SolarWinds Corporation (NYSE:SWI), a leading provider of simple,
powerful, secure observability and IT management software, today
reported results for its first quarter ended March 31, 2024.
First Quarter Financial Highlights
- Total revenue for the first quarter of $193.3 million,
representing 4% year-over-year growth, and total recurring revenue
representing 93% of total revenue.
- Net income for the first quarter of $15.6 million.
- Adjusted EBITDA for the first quarter of $92.1 million,
representing a margin of 48% of total revenue and 19%
year-over-year growth.
- Subscription Annual Recurring Revenue (ARR) of $251.3 million,
representing year-over-year growth of 36%, and Total ARR of $695.3
million, representing year-over-year growth of 7%.
Please see the tables below for a reconciliation of our GAAP to
non-GAAP results.
“We started the year strong, exceeding the high end of our
guidance for total revenue and adjusted EBITDA, and also delivering
our highest quarterly adjusted EBITDA margin in over three years,”
said Sudhakar Ramakrishna, SolarWinds President and Chief Executive
Officer. “I'm proud of our team's focus on helping customers
accelerate their business transformations with solutions built to
improve productivity while lowering complexity and costs. We look
forward to building on this momentum with our SolarWinds Platform
solution offerings.”
Recent Business Highlights
- In February, SolarWinds announced AI-powered enhancements to
its SaaS-delivered and self-hosted, on-premises observability
solutions, built to enable teams to manage on-premises,
cloud-native, or hybrid ecosystems with full-stack visibility
across networks, infrastructure, databases, applications, user
experiences, and security through a unified, integrated solution
available either on-premises or in the cloud, so organizations can
monitor and observe everything from anywhere.
- Also in February, SolarWinds kicked off its series of Transform
Partner Summits hosted in Lisbon, Portugal (February 19-23), Bali,
Indonesia (March 4-6), and Miami, Florida (April 8-10), emphasizing
the company’s commitment to its partners, and introducing its
latest initiatives, programs, and incentives designed to create
greater opportunities for shared growth between the company and its
valued global channel partners.
- On March 21, SolarWinds announced it submitted its Secure
Software Development self-attestation in alignment with
Cybersecurity and Infrastructure Security Agency (CISA) and Office
of Management and Budget (OMB) requirements. In submitting its form
to the Repository for Software Attestation and Artifacts (RSAA),
SolarWinds became the first software provider to publish CISA
self-attestation in alignment with U.S. government requirements of
all software providers.
- Also in March, SolarWinds announced a special cash dividend of
$1.00 per share, returning significant capital to stockholders
while continuing to grow the business.
Balance Sheet
At March 31, 2024, total cash and cash equivalents and
short-term investments were $312.8 million, and total debt was $1.2
billion. The special cash dividend of $168.2 million declared in
March and reflected as a current liability on our balance sheet as
of March 31, 2024 was paid on April 15, 2024.
The financial results included in this press release are
preliminary and pending final review by the company and its
external auditors. Financial results will not be final until
SolarWinds files its quarterly report on Form 10-Q for the period.
Information about SolarWinds’ use of non-GAAP financial measures is
provided below under “Non-GAAP Financial Measures.”
Financial Outlook
As of May 2, 2024, SolarWinds is providing its financial outlook
for the second quarter and its updated financial outlook for the
full year of 2024. The financial information below represents
forward-looking non-GAAP financial information, including an
estimate of adjusted EBITDA and non-GAAP diluted earnings per
share. These non-GAAP financial measures exclude, among other items
mentioned below, stock-based compensation expense and related
employer-paid payroll taxes, amortization, certain expenses related
to the cyberattack that occurred in December 2020 (the “Cyber
Incident”), restructuring costs, and other costs related to
non-recurring items. We have not reconciled our estimates of these
non-GAAP financial measures to their most directly comparable GAAP
measure as a result of uncertainty regarding, and the potential
variability of, these excluded items in future periods.
Accordingly, reconciliation is not available without unreasonable
effort, although it is important to note that these excluded items
could be material to our results computed in accordance with GAAP
in future periods. Our reported results provide reconciliations of
non-GAAP financial measures to their nearest GAAP equivalents.
Financial Outlook for Second Quarter of 2024
SolarWinds’ management currently expects to achieve the
following results for the second quarter of 2024:
- Total revenue in the range of $186 to $191 million,
representing growth of approximately 2% as compared to the second
quarter of 2023 total revenue at the midpoint of the range.
