Thank you for joining us today for the N-able Fourth Quarter 2025 Earnings Call. I will now turn the conference over to Griffin Gyr from Investor Relations. Please proceed.

Thank you, operator, and welcome, everyone, to N-able's Fourth Quarter 2025 Earnings Call. With me today are John Pagliuca, N-able's President and CEO; and Tim O'Brien, EVP and CFO. Following our prepared remarks, we will open the line for a question-and-answer session. This call is being simultaneously webcast on our Investor Relations website at investors.enable.com. There, you can also find our earnings press release, which is intended to supplement our prepared remarks during today's call. Certain statements made during this call are forward-looking statements, including those concerning our financial outlook, our market opportunities and the impact of the global economic environment on our business. These statements are based on currently available information and assumptions, and we undertake no duty to update this information, except as required by law. These statements are also subject to a number of risks and uncertainties, including those highlighted in today's earnings release and our filings with the SEC. Additional information concerning these statements and the risks and uncertainties associated with them is highlighted in today's earnings release and in our filings with the SEC. Copies are available from the SEC or on our Investor Relations website. Furthermore, we will discuss various non-GAAP financial measures on today's call. Unless otherwise specified, when we refer to financial measures, we will be referring to non-GAAP financial measures. A reconciliation of certain GAAP to non-GAAP financial measures discussed on today's call is available in our earnings press release on our Investor Relations website. And now, I will turn the call over to John.

