Hit year hi today.. SolarWinds Announces First Quarter 2012 Results
AUSTIN, TX, Apr 26, 2012 (MARKETWIRE via COMTEX) -- SolarWinds(R) (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(TM) 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(TM).
--SolarWinds launched a significant update to thwack(R), 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(R) systems, VM
Monitor for Microsoft(R) Hyper-V(R), a free tool for monitoring
the health of Hyper-V(R) environments, and three new free tools for
use with Microsoft Active Directory(R) 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). A live webcast of the event, including any supplemental information, will
be available on the SolarWinds Investor Relations website at
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.
About SolarWinds
SolarWinds (SWI) provides powerful and affordable IT management software to
customers worldwide -- from Fortune 500 enterprises to small businesses. We work
to put our users first and remove the obstacles that have become "status quo" in
traditional enterprise software. SolarWinds products are downloadable, easy to
use and maintain, and provide the power, scale, and flexibility needed to address
users' management priorities. Our online user community, thwack, is a
gathering-place where tens of thousands of IT pros solve problems, share
technology, and participate in product development for all of SolarWinds'
products. Learn more today at solarwinds.com.
SolarWinds, the SolarWinds logo and thwack marks are exclusive trademarks of
SolarWinds, are registered with the U.S. patent and trademark office, and may be
registered or pending registration in other countries. All other SolarWinds
trademarks, service marks, and logos, including without limitation, DameWare and
Storage Manager, Powered by Profiler, may be common law marks or registered or
pending registration in the United States or in other countries. All other
trademarks or registered trademarks mentioned herein are used for identification
purposes only and may be trademarks or registered trademarks of their respective
companies.
Copyright Copyright 2012 SolarWinds Worldwide, LLC. All rights reserved.
SolarWinds, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share information)
(Unaudited)
March 31,December 31,
20122011
------------------------------
Assets
Current assets:
Cash and cash equivalents$139,336$122,707
Short-term investments31,84929,688
Accounts receivable, net of allowances
of $233 and $192 as of March 31, 2012
and December 31, 2011, respectively27,84826,965
Income tax receivable1,170110
Deferred taxes753668
Prepaid and other current assets2,7222,770
------------------------------
Total current assets203,678182,908
Property and equipment, net7,4637,341
Deferred taxes3,4493,334
Goodwill118,285110,746
Intangible assets and other, net60,27758,079
------------------------------
Total assets$393,152$362,408
==============================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$2,580$2,213
Accrued liabilities8,3699,442
Accrued earnout9603,513
Income taxes payable836779
Current portion of deferred revenue79,05573,774
------------------------------
Total current liabilities91,80089,721
Long-term liabilities:
Deferred revenue, net of current portion3,9313,373
Non-current deferred taxes-289
Other long-term liabilities5,0464,078
------------------------------
Total liabilities100,77797,461
Commitments and contingencies
Stockholders' equity:
Common stock, $0.001 par value:
123,000,000 shares authorized and
73,886,692 and 73,367,367 shares issued
and outstanding as of March 31, 2012
and December 31, 2011, respectively7473
Additional paid-in capital203,475194,379
Accumulated other comprehensive loss(1,570)(2,769)
Accumulated earnings90,39673,264
------------------------------
Total stockholders' equity292,375264,947
------------------------------
Total liabilities and stockholders'
equity$393,152$362,408
==============================
SolarWinds, Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share information)
(Unaudited)
Three Months Ended
March 31,
--------------------------------
20122011
------------------------------
Revenue:
License$27,457$20,380
Maintenance and other32,21422,598
------------------------------
Total revenue59,67142,978
Cost of license revenue1,880765
Cost of maintenance and other revenue2,3931,721
------------------------------
Gross profit55,39840,492
Operating expenses:
Sales and marketing16,56011,727
Research and development6,6715,038
General and administrative8,4496,670
------------------------------
Total operating expenses31,68023,435
------------------------------
Operating income23,71817,057
Other income (expense):
Interest income8855
Other expense, net(16)(306)
------------------------------
Total other income (expense)72(251)
------------------------------
Income before income taxes23,79016,806
Income tax expense6,6595,096
------------------------------
Net income$17,131$11,710
==============================
Net income per share:
Basic earnings per share$0.23$0.16
==============================
Diluted earnings per share$0.23$0.16
==============================
Weighted shares used to compute net income
per share:
Shares used in computation of basic
earnings per share73,74372,368
==============================
Shares used in computation of diluted
earnings per share75,44074,003
==============================
SolarWinds, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share amounts and percentages)
