Financial Performance - Total revenue for Q4 2024 was $210.3 million, representing a 6% year-over-year growth, with total recurring revenue accounting for 94% of total revenue[5]. - Net income for Q4 2024 was $72.7 million, while adjusted EBITDA was $104.1 million, reflecting a margin of 49% and a 20% year-over-year growth[5]. - For the full year 2024, total revenue reached $796.9 million, marking a 5% year-over-year growth, with total recurring revenue also at 94% of total revenue[5]. - Full year net income was $111.9 million, and adjusted EBITDA totaled $384.7 million, representing a margin of 48% and a 17% year-over-year growth[5]. - Subscription Annual Recurring Revenue (ARR) was $311.7 million, showing a year-over-year growth of 34%, while total ARR reached $729.0 million, with a 7% year-over-year growth[5]. - Total revenue for the twelve months ended December 31, 2024, was $796.895 million, an increase of 5.0% compared to $758.740 million for the same period in 2023[29]. - Subscription revenue for the three months ended December 31, 2024, reached $89.259 million, up 31.8% from $67.726 million in the same period of 2023[29]. - Net income for the twelve months ended December 31, 2024, was $111.903 million, a significant recovery from a net loss of $9.109 million in 2023[29]. - Operating income for the three months ended December 31, 2024, was $60.350 million, compared to $43.370 million for the same period in 2023, reflecting a year-over-year increase of 39.2%[29]. - Total operating expenses for the twelve months ended December 31, 2024, were $505.169 million, a decrease from $521.362 million in 2023[29]. - Non-GAAP gross profit for the twelve months ended December 31, 2024, was $723.139 million, compared to $687.566 million in 2023, indicating a growth of 5.2%[34]. - Non-GAAP operating income for the twelve months ended December 31, 2024, reached $361,416, up from $310,129 in 2023, reflecting a growth of 16.5%[35]. - GAAP net income for Q4 2024 was $72,670, a significant recovery from a net loss of $576 in Q4 2023[35]. - Non-GAAP diluted earnings per share for the twelve months ended December 31, 2024, was $1.32, compared to $0.88 in 2023, reflecting a 50% increase[35]. Acquisition and Corporate Developments - SolarWinds entered into a definitive agreement to be acquired by Turn/River Capital in an all-cash transaction valued at approximately $4.4 billion, with stockholders receiving $18.50 per share[6]. - The acquisition is expected to be completed in Q2 2025, pending regulatory approvals and customary closing conditions[6]. - In October 2024, SolarWinds launched its Observability SaaS and Self-Hosted offerings, along with a new Universal Database License for its Database Performance Analyzer and SQL Sentry products[6]. - The company released its 2024 State of ITSM Report in November, analyzing over 2,000 ITSM data systems and 60,000 points of anonymized customer data[6]. Cash and Debt Management - As of December 31, 2024, total cash and cash equivalents were $259.3 million, while total debt stood at $1.2 billion[7]. - Cash and cash equivalents decreased from $284,695 thousand in 2023 to $251,850 thousand in 2024, a reduction of approximately 11.5%[27]. - Cash flows from operating activities for the twelve months ended December 31, 2024, amounted to $188.298 million, compared to $183.465 million in 2023[31]. - Cash and cash equivalents at the end of the period were $251.850 million, down from $284.695 million at the beginning of the period[32]. - The company paid $168.162 million in dividends during the twelve months ended December 31, 2024[31]. Assets and Liabilities - Total assets decreased from $3,250,915 thousand in 2023 to $3,168,288 thousand in 2024, reflecting a reduction of approximately 2.5%[27]. - Total liabilities decreased from $1,808,871 thousand in 2023 to $1,767,574 thousand in 2024, indicating a decline of about 2.3%[27]. - The accumulated deficit improved from $(1,218,874) thousand in 2023 to $(1,106,971) thousand in 2024, showing a reduction of approximately 9.2%[27]. Non-GAAP Measures and Performance Metrics - Non-GAAP net income (loss) is calculated by excluding adjustments to non-GAAP cost of revenue and non-GAAP operating income, resulting in a clearer understanding of past performance and future prospects[17]. - Adjusted EBITDA for the period is defined as net income (loss) excluding various costs, including stock-based compensation and restructuring costs, providing a measure to assess operating performance[18]. - Subscription Annual Recurring Revenue (Subscription ARR) is used to assess business performance, reflecting the annualized recurring value of all active subscription contracts[21]. - Total Annual Recurring Revenue (Total ARR) combines Subscription ARR and maintenance contracts, providing insights into customer retention and growth[22]. - The company expects to incur significant legal and professional service expenses related to a Cyber Incident in future periods, impacting operating expenses[19]. - Non-GAAP measures exclude restructuring costs and Cyber Incident costs, facilitating a more meaningful evaluation of operating performance[19][20]. - Unlevered free cash flow for the twelve months ended December 31, 2024, was $263,752, compared to $254,472 in 2023, marking a growth of 3.5%[42]. Profitability Metrics - The company reported a gross profit margin of 89.9% for the three months ended December 31, 2024, compared to 89.0% in the same period of 2023[34]. - GAAP operating margin improved to 28.7% in Q4 2024 from 21.9% in Q4 2023[35]. - Non-GAAP operating margin for the twelve months ended December 31, 2024, was 45.4%, up from 40.9% in 2023[35]. - Adjusted EBITDA for Q4 2024 was $104,097, up from $87,006 in Q4 2023, indicating a 19.6% increase[37]. - Total GAAP revenue for Q4 2024 was $210,309, a 6.1% increase from $198,139 in Q4 2023[40]. - Non-GAAP total revenue on a constant currency basis for the twelve months ended December 31, 2024, was $796,411, showing a growth rate of 5.0% compared to 2023[40].