- Adjusted EBITDA of approximately $85 to $88 million,
representing growth of approximately 9% over the second quarter of
2023 adjusted EBITDA at the midpoint of the range.
- Non-GAAP diluted earnings per share of $0.21 to $0.23.
- Weighted average outstanding diluted shares of approximately
171.6 million.
Financial Outlook for Full Year of 2024
SolarWinds’ management currently expects to achieve the
following results for the full year of 2024:
- Total revenue in the range of $771 to $786 million,
representing growth of approximately 3% over the full year of 2023
total revenue at the midpoint of the range.
- Adjusted EBITDA of approximately $360 to $370 million,
representing growth of approximately 11% over the full year of 2023
adjusted EBITDA at the midpoint of the range.
- Non-GAAP diluted earnings per share of $1.00 to $1.04.
- Weighted average outstanding diluted shares of approximately
173.4 million.
The conference call will provide additional details on the
company's outlook.
Conference Call and Webcast
In conjunction with this announcement, SolarWinds will host a
conference call today to discuss its financial results, business
and business outlook at 7:30 a.m. CT (8:30 a.m. ET/5:30 a.m. PT). A
live webcast of the call and materials presented during the call
will be available on the SolarWinds Investor Relations website at
http://investors.solarwinds.com. A live dial-in will be available
domestically at +1 (888) 510-2008 and internationally at +1 (646)
960-0306. To access the live call, please dial in 5-10 minutes
before the scheduled start time and enter the conference passcode
2975715. A replay of the webcast will be available on a temporary
basis shortly after the event on the SolarWinds Investor Relations
website.
Forward-Looking Statements
This press release contains “forward-looking” statements, which
are subject to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, including statements regarding our
financial outlook for the second quarter and the full year 2024.
These forward-looking statements are based on management's beliefs
and assumptions and on information currently available to
management. Forward-looking statements include all statements that
are not historical facts and may be identified by terms such as
“aim,” “anticipate,” “believe,” “can,” “could,” “seek,” “should,”
“feel,” “expect,” “will,” “would,” “plan,” “project,” “intend,”
“estimate,” “continue,” “may,” or similar expressions and the
negatives of those terms. Forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause
actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Factors
that could cause or contribute to such differences include, but are
not limited to, the following: (a) risks related to the Cyber
Incident, including with respect to (1) litigation and
investigation risks related to the Cyber Incident, including as a
result of the pending civil complaint filed by the Securities and
Exchange Commission against us and our Chief Information Security
Officer, including that we may incur significant costs in defending
ourselves and may be unsuccessful in doing so, resulting in
exposure to potential penalties, judgements, fines,
settlement-related costs and other costs and liabilities related
thereto, (2) numerous financial, legal, reputational and other
risks to us related to the Cyber Incident, including risks that the
incident, SolarWinds’ response thereto or litigation related to the
Cyber Incident may result in the loss of business as a result of
termination or non-renewal of agreements, or reduced purchases or
upgrades of our products, reputational damage adversely affecting
customer, partner, and vendor relationships and investor
confidence, increased attrition of personnel and distraction of key
and other personnel, indemnity obligations, damages for contractual
breach, penalties for violation of applicable laws or regulations,
significant costs for remediation, and the incurrence of other
liabilities and risks related to the impact of any such costs and
liabilities, and (3) the possibility that our steps to secure our
internal environment, improve our product development environment,
and ensure the security and integrity of the software that we
deliver to our customers may not be successful or sufficient to
protect against future threat actors or attacks, or be perceived by
existing and prospective customers as sufficient to address the
harm caused by the Cyber Incident; (b) other risks related to
cybersecurity, including that we may experience other security
incidents or have vulnerabilities in our systems and services
exploited, whether through the actions or inactions of our
employees, our customers, insider threats or otherwise, which may
result in compromises or breaches of our and our customers’ systems
or, theft or misappropriation of our and our customers’
confidential, proprietary or personal information, as well as
exposure to legal and other liabilities, including the related risk
of higher customer, employee and partner attrition and the loss of
key personnel, as well as negative impacts to our sales, renewals
and upgrades; (c) risks related to the evolving breadth of our
sales motion and challenges, investments and additional costs
associated with increased selling efforts toward enterprise
customers and adopting a subscription first approach; (d) risks
relating to increased investments in, and the timing and success
of, our ongoing transformation from monitoring to observability;
(e) risks related to any shifts in our revenue mix and the timing
of how we recognize revenue as we transition to subscription; (f)
risks related to using artificial intelligence (“AI”) in our
business and our solutions, including risks related to evolving
regulation of AI, machine learning and the receipt, collection,