(Unaudited)
Three Months Ended
March 31,
------------------------
20122011
----------------------
Revenue$59,671$42,978
GAAP cost of revenue$4,273$2,486
Amortization of intangible assets (1)(1,682)(701)
Stock-based compensation expense and related
employer-paid payroll taxes (2)(92)(53)
----------------------
Non-GAAP cost of revenue$2,499$1,732
======================
GAAP gross profit$55,398$40,492
Amortization of intangible assets (1)1,682701
Stock-based compensation expense and related
employer-paid payroll taxes (2)9253
----------------------
Non-GAAP gross profit$57,172$41,246
======================
GAAP sales and marketing expense$16,560$11,727
Stock-based compensation expense and related
employer-paid payroll taxes (2)(1,393)(909)
----------------------
Non-GAAP sales and marketing expense$15,167$10,818
======================
GAAP research and development expense$6,671$5,038
Stock-based compensation expense and related
employer-paid payroll taxes (2)(801)(470)
----------------------
Non-GAAP research and development expense$5,870$4,568
======================
GAAP general and administrative expense$8,449$6,670
Amortization of intangible assets (1)(1,825)(471)
Stock-based compensation expense and related
employer-paid payroll taxes (2)(1,848)(1,428)
Acquisition related adjustments (3)(222)(1,004)
----------------------
Non-GAAP general and administrative expense$4,554$3,767
======================
GAAP operating expense$31,680$23,435
Amortization of intangible assets (1)(1,825)(471)
Stock-based compensation expense and related
employer-paid payroll taxes (2)(4,042)(2,807)
Acquisition related adjustments (3)(222)(1,004)
----------------------
Non-GAAP operating expense$25,591$19,153
======================
GAAP operating income$23,718$17,057
Amortization of intangible assets (1)3,5071,172
Stock-based compensation expense and related
employer-paid payroll taxes (2)4,1342,860
Acquisition related adjustments (3)2221,004
----------------------
Non-GAAP operating income$31,581$22,093
======================
GAAP other income (expense), net$72$(251)
Acquisition related adjustments (3)9-
----------------------
Non-GAAP other income (expense), net$81$(251)
======================
GAAP income tax expense$6,659$5,096
Income tax effect on non-GAAP exclusions (4)2,1911,047
----------------------
Non-GAAP income tax expense$8,850$6,143
======================
GAAP net income$17,131$11,710
Amortization of intangible assets (1)3,5071,172
Stock-based compensation expense and related
employer-paid payroll taxes (2)4,1342,860
Acquisition related adjustments (3)2311,004
Tax benefits associated with above adjustments
(4)(2,191)(1,047)
----------------------
Non-GAAP net income$22,812$15,699
======================
Non-GAAP diluted earnings per share (5)$0.30$0.21
======================
Weighted average shares used in computing diluted
earnings per share75,44074,003
======================
Percentage of Revenue:
GAAP gross profit92.8%94.2%
Non-GAAP adjustments (1)(2)3.0%1.8%
----------------------
Non-GAAP gross profit95.8%96.0%
======================
GAAP operating margin39.7%39.7%
Non-GAAP adjustments (1)(2)(3)13.2%11.7%
----------------------
Non-GAAP operating margin52.9%51.4%
======================
GAAP net income28.7%27.2%
Non-GAAP adjustments (1)(2)(3)(4)9.5%9.3%
----------------------
Non-GAAP net income38.2%36.5%
======================
(1) Amortization of Intangible Assets. We provide non-GAAP information which
excludes expenses for the amortization of intangible assets which primarily
relate to purchased intangible assets associated with our acquisitions.
Because of varying fair value amounts of intangible assets, subjective
impairment assumptions and the variety of useful lives, which affect the
recognition of amortization expense, we believe that the exclusion of
amortization expense allows for more accurate comparisons of our operating
results to our peer companies. The amortization of purchased intangible
assets associated with our acquisitions results in our recording expenses in
our GAAP financial statements that were already expensed by the acquired
company before the acquisition and for which we have not expended cash.
Accordingly, we analyze the performance of our operations in each period
without regard to such expenses.
(2) Stock-Based Compensation Expense and Related Employer-Paid Payroll
Taxes. We provide non-GAAP information which excludes expenses for stock-
based compensation and related employer-paid payroll taxes. We believe the
exclusion of these items allows for financial results that are more
indicative of our continuing operations. We believe that the exclusion of
stock-based compensation expense provides for a better comparison of our
operating results to prior periods and to our peer companies as the
calculations of stock-based compensation vary from period to period and
company to company due to different valuation methodologies, subjective
assumptions and the variety of award types. Employer-paid payroll taxes on
stock- based compensation is dependent on our stock price and the timing of
the taxable events related to the equity awards, over which our management
has little control, and does not correlate to the core operation of our
business. Because of these unique characteristics of stock-based
compensation and the related employer-paid payroll taxes, management
excludes these expenses when analyzing the organization's business
performance.