Thanks, Griffin. We entered 2026 with momentum, following another year of profitable growth, and with confidence that we can drive continued strong performance. Cybersecurity is a matter of survival, and our AI-powered cybersecurity platform delivers the business resilience customers need. Our fourth quarter and full year results reflect this strength with solid results across our key operating metrics. Both fourth quarter and full year 2025 revenue grew 9% year-over-year in constant currency. We exited 2025 with ARR of $540 million, growing 8% at constant currency. Our adjusted EBITDA in the fourth quarter was $39 million, reflecting a 30% margin and $153 million for the full year, also reflecting a 30% margin. Beyond the financial results, we made exceptional progress across the business in 2025. We solidified our presence in the AI SOC market with the successful integration of our Adlumin acquisition, crossed $200 million of ARR in data protection and expanded into the VAR channel to broaden our sales reach. We also opened up a new R&D center in India to deepen our engineering capacity, elevated our cybersecurity brand, and accelerated innovation across the platform with AI-driven capabilities. Our teams executed exceptionally well, and the business is meaningfully stronger as a result. Building on this progress, let's now discuss our strategy and approach moving forward. In particular, there's a lot of debate about the impact of AI on software, and I want to share how N-able is approaching AI and the tailwinds we see. First and foremost, we continue to think long term. N-able was founded over 25 years ago on the belief that small and midsized organizations would keep digitally evolving and would rely on technology experts to help guide that journey. This enduring belief anchors our business. AI accelerates digital evolution, which we believe is the fundamental driver of our business and fuels even greater opportunity. Durable truths guide this evolution. Businesses need to be secure, and they want to achieve this efficiently. N-able helps them accomplish both. AI enhances our ability to deliver these outcomes by automating routine tasks, strengthening threat detection and helping customers scale. For N-able, we believe AI is a fundamental tailwind, and we are not only embracing, but actively capitalizing on it. Second, our foundation is rock solid. With telemetry from 11 million IT assets across more than 500,000 businesses and decades of trust and cybersecurity expertise, we have the structural attributes to succeed in the AI era. We want to be clear about our stance on the AI-related debates unfolding in the industry. One narrative is that businesses will look to replace existing software tools with low-code and no-code solutions. We see our position in cybersecurity as fundamentally different. Building cybersecurity solutions isn't a part-time or easy job. The difficulty and stakes are too high. One mistake and your business can become extinct. Our cybersecurity software solutions are a foundational part of complex business infrastructure. Sitting at the cybersecurity table requires deep domain expertise, meeting stringent compliance standards, mastering a long tail of edge cases, and an innovation engine capable of quickly responding to new and emerging threats. Businesses aren't looking for component parts to assemble. They want complete products and dependable cybersecurity outcomes. Coding is a component; N-able delivers the full product and the outcomes that actually matter. In fact, the democratization of coding is contributing to an increase in the scale, speed, and sophistication of attacks. This has created a more dangerous AI-empowered adversary and makes our innovation, domain expertise, and ability to deliver trusted outcomes more critical than ever. Another discussion is that new AI solutions will replace existing software workflows. We believe this view overlooks a key insight. Probabilistic AI doesn't replace deterministic workflows. It complements them. We are combining our SaaS system of record in context with an AI system of action. This unlocks step function value that we believe will take us to $1 billion of ARR and beyond. Let me be clear. The way we see it, AI doesn't erode our competitive advantage; it widens it. Third, and perhaps most importantly, we are delivering value with AI now. AI is embedded across our cybersecurity platform, reducing risk and improving customer efficiency. Each solution has exciting progress and use cases. I'll detail some product specifics in a moment. Underpinning our opportunity is a threat landscape that is constantly growing more difficult for businesses to manage. Attack surfaces are widening, data volumes are growing, and IT complexity is increasing. These challenges are further compounded as bad actors are utilizing AI to execute more advanced and widespread attacks. The need for cybersecurity has never been more critical and will only continue to grow. We believe N-able is