SolarWinds Corporation, a leading provider of simple, powerful, secure observability and IT management software, reported results for its first quarter ended March 31, 2023.

First Quarter Financial Highlights

• Total revenue for the first quarter of $186.0 million, representing 5% year-over-year growth, and total recurring revenue representing 91% of total revenue.

• Net loss for the first quarter of $5.6 million.

• Adjusted EBITDA for the first quarter of $77.4 million, representing a margin of 42% of total revenue and 12% year-over-year growth.

Please see the tables below for a reconciliation of our GAAP to non-GAAP results.

"We had a strong start to the year building off the foundations we established in 2022 and delivered total revenue and adjusted EBITDA results above the high end of our guidance, driven by strong subscription revenue growth," said Sudhakar Ramakrishna, President and Chief Executive Officer, SolarWinds. "We believe our broad portfolio of solutions, compelling value proposition, the trust our customers place in us, the resiliency of our business model, and our committed teams position us for revenue growth while increasing profitability."

Recent Business Highlights

• SolarWinds hosted partner summits in all three major geographies in Q1, in addition to a virtual partner summit for the public sector, emphasizing the company's growing focus on channel partners through its Transform Partner Program.

• SolarWinds announced the opening of a new data center in Germany, which will allow more Amazon Web Services® (AWS) customers to manage their hybrid and multi-cloud IT environments with expanded access to SolarWinds Observability SaaS solution.

• SolarWinds announced the launch of its first ITSM data center in Australia for Service Desk customers, enhancing its SaaS-delivered offering and expanding customer availability to Australian customers and businesses throughout the Asia-Pacific and Japan region.

• Forrester Research named SolarWinds among notable AIOps vendors in its "Process-Centric AIOps Landscape, Q1 2023" report.

Balance Sheet

At March 31, 2023, total cash and cash equivalents and short-term investments were $140.7 million, and total debt was $1.2 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 27, 2023, SolarWinds is providing its financial outlook for the second quarter and its updated financial outlook for the full year of 2023. 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 2023

SolarWinds' management currently expects to achieve the following results for the second quarter of 2023:

• Total revenue in the range of $177 to $182 million, representing growth at the midpoint of approximately 2% as compared to the second quarter of 2022 total revenue.

• Adjusted EBITDA of approximately $69.5 million to $72.5 million, representing growth at the midpoint of approximately 6% over the second quarter of 2022 adjusted EBITDA.

• Non-GAAP diluted earnings per share of $0.15 to $0.17.

• Weighted average outstanding diluted shares of approximately 164.4 million.

Financial Outlook for Full Year of 2023

SolarWinds' management currently expects to achieve the following results for the full year of 2023:

• Total revenue in the range of $725 to $740 million, representing growth at the midpoint of approximately 2% over the full year of 2022 total revenue.

• Adjusted EBITDA of approximately $295 to $305 million, representing growth at the midpoint of approximately 7% over the full year of 2022 adjusted EBITDA.

• Non-GAAP diluted earnings per share of $0.71 to $0.76.

• Weighted average outstanding diluted shares of approximately 166.3 million.