Governance & Risk Management , Managed Security Service Provider (MSSP)

Why Barracuda Networks Is Eyeing MSP Platform Vendor N-able

Barracuda is looking to extend its tentacles beyond security and into remote monitoring and management through the purchase of MSP platform provider N-able, Reuters reported.

See Also: Nudge Toolkit: Your Key to Enhanced Cybersecurity

The Silicon Valley-based SMB security provider is one of the suitors for Boston-area N-able, which was itself spun off from publicly traded IT management software firm SolarWinds in July 2021. Reuters reported Wednesday that N-able is exploring a sale process after attracting acquisition interest and that both private equity firms and technology vendors such as Barracuda are participating in the sale process.

The acquisition of N-able would be Barracuda's first deal since being purchased by KKR for a reported $4 billion in August 2022. That's in stark contrast to Barracuda's four and a half years under rival Thoma Bravo, during which time the company made three buys and promoted Hatem Naguib to CEO. Neither Barracuda nor N-able responded to Information Security Media Group requests for comment (see: Hatem Naguib on Charting Barracuda's New Course Under KKR).

N-able's stock is up $1.01 - or 8.1% - to $13.50 per share since Reuters published its report Wednesday, giving the company a valuation of $2.48 billion. That's still $2.02 - or nearly 15% - below the company's all-time trading high of $15.52 per share in September 2021. Silver Lake and Thoma Bravo are N-able's top backers; they own 33.3% and 27.1%, respectively, and BlackRock and the Canada Pension Plan also have stakes.

How Barracuda and N-able Stack Up

N-able's security capabilities largely mirror Barracuda's and include endpoint protection, managed detection and response, patch management, web protection and content filtering, and email protection and archiving. Like Barracuda, N-able also has a data protection practice focused on backup, recovery and disaster recovery.

N-able sets itself apart from Barracuda through tools that help managed service providers run their businesses better, including remote monitoring and management, professional services automation and ticketing, password and documentation management, and desktop management. Barracuda bought Avast's RMM platform in February 2019, but it still lacks a broad suite of business tools for MSPs, such as PSA.

On the other hand, Barracuda's security products are better regarded by technology analysts. Its network firewall is recognized as a visionary by Gartner, and its web application firewall and its enterprise email security products were recognized as strong performers by Forrester between summer 2022 and spring 2023. In contrast, N-able doesn't appear in any Gartner Magic Quadrants or Forrester Waves.

The company endured an extended hack of its email security appliances by Chinese threat actors UNC4841 for much of 2023, and adversaries deployed an additional backdoor in Barracuda's ESG line of products to go after U.S. and foreign government agencies as well as high-tech companies. The backdoor allowed hackers to re-compromise victims who restored backup from a compromised device (see: Chinese Hackers Anticipated Barracuda ESG Patch).

N-Able by the Numbers

N-able had 1,584 employees at the end of 2023 - one-fifth of which are based in the United States - and Barracuda has 2,165 employees, nearly half of whom work in the U.S., according to U.S. Securities and Exchange Commission filings and IT-Harvest. N-able had roughly 25,000 customers at the end of 2023 along with 2,196 MSP partners with annual recurring revenue of more than $50,000.

N-able enjoyed solid top-line growth in 2023, with sales increasing nearly 13.5% to $421.9 million. The company's net income climbed to $23.4 million, or $0.13 per share, up 40.1% from $16.7 million, or $0.09 per share, the year prior. The N-able business has been led since May 2016 by John Pagliuca, 47, who joined the company through its acquisition of LogicNow, where he served as chief financial officer.

In its most recent investor presentation, N-able identified Barracuda as one of the "point solutions" it wins against alongside Sophos, Veeam, Atera, Acronis and Ivanti. N-able said its technology breadth and depth, platform efficiency, customer success resources, and being built for the MSP allow the company to compete and win against the likes of Barracuda.

Will N-able go from competing against Barracuda to being part of Barracuda? MSPs and the sub 1,000-employee organizations they serve will watch closely to see how things shake out.