well positioned to capture this growing demand. From a go-to-market perspective, our channel-led approach unlocks efficient global scale. And from a solution standpoint, our purpose-built platform, which spans security operations, data protection, and unified endpoint management drives compelling value. We enable customers to identify and stop threats, protect and recover data, and efficiently manage complex IT environments to achieve true business resilience. This balanced platform breadth is our strategic advantage. By maintaining focused product development, we can continue to deliver technical excellence in each category where we compete. And by offering a wide breadth of solutions, we can also deliver platform-level value, including economic and technical benefits. Our approach improves technician feasibility and enables solution consolidation for our customers, helping them reduce risk and improve profitability. A near $300,000 ARR fourth quarter customer win demonstrates this value proposition in action. The customer consolidated their unified endpoint management, security operations, and data protection onto N-able, displacing five separate competitors. We addressed three critical pain points that included automation gaps, alert fatigue, and high data protection overhead costs. A deal of this magnitude from a customer with only approximately 50 employees speaks directly to the power of our strategy to deliver enterprise-grade security to every business. The combination of our best-of-breed capabilities and efficiency of our platform approach drove compelling value. Bringing it all together, our positioning is sound, and our opportunity is significant. AI is a positive demand driver and a technology we are integrating across our platform. More broadly, as we seek to be a business that compounds value over the long term, our fundamental objective remains the same: focus on solving ever-evolving customer problems, deliver security, efficiency, and unrivaled business resilience. With that said, let's now turn to key tenets of our 2026 plan. Our priorities span product innovation, strengthening our trusted brand, and continued improvements in go-to-market operations. On the product side, we plan to continue to develop AI as a core differentiator. For our UEM solution, we are excited to debut N-zo, our powerful AI workflow assistant that users will be able to command to complete tasks and better run their IT and security operations. We believe this is a game changer. With a single query, customers will be able to derive insights and complete actions in seconds that previously took hours. As it evolves, our AI workflow assistant is intended to diagnose issues, recommend next steps, write and execute scripts, summarize device health, and turn raw data from millions of endpoints into safe, reliable, and efficient actions. Adding this orchestration layer is a force multiplier on top of our already powerful autonomous management capabilities. The industry faces a well-documented IT and security skills gap. Our customers operate labor-intensive businesses in a market with tight employment. AI can change that equation. We're empowering customers to automate more tickets, streamline workflows, and amplify the capabilities of every technician. Closing the skills gap with technology rather than headcount unlocks a new frontier of scalable, profitable growth. Additionally, we have received industry recognition, positioned in the 2026 Gartner Magic Quadrant for endpoint management tools. Our roadmap also includes furthering our investment in AI within our security operations solution. AI unlocks security scalability that manual approaches simply cannot match. Within our security operations solution, AI now handles 90% of identified threats automatically, up from 70% a year ago, freeing customers to focus on higher-value strategic tasks. In addition to our AI advantage, we bring multiple proven differentiators, including interoperability across a spectrum of EDR providers and shared visibility into our data system. On the back of our product strength, we are excited to recently introduce a new cyber warranty program. We believe this warranty will help derisk adoption and bolster customer confidence. Our solution is scaling quickly, driving strong net new ARR dollar growth. A recent customer incident illustrates the real-world difference we make when it matters most. At 5:00 a.m. Christmas morning, attackers identified a transportation company as an easy target for a holiday heist. Fortunately, our security operations solution was standing guard and spotted the targeted server attack and moved quickly to lock down the compromised asset. Leveraging our AI-powered SOC, the time to containment was mere minutes. No data was taken, no downtime occurred, and what could have been a major business disruption was completely avoided. Threat actors don't take the holidays off, and neither do our AI agents. Each of our three solution pillars is AI infused. And in data