SolarWinds, a leading provider of powerful and affordable IT management software, today reported results for its first quarter ended March 31, 2014.

• Total revenue for the first quarter of $95.9 million, representing 32% year-over-year growth.
  
• Combined maintenance and subscription revenue for the first quarter of $59.6 million, representing 41% year-over-year growth in recurring revenue.
  
• License revenue for the first quarter of $36.4 million, representing 18% year-over-year growth.
  
• GAAP diluted earnings per share of $0.23 and non-GAAP diluted earnings per share of $0.41 for the first quarter.
  
• GAAP operating income of $21.8 million, or a GAAP operating margin of 23%, and non-GAAP operating income of $40.8 million, or a non-GAAP operating margin of 43% for the first quarter.
  

Financial Results

SolarWinds reported total revenue for the first quarter of 2014 of $95.9 million, a 31.5% increase over total revenue for the first quarter of 2013. Total recurring revenue, comprised of subscription revenue of $4.6 million and record maintenance revenue of $54.9 million, reached $59.6 million, increasing by 41.2% over the first quarter of 2013 and now represents over 62.1% of total revenue. License revenue was $36.4 million for the first quarter of 2014, representing an 18.3% increase over license revenue for the first quarter of 2013.

On a GAAP basis, diluted earnings per share were $0.23 for the first quarter of 2014 compared to $0.30 for the first quarter of 2013. Non-GAAP diluted earnings per share were $0.41 for the first quarter of 2014, in line with $0.41 for the first quarter of 2013.

Net cash provided by operating activities was $42.6 million for the first quarter of 2014 compared to $30.9 million for the first quarter of 2013, representing a year-over-year increase of 37.9%. Free cash flow was $39.4 million for the first quarter of 2014 compared to $34.8 million for the first quarter of 2013.

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

"I am pleased to report that we kicked off 2014 with a strong start, including improved levels of performance in important areas of our business, such as the EMEA and Asia-Pacific regions. The investments that we made to better attack our market opportunity around the globe translated into first quarter revenue and profitability that exceeded our outlook and puts us in a good position to deliver against this year's goals," said Kevin Thompson, SolarWinds' President and Chief Executive Officer.

"As we look to the rest of 2014, we believe that the management challenges created by the convergence of emerging technologies, like Cloud-based applications, and existing IT infrastructure investments offer SolarWinds an opportunity to continue to accelerate our revenue growth in 2014 and solidify our position as a leader in the IT management market. We anticipate that these technology shifts will impact both large and small IT organizations and that our product strength, depth of knowledge, and our experience serving the needs of a wide range of IT professionals provides us with the unique opportunity to help IT teams navigate this changing landscape and become the IT management provider of choice," added Thompson.

Recent SolarWinds business highlights include:

• During the first quarter, SolarWinds continued to build upon the functionality offered in its flagship network management and systems & application management products through new releases of SolarWinds Network Performance Monitor (NPM) and SolarWinds Server & Application Monitor (SAM). The highlight among a wealth of new features included in SolarWinds SAM v6.1 is AppInsight for Exchange. This new functionality allows Exchange Administrators and Systems Administrators to proactively prevent downtime of business-critical email application availability with comprehensive technology that has traditionally only been available in expensive, specialized tools. In keeping with the tradition of delivering advanced functionality at a market-differentiating price, SolarWinds NPM v10.7 added new baseline threshold calculating functionality, providing a deep level of visibility and advanced analytics not previously available to network administrators at NPM's price points.
  
  
• SolarWinds built upon the N-able suite of products for Managed Service Providers with the addition of N-able Help Desk Manager, an MSP-optimized product for ticketing management. Help Desk Manager is available as a stand-alone product and is also fully-integrated with N-central^®, the leading MSP service automation platform on the market.
  
  
• SolarWinds products continued the streak of user and industry recognition, collecting top honors in network management, security management, virtualization management, and Remote IT and Help Desk Management from leading IT publications including Network Computing Magazine, SC Magazine, Virtualization Review, Windows Networking, Virtualization Admin, IT Europa, and Ed Tech Digest.
  
  

"Looking back at our performance in the first quarter, we are excited to see that the increased pace of investment in our core business that began in the third quarter of 2013 has had a positive impact on our results," said Jason Ream, SolarWinds Executive Vice President and Chief Financial Offer. "We believe those investments, which span product development, marketing, sales, and support, have laid the ground work needed to more effectively attack the market opportunity that exists today across network, systems, and application management. At the same time, we continue to work towards our strategic roadmap that will enable SolarWinds to bridge the gap between the management of on-premise and Cloud-based IT infrastructure," added Ream.