SolarWinds® (NYSE: SWI), a leading provider of powerful and affordable IT management software, today reported results for its first quarter ended March 31, 2012. •Record total revenue for the first quarter of $59.7 million, representing 39% year-over-year growth. •GAAP operating income of $23.7 million and non-GAAP operating income of $31.6 million, or a non-GAAP operating margin for the first quarter of 53%. •GAAP diluted earnings per share of $0.23 and non-GAAP diluted earnings per share of $0.30. •First quarter free cash flow of $30.9 million, representing 41% year-over-year growth. Financial Results SolarWinds reported record total revenue for the first quarter of 2012 of $59.7 million, a 39% increase over total revenue for the first quarter of 2011. License revenue was a record $27.5 million for the first quarter of 2012 representing a 35% increase over license revenue for the first quarter of 2011. Maintenance revenue was a record $32.2 million for the first quarter of 2012, representing a 43% increase over maintenance revenue for the first quarter of 2011. On a GAAP basis, diluted earnings per share were $0.23 for the first quarter of 2012 compared to $0.16 for the first quarter of 2011. Non-GAAP diluted earnings per share were $0.30 for the first quarter of 2012 compared to $0.21 for the first quarter of 2011. Net cash provided by operating activities was $28.3 million for the first quarter of 2012 compared to $18.9 million for the first quarter of 2011, representing a year-over-year increase of 50%. Free cash flow was $30.9 million for the first quarter of 2012 compared to $21.8 million for the first quarter of 2011, representing a year-over-year increase of 41%. Cash, cash equivalents, and investments at the end of the first quarter of 2012 were $171.2 million, an increase of $18.8 million from the end of the fourth quarter of 2011.
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 are off to a solid start for 2012 due to the tremendous efforts of the SolarWinds team to deliver strong results for the first quarter across each of our geographies and across our product portfolio. We feel that our quarterly performance reflects the power of our disruptive business model and the success of our efforts to introduce more and more IT pros to our brand of IT management solutions," said Kevin Thompson, SolarWinds' President and Chief Executive Officer.
"Looking ahead, we will continue to focus our efforts on delivering the unexpected simplicity of products that just work for IT professionals -- products that easily and affordably solve the real-world challenges of today's IT environments, that do not sacrifice power for ease of use, and that rapidly increase in value over time through frequent, user-driven feature updates. We believe that this commitment will continue to set us apart from our competition and allow us to continue to grow in the IT management market," added Thompson. SolarWinds' business highlights during the first quarter of 2012 include: •SolarWinds expanded its systems management portfolio with a new release of DameWare™ Tools and the release of Patch Manager, the patch management product acquired from EminentWare. These join the latest versions of SolarWinds Server & Application Monitor (formerly APM) and SolarWinds Synthetic End User Monitor to form a product portfolio that addresses the real-world needs of sysadmins. •The company continued to increase the value of its customers' investment in SolarWinds products through new releases of SolarWinds User Device Tracker and SolarWinds Storage Manager, Powered by Profiler™. •SolarWinds launched a significant update to thwack®, its online community of more than 100,000 IT professionals. This re-launch positions thwack to be not only a trusted, go-to resource for SolarWinds customers, but also a valuable source of information for the broader IT professional community through improved user experience and engagement, expanded discussion topics and forums, and broader content offerings. •As part of the ongoing effort to drive greater awareness for its broad set of IT management capabilities, SolarWinds released five new free tools including Event Log Consolidator, a free tool for monitoring, consolidating, and addressing events logs on Windows® systems, VM Monitor for Microsoft® Hyper-V®, a free tool for monitoring the health of Hyper-V® environments, and three new free tools for use with Microsoft Active Directory® designed to help manage the routine tasks of removing inactive users (Inactive Computer Removal Tool) and computers (Inactive Computer Removal Tool), and adding users in bulk (User Import Tool).
•SolarWinds products garnered additional accolades and awards from IT pros and industry influencers for their ease of use, power, and affordability. Recognized products included SolarWinds Network Performance Monitor, SolarWinds User Device Tracker, DameWare NT Utilities, SolarWinds Storage Manager, SolarWinds Virtualization Manager, and SolarWinds Log & Event Manager. "With strong top- and bottom-line results for the first quarter, SolarWinds is off to a solid start for the year," added Mike Berry, SolarWinds' Chief Financial Officer. "Driven largely by our broad-based outperformance in the first quarter coupled with our continued confidence in the strength of our business, we are increasing our revenue and earnings outlook for the full year. Overall, we continue to be very excited about our opportunities to generate solid revenue growth, profitability, and cash flow." Financial Outlook As of April 26, 2012, SolarWinds is providing its financial outlook for its second quarter and full year of 2012. The financial information below represents forward-looking non-GAAP financial information, including an estimate of non-GAAP operating income as a percentage of revenue, and non-GAAP diluted earnings per share, for the second quarter of 2012 and for the full year 2012. 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 2012 SolarWinds management currently expects to achieve the following results for the second quarter of 2012: •Total revenue in the range of $59.0-$60.2 million, or 29% to 31% growth over the second quarter of 2011. •Non-GAAP operating income representing approximately 50% of revenue. •Non-GAAP diluted earnings per share of $0.26-$0.27. •Weighted average shares outstanding of approximately 76.5 million. Financial Outlook for Full Year 2012 SolarWinds management is increasing its annual outlook and currently expects to achieve the following results for the full year 2012: •Total revenue in the range of $250.0-$260.0 million, or 26% to 31% year-over-year growth. •Non-GAAP operating income representing 50%-51% of revenue. •Non-GAAP diluted earnings per share of $1.14-$1.19. •Weighted average shares outstanding of approximately 77.2 million. Conference Call and Webcast In conjunction with this announcement, SolarWinds will host a conference call today to discuss its financial results and other business at 8:00am CT (9:00am ET/6:00am PT). A live webcast of the event, including any supplemental information, will be available on the SolarWinds Investor Relations website at http://ir.solarwinds.com. A live dial-in will be available domestically at 877-397-0272 and internationally at +1-719-325-4915. To access the live call, please dial in 5-10 minutes before the scheduled start time. A replay of the webcast will be available on a temporary basis shortly after the event on the SolarWinds Investor Relations website.