protection, our AI-enabled recovery testing saves customers hours of time and eliminates the guesswork involved in ensuring their backups are safe and secure. We aim to extend our advantage in data protection this year by adding Disaster Recovery as a Service or DRaaS and Google Workspace workload coverage. These are two highly requested billable capabilities across our 14,000 data protection customers and both represent meaningful TAM expansion. DRaaS solves multiple pain points. Customers are challenged to manage backup infrastructure themselves. They face large upfront hardware costs, expensive and time-consuming setup, ongoing maintenance, and potential liability associated with storing data. At the same time, expectations are rising, and businesses are seeking shorter return to operation timelines. These dynamics are particularly acute among upmarket customers. Our Disaster Recovery as a Service will allow customers to quickly launch virtual servers in our secure cloud environment. This delivers real-time restore capabilities, seamless business continuity, and eliminates the need for them to have to manage backup ecosystems themselves, significantly reducing costs, time, risk, and headache. Google Workspace coverage addresses another important customer need. Google Workspace has a large and growing footprint, particularly in the education sector and among cloud-first organizations. Customers want to ensure this data is protected and recoverable. Adding coverage will expand our strike zone significantly and unlock opportunity for N-able with both existing and new customers. Our high confidence and expectations from both DRaaS and Google Workspace are supported by a robust demand environment and our market trajectory. As customers manage rapidly growing data estates and ransomware attacks escalate, our data protection solution delivers the simplicity and robust performance customers value and continues to grow meaningfully faster than our total ARR. From a marketing perspective, 2026 is about capitalization on our brand strength. We protect over 500,000 businesses and bring 25 years of service excellence. The N-able name carries weight, underscored by Omdia recently naming N-able as a cybersecurity titan. That recognition validates the three-pillar strategy we've been executing across unified endpoint management, security operations, and data protection. The positioning is resonating. Partners and end customers alike are responding to the N-able brand, and we're seeing that translate into both deeper retention and new logo growth. From a sales and customer success perspective, our priority is accelerating portfolio adoption and deepening engagement across our full channel for both MSPs and VARs. Security operations is a standout growth lever and key to both objectives. Penetration of our AI-powered security operations solution remains in the early stages and, more broadly, a large portion of MSPs still operate without a security operations solution. In fact, over 75% of our new lands are entering the category for the first time. We believe we are tapping into a sizable greenfield market with considerable upside. Pertaining to full channel development, we continue to expand our VAR outbound motion. This includes investments in field reps and channel account managers, which establishes critical in-market boots on the ground. From a product perspective, we are also seeing particularly strong traction with UEM in the VAR channel. Our all-in-one highly autonomous IT management and security value proposition is resonating with enterprises struggling with vendor sprawl and tool complexity. With our UEM platform, we're replacing multiple point solutions with a single converged offering that spans patching, vulnerability management, remote access, endpoint management, and endpoint security. This not only delivers cost savings and operational efficiency for our customers, but positions N-able to capture a larger share of endpoint spend as organizations consolidate their security and IT management stacks. We plan to double down on this momentum with increased field events, an elevated account team, and continued investment in prospect pipeline generation. The success of our strategy and execution is reflected in our financials. We are sustaining a strong top line trajectory. N-able is not slowing down. Constant currency ARR growth in fiscal year '25 was 8%, and the midpoint of our fiscal year '26 guide calls for the same. We are excited but not content. Our go-to-market and product strategy are aligned with customer demand. The foundation is in place to reach greater heights over time. Key to achieving this acceleration is the success of our channel expansion, new product introductions, and monetization opportunities created by AI. We're executing today while building for tomorrow. We've never been more energized and appreciate you're being part of the N-able journey. With that, I'll turn it over to Tim and then circle back for closing remarks.