SolarWinds (SWI) shares ended the last trading session 21.8% higher at $18.31. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 6.9% gain over the past four weeks.SolarWinds is benefiting from its Subscription First strategy, which has driven strong subscription and ARR growth, increased adoption of its Observability solutions, high customer retention, and a broad, diversified customer base, all contributing to sust ...

Looking for a stock that has been consistently beating earnings estimates and might be well positioned to keep the streak alive in its next quarterly report? SolarWinds (SWI) , which belongs to the Zacks Internet - Software industry, could be a great candidate to consider.When looking at the last two reports, this provider of information-technology management software has recorded a strong streak of surpassing earnings estimates. The company has topped estimates by 13.09%, on average, in the last two quarte ...

I recommended a hold rating for SolarWinds Corporation (NYSE: SWI ) when I wrote about it in September last year, as I was concerned about the near-term growth outlook. Based on my current outlook and analysis, I recommendI consider an investment ideal if it performs its core business in a sector projected to experience structural (organic) growth in excess of GDP growth over the next 5-10 years; profits from sustainable competitive advantages that translate into attractive unit economics; In the hands of c ...

Have you been paying attention to shares of SolarWinds (SWI) ? Shares have been on the move with the stock up 6% over the past month. The stock hit a new 52-week high of $14.03 in the previous session. SolarWinds has gained 12% since the start of the year compared to the 29.4% move for the Zacks Computer and Technology sector and the 27.4% return for the Zacks Internet - Software industry.What's Driving the Outperformance?The stock has a great record of positive earnings surprises, as it hasn't missed our e ...