Forward-Looking Statements This press release contains "forward-looking" statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including SolarWinds' financial outlook, its plan to focus efforts on delivering the unexpected simplicity of products that just work for IT professionals, and its belief that this plan will continue to set it apart from competition and allow it to continue to grow in the IT management market. These forward-looking statements are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements that are not historical facts and may be identified by terms such as "believe," "continue," or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the following: (a) the inability to generate significant volumes of sales leads from Internet search engines, marketing campaigns and traffic to our websites; (b) the possibility that general economic conditions or uncertainty cause information technology spending to be reduced or purchasing decisions to be delayed; (c) the presence or absence of occasional large customer orders, including in particular those placed by the U.S. federal government; (d) the inability to increase sales to existing customers and to attract new customers; (e) SolarWinds' failure to integrate acquired businesses and any future acquisitions successfully; (f) the timing and success of new product introductions by SolarWinds or its competitors; (g) potential foreign exchange gains and losses related to expenses and sales denominated in currencies other than the functional currency of an associated entity; and (h) such other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission, including the Form 10-Q that SolarWinds anticipates filing on or before May 10, 2012. All information provided in this release is as of the date hereof and SolarWinds undertakes no duty to update this information except as required by law.
Non-GAAP Financial Measures In addition to disclosing financial measures prepared in accordance with GAAP, this press release and the accompanying tables contain certain non-GAAP financial measures. The tables below set forth a reconciliation of each of these non-GAAP measures to a GAAP financial measure that we consider to be most comparable. SolarWinds believes that each of these non-GAAP financial measures provides meaningful supplemental information regarding its performance by excluding certain items that may not be indicative of its core business operations. SolarWinds' management and Board of Directors use certain of these non-GAAP measures to assess operational performance and to determine employee incentive compensation. Accordingly, these measures may provide helpful insight to investors on the motivation and decision-making of management in operating the business. SolarWinds considers free cash flow also to be a liquidity measure that provides important information regarding the cash generated by the business after the purchase of property and equipment that can then be used for, among other things, strategic acquisitions and investments in the business, stock repurchases and funding ongoing operations. SolarWinds also believes that these non-GAAP financial measures are used by investors and security analysts to (a) compare and evaluate its performance from period to period and (b) compare its performance to those of its competitors. These non-GAAP measures exclude certain items that can vary substantially from company to company depending upon their financing and accounting methods, the book value of their assets, their capital structures and the method by which their assets were acquired. There are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with GAAP, do not reflect a comprehensive system of accounting and may not be completely comparable to similarly-titled measures of other companies due to potential differences in the exact method of calculation between companies. Certain items that are excluded from these non-GAAP financial measures can have a material impact on operating and net income. In addition, free cash flow does not represent the total increase or decrease in the cash balance for the period. As a result, these non-GAAP financial measures have limitations and should not be considered in isolation from, or as a substitute for the most comparable GAAP measures. SolarWinds' management and Board of Directors compensate for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measure. Investors are encouraged to review the reconciliations of these non-GAAP financial measures to their most comparable GAAP financial measures that are set forth in the tables below.
Posted: May 20, 2009 at 7:31 am
SolarWinds, Inc. (NYSE: SWI) is set to debut in an initial public offering this Wednesday morning. We got a premium pricing at $12.50 for 12.11 million shares, which is higher than the $9.50 to $11.50 indicated price range. Despite the name, this is not a green technology or solar power company. About 9 million shares are from the company and some 3.11 million are form selling holders. JPMorgan Chase, Goldman Sachs, and Morgan Stanley are the lead underwriters on the offering; and co-managers are listed as Jefferies & Co., Thomas Weisel Partners, and Ladenburg Thalmann. The underwriting group has an overallotment option to sell some 1.81 million shares.
As a reminder, this is not a solar power company. The company makes enterprise-class network management software ranging from individual software tools to more comprehensive software products, solve problems faced every day by network professionals and help to enable efficient and effective network management.
For the years ended December 31, 2006, 2007 and 2008 and the three months ended March 31, 2009, it generated:
JON C. OGG