Thank you, John, and thank you all for joining us today. N-able continues to execute with focus and purpose. We exited 2025 with $540 million in ARR, growing 12% year-over-year, while delivering a 30% adjusted EBITDA margin. Operationally, we deepened our presence in data protection and security operations, expanded our channel reach, and accelerated AI innovation, all while maintaining a healthy balance of growth and profit. The acquisition of Adlumin was successful, with cross-sell to our existing MSP customers performing well and ahead of our acquisition plan. I'll now walk through our fourth quarter and full year results, provide additional detail on the drivers of our performance and discuss our 2026 outlook. First, let's discuss our results for the fourth quarter and full year. For our fourth quarter results, total ARR was $540 million, growing at 12% year-over-year on a reported basis and 8% on a constant currency basis. Total revenue was $130 million, $3 million above the high end of our guidance, representing approximately 12% year-over-year growth on a reported basis and 9% on a constant currency basis. Subscription revenue was $129 million, representing approximately 12% year-over-year growth on a reported basis and 9% on a constant currency basis. As a reminder, we purchased Adlumin on November 20, 2024. As such, we only recognized approximately half a quarter of revenue in that period, while the fourth quarter of 2025 reflects a full quarter of Adlumin revenue contribution. This dynamic bolsters our fourth quarter 2025 revenue growth rate relative to our guidance for Q1 2026 revenue growth. We ended the quarter with 2,671 customers that contributed $50,000 or more of ARR, which is up approximately 14% year-over-year. Customers with over $50,000 of ARR now represent approximately 61% of our total ARR, up from approximately 57% a year ago. Our momentum upmarket has been consistent and pronounced. This customer cohort has grown from 46% of total ARR at the time of our 2021 spin-off and has historically retained at rates roughly 2% to 3% above the total company average, supporting our continued upmarket and cross-sell focus. Dollar-based net revenue retention, which is calculated on a trailing 12-month basis, was approximately 103% on a reported basis and 102% on a constant currency basis. For the full year, we finished 2025 ahead of our outlook with total revenue of $511 million, representing year-over-year growth of 10% on a reported basis and 9% on a constant currency basis. Subscription revenue was $506 million, growing approximately 10% year-over-year on a reported basis and 9% on a constant currency basis. Approximately 45% of our revenue was outside of North America in the quarter and the full year. Turning to profit and margins. Note that unless otherwise stated, all references to profit measures and expenses are calculated on a non-GAAP basis and exclude the items outlined in the GAAP to non-GAAP reconciliations provided in today's press release. Fourth quarter gross margin was 80% compared to 82% in the same period in 2024. Full year 2025 gross margin was 81% compared to 84% in 2024. Fourth quarter adjusted EBITDA was $39 million, $4 million above the high end of our guidance, representing approximately 30% adjusted EBITDA margin. Full year 2025 adjusted EBITDA was $153 million, representing an adjusted EBITDA margin of 30%. Unlevered free cash flow was $28 million in the fourth quarter and $101 million for the full year. CapEx, inclusive of $2 million of capitalized software development costs was $7 million or 5% of revenue in the fourth quarter. CapEx was $29 million, inclusive of $11 million of capitalized software development costs or 6% of revenue for the full year. We ended the year with approximately $112 million of cash and an outstanding loan principal balance of approximately $400 million, representing net leverage of approximately 1.9x. We refinanced our credit facility in the fourth quarter, increasing our commitment from approximately $336 million to $400 million. This new facility enhances our flexibility and supports our broader capital allocation strategy, including evaluating potential share buybacks and M&A. Non-GAAP earnings per share was $0.06 in the fourth quarter based on 188 million weighted average diluted shares and $0.39 for the full year based on 189 million weighted average diluted shares. Note that both the fourth quarter and full year non-GAAP earnings per share experienced approximately a $0.02 negative impact from one-time fees related to the new debt facility. We executed $30 million of share repurchases in the year, reflecting our belief in the business and our commitment to disciplined share count management. Turning to our financial outlook. Our guidance incorporates the following elements. First, our guidance assumes FX rates of $1.17 for the euro and $1.34 for the pound. More broadly, our outlook reflects our expectations for steady demand trends, stable retention, and continued execution across our platform and sales channels. Key initiatives spanning our growth algorithm give us confidence in this view. In gross retention, we see our contract initiative and ongoing shift upmarket driving sustained strong performance. In net retention, we see cross-sell traction in security operations and data protection powering continued success. And on the new business side, our channel expansion, enhanced marketing engine, and broader portfolio position us well to deliver consistent new logo growth. From an investment standpoint, in 2026, we intend to continue to make disciplined investments in AI and product innovation as well as go-to-market expansion. We are excited to make these growth-oriented investments while materially improving our unlevered free cash flow on a year-over-year basis as we realize synergies from our Adlumin integration and begin to see benefits from our India development site investment. With that in mind, for the first quarter of 2026, we expect total revenue in the range of $131 million to $132 million, representing approximately 11% to 12% year-over-year growth on a reported basis and 6% to 7% on a constant currency basis. We expect first quarter adjusted EBITDA in the range of $35.5 million to $36.5 million, representing an adjusted EBITDA margin of 27% to 28%. For the full year 2026, our total revenue outlook is approximately $554 million to $559 million, representing approximately 8% to 9% year-over-year growth on a reported basis and 7% to 8% on a constant currency basis. Our full year ARR outlook is $581 million to $586 million, representing 8% to 9% year-over-year growth on a reported and constant currency basis. To be clear, the high end of our full year 2026 ARR guidance calls for approximately 20% more net new ARR dollars on a constant currency basis than in 2025. We expect full year adjusted EBITDA of $167 million to $171 million, representing an adjusted EBITDA margin of 30% to 31%. We expect CapEx, which includes capitalized software development costs to be approximately 5% of total revenue for 2026. We also expect our unlevered free cash flow to be approximately $114 million to $118 million. We expect cash interest payments of approximately $27 million, assuming interest rates remain in line with current levels. This cash flow outlook equates to a 17% increase in unlevered free cash flow dollars at the high end. Our model is built for profitable growth, and our outlook reflects this strength. We expect total weighted average diluted shares outstanding of approximately 188 million to 189 million for the first quarter and 188 million to 191 million for the full year. Finally, we expect our non-GAAP tax rate to be approximately 24% to 27% for both the first quarter and the full year. We are delivering strong financial results while positioning the company for long-term success. Our 2026 guide calls for meaningful growth in constant currency, net new ARR dollars, and unlevered free cash flow dollars. Our growth algorithm remains healthy across gross retention, net retention, and new customer acquisition. We are executing well, and our AI-powered cybersecurity platform is resonating. Importantly, we are achieving these results while continuing to invest for the long term with an exciting AI roadmap and a clear path to further build our global go-to-market engine. Now I will turn it over to John for closing remarks.