Financial Data and Key Metrics Changes - In Q3 2024, total revenue reached $200 million, reflecting a 6% year-over-year growth, exceeding the high end of the guidance range [11][29] - Subscription revenue grew by 30% year-over-year, totaling $76 million, while subscription ARR increased by 36% to $289 million [11][30] - Adjusted EBITDA for Q3 was $96 million, representing a 13% year-over-year growth with a margin of 48% [12][35] - Total ARR at the end of Q3 was $724 million, an 8% increase year-over-year, with a maintenance renewal rate of 96% for the quarter [12][30] Business Line Data and Key Metrics Changes - The Observability solution saw increased adoption, contributing to revenue growth, with significant updates announced on October 2nd [9][18] - Maintenance revenue declined by 5% year-over-year to $111 million, as the company continues to convert customers to subscription products [32] - License revenue decreased by 10% to $13 million, impacted by the Subscription First strategy [34] Market Data and Key Metrics Changes - The company reported a balanced deal size across regions and market segments, indicating low customer concentration and criticality of solutions [10] - The customer base includes 1,100 customers with over $100,000 in total ARR, marking an 18% growth year-over-year [30] Company Strategy and Development Direction - The company is focused on a Subscription First strategy, aiming to enhance customer success and retention while expanding profitability [26][41] - Investments are being made selectively to drive growth while maintaining expense discipline [26][84] - The company aims to address the Hybrid Observability gap, providing unified visibility across on-premises and cloud environments [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving business and financial goals despite a challenging IT spending environment [28] - The demand environment remains stable, with growth driven by both existing customers and new customer acquisitions [60] - The company anticipates continued strong performance in Q4 2024, supported by a diversified customer base and robust solutions [41][42] Other Important Information - The company has transitioned to a model where 94% of total revenue is now recurring [33] - The net leverage ratio improved to approximately 2.8 times trailing 12-month adjusted EBITDA [36] Q&A Session Summary Question: Insights on product traction and partner activity - Management noted that customers are looking to bridge on-premises and cloud divides, leading to increased traction across various solutions [49] Question: Thoughts on financial model and topline growth - The new CFO highlighted the effectiveness of the business model and the alignment with market needs, emphasizing a long-term growth strategy [52][54] Question: Demand environment and growth trends - Management confirmed stable demand with a diversified customer base contributing to growth, while remaining prudent about future quarters [60][61] Question: Insights on new Chief Revenue Officer's impact - The new Chief Revenue Officer is expected to enhance the go-to-market model without major strategic shifts, focusing on partnerships and market reach [68][70] Question: Pricing strategy for Gen AI and Observability - Management indicated that Gen AI capabilities are part of premium packages, leading to automatic ASP uplift, but consumption-based pricing models are still under consideration [72][74] Question: Drivers behind the increase in $100K customers - The increase is attributed to ongoing subscription conversions, a unified Observability solution, and selective upstream customer requirements [78][79] Question: Consolidation theme in sales - Both proactive outreach and renewal cycles are driving consolidation discussions, supported by a strong customer success team [82] Question: Balancing margin and investment in growth - The company aims to balance growth and profitability, focusing on investments that yield clear returns while maintaining efficiency [89]

Exhibit 99.1 SolarWinds Announces Third Quarter 2024 Results AUSTIN, Texas - October 31, 2024 - SolarWinds Corporation (NYSE:SWI), a leading provider of simple, powerful, secure observability and IT management software, today reported results for its third quarter ended September 30, 2024. Third Quarter Financial Highlights • Total revenue for the third quarter of $200.0 million, representing 6% year-over-year growth, and total recurring revenue representing 94% of total revenue. • Net income for the third ...

Financial Data and Key Metrics Changes - Total revenue for Q2 2024 was $193 million, representing a year-over-year growth of 4% and exceeding the high end of the guidance range [6][15] - Subscription revenue grew by 31% year-over-year, reaching $70 million, while total ARR increased by 7% year-over-year to $705 million [7][15] - Adjusted EBITDA for Q2 2024 was $92.5 million, reflecting a 17% year-over-year growth and an adjusted EBITDA margin of 48% [17] Business Line Data and Key Metrics Changes - Subscription ARR grew by 36% year-over-year, reaching $270 million, with a maintenance renewal rate of 97% [7][15] - Maintenance revenue decreased by 5% year-over-year to $110 million, as the company continued to convert customers to subscription products [16] - License revenue was $13 million, down 17% from the previous year, impacted by the subscription-first strategy [17] Market Data and Key Metrics Changes - The company reported a strong performance in hybrid cloud observability solutions, surpassing $100 million in total ARR for this segment [7] - The customer base included 1,042 customers with over $100,000 in total ARR, marking a 16% growth year-over-year [15] Company Strategy and Development Direction - The company is focused on a subscription-first strategy, emphasizing customer success and product innovation to drive growth [5][6] - Ongoing product enhancements aim to improve productivity, reduce complexity, and lower costs for customers [8][10] - The company is committed to expanding its hybrid visibility solutions and investing selectively while maintaining expense discipline [13] Management's Comments on Operating Environment and Future Outlook - Management noted that there has been no significant change in the macro environment from Q1 to Q2, with a strong value proposition resonating with customers [25] - The company is confident in its ability to meet financial goals for the remainder of 2024, raising revenue guidance for the full year to a range of $778 million to $788 million [20][22] - Management expressed optimism about the ongoing transformation efforts and the ability to adapt to evolving customer needs [23] Other Important Information - The company refinanced its debt in July 2024, reducing the interest rate by 50 basis points and extending the maturity to February 2030 [18] - Bart Kalsu, the CFO, announced his departure, with Lewis Black set to take over the role [14] Q&A Session Summary Question: What did you see during the quarter regarding the macro environment? - Management indicated no meaningful difference in the macro environment from Q1 to Q2, with strong customer value propositions driving performance [25] Question: How significant is the hybrid cloud observability solution for large customers? - Management stated that the hybrid cloud observability solution is a significant driver for customer adoption, particularly for larger enterprises [30] Question: Why is the Q3 guidance lower than the first half growth? - Management explained that the guidance is consistent with previous performance and reflects a prudent approach to forecasting [31] Question: What gives confidence to raise guidance despite others cutting it? - Management cited strong internal demand and the value customers see in their products as reasons for raising guidance [37] Question: Is there an increase in the pace of maintenance to subscription migration? - Management confirmed that they are achieving their plans and expanding market opportunities, with consistent results across geographies [38]

