SolarWinds Corporation, a leading provider of simple, powerful, secure observability and IT management software, today reported results for its third quarter ended September 30, 2023.
Third Quarter Financial Highlights
- Total revenue for the third quarter of $189.6 million, representing 6% year-over-year growth, and total recurring revenue representing 92% of total revenue.
- Net loss for the third quarter of $3.2 million.
- Adjusted EBITDA for the third quarter of $85.1 million, representing a margin of 45% of total revenue and 21% year-over-year growth.
Please see the tables below for a reconciliation of our GAAP to non-GAAP results.
“We again delivered total revenue and adjusted EBITDA that exceeded the high end of our guidance range, highlighted by 6% year-over-year revenue growth and 21% year-over-year adjusted EBITDA growth,” said Sudhakar Ramakrishna, President and Chief Executive Officer, SolarWinds. “Our subscription-first strategy continues to yield strong results while our product teams continue to deliver multi-cloud solutions on the SolarWinds Platform designed to improve customer productivity and reduce their costs. I’m pleased with the team’s progress and strong execution across our business.”
Recent Business Highlights
- SolarWinds announced on July 18 its Next-Generation Build System meets or exceeds NIST Secure Software Development Framework guidance for secure software development as directed by Executive Order 14028.
- In August, SolarWinds unveiled enhancements to its Transform Partner Program, announcing new tier qualifications and improved benefits to accelerate growth and drive revenue for channel partners.
- Ahead of its eighth-annual IT Pro Day celebration on September 19, SolarWinds released its annual survey report, IT Trends Report 2023: Lessons From Observability Leaders, finding that enterprises leveraging observability increase operational efficiency, grow revenue, advance automation, and empower innovation, yet broad adoption remains in early stages.
- In September, the company continued its ongoing business evolution as it launched SolarWinds Enterprise Service Management and upgraded SQL Sentry to accelerate customers’ digital transformations and innovation.
- The company received several industry awards and recognitions in the third quarter, including The Cloud Security Awards 2023 Best Security Infrastructure in Enterprise Cloud Security award for the Next-Generation Build System, The Stevie Awards 2023 International Business Awards Gold Stevie® award for best Service Management Solution, 2023 SaaS Awards Best SaaS Product for IT Management for SolarWinds Observability, 2023 Globee® Awards for Information Technology Most Innovative Company of the Year – Cloud/SaaS for SolarWinds Observability, and was named a finalist in CRN’s 2023 Tech Innovators in the Application Development & DevOps category.
Balance Sheet
At September 30, 2023, total cash and cash equivalents and short-term investments were $235.2 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 November 2, 2023, SolarWinds is providing its financial outlook for the fourth 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 Fourth Quarter of 2023
SolarWinds’ management currently expects to achieve the following results for the fourth quarter of 2023:
- Total revenue in the range of $188.5 to $192.5 million, representing growth of approximately 2% as compared to the fourth quarter of 2022 total revenue at the midpoint of the range.
- Adjusted EBITDA of approximately $80.5 to $82.5 million, representing growth of approximately 9% over the fourth quarter of 2022 adjusted EBITDA at the midpoint of the range.
- Non-GAAP diluted earnings per share of $0.20 to $0.22.
- Weighted average outstanding diluted shares of approximately 167.4 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 $749 to $753 million, representing growth of approximately 4% over the full year of 2022 total revenue at the midpoint of the range.
- Adjusted EBITDA of approximately $322 to $324 million, representing growth of approximately 15% over the full year of 2022 adjusted EBITDA at the midpoint of the range.
- Non-GAAP diluted earnings per share of $0.83 to $0.85.
- Weighted average outstanding diluted shares of approximately 166.4 million.
