N-able Inc., a supplier of software for managed service providers, is acquiring partner Adlumin Inc. to expand its cybersecurity portfolio.

The companies announced the deal today. N-able is financing the transaction with $220 million in cash and 15.7 million shares, which are worth about $16 million at its current stock price. Adlumin investors will receive up to $30 million more by the end of 2026 if certain performance milestones are met.

N-able is a former SolarWinds Corp. unit that spun out in 2021 through an initial public offering. It sells software to managed service providers, or MSPs, companies that specialize in maintaining other organizations’ information technology infrastructure. MSPs can use N-able’s technology to monitor a client organization’s devices for technical issues, back up the data they contain, carry out patching and perform related tasks.

Cybersecurity is another focus for the company. It provides tools that MSPs can use to secure employee inboxes and manage login credentials. Additionally, N-able resells cybersecurity software from Adlumin, the company that it’s acquiring.

Washington, D.C.-based Adlumin develops an XDR, or extended detection and response, platform of the same name. The software uses artificial intelligence to map out user activity patterns in a company’s network. Adlumin then flags events that diverge from those usual patterns and could be malicious in nature.

A vulnerability detection tool included in the platform spots systems with security flaws. According to Adlumin, its software ranks detected vulnerabilities based on factors such as the likelihood that they will cause a breach. Meanwhile, a regulatory compliance feature automatically checks how well a company complies with cybersecurity and privacy laws such as HIPAA.

Adlumin offers the platform alongside a managed detection and response service. Using the data that its software collects about cybersecurity incidents, it can help customers map out the scope of a breach and remediate it. It also provides alerts when an organization’s internal data is posted to a dark web forum. 

The company says that its offerings are used by more than 3,500 customers. It received $83 million in funding prior to the acquisition, most of which was raised through a $70 million Series B round that closed last year.

“Our customers have been telling us for some time that cloud-native XDR and MDR solutions are mission-critical to their ability to fully secure their customers and users — which solidified our decision to partner with, and now, acquire Adlumin,” said N-able Chief Executive Officer John Pagliuca.

N-able disclosed today that its partnership with Adlumin has already “driven meaningful ARR growth.” The company hopes to accelerate that revenue growth after the acquisition closes. Additionally, N-able plans to more closely integrate Adlumin’s technology with its product portfolio.

The company updated its financial guidance against the backdrop of the acquisition announcement. Compared with its previous guidance, N-able is now expecting slightly lower adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization. The software maker also upgraded its revenue growth forecast by 3%, to between $111.5 million and $113 million. 

Image: N-able