storage, processing and transfer of data as well as the threat of
cyberattacks created through AI or leveraging AI; (g) potential
foreign exchange gains and losses related to expenses and sales
denominated in currencies other than the functional currency of an
associated entity; (h) any of the following factors either
generally or as a result of the impacts of global macroeconomic
conditions, including the wars in Israel and Ukraine, geopolitical
tensions involving China, disruptions in the global supply chain
and energy markets, inflation, uncertainty over liquidity concerns
in the broader financial services industry, foreign currency
exchange rates and the effects of the global COVID pandemic or
other public health crises on the global economy or on our business
operations and financial condition or on the business operations
and financial conditions of our customers, their end-customers and
our prospective customers: (1) reductions in information technology
spending or delays in purchasing decisions by our customers, their
end-customers and our prospective customers, (2) the inability to
sell products to new customers or to sell additional products or
upgrades to our existing customers or to convert our maintenance
customers to subscription products, (3) any decline in our renewal
or net retention rates or any delay or loss of U.S. government
sales, (4) the inability to generate significant volumes of high
quality sales leads from our digital marketing initiatives and
convert such leads into new business at acceptable conversion
rates, (5) the timing and adoption of new products, product
upgrades or pricing model changes by us or our competitors, (6)
changes in interest rates, (7) risks associated with our
international operations and any international expansion efforts
and (8) ongoing sanctions and export controls; (i) the possibility
that our operating income could fluctuate and may decline as
percentage of revenue as we make further expenditures to expand our
infrastructure, product offerings and sales motion in order to
support additional growth in our business; (j) our ability to
compete effectively in the markets we serve and the risks of
increased competition as we enter new markets; (k) our ability to
attract, retain and motivate employees; (l) any violation of legal
and regulatory requirements or any misconduct by our employees or
partners; (m) risks associated with increased efforts and costs to
comply with ongoing changes in applicable laws and regulations; (n)
our inability to successfully identify, complete, and integrate
acquisitions and manage our growth effectively; (o) risks
associated with our status as a controlled company; and (p) such
other risks and uncertainties described more fully in documents
filed with or furnished to the Securities and Exchange Commission,
including the risk factors discussed in our Annual Report on Form
10-K for the year ended December 31, 2023 filed on February 16,
2024, and our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2024 that SolarWinds anticipates filing on or before May
10, 2024. All information provided in this release is as of the
date hereof, and SolarWinds undertakes no duty to update this
information except as required by law.
Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with
GAAP, we use certain non-GAAP financial measures to clarify and
enhance our understanding, and aid in the period-to-period
comparison, of our performance. We believe that these non-GAAP
financial measures provide supplemental information that is
meaningful when assessing our operating performance because they
exclude the impact of certain amounts that our management and board
of directors do not consider part of core operating results when
assessing our operational performance, allocating resources,
preparing annual budgets and determining compensation. Accordingly,
these non-GAAP financial measures may provide insight to investors
into the motivation and decision-making of management in operating
the business.
SolarWinds also believes that investors and securities analysts
use these non-GAAP financial measures to (a) compare and evaluate
its performance from period to period and (b) compare its
performance to those of its competitors. These non-GAAP measures
exclude certain items that can vary substantially from company to
company depending upon their financing and accounting methods, the
book value of their assets, their capital structures, and the
method by which their assets were acquired.
There are limitations associated with the use of these non-GAAP
financial measures. These non-GAAP financial measures are not
prepared in accordance with GAAP, do not reflect a comprehensive
system of accounting and may not be completely comparable to
similarly titled measures of other companies due to potential
differences in the exact calculation method between companies.
Certain items that are excluded from these non-GAAP financial
measures can have a material impact on operating and net income
(loss).
As a result, these non-GAAP financial measures have limitations
and should not be considered in isolation from, or as a substitute
for, the most comparable GAAP measures. SolarWinds' management and
board of directors compensate for these limitations by using these
non-GAAP financial measures as supplements to GAAP financial
measures and by reviewing the reconciliations of the non-GAAP
financial measures to their most comparable GAAP financial measure.
Set forth in the tables below are the corresponding GAAP financial
measures for each non-GAAP financial measure presented. Investors
are encouraged to review the reconciliations of these non-GAAP
financial measures to their most comparable GAAP financial measures
that are set forth in the tables below.