(3) Acquisition Related Adjustments. We exclude certain expense items
resulting from acquisitions including the following, when applicable: (i)
amortization of purchased intangible assets associated with our acquisitions
(see Note 1 for further discussion); (ii) legal, accounting and advisory
fees to the extent associated with acquisitions; (iii) changes in fair value
of contingent consideration; (iv) costs related to integrating the acquired
businesses; and (v) restructuring costs, including adjustments related to
changes in estimates, related to acquisitions. We consider these
adjustments, to some extent, to be unpredictable and dependent on a
significant number of factors that are outside of our control. Furthermore,
acquisitions result in non-continuing operating expenses, which would not
otherwise have been incurred by us in the normal course of our organic
business operations, with respect to each acquisition. We believe that
providing non-GAAP information for acquisition related expense items in
addition to the corresponding GAAP information allows the users of our
financial statements to better review and understand the historic and
current results of our continuing operations, and also facilitates
comparisons to our historical results and results of less acquisitive peer
companies, both with and without such adjustments.
(4) Income Tax Effect of Non-GAAP Exclusions. We believe providing financial
information with and without the income tax effect of excluding items
related to our non-GAAP financial measures provide our management and users
of the financial statements with better clarity regarding the on-going
performance and future liquidity of our business.
(5) Non-GAAP Diluted Earnings Per Share Item. We provide non-GAAP diluted
earnings per share. The non-GAAP diluted earnings per share amount was
calculated based on our non-GAAP net income and the weighted-average number
of shares outstanding during the reporting period. The non-GAAP diluted
earnings per share included additional dilution from potential issuance of
common stock, except when such issuances would be anti-dilutive.
SolarWinds, Inc.
Reconciliation of Free Cash Flow to GAAP Cash Flows From Operating
Activities
(In thousands)
(Unaudited)
Three Months Ended
March 31,
------------------------
20122011
----------------------
Reconciliation of free cash flow to GAAP cash
flows from operating activities:
GAAP cash flows from operating activities$28,339$18,866
Excess tax benefit from stock-based compensation3,3093,565
Purchases of property and equipment(771)(598)
----------------------
Free cash flow (1)$30,877$21,833
======================
(1)Free Cash Flow:We define free cash flow as cash flows from
operating activities plus the excess tax benefit from stock-based
compensation and less the purchase of property and equipment.We believe
free cash flow is an important liquidity measure that reflects 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, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
March 31,
------------------------
20122011
----------------------
Cash flows from operating activities
Net income$17,131$11,710
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization4,2961,832
Provision for doubtful accounts40(11)
Stock-based compensation expense3,8652,669
Deferred taxes(495)(472)
Excess tax benefit from stock-based
compensation(3,309)(3,565)
Other non-cash expenses382110
Changes in operating assets and liabilities, net
of assets acquired and liabilities assumed in
business combinations:
Accounts receivable(814)(288)
Income taxes receivable5010
Prepaid and other current assets731,420
Accounts payable362(278)
Accrued liabilities(1,394)(2,885)
Income taxes payable3,2165,421
Deferred revenue and other liabilities4,9363,193
----------------------
Net cash provided by operating activities28,33918,866
Cash flows from investing activities
Purchases of short-term investments(11,948)-
Maturities of investments9,540-
Purchases of property and equipment(771)(598)
Purchases of intangible assets and other(141)(108)
Acquisition of businesses, net of cash acquired(11,034)(23,000)
Earnout payments for acquisitions(3,203)(3,743)
----------------------
Net cash used in investing activities(17,557)(27,449)
Cash flows from financing activities
Repurchase of common stock(1,334)(305)
Exercise of stock options3,2565,193
Excess tax benefit from stock-based compensation3,3093,565
----------------------
Net cash provided by financing activities5,2318,453
Effect of exchange rate changes on cash and cash
equivalents6161,444
----------------------
Net increase in cash and cash equivalents16,6291,314
Cash and cash equivalents
Beginning of period122,707142,003
----------------------
End of period$139,336$143,317
======================
Supplemental disclosure of cash flow information
Cash paid for income taxes$3,812$88
======================
Noncash investing transactions
Accrued earnout$951$3,938
======================
CONTACTS:
Investors:
Dave Hafner
Phone: 512.682.9867
ir@solarwinds.com
Media:
Tiffany Nels
Phone: 512.682.9545
pr@solarwinds.com
SOURCE: SolarWinds
mailto:ir@solarwinds.com
mailto:pr@solarwinds.com |