Thanks, Tim. We move forward with a strong financial profile, a durable position in cybersecurity and a focused strategy. AI is amplifying what we do, and we are delivering AI capabilities today. 2026 is a year of execution for N-able. And on behalf of nearly 2,000 N-ableites across the globe, I'm excited for what we will deliver. And with that, operator, we'll open the line for questions.

Your first question comes from the line of Joe Vandrick with Scotiabank.

John and Tim, so ARR grew about 8% on a constant currency basis in 4Q. Can you talk a little bit more about what you're seeing today that gives you confidence to guide to that slightly higher constant currency ARR growth in 2026?

Sure. Yes. Joe, thanks. This is John. I believe the guidance is based on a strong level of confidence due to its stability. We anticipate steady to slightly improved gross retention, which we are already observing in the business. We have new SKUs that are starting to gain traction, including our AI-powered XDR, as well as offerings in data protection, Disaster Recovery as a Service, and Google Workspace, which were mentioned earlier. This reflects a combination of factors contributing to growth: first, the improvement in gross retention rate; second, enhanced expansion from these new SKUs; and third, ongoing acceleration in our engagement with the VAR community. We are employing a multi-faceted strategy, and I would say that the guidance incorporates a moderate expectation for the performance of these factors.

Makes sense. And then if I could just sneak in one more on the product side. You talked a lot about AI innovations that you have in the pipeline, and one that you called out, I think it was called N-zo, which seemed really interesting. Just wanted to clarify, is this a product that you expect to be released in the coming year? And can you just talk a little bit more about the value this is going to create for customers?

Sure. So it's N-zo, and it's N-Z-O. Make sure we get the spelling right in the script. And so yes, it's actually in customers' hands right now in limited preview. We're learning from it and getting the behavior. So far, the reviews have been fantastic. It is an in-product AI agent, a workflow assistant. So embedded today in our UEM, but the plan is to really embed these AI assistants or these AI agents in most of our offerings. So what it will allow MSPs to do today right out of the gate, it allows them to really get a better assessment of what their environments might look like using simple natural language. If an MSP wants to know if they have any vulnerable devices, or if there's a process that needs to be completed. And that's today. And then going forward, it will actually be a source of action. So they'll be able to request to understand what's going on in their customer environments and take proactive action to remedy any vulnerabilities or operations. Tasks that might have taken hours to do like a script or some type of level of automation can now be completed in minutes using natural language. So that's the play. And if I consider AI in general, we're approaching this with a three-pronged strategy: number one, we have AI infused in our products today, right? And so both machine learning and Agentic AI, as an example, our AI SOC or XDR has AI in it today. This is making our customers more secure and providing a better experience. That's also giving us a competitive advantage over other solutions because we are ahead in AI and our XDR. Secondly, we discussed in-product AI agents. This should improve user experience and expand our GRR while potentially offering a premium experience. Thirdly, are AI-specific SKUs and agents that we can charge for, adding another layer to our revenue strategy. It's a comprehensive strategy. We've executed the first part with our existing products and will continue with N-zo being the first example of that embedded AI agent helping MSPs with their workflows.

Your next question comes from the line of Mike Cikos with Needham.

Congratulations on the strong finish to calendar '25. I wanted to revisit Tim's comments about Adlumin. It seems that the cross-sell to the existing customer base is performing better than initially expected at the time of the acquisition. Could you help us understand what is contributing to this earlier-than-anticipated success? It's great to hear, but any additional context you could provide would be appreciated. I have a follow-up as well.

Sure. Look, we knew we had a winner with the AI solution with Adlumin. And just as a reminder, this was a top need that we identified in the MSP community. They needed support with threats, not just assessing but also managing and taking action on them. This started off as an OEM arrangement. We conducted extensive research and chose Adlumin because of its technology stack and the AI capabilities. Additionally, it's agnostic, meaning we can assess a diverse range of MSP and customer environments regardless of their existing security tools. I believe a combination of our AI-infused technology, the speed at which we can assess and take action where competitors might take hours or days, is resonating well. We've also separated our software and service offerings so that technicians can have visibility, which fosters trust. The demand for compliance is driving this need as well. Our original estimates didn't fully capture the breadth of the demand; we're seeing larger MSPs adopting it, as well as smaller shops. Compliance and ongoing cyber threats are crucial drivers, and many MSPs are now integrating this solution into their standard offerings.

Mike, I would probably just add, and John hit on it in his prepared remarks, is the mix of greenfield opportunities versus incumbents as well. We're seeing about 70%, 75% of the opportunities coming in from a greenfield perspective. So I think that's also been a catalyst in the equation as we've executed through 2025.

That's great and very encouraging. I have a quick follow-up regarding the guidance assumptions. If I look at the constant currency growth we expect in Q1 compared to the full year, it suggests stronger growth as we move into Q2 and the second half of the year. I'm trying to understand if there are any seasonal factors to consider or if the slightly improved or stable GRR might lead to better NRR in the latter half of the year with the new products being developed. Can you provide more insight to support this guidance?

Yes. Mike, looking back at 2025, we saw some seasonality in Q1. We built ARR up from a growth standpoint more so in the second half than the first half for 2025. As we look at 2026, I would expect some similar seasonality, likely with heavier impact from some of the newer product initiatives in the second half. We do have some items in customer preview that we plan to roll out in the first half, which should impact the net new ARR in the second half positively. So, similar seasonality is expected in 2026 compared to 2025.