Non-GAAP Revenue on a Constant Currency Basis. We provide
non-GAAP revenue on a constant currency basis to provide a
framework for assessing our performance, excluding the effect of
foreign currency rate fluctuations. To present this information,
current period results for entities reporting in currencies other
than U.S. Dollars are converted into U.S. Dollars at the average
exchange rates in effect during the corresponding prior period
presented. We believe that providing non-GAAP revenue on a constant
currency basis facilitates the comparison of revenue to prior
periods.
Non-GAAP Cost of Revenue and Non-GAAP Operating Income.
We provide non-GAAP cost of revenue and non-GAAP operating income
and related non-GAAP margins excluding such items as amortization
of acquired intangible assets, stock-based compensation expense and
related employer-paid payroll taxes, acquisition and other costs,
restructuring costs, and Cyber Incident costs. Management believes
these measures are useful for the following reasons:
- Amortization of Acquired Intangible Assets. We provide non-GAAP
information that excludes expenses related to purchased intangible
assets associated with our acquisitions including our acquired
technologies. We believe that eliminating this expense from our
non-GAAP measures is useful to investors because the amortization
of acquired intangible assets can be inconsistent in amount and
frequency and is significantly impacted by the timing and magnitude
of our acquisition transactions, which also vary in frequency from
period to period. Accordingly, we analyze the performance of our
operations in each period without regard to such expenses.
- Stock-Based Compensation Expense and Related Employer-Paid
Payroll Taxes. We provide non-GAAP information that excludes
expenses related to stock-based compensation and related
employer-paid payroll taxes. We believe that the exclusion of
stock-based compensation expense provides for a better comparison
of our operating results to prior periods and to our peer companies
as the calculations of stock-based compensation vary from period to
period and company to company due to different valuation
methodologies, subjective assumptions, and the variety of award
types. Employer-paid payroll taxes on stock-based compensation is
dependent on our stock price and the timing of the taxable events
related to the equity awards, over which our management has little
control and does not correlate to the core operation of our
business. Because of these unique characteristics of stock-based
compensation and related employer-paid payroll taxes, management
excludes these expenses when analyzing the organization’s business
performance.
- Acquisition and Other Costs. We exclude certain expense items
resulting from acquisitions, such as legal, accounting and advisory
fees, changes in fair value of contingent consideration, costs
related to integrating the acquired businesses, deferred
compensation, severance and retention expense. In addition, we
exclude certain other non-recurring costs, including internal
investigation costs. We consider these adjustments, to some extent,
to be unpredictable and dependent on a significant number of
factors that are outside of our control. Furthermore, acquisitions
result in operating expenses we would not have otherwise incurred
in the normal course of our organic business operations. We believe
that providing these non-GAAP measures that exclude acquisition and
other costs allows users of our financial statements to better
review and understand the historical and current results of our
operations, and also facilitates comparisons to our historical
results and results of less acquisitive peer companies, both with
and without such adjustments.
- Restructuring Costs. We provide non-GAAP information that
excludes restructuring costs such as severance paid in connection
with corporate restructuring activities, as well as costs related
to the separation of employment with executives of the Company. In
addition, we exclude lease impairments and other costs incurred in
connection with the exiting of certain leased facilities and other
contracts as they relate to our corporate restructuring and exit
activities. These costs are infrequent, inconsistent in amount and
are significantly impacted by the timing and nature of these
events. Therefore, although we may incur these types of expenses in
the future, we believe that eliminating these costs for purposes of
calculating the non-GAAP financial measures facilitates a more
meaningful evaluation of our operating performance and comparisons
to our past operating performance.
- Cyber Incident Costs. We exclude certain expenses resulting
from the Cyber Incident. Expenses include costs to investigate and
remediate the Cyber Incident, costs of lawsuits and investigations
related thereto, including settlement costs and legal and other
professional services, and estimated loss contingencies. Cyber
Incident costs are provided net of insurance reimbursements,
although the timing of recognizing insurance reimbursements has
differed from the timing of recognizing the associated expenses. We
expect to incur significant legal and other professional services
expenses associated with the Cyber Incident in future periods. The
Cyber Incident results in operating expenses that we would not have
otherwise incurred by us in the normal course of our organic
business operations. We believe that providing non-GAAP measures
that exclude these costs facilitates a more meaningful evaluation
of our operating performance and comparisons to our past operating
performance. We expect to continue to invest significantly in
cybersecurity, and such additional investments are not included in
the net Cyber Incident costs reported.
Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) Per
Diluted Share. We believe that the use of non-GAAP net income
(loss) and non-GAAP net income (loss) per diluted share is helpful
to our investors to clarify and enhance their understanding of past
performance and future prospects. Non-GAAP net income (loss) is
calculated as net income (loss) excluding the adjustments to
non-GAAP cost of revenue and non-GAAP operating income, certain
other non-operating gains and losses and the income tax effect of
the non-GAAP exclusions. We define non-GAAP net income (loss) per
diluted share as non-GAAP net income (loss) divided by the weighted
average outstanding diluted common shares.
Adjusted EBITDA and Adjusted EBITDA Margin. We regularly
monitor adjusted EBITDA and adjusted EBITDA margin, as it is a
measure we use to assess our operating performance. We define
adjusted EBITDA as net income (loss), excluding amortization of
acquired intangible assets and developed technology, depreciation
expense, stock-based compensation expense and related employer-paid
payroll taxes, restructuring costs, acquisition and other costs,
Cyber Incident costs, net, interest expense, net, debt-related
costs including fees related to our credit agreements, debt
extinguishment and refinancing costs, unrealized foreign currency
(gains) losses, and income tax expense (benefit). We define
adjusted EBITDA margin as adjusted EBITDA divided by total revenue.
Adjusted EBITDA has limitations as an analytical tool, and you
should not consider it in isolation or as a substitute for analysis
of our results as reported under GAAP. Some of these limitations
are: although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized may have to be replaced
in the future, and adjusted EBITDA does not reflect cash capital
expenditure requirements for such replacements or for new capital
expenditure requirements. Additionally, adjusted EBITDA: excludes
the impact of restructuring impairment charges related to exited
leased facilities which may continue to require future cash rent
payments; does not reflect changes in, or cash requirements for,
our working capital needs; does not reflect the significant
interest expense, or the cash requirements necessary to service
interest or principal payments, on our debt; and does not reflect
tax payments that may represent a reduction in cash available to
us. Other companies, including companies in our industry, may
calculate adjusted EBITDA differently, which reduces its usefulness
as a comparative measure.
Unlevered Free Cash Flow. Unlevered free cash flow is a
measure of our liquidity used by management to evaluate cash flow
from operations after the deduction of capital expenditures and
prior to the impact of our capital structure, acquisition and other
costs, restructuring costs, Cyber Incident costs, net,
employer-paid payroll taxes on stock awards and other one-time
items, that can be used by us for strategic opportunities and
strengthening our balance sheet. However, given our debt
obligations, unlevered free cash flow does not represent residual
cash flow available for discretionary expenses.
Other Defined Terms
Subscription Annual Recurring Revenue (Subscription ARR).
Subscription ARR represents the annualized recurring value of all
active subscription contracts at the end of a reporting period.
Total Annual Recurring Revenue (Total ARR). Total ARR
represents the sum of Subscription ARR and the annualized value of
all maintenance contracts related to perpetual licenses active at
the end of a reporting period assuming those contracts are renewed
at their existing terms.
We use Subscription ARR and Total ARR to better understand and
assess the performance of our business, as our mix of revenue
generated from recurring revenue has increased in recent years.
Subscription ARR and Total ARR each provides a normalized view of
customer retention, renewal and expansion, as well as growth from
new customers. Subscription ARR and Total ARR should each be viewed
independently of revenue and deferred revenue and are not intended
to be combined with or to replace either of those items.
#SWIfinancials
About SolarWinds
SolarWinds (NYSE:SWI) is a leading provider of simple, powerful,
secure observability and IT management software built to enable
customers to accelerate their digital transformation. Our solutions
provide organizations worldwide—regardless of type, size, or
complexity—with a comprehensive and unified view of today’s modern,
distributed, and hybrid network environments. We continuously
engage IT service and operations professionals, DevOps and SecOps
professionals, and Database Administrators (DBAs) to understand the
challenges they face in maintaining high-performing and highly
available IT infrastructures, applications, and environments. The
insights we gain from them, in places like our THWACK® community,
allow us to address customers’ needs now, and in the future. Our
focus on the user and our commitment to excellence in end-to-end
hybrid IT management have established SolarWinds as a worldwide
leader in solutions for observability, IT service management,
application performance, and database management. Learn more today
at www.solarwinds.com.
