Enable (NABL) Q1 2025: ARR Climbs 11% on Channel Expansion and AI Security Differentiation
Enable’s Q1 results highlight a platform-driven expansion strategy, with ARR up 11% in constant currency and early traction in reseller channels and AI-powered security solutions. New product launches and a broadened go-to-market approach are positioning the company to capture a larger share of the SMB and mid-market cybersecurity spend. Management’s guidance reflects ongoing investment in growth levers, even as macro and FX headwinds persist.
Summary
- Platform Bundling Gains Momentum: Enable’s cross-sell and bundling strategy is driving higher deal sizes and customer stickiness.
- Reseller Channel Build-Out: Early-stage reseller expansion is beginning to generate pipeline growth, with more impact expected in 2026.
- AI Security Differentiation: Automated SOC and vulnerability management features are resonating, differentiating Enable in a crowded SMB cybersecurity market.
Performance Analysis
Enable reported first quarter ARR growth of 11% in constant currency, with total revenue exceeding guidance and adjusted EBITDA margins at 27%. Subscription revenue, which forms the core of Enable’s recurring revenue model, grew 7% in constant currency. The company’s customer mix continues to shift toward higher-value accounts, as those contributing over $50,000 ARR now represent 58% of total ARR, up from 56% a year ago. Dollar-based net revenue retention (NRR) held at 101%, reflecting a trough but steady gross retention, with management targeting cross-sell as the primary lever for NRR improvement in coming quarters.
Gross margin compressed to 80.6% from 84.7% YoY, reflecting investments in product and go-to-market, as well as integration of the Adlumen acquisition, which contributed approximately $21 million ARR at acquisition. Free cash flow conversion improved, aided by a lower tax rate and disciplined capital allocation. The company’s $75 million share repurchase authorization provides flexibility but has not yet been utilized.
- Customer Expansion Leverage: Multi-product deals and platformization are driving higher average contract values, especially in the lower mid-market.
- FX and Revenue Recognition: Q1 revenue benefited from FX upside and some positive 606 impact, though full-year guidance reflects ongoing 606 headwinds.
- International Exposure: 43% of revenue is generated outside North America, adding both opportunity and FX risk.
Management’s outlook for the rest of 2025 calls for steady sequential ARR growth, with cross-sell and reseller traction as key watchpoints. EBITDA margins are expected to remain in the high 20s as Enable prioritizes investment in growth initiatives.
Executive Commentary
"We are reducing software sprawl, reducing fragmentation and closing security gaps while making the technicians we serve more efficient. We have already discovered millions of vulnerabilities and early positive customer reception gives us confidence that our solution hits the mark."
John Pagliuca, President & CEO
"We had a solid start to the year with Q1 revenue and adjusted EBITDA both coming in above the high end of our guidance range and continued progress across our strategic priorities. We were also pleased to announce a $75 million share repurchase authorization program."
Tim O'Brien, EVP & CFO
Strategic Positioning
1. AI-Driven Security Differentiation
Enable’s AI-powered SOC (Security Operations Center) automates 70% of incident and threat remediation, setting it apart from legacy solutions in the SMB and mid-market. New launches such as Microsoft 365 breach prevention and integrated vulnerability management are designed to close critical security gaps and streamline workflows for overburdened IT teams. Early customer wins and industry awards validate the platform’s technical edge and market resonance.
2. Channel Expansion Beyond MSPs
Historically focused on MSPs (Managed Service Providers), Enable is now expanding into the reseller, SI (System Integrator), and distributor channels, which collectively represent double the market opportunity of MSPs alone. The Adlumen acquisition brought a U.S. reseller network, now being broadened with additional products. While still in the early innings, management expects the reseller channel to drive more material growth in 2026 and beyond, with initial pipeline build and deal flow already visible.
3. Platformization and Customer Expansion
Enable’s multi-product suite provides a $2.5 billion cross-sell opportunity within its base. By bundling endpoint management, data protection, and security operations, the company is raising average deal sizes and improving customer retention. Bundling is showing the greatest impact in the lower mid-market, where fragmented solutions have historically dominated. Management is actively testing and scaling this approach, with broader rollout targeted for late 2025 and 2026.
4. Investment in R&D and Global Operations
Enable is investing in an India R&D site and integrating Adlumen, with a focus on accelerating product innovation and expanding global reach. CapEx remains disciplined at about 6% of revenue, with software development prioritized to maintain differentiation in AI and automation.
Key Considerations
Enable’s Q1 reflected disciplined execution on a multi-pronged growth strategy, balancing near-term profitability with long-term market share capture. The company’s focus on automation, channel diversity, and platformization underpins its competitive moat in the SMB cybersecurity space.
Key Considerations:
- Cross-Sell Execution: Success in driving NRR higher depends on effective bundling and upsell across the existing customer base.
- Reseller Channel Ramp: Early traction must translate into consistent deal flow and scale to materially impact 2026 growth.
- AI and Automation Edge: Continued investment in AI-driven security will be critical to maintaining differentiation as competitors increase automation capabilities.
- Macro and FX Sensitivity: With 43% international revenue, Enable remains exposed to currency volatility and regional economic shifts.
Risks
Enable faces headwinds from ongoing FX volatility, changing tariff policy, and macro uncertainty, which may elongate deal cycles or pressure margins. The company’s ability to execute cross-sell and scale new channels is unproven at full scale. Gross margin compression and integration risk from Adlumen and global R&D expansion also warrant close monitoring. Management’s prudent guidance reflects these external and operational risks.
Forward Outlook
For Q2 2025, Enable guided to:
- Total revenue of $125.5 to $126.5 million (5-6% YoY growth)
- Adjusted EBITDA of $34 to $35 million (27-28% margin)
For full-year 2025, management raised reported ARR and revenue guidance to:
- Total revenue of $492 to $497 million (6-7% YoY growth)
- ARR of $519 to $525 million (8-9% YoY growth)
- Adjusted EBITDA of $134 to $139 million (27-28% margin)
Management cited ongoing demand for cybersecurity, strong pipeline, and cross-sell opportunity as key drivers, while maintaining a conservative stance due to macro and FX uncertainty.
- Ongoing investment in channel and R&D initiatives
- Expectations for sequential ARR build through 2025
Takeaways
Enable’s Q1 performance demonstrates early success in broadening its go-to-market model and deepening its platform offering, but full impact from new channels and cross-sell will take time to materialize.
- ARR Growth Anchored by Platform and Channel Initiatives: The company’s ability to drive higher-value deals and expand its addressable market is evident, but execution risk remains as new programs scale.
- Margin and Cash Flow Discipline: Management is balancing growth investments with profitability, as reflected in steady EBITDA margins and improved free cash flow conversion.
- 2026 as an Inflection Year: Reseller channel and platform bundling should become more visible in financials in 2026; investors should monitor NRR, large deal flow, and margin progression as key signals.
Conclusion
Enable’s Q1 2025 results signal a company in transition, leveraging AI and channel expansion to capture a greater share of the SMB cybersecurity market. Execution on cross-sell and reseller ramp will be critical to sustaining the current growth trajectory and achieving long-term ARR targets.
Industry Read-Through
Enable’s focus on AI-driven security and channel diversification reflects broader trends in the cybersecurity industry, where automation and platformization are becoming table stakes for SMB and mid-market providers. The company’s early traction with integrated vulnerability management and automated SOC solutions highlights growing demand for unified, efficient security platforms as IT teams face resource constraints. Competitors serving the SMB and MSP channel will need to accelerate their own automation and go-to-market innovation to keep pace, while investors should expect continued margin and FX volatility across the sector as global expansion intensifies.