Your next question comes from the line of Matt Hedberg with RBC.

John, I appreciate your comments at the start of the call about market confusion surrounding AI. I believe, especially within your core customer base, your company could act as a catalyst for AI adoption among customers. Considering your three pillars of N-able today, do you think they could all benefit from an increased focus on Agentic AI? I'm curious about your thoughts, particularly regarding Disaster Recovery as a Service. Are there aspects of your business that might experience an even greater uplift with customer AI adoption?

Sure. Look, the key tenets of our business, and this is part of the durable truth, Matt, it really is about security and efficiency. That benefits all three pillars. So we have our data protection suite, which is over $200 million and growing. Disaster Recovery as a Service will drive experiences for our MSPs and their clients through AI. We will ensure that backups are continually active to meet RTO and RPO goals. XDR, of course, is critical, and rapid containment of compromised assets is essential. The example we mentioned previously illustrates this well. Using AI helps drive efficiency and take action quickly. For UEM, that's where we aim to boost efficiency and introduce AI SKU to assist MSPs with compliance matters and posture management. The verbs in our business have remained the same for 25 years and will continue for the next 25. We monitor, manage, secure, protect, and recover. As new nouns like LLMs and agents emerge, MSPs will need to help ensure safety and recoverability of data. This will offer tailwinds for MSPs and enhance opportunities for cybersecurity vendors servicing them. Finally, AI tackles the labor bottleneck many MSPs face, enabling them to serve a larger customer base effectively. Our tools empower MSPs to grow and support multiple sectors, including Fortune 1000 clients. Many studies suggestover 75% of our MSPs are adopting a co-managed approach in enterprise environments.

That's super helpful. And then I think one of the things you guys do really well is balance stable top-line growth with EBITDA margin expansion. When we think to 2026, and obviously, we're anniversarying Adlumin and rolling out new organic products that you've talked about in your script. How do we think about capital allocation for 2026? Should we expect a bit of M&A, organic investments, or an increased focus on VARs? Just a little bit more on capital allocation and how you plan to balance growth and profitability.

Sure. Look, Tim and the team did a great job structuring our new debt, providing us flexibility. We balance our approach. You stated it well: a balanced approach. Share repurchases will remain an option as experienced last year. However, I do expect us to continue exploring solutions that both MSPs and VARs require to complement our best-in-class offerings. We'll continue assessing build versus buy strategies as we did with Adlumin and in other areas, guided by our North Star. That North Star is understanding the needs of small to medium enterprises to ensure they remain secure, compliant, and ahead of adversaries. Our robust balance sheet positions us well, providing optionality to meet customer needs.

Your next question comes from the line of Keith Bachman with BMO.

This is Adam on for Keith. But I wanted to follow up on the last AI question. It's good to see the different prongs in growth levers there, but I was wondering if you can quantify the monetization opportunity. And I know it's early, but in the past, you guys talked about the $3 per device per month opportunity. I was wondering if AI adds meaningfully to that opportunity. And then second, on the other side, I know device headwinds have come up in the past, primarily from the macro. Is it possible in the future that AI use among MSPs and SMBs can create a headwind there? And if so, how do you defend against that?

Thanks, Adam. A couple of things: What we monitor, manage, protect, and recover goes beyond just endpoints. It includes servers, virtual machines, SaaS applications, and data. That is number one. A significant portion of our revenue comes from those metrics. Secondly, the SME market is relatively insulated from macro headwinds. Our customers span sectors like healthcare, finance, and education, which are well-protected. Thirdly, we continually seek to increase ASP per MSP and per user by introducing new SKUs, many of which will incorporate AI. I believe this will enhance our revenue potential and expand the TAM while supporting the MSPs in revenue generation too. Our multipronged approach enhances optimism for revenue growth, maintaining our strong economic structure.

There are no further questions at this time. I will now turn the call back to CEO, John Pagliuca, for closing remarks.

Thank you, operator, and thank you, everyone, for joining us today and your ongoing interest in N-able. See you next time.

This concludes today's call. Thank you for attending. You may now disconnect.