The SolarWinds, SolarWinds & Design, Orion, and THWACK
trademarks are the exclusive property of SolarWinds Worldwide, LLC
or its affiliates, are registered with the U.S. Patent and
Trademark Office, and may be registered or pending registration in
other countries. All other SolarWinds trademarks, service marks,
and logos may be common law marks or are registered or pending
registration. All other trademarks mentioned herein are used for
identification purposes only and are trademarks of (and may be
registered trademarks of) their respective companies.
© 2024 SolarWinds Worldwide, LLC. All rights reserved.
SolarWinds Corporation
Condensed Consolidated Balance
Sheets
(In thousands, except share
and per share information)
(Unaudited)
March 31,
December 31,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
304,431
$
284,695
Short-term investments
8,382
4,477
Accounts receivable, net of allowances of
$776 and $743 as of March 31, 2024 and December 31, 2023,
respectively
102,752
103,455
Income tax receivable
603
459
Prepaid and other current assets
26,451
28,241
Total current assets
442,619
421,327
Property and equipment, net
18,641
19,669
Operating lease assets
39,848
43,776
Deferred taxes
133,288
133,224
Goodwill
2,384,077
2,397,545
Intangible assets, net
168,624
183,688
Other assets, net
51,567
51,686
Total assets
$
3,238,664
$
3,250,915
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
9,541
$
9,701
Accrued liabilities and other
40,516
56,643
Current operating lease liabilities
14,762
14,925
Accrued interest payable
1,182
942
Dividends payable
168,162
—
Income taxes payable
38,038
29,240
Current portion of deferred revenue
344,292
344,907
Current debt obligation
9,267
12,450
Total current liabilities
625,760
468,808
Long-term liabilities:
Deferred revenue, net of current
portion
41,920
42,070
Non-current deferred taxes
1,904
1,933
Non-current operating lease
liabilities
46,366
49,848
Other long-term liabilities
41,795
55,278
Long-term debt, net of current portion
1,195,800
1,190,934
Total liabilities
1,953,545
1,808,871
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value:
1,000,000,000 shares authorized and 168,161,987 and 166,637,506
shares issued and outstanding as of March 31, 2024 and December 31,
2023 respectively
168
167
Preferred stock, $0.001 par value:
50,000,000 shares authorized and no shares issued and outstanding
as of March 31, 2024 and December 31, 2023, respectively
—
—
Additional paid-in capital
2,532,169
2,688,854
Accumulated other comprehensive loss
(43,903
)
(28,103
)
Accumulated deficit
(1,203,315
)
(1,218,874
)
Total stockholders’ equity
1,285,119
1,442,044
Total liabilities and stockholders’
equity
$
3,238,664
$
3,250,915
SolarWinds Corporation
Condensed Consolidated
Statements of Operations
(In thousands, except per
share information)
(Unaudited)
Three Months Ended March
31,
2024
2023
Revenue:
Subscription
$
68,757
$
54,357
Maintenance
111,720
114,478
Total recurring revenue
180,477
168,835
License
12,834
17,141
Total revenue
193,311
185,976
Cost of revenue:
Cost of recurring revenue
18,172
18,394
Amortization of acquired technologies
2,664
3,436
Total cost of revenue
20,836
21,830
Gross profit
172,475
164,146
Operating expenses:
Sales and marketing
54,921
65,916
Research and development
27,828
23,791
General and administrative
31,308
25,601
Amortization of acquired intangibles
11,519
13,005
Total operating expenses
125,576
128,313
Operating income
46,899
35,833
Other income (expense):
Interest expense, net
(26,830
)
(28,581
)
Other income (expense), net
51
(89
)
Total other expense
(26,779
)
(28,670
)
Income before income taxes
20,120
7,163
Income tax expense
4,561
12,784
Net income (loss)
$
15,559
$
(5,621
)
Net income (loss) available to common
stockholders
$
15,559
$
(5,621
)
Net income (loss) available to common
stockholders per share:
Basic income (loss) per share
$
0.09
$
(0.03
)
Diluted income (loss) per share
$
0.09
$
(0.03
)
Weighted-average shares used to compute
net income (loss) available to common stockholders per share:
Shares used in computation of basic income
(loss) per share
