solarwinds(SWI) - 2024 Q4 - Annual Results

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].