S&P rates N-able, loans B+

S&P said it rated N-able, LLC, its $350 million term loan due 2028 and $60 million revolver due 2026 B+. The loans’ recovery rating is 3.

“Reliance on small and midsize businesses (SMBs) and potential MSP partner churn present meaningful business risks, but N-able has maintained stable operating performance to date through a growing subscription revenue base. SMBs are increasingly turning to MSPs to provide core IT functionality and support digital transformations requiring greater technological aptitude. In turn, MSPs are partnering with software providers such as N-able to efficiently deliver services to their customers across on-premise, cloud, or hybrid environments,” S&P said in a press release.

“Nevertheless, we see risks to this market, particularly related to the highly fragmented MSP marketplace, and fairly high level of churn in customers as MSPs are acquired or go out of business. We estimate that N-able needs to grow revenue in the double-digit percentage area with existing partners each year in order to offset these losses and maintain its current net retention rate of over 100%,” the agency said.

The outlook is stable, indicating it will increase revenues in the high-single-digit percent area while maintaining profitability and generating sufficient cash flow, with leverage staying in the 3x area in the next 12 months, S&P said.

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