167,419
162,773
Shares used in computation of diluted
income (loss) per share
171,169
162,773
SolarWinds Corporation
Condensed Consolidated
Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended March
31,
2024
2023
Cash flows from operating activities
Net income (loss)
$
15,559
$
(5,621
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
19,277
22,018
Provision for losses on accounts
receivable
62
594
Stock-based compensation expense
17,881
16,234
Amortization of debt issuance costs
2,657
2,666
Deferred taxes
(3,043
)
1,906
(Gain) loss on foreign currency exchange
rates
(230
)
184
Lease impairment charges
1,381
5,754
Other non-cash expenses (benefit)
(36
)
166
Changes in operating assets and
liabilities:
Accounts receivable
(327
)
(7,930
)
Income taxes receivable
(155
)
(312
)
Prepaid and other assets
2,315
(6,339
)
Accounts payable
(139
)
(5,205
)
Accrued liabilities and other
(16,823
)
(33,587
)
Accrued interest payable
240
(273
)
Income taxes payable
(4,690
)
3,485
Deferred revenue
2,345
7,059
Net cash provided by operating
activities
36,274
799
Cash flows from investing activities
Purchases of investments
(8,311
)
—
Maturities of investments
4,500
15,035
Purchases of property and equipment
(1,411
)
(342
)
Capitalized software development costs
(3,310
)
(3,087
)
Purchases of intangible assets
(54
)
(51
)
Other investing activities
—
564
Net cash provided by (used in) investing
activities
(8,586
)
12,119
Cash flows from financing activities
Proceeds from issuance of common stock
under employee stock purchase plan
1,594
1,711
Repurchase of common stock
(8,289
)
(6,991
)
Exercise of stock options
8
8
Payment of debt issuance costs
(1,036
)
—
Net cash used in financing activities
(7,723
)
(5,272
)
Effect of exchange rate changes on cash
and cash equivalents
(229
)
(204
)
Net increase in cash and cash
equivalents
19,736
7,442
Cash and cash equivalents
Beginning of period
284,695
121,738
End of period
$
304,431
$
129,180
Supplemental disclosure of cash flow
information
Cash paid for interest
$
27,083
$
26,740
Cash paid for income taxes
$
11,144
$
6,566
Non-cash investing and financing
transactions
Stock-based compensation included in
capitalized software development costs
$
284
$
322
Dividends declared but not paid
$
168,162
$
—
SolarWinds Corporation
Reconciliation of GAAP to
Non-GAAP Financial Measures
(Unaudited)
Three Months Ended March
31,
2024
2023
(in thousands, except margin
data)
GAAP cost of revenue
$
20,836
$
21,830
Stock-based compensation expense and
related employer-paid payroll taxes
(590
)
(519
)
Amortization of acquired technologies
(2,664
)
(3,436
)
Restructuring costs
(39
)
(377
)
Non-GAAP cost of revenue
$
17,543
$
17,498
GAAP gross profit
$
172,475
$
164,146
Stock-based compensation expense and
related employer-paid payroll taxes
590
519
Amortization of acquired technologies
2,664
3,436
Restructuring costs
39
377
Non-GAAP gross profit
$
175,768
$
168,478
GAAP gross margin
89.2
%
88.3
%
Non-GAAP gross margin
90.9
%
90.6
%
GAAP sales and marketing expense
$
54,921
$
65,916
Stock-based compensation expense and
related employer-paid payroll taxes
(5,202
)
(5,536
)
Restructuring costs
(908
)
(2,574
)
Non-GAAP sales and marketing expense
$
48,811
$
57,806
GAAP research and development expense
$
27,828
$
23,791
Stock-based compensation expense and
related employer-paid payroll taxes
(3,491
)
(3,012
)
Restructuring costs
(629
)
(240
)
Non-GAAP research and development
expense
$
23,708
$
20,539
GAAP general and administrative
expense
$
31,308
$
25,601
Stock-based compensation expense and
related employer-paid payroll taxes
(9,440
)
(8,090
)
Acquisition and other costs
(507
)
(55
)
Restructuring costs
(1,798
)
(7,768
)
Cyber Incident costs, net
(3,005
)
7,770
Non-GAAP general and administrative
expense
$
16,558
$
17,458
GAAP operating expenses
$
125,576
$
128,313
Stock-based compensation expense and
related employer-paid payroll taxes
(18,133
)
(16,638
)
Amortization of acquired intangibles
(11,519
)
(13,005
)
Acquisition and other costs
(507
)
(55
)
Restructuring costs
(3,335
)
(10,582
)
Cyber Incident costs, net
