million related to the Adlumin deferred consideration liability and an increase in expense of $3.3 million related to one-time fees incurred in connection with entering into Amendment No. 2 to the Credit Agreement on November 26, 2025, partially offset by a decrease in interest expense of $2.5 million due to the impact of decreased interest rates and lower average 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 9. Debt in the Notes to Consolidated Financial Statementsfor additional information regarding the Credit Agreement.

Previous wording

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.

Current wording

Other income, net decreased by $0.3 million, or 17.2%, in the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to a decrease in dividend income from our money market fund financial assets of $3.3 million, partially offset by an increase in the impact of changes in foreign currency exchange rates of $2.5 million related to various accounts for the period.

Previous wording

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. 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. Income Taxesin the Notes to Consolidated Financial Statements.

Current wording

Our income tax expense for the year ended December 31, 2025 decreased by $3.9 million as compared to the year ended December 31, 2024. The effective tax rate increased to 812.3% for the year ended December 31, 2025 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 14. Income Taxesin the Notes to Consolidated Financial Statements.

Previous wording

Subscription Revenue. 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. 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.

Current wording

Subscription Revenue. 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. 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.

Previous wording

Sales and Marketing. 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.

Current wording

Sales and Marketing. 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 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.

Previous wording

General and Administrative. 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. 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.

Current wording

General and Administrative. 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 is net of 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, 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. 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.

Previous wording

Amortization of Acquired Intangibles. 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 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.

Current wording

Amortization of Acquired Intangibles. Amortization of acquired intangibles decreased $0.3 million, or 53.4%, primarily due to a decrease in expense of $0.6 million related 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, partially offset by an increase in expense of $0.2 million related to the November 20, 2024 acquisition of Adlumin.

Previous wording

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. 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 Statementsfor additional information regarding the Credit Agreement.

Current wording

Interest expense, net decreased by $0.2 million, or 0.7%, for 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. 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 Statementsfor additional information regarding the Credit Agreement.

Previous wording

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.

Current wording

Other income, net decreased by $2.3 million, or 54.7%, for 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.

Previous wording

Cash and cash equivalents were $85.2 million as of December 31, 2024. As our sales and operating cash flows are primarily generated by international entities in the United Kingdom and Canada, our international subsidiaries held approximately $79.3 million of cash and cash equivalents, of which 69.6%, 19.1% and 3.3% 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 $111.8 million as of December 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 $101.0 million of cash and cash equivalents, of which 74.0%, 15.8% and 4.6% 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.

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 $333.1 million and $335.0 million as of December 31, 2024 and 2023, respectively, net of debt issuance costs of $5.5 million and $7.1 million, respectively. In addition to our total borrowings, we are also committed to cash interest payments of approximately $90.1 million over the term of the Credit Agreement, based upon an interest rate as of December 31, 2024 of 7.53%. See Note 9. Debt in 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. We subsequently entered into Amendment No. 1 to the Credit Agreement on June 26, 2023, and Amendment No. 2 to the Credit Agreement on November 26, 2025. The Credit Agreement provides for $460.0 million of first lien secured credit facilities (the “Credit Facilities”), consisting of a $60.0 million revolving credit facility (the “Revolving Facility”), and a $400.0 million term loan facility (the “Term Loan”). We had total borrowings of $393.9 million and $333.1 million as of December 31, 2025 and 2024, respectively, net of debt issuance costs of $6.1 million and $5.5 million, respectively. In addition to our total borrowings, we are also committed to cash interest payments of approximately $178.4 million over the term of the Credit Agreement, based upon an interest rate as of December 31, 2025 of 6.59%. See Note 9. Debt in the Notes to Consolidated Financial Statements for further details regarding the Credit Agreement.

