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SolarWinds Announces First Quarter 2019 Results
SolarWinds Corporation (SWI), a leading provider of powerful and affordable IT management software, today reported results for its first quarter ended March 31, 2019.

On a GAAP basis, reflecting our adoption of the new standard ASC 606 effective January 1, 2019:
  • Total revenue for the first quarter of $215.8 million, representing 9.6% growth on a reported basis.
  • Total recurring revenue for the first quarter of $177.9 million, representing 11.1% growth on a reported basis.
  • Net income for the first quarter of $3.1 million.
On a non-GAAP basis including presentation of results under ASC 605:
  • Non-GAAP total revenue for the first quarter of $216.0 million, representing 8.9% year-over-year growth and 11.2% year-over-year growth on a constant currency basis. Non-GAAP total revenue assuming foreign currency exchange rates used in previously issued outlook would have been $216.6 million.
  • Non-GAAP total recurring revenue for the first quarter of $178.2 million, representing 10.4% year-over-year growth and 12.9% year-over-year growth on a constant currency basis.
  • Adjusted EBITDA for the first quarter of $103.6 million, representing a margin of 48.0% on non-GAAP total revenue.
“We had a good start to 2019 with first quarter total revenue results that were led by subscription revenue growth and included solid maintenance revenue growth and license revenue that grew for the fifth consecutive quarter,” said Kevin Thompson, SolarWinds' President & Chief Executive Officer.  “In addition, we added over 6,000 new customers for the thirteenth quarter in a row while doing an excellent job of retaining our existing customers as reflected by a very strong 97% maintenance renewal rate and subscription net retention rate of 105% both measured on a trailing twelve months basis.”

“As we look ahead to the rest of the year, we're excited about the opportunities for accelerating growth across our business, including the opportunity we now have to disrupt the ITSM market with SolarWinds Service Desk, which we plan to launch in the second quarter assuming completion of the Samanage acquisition,” added Thompson. “We believe that a powerful, market-leading ITSM solution offers us another opportunity to create a unique position to serve IT professionals in organizations of all sizes while expanding our addressable market and creating additional cross sell opportunities.”

“Adjusted EBITDA for the first quarter of 2019 of $103.6 million (ASC 605) came in well ahead of our outlook, representing a stronger than expected margin of 48% on non-GAAP total revenue (ASC 605). The first quarter also represented another period of solid cash flow generation,” said Bart Kalsu, SolarWinds' Executive Vice President and Chief Financial Officer.

Balance Sheet

At March 31, 2019, total cash and cash equivalents were $434.5 million and total debt was $1.9 billion.

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 April 24, 2019, SolarWinds is providing its financial outlook for the second quarter of 2019 and full year 2019. The financial information below represents forward-looking non-GAAP financial information, including an estimate of non-GAAP revenue and revenue growth, adjusted EBITDA and non-GAAP diluted earnings per share, for the second quarter of 2019 and for the full year 2019. These non-GAAP financial measures exclude, among other items mentioned below, stock-based compensation expense, amortization and 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 2019

Including the expected contribution from the Samanage acquisition, SolarWinds’ management currently expects to achieve the following results for the second quarter of 2019 under ASC 606:
  • Non-GAAP total revenue in the range of $224.0 to $229.0 million, representing growth over the second quarter of 2018 non-GAAP total revenue of 10% to 13%, or 12% to 15% on a constant currency basis assuming the same average foreign currency exchange rates as those in the second quarter of 2018.
  • Adjusted EBITDA in the range of $107.0 to $109.0 million, representing approximately 48% of non-GAAP total revenue.
  • Non-GAAP diluted earnings per share of $0.18 to $0.19.
  • Weighted average outstanding diluted shares of approximately 311.5 million.
Financial Outlook for Full Year 2019

Including the expected contribution from the Samanage acquisition, SolarWinds’ management currently expects to achieve the following results for the full year 2019 under ASC 606:
  • Non-GAAP total revenue in the range of $934.0 to $949.0 million, representing growth over 2018 non-GAAP revenue of 12% to 13%, or 13% to 15% on a constant currency basis, assuming the same average foreign currency exchange rates as those in 2018. This includes approximately $11.5 to $12.5 million of revenue contribution from the Samanage acquisition.
  • Adjusted EBITDA in the range of $446.0 to $453.0 million, representing approximately 48% of non-GAAP total revenue.  This includes the dilutive impact of approximately $8.0 to $10.0 million loss associated with the Samanage acquisition.
  • Non-GAAP diluted earnings per share of $0.80 to $0.82.
  • Weighted average outstanding diluted shares of approximately 312.5 million.
Published Wednesday, April 24, 2019 4:05 PM by David Marshall
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