Group 1: Earnings Performance - SolarWinds reported quarterly earnings of $0.26 per share, exceeding the Zacks Consensus Estimate of $0.22 per share, and up from $0.21 per share a year ago, representing an earnings surprise of 18.18% [1] - The company has surpassed consensus EPS estimates for four consecutive quarters [2] - SolarWinds posted revenues of $193.25 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 2.51%, and up from $185.03 million year-over-year [2] Group 2: Stock Performance and Outlook - SolarWinds shares have declined approximately 4.5% since the beginning of the year, while the S&P 500 has gained 15.8% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the earnings outlook [4][6] - The current consensus EPS estimate for the upcoming quarter is $0.25 on revenues of $194.23 million, and for the current fiscal year, it is $1.03 on revenues of $778.91 million [7] Group 3: Industry Context - The Internet - Software industry, to which SolarWinds belongs, is currently ranked in the top 36% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact SolarWinds' stock performance [5]

Core Thesis - SolarWinds is strategically repositioning towards integrated AI technologies and subscription-based models, aligning with trends in automation solutions and recurring revenue streams in the IT sector, which is expected to enhance operational efficiency and customer satisfaction [3]. Company Overview - SolarWinds, founded in 1999, is a leading IT management software provider serving over 300,000 customers globally, including 499 of the Fortune 500 companies, with solutions tailored for various industries such as healthcare, finance, and government [4]. New Initiatives and Vulnerabilities - The introduction of SolarWinds AI technology aims to facilitate IT transitions, reducing resolution time by up to 40%, while the Database Performance Analyzer enhances PostgreSQL support, improving query performance by up to 30% [5]. - Despite these advancements, there are concerns regarding data privacy and security risks associated with AI technologies, necessitating robust security measures and continuous monitoring to maintain customer trust [6]. Financial Performance - In Q1 2024, SolarWinds reported total revenue of $193.31 million, a 4% increase year-over-year, driven by a shift to subscription models, although net income fluctuated from a loss of $5.62 million in Q1 2023 to a profit of $15.56 million in Q1 2024 [7]. - The stock price exhibited volatility over the past year, reflecting the company's financial performance and strategic initiatives, with a notable recovery in December [8]. Competitive Landscape - SolarWinds faces competition from significant rivals such as Progress Software, Rapid7, and Appian, which creates diverse competitive dynamics in the market [9]. Future Outlook - The adoption of AI technologies and upgrades to existing products are expected to drive significant growth for SolarWinds in the coming year, with revenue growth projected at approximately 5% and profit growth potentially improving to around 9-10% [10]. - Analysts estimate a revenue growth of 4.29% and an earnings growth of 8.53% for the upcoming year, indicating a positive outlook despite the competitive challenges [12]. Valuation Metrics - SolarWinds has a gross margin of 90.42%, significantly higher than the industry median of 49.23%, indicating strong cost management [12]. - The company's P/S ratio of 2.55 suggests it is undervalued compared to the sector median of 3.11, while the high P/E ratio of 188.98 indicates it may be overvalued in terms of earnings [12].