N-able (NABL) Q2 FY26 earnings call: guidance and Q&A

The analyst questioned why Q2 guidance was maintained despite a month of Q2 results, only to be lowered now, specifically asking about the timing and impact of UEM/EDR renewal rate declines.

Tim O'Brien explained that Q2 has the largest renewal cohort, and renewal rates for UEM and EDR, initially in the high-80s, declined to the mid-80s as the quarter progressed. This decline, combined with the cohort size, was the main driver for Q2 performance and the updated full-year guidance, with similar rates assumed for the remainder of the year.

“So the impact of the renewal rate, what we kind of saw was we were seeing renewal rates in the higher 80s. And as we progress through the quarter, we saw them kind of middling out more in the mid-80s. And the impact of that plus the size of the cohort is what drove kind of the Q2 performance.”

asked by Michael Cikos · answered by Tim OBrien

The analyst asked where customers are going if they are not renewing, seeking to understand the nature of customer departures.

John Pagliuca clarified that the impact on renewal rates is often due to pricing pressure (customers renewing at a lower price or reduced quantity) rather than outright churn. For EDR, some customers might switch to providers partnering with SentinelOne or other industry names. For UEM, it's primarily pricing sensitivity, with no significant market share shift observed.

“So you can't just take a straight line and say that the customers are leaving. To answer your question a little bit more succinctly, if they're leaving on EDR, they could actually be going to another provider who might be offering or partnering with the SentinelOne or they might be going to some of the other names that we know in the industry.”

asked by Michael Cikos · answered by John Pagliuca

The analyst inquired about the revenue contribution from DRaaS in Q2 and sought clarification on whether SentinelOne is offering better pricing to other channels, impacting N-able.

John Pagliuca stated that DRaaS, which went GA in July, had no revenue impact in Q2 but is expected to be a strong offering. Regarding SentinelOne, he couldn't speak to other channels' pricing but emphasized N-able's differentiation through integration, support, and a recently amended agreement that extends SKUs (e.g., FedRAMP) and provides pricing protection, enhancing their combined offering.

“We've now amended that agreement with SentinelOne, opening up the SKUs, and we think that will also provide a strengthening of renewal rates, especially for the EDR part of our customer base.”

asked by Erik Suppiger · answered by John Pagliuca

The analyst asked about the macro/competitive dynamics in the MSP market and if N-able's pivot towards the VAR channel indicates more headwinds for MSPs.

John Pagliuca explained that MSPs are consolidating through M&A, leading to larger entities that require a different selling motion. The 'upmarket' strategy targets these larger MSPs and mid-market CIOs via VARs, where UEM is less competitive. He noted that while MSPs are scrutinizing 'sell-to' tools like UEM due to AI, 'sell-through' security and data protection remain strong.

“In the mid-market, where CIOs like this all-in-one tool where they can combine things like a take control tool, a monitoring capability, vulnerability management, patching management and reporting all in one tool, wow, they'll get to replace maybe four or five, potentially even six tools in their stack with one tool at a price point that saves them a good amount of money.”

asked by Jason Ader · answered by John Pagliuca

The analyst asked if the complexity of AI rollout and strategy in the SMB market is causing a pause in buying behavior or questions on existing spend.

John Pagliuca confirmed that there is definitely an element of pause and scrutiny. While 'sell-through' security and data protection offerings remain strong, MSPs are taking a harder look at 'sell-to' tools like UEM, which are operational in nature, to understand how AI will impact workflows and technician efficiency. N-able's multi-pronged AI strategy, including AI assistants and autonomous agents, aims to address this need for efficiency.

“But you're right, MSPs are stepping back. And I would say, I hate to use the word every, but nearly every conversation, folks want to understand whether it be N-able or there other vendors, what is our AI strategy? How are we playing in that equation?”

asked by Matthew Hedberg · answered by John Pagliuca