SolarWinds reported record total revenue for the first quarter of 2011 of
$43.0 million, a 25% increase over total revenue in the first quarter of 2010.
License revenue was $20.4 million in the first quarter of 2011, representing a
16% increase over license revenue in the first quarter of 2010. Maintenance
revenue was a record $22.6 million in the first quarter of 2011, representing a
35% increase over maintenance revenue in the first quarter of 2010.
On a GAAP basis, diluted earnings per share were $0.16 in the first quarter
of 2011 compared to $0.12 in the first quarter of 2010. Non-GAAP diluted
earnings per share were $0.21 in the first quarter of 2011 compared to $0.16 in
the first quarter of 2010.
Net cash provided by operating activities was $18.9 million in the first
quarter of 2011 compared to $15.9 million for the first quarter of 2010,
representing a year-over-year increase of 18%. Free cash flow was $21.8 million
in the first quarter of 2011 compared to $19.2 million for the first quarter of
2010, representing a year-over-year increase of 14%.
Cash and cash equivalents at the end of the first quarter of 2011 were $143.3
million, an increase of $1.3 million from the end of the fourth quarter of 2010
despite cash payments during the first quarter of $23.0 million for the
acquisition of Hyper9 and $4.0 million for the earnout payment associated with
the acquisition of Tek-Tools in 2010.
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 these non-GAAP financial
measures is provided below under "Non-GAAP Financial Measures."
Recent Business Highlights
"We believe that 2011 is off to a solid start -- the company generated
another quarter of record revenue and made good progress on one of our key
objectives for the year: extending our product portfolio beyond our traditional
network management focus," said Kevin Thompson, SolarWinds' President and CEO.
"During the first quarter, we acquired Hyper9, a provider of virtualization
management software and released a number of new products, including SolarWinds
Application Performance Monitor. We're very encouraged by the traction these
products have gained so far. Throughout the remainder of the year, we plan to
build on this positive momentum, expanding our product portfolio to serve a
wider audience of IT professionals across a growing global footprint."
SolarWinds' business highlights during the first quarter of 2011 include:
- In the first ten weeks following the acquisition, SolarWinds increased the number of Hyper9 customers by nearly 250%, showing the advantage of our high volume inside sales model. Hyper9 adds optimization, capacity planning, configuration, and chargeback reporting for virtualized server environments to SolarWinds' portfolio.
- SolarWinds released Application Performance Monitor (APM), a comprehensive application and systems management solution that provides visibility into the performance of critical IT services, the underlying application components, the operating system, and the Windows, Unix and Linux server resources on which they run.
- SolarWinds released Orion IP Address Manager (IPAM) as a standalone solution. Orion IPAM delivers powerful and affordable IP address management to companies of all sizes and IT budgets looking to more effectively manage IP address usage across their organization and prepare for an IPv6 migration.
- SolarWinds introduced SNMP Enabler for Windows, a free tool for system administrators to install, configure, and enable SNMP on remote Windows servers and workstations. SolarWinds also introduced Switch Port Mapper, an affordable tool for discovering the devices connected to each port on a switch or hub.
"Our results for the first quarter underscore the strength of our financial
model," added Mike Berry, SolarWinds' Chief Financial Officer. "We generated
higher than expected margins and cash flow and even grew our cash balance
despite the acquisition of Hyper9 during the quarter. As we look ahead, we are
encouraged by our continued ability to invest meaningfully for growth while
delivering robust profitability and cash flow."
Financial Outlook
As of May 4, 2011, SolarWinds is providing its financial outlook for its
second quarter and full year of 2011. The financial information below represents
forward-looking non-GAAP financial information, including an estimate of
non-GAAP operating income, and non-GAAP diluted earnings per share, for the
second quarter of 2011 and for the full year 2011. These non-GAAP financial
measures exclude, among other items mentioned below, stock-based compensation
expense and related employer-paid payroll taxes. SolarWinds cannot reasonably
estimate the expected stock-based compensation expense and related employer-paid
payroll taxes for these future periods as the amounts depend upon such factors
as the future price of SolarWinds' stock for purposes of computation. In
addition, costs related to non-recurring items and acquisitions are not
something that SolarWinds can estimate because they are a function of what
non-recurring items and acquisitions, if any, occur and the kind of costs
incurred in connection with any such non-recurring items or acquisitions.
Financial Outlook for the Second Quarter of 2011
SolarWinds management currently expects to achieve the following results for
the second quarter of 2011:
- Total revenue in the range of $43.2-$44.7 million.
- Non-GAAP operating income representing 47%-48% of revenue.
- Non-GAAP diluted earnings per share of $0.19-$0.20.
- Weighted average shares outstanding of approximately 75.0 million.
Financial Outlook for Full Year 2011
SolarWinds management currently expects to achieve the following results for
the full year 2011:
- Total revenue in the range of $185.5-$191.5 million.
- Non-GAAP operating income representing approximately 49% of revenue.
- Non-GAAP diluted earnings per share of $0.83-$0.89.
- Weighted average shares outstanding of approximately 76.0 million.