(3,005
)
7,770
Non-GAAP operating expenses
$
89,077
$
95,803
GAAP operating income
$
46,899
$
35,833
Stock-based compensation expense and
related employer-paid payroll taxes
18,723
17,157
Amortization of acquired technologies
2,664
3,436
Amortization of acquired intangibles
11,519
13,005
Acquisition and other costs
507
55
Restructuring costs
3,374
10,959
Cyber Incident costs, net
3,005
(7,770
)
Non-GAAP operating income
$
86,691
$
72,675
GAAP operating margin
24.3
%
19.3
%
Non-GAAP operating margin
44.8
%
39.1
%
GAAP net income (loss)
$
15,559
$
(5,621
)
Stock-based compensation expense and
related employer-paid payroll taxes
18,723
17,157
Amortization of acquired technologies
2,664
3,436
Amortization of acquired intangibles
11,519
13,005
Acquisition and other costs
507
55
Restructuring costs
3,374
10,959
Cyber Incident costs, net
3,005
(7,770
)
Loss on extinguishment of debt
65
—
Tax benefit (expense) associated with
above adjustments
(5,583
)
1,662
Non-GAAP net income
$
49,833
$
32,883
GAAP diluted earnings (loss) per share
$
0.09
$
(0.03
)
Non-GAAP diluted earnings per share
$
0.29
$
0.20
Reconciliation of GAAP Net
Income (Loss) to Adjusted EBITDA
(Unaudited)
Three Months Ended March
31,
2024
2023
(in thousands, except margin
data)
Net income (loss)
$
15,559
$
(5,621
)
Amortization and depreciation
19,040
20,931
Income tax expense
4,561
12,784
Interest expense, net
26,830
28,581
Unrealized foreign currency (gains)
losses
(230
)
184
Acquisition and other costs
507
55
Debt-related costs
701
105
Stock-based compensation expense and
related employer-paid payroll taxes
18,723
17,157
Restructuring costs(1)
3,374
10,959
Cyber Incident costs, net
3,005
(7,770
)
Adjusted EBITDA
$
92,070
$
77,365
Adjusted EBITDA margin
47.6
%
41.6
%
__________
(1)
Restructuring costs for the three months
ended March 31, 2024 and 2023 include $1.6 million and $6.8
million, respectively, of non-cash lease impairment and other
charges incurred in connection with the exiting of certain leased
facilities.
Reconciliation of Revenue to
Non-GAAP Revenue
on a Constant Currency
Basis
(Unaudited)
Three Months Ended March
31,
2024
2023
Growth Rate
(in thousands, except
percentages)
Total revenue
$
193,311
$
185,976
3.9
%
Estimated foreign currency impact(1)
(407
)
—
(0.2
)
Non-GAAP total revenue on a constant
currency basis
$
192,904
$
185,976
3.7
%
__________
(1)
The estimated foreign currency impact is
calculated using the average foreign currency exchange rates in the
comparable prior year monthly periods and applying those rates to
foreign-denominated revenue in the corresponding monthly periods in
the three months ended March 31, 2024.
Reconciliation of Unlevered
Free Cash Flow
(Unaudited)
Three Months Ended March
31,
2024
2023
(in thousands)
Net cash provided by operating
activities
$
36,274
$
799
Capital expenditures(1)
(4,775
)
(3,480
)
Free cash flow
31,499
(2,681
)
Cash paid for interest and other debt
related items
24,568
26,129
Cash paid for acquisition and other costs,
restructuring costs, Cyber Incident costs(2), net, employer-paid
payroll taxes on stock awards and other one-time items
7,517
24,463
Unlevered free cash flow (excluding
forfeited tax shield)
63,584
47,911
Forfeited tax shield related to interest
payments(3)
(7,042
)
(6,952
)
Unlevered free cash flow
$
56,542
$
40,959
__________
(1)
Includes purchases of property and
equipment, capitalized software development costs and purchases of
intangible assets.
(2)
Includes the $26 million consolidated
putative class action lawsuit settlement payment made during the
three months ended March 31, 2023.
(3)
Forfeited tax shield related to interest
payments assumes a statutory rate of 26.0% for both the three
months ended March 31, 2024 and 2023.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240502069092/en/
Media: Jenne Barbour Phone: 512.498.6804 Media:
pr@solarwinds.com
Investors: Tim Karaca Phone: 512.498.6739 Investors:
ir@solarwinds.com
Grafico Azioni SolarWinds (NYSE:SWI)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni SolarWinds (NYSE:SWI)
Storico
Da Gen 2024 a Gen 2025