Previous wording

In addition to committed payments related to the Credit Agreement, we are also committed to purchase obligations of $119.1 million through the fiscal year ended December 31, 2028 and remaining operating lease liabilities of $36.1 million through the fiscal year ended December 31, 2032. Purchase obligations represent outstanding purchase orders for items including public cloud infrastructure and hosting fees, royalty fees, marketing activities, software license and support fees, and accounting and legal fees. On October 4, 2023, we entered into a non-cancellable royalty agreement for third-party cloud-based platform and hosting services, with an effective date of September 1, 2023. Our total commitment under this agreement is $39.0 million, with royalty fees of $24.4 million payable over the next 1.7 years as of December 31, 2024. See Note 6. Leases in the Notes to Consolidated Financial Statements for further details regarding our operating leases.

Current wording

In addition to committed payments related to the Credit Agreement, we are also committed to purchase obligations of $243.2 million through the fiscal year ended December 31, 2029, and remaining operating lease liabilities of $36.5 million through the fiscal year ended December 31, 2032. Purchase obligations represent outstanding purchase orders for items including public cloud infrastructure and hosting fees, royalty fees, marketing activities, software license and support fees, and accounting and legal fees. On October 4, 2023, we entered into a non-cancellable royalty agreement for third-party cloud-based platform and hosting services, with an effective date of September 1, 2023. Our total commitment under this agreement is $39.0 million, with royalty fees of $10.0 million payable over the next 0.7 years as of December 31, 2025. See Note 6. Leases in the Notes to Consolidated Financial Statements for further details regarding our operating leases.

Previous wording

For the year ended December 31, 2024 as compared to the year ended December 31, 2023, the decrease in cash provided by operating activities was primarily due to a decrease in accrued liabilities and other, an increase in recoverable taxes, an increase in current contract assets, an increase in other long-term assets, and a decrease in accounts payable, partially offset by a decrease in prepaid expenses and other assets, a decrease in accounts receivable, a decrease in income taxes receivable, a decrease in operating lease right-of-use assets, net, an increase in income taxes payable, an increase in deferred revenue, and an increase in other long-term liabilities. The net cash outflow of $21.5 million and net cash inflow of $2.1 million resulting from the changes in our operating assets and liabilities for the years ended December 31, 2024 and 2023, respectively, excluding the changes noted above, was primarily due to the timing of sales, cash payments and receipts.

Current wording

For the year ended December 31, 2025 as compared to the year ended December 31, 2024, the increase in cash provided by operating activities was primarily due to a decrease in recoverable taxes, a decrease in other long-term assets, a decrease in current contract assets, an increase in accrued liabilities and other, and an increase in accounts payable, partially offset by an increase in prepaid and other current assets, an increase in accounts receivable, a decrease in income taxes payable, an increase in income taxes receivable, a decrease in deferred revenue, an increase in operating lease right-of-use assets, net, and a decrease in other long-term liabilities. The net cash outflows of $2.2 million and $21.0 million resulting from the changes in our operating assets and liabilities for the years ended December 31, 2025 and 2024, respectively, excluding the changes noted above, were primarily due to the timing of sales, cash payments and receipts.

Previous wording

Investing cash flows consist of cash used for acquisitions, net of cash acquired, 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 acquisitions, net of cash acquired, capital expenditures, 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 year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to an increase in acquisitions, net of cash acquired and an increase in capital expenditures, partially offset by a decrease in capitalized research and development costs.

Current wording

Net cash used in investing activities decreased for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to a decrease in acquisitions, net of cash acquired and an increase in the return of deposits in escrow related to the November 20, 2024 acquisition of Adlumin, partially offset by 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.

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, deferred acquisition payments, and repayments of borrowings from the Credit Agreement

Current wording

Financing cash flows consist of payments of tax withholding obligations related to restricted stock, repurchases of our common stock, the exercise of stock options, proceeds from the issuance of common stock under the Employee Stock Purchase Plan, deferred acquisition payments, repayments of borrowings from the Credit Agreement, net proceeds from the Credit Agreement, and payments of debt issuance costs.

Previous wording

Net cash used in financing activities increased for the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to an increase in payments of tax withholding obligations related to restricted stock and a decrease in proceeds from exercises of stock options, partially offset by an increase in proceeds from the issuance of common stock under the Employee Stock Purchase Plan and a decrease in deferred acquisition payments.

Current wording

Net cash used in financing activities increased for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to an increase in deferred acquisition payments related to the November 20, 2024 acquisition of Adlumin, an increase in repurchases of our common stock, a decrease in proceeds from the issuance of common stock under the Employee Stock Purchase Plan, and a decrease in proceeds from exercises of stock options, partially offset by an increase in net proceeds from the Credit Agreement, a decrease in payments of tax withholding obligations related to restricted stock, and a decrease in repayments of borrowings from the Credit Agreement.

Previous wording

Our goodwill was derived from the take private transaction of SolarWinds in February 2016 and subsequent business combinations, where the purchase price exceeded the fair value of the net identifiable assets acquired. The N-able legal entities were managed as a single reporting unit of the Parent prior to the Separation and Distribution and N-able continues to be managed as a single reporting unit following the Separation and Distribution. Goodwill is tested for impairment at least annually during the fourth quarter or sooner when circumstances indicate an impairment may exist. An impairment of goodwill is recognized when the carrying amount of a reporting unit exceeds its fair value. For purposes of the annual impairment test, we assess qualitative factors to determine if it is more likely than not that goodwill might be impaired and whether it is necessary to perform the quantitative impairment test which considers the fair value of the reporting unit compared with the carrying value on the date of the test. Qualitative factors include industry and market considerations, overall financial performance, changes in management or key personnel, changes in strategy, changes in customers and other relevant events and circumstances affecting the reporting unit.

Current wording

Our goodwill was derived from the take private transaction of SolarWinds in February 2016 and subsequent business combinations, where the purchase price exceeded the fair value of the net identifiable assets acquired. The N-able legal entities were managed as a single reporting unit of the Parent prior to the Separation and Distribution and N-able continues to be managed as a single reporting unit following the Separation and Distribution. Goodwill is tested for impairment at least annually during the fourth quarter or sooner when circumstances indicate an impairment may exist. An impairment of goodwill is recognized when the carrying amount of a reporting unit exceeds its fair value. For purposes of the annual impairment test, we assess qualitative factors to determine if it is more likely than not that goodwill might be impaired and whether it is necessary to perform the quantitative impairment test which considers the fair value of the reporting unit compared with the carrying value on the date of the test. Qualitative factors include industry and market considerations, overall financial performance, changes in management or key personnel, changes in strategy, changes in customers and other relevant events and circumstances affecting the reporting unit. We may also elect to bypass the qualitative assessment and perform a quantitative assessment.

Previous wording

We establish valuation allowances when necessary to reduce deferred tax assets to the amounts expected to be realized. On a quarterly basis, we evaluate the need for, and the adequacy of, valuation allowances based on the expected realization of our deferred tax assets. The factors used to assess the likelihood of realization include our latest forecast of future taxable income, available tax planning strategies that could be implemented, reversal of taxable temporary differences and carryback potential to realize the net deferred tax assets. As of December 31, 2024, we recorded a valuation allowance of $7.4 million in the U.S. and $0.4 million outside the U.S., respectively. As of December 31, 2023, we recorded a valuation allowance of $4.9 million in the U.S. If, based upon the weight of all available evidence, it is more likely than not (a likelihood of greater than 50%) that some portion or all of the deferred tax assets will not be realized, a valuation allowance must be recorded to reduce the deferred tax assets.

Current wording

We establish valuation allowances when necessary to reduce deferred tax assets to the amounts expected to be realized. On a quarterly basis, we evaluate the need for, and the adequacy of, valuation allowances based on the expected realization of our deferred tax assets. The factors used to assess the likelihood of realization include our latest forecast of future taxable income, available tax planning strategies that could be implemented, reversal of taxable temporary differences and carryback potential to realize the net deferred tax assets. During the year ended December 31, 2025, we recorded a valuation allowance of $5.8 million in the U.S. and $0.5 million outside the U.S. During the year ended December 31, 2024, we recorded a valuation allowance of $2.4 million in the U.S. and $0.5 million outside the U.S. If, based upon the weight of all available evidence, it is more likely than not (a likelihood of greater than 50%) that some portion or all of the deferred tax assets will not be realized, a valuation allowance must be recorded to reduce the deferred tax assets.