AUSTIN, TX — (Marketwire) — 02/04/13 — SolarWinds® (NYSE: SWI), a leading provider of powerful and affordable , today reported results for its fourth quarter and full year ended December 31, 2012.
Record total revenue for the fourth quarter of $73.5 million, representing 32% year-over-year growth.
Record total revenue for the full year of 2012 of $269.0 million, representing 36% year-over-year growth.
Fourth quarter GAAP operating income of $31.6 million and non-GAAP operating income of $39.4 million, or a non-GAAP operating margin for the fourth quarter of 54%.
Fourth quarter GAAP diluted earnings per share of $0.29 and non-GAAP diluted earnings per share of $0.36.
Record fourth quarter free cash flow of $48.0 million, representing 32% year-over-year growth.
SolarWinds reported record total revenue for the fourth quarter of 2012 of $73.5 million, a 32% increase over total revenue for the fourth quarter of 2011. License revenue was $33.1 million for the fourth quarter of 2012, representing a 31% increase over license revenue for the fourth quarter of 2011. Maintenance revenue was a record $40.5 million for the fourth quarter of 2012, representing a 33% increase over maintenance revenue for the fourth quarter of 2011.
On a GAAP basis, diluted earnings per share were $0.29 for the fourth quarter of 2012 compared to $0.22 for the fourth quarter of 2011. Non-GAAP diluted earnings per share were $0.36 for the fourth quarter of 2012 compared to $0.29 for the fourth quarter of 2011.
Net cash provided by operating activities was $47.2 million for the fourth quarter of 2012 compared to $36.3 million for the fourth quarter of 2011, representing a year-over-year increase of 30%. Free cash flow was $48.0 million for the fourth quarter of 2012 compared to $36.4 million for the fourth quarter of 2011, representing a year-over-year increase of 32%. Cash, cash equivalents, and investments at the end of the fourth quarter of 2012 were $241.8 million, an increase of $33.3 million from the end of the third quarter of 2012.
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 annual report on Form 10-K for the period. Information about SolarWinds- use of these non-GAAP financial measures is provided below under “Non-GAAP Financial Measures.”
“Once again, the SolarWinds team delivered an impressive performance in 2012, resulting in full year revenue growth of 36% and a solid acceleration over our strong revenue growth last year. We believe that the team-s hard work and focus the past year to extend our product portfolio in meaningful ways, engage the IT community through compelling content and targeted marketing efforts, and establish ourselves as a significant player in the broader IT management market are reflected in this quarter-s and full year 2012 results,” said Kevin Thompson, SolarWinds- President and Chief Executive Officer.
“2012 marked a year of significant progress for our company and brand. We believe that the investments that we made to raise systems administrators- awareness of SolarWinds- brand and products paid off with solid growth for many of our systems management products. Strong demand for our network configuration products, in particular SolarWinds IP Address Manager, helped to support our continued growth in network management and helped us to reinforce our leadership in that market. Once again, we believe that the strong growth across all of our geographies demonstrates that our unique approach to solving IT professionals- critical, real-world problems continues to be a compelling alternative to our competitors,” added Thompson.
SolarWinds business highlights during the fourth quarter of 2012 include:
The company completed a year of strengthening its systems management portfolio with new releases of (WPM), formerly SolarWinds Synthetic End User Monitor, and . Using SolarWinds WPM, System Administrators can continuously monitor websites and Web applications, including those that are internal (behind the firewall), customer-facing, SaaS, and cloud-based to keep a proactive watch on the end user-s point of view. The latest version of SolarWinds WPM extends its application support to include Web-based Java applications such as Oracle forms and those served via the Citrix Web Interface. The latest version of SolarWinds Virtualization Manager includes feature enhancements designed to help simplify the monitoring of VDI performance issues like boot/logon storms related to storage I/O bottlenecks, CPU, memory contention and more.
Throughout 2012, the company used acquisitions to significantly expand the number of systems management problems that it solves for IT pros. Through the acquisition of Rhino Software, Inc. in December 2012, SolarWinds launched its new and a new free tool . SolarWinds Serv-U Managed File Transfer Server provides a cost-effective, secure managed file transfer solution with an intuitive, easy-to-use web interface as well as the ability to access files on the go through secure mobile access. The addition of the free FTP Voyager to the company-s robust offerings of free tools is an example of the company-s ongoing commitment to creating value and giving back to the IT community.
New versions of (IPAM) and (NPM) were also released in the fourth quarter, increasing the depth of the company-s network management capabilities. SolarWinds- latest version of IPAM combines feature-rich IP address management capabilities, support for Microsoft DHCP and DNS management, Cisco DHCP management and Cisco Adaptive Security Appliances (ASA), and integration with key SolarWinds IT management products.
As part of the ongoing effort to more effectively reach, market to, and support users around the world, SolarWinds introduced a new set of localized assets for the German markets in the fourth quarter 2012. The company launched a fully featured, localized German-language website (), the German language version of its flagship network monitoring solution, SolarWinds Network Performance Monitor, and the German version of its most popular free tool, SolarWinds free TFTP Server.
“For the fourth quarter and full year of 2012, our financial results continued to illustrate the strength of our team and the unique and disruptive nature of our business model,” added Mike Berry, SolarWinds- Chief Financial Officer. “These factors once again enabled us to deliver a combination of strong revenue growth, non-GAAP operating margins, and record free cash flow amidst a period of significant investment in our business. These investments included extensive marketing to build awareness of our brands and products as well as several product releases based on both acquired and internally developed technologies that allowed us to go broader and deeper within the markets we serve. Overall, we are very pleased with our financial results for 2012, and given our disciplined approach to investing in our business and the large opportunity we see before us, we continue to be excited about our opportunity to generate solid growth while delivering strong profitability and free cash flow in 2013.”
As of February 4, 2013, SolarWinds is providing its financial outlook for its first quarter and full year of 2013. 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 first quarter of 2013 and for the full year 2013. 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.
SolarWinds- management currently expects to achieve the following results for the first quarter of 2013:
Total revenue in the range of $74.9-$75.7 million, or 26% to 27% growth over the first quarter of 2012.
Non-GAAP operating income representing 51%-51.5% of revenue.
Non-GAAP diluted earnings per share of approximately $0.37.
Weighted average outstanding diluted shares of approximately 77.2 million.
SolarWinds- management currently expects to achieve the following results for the full year 2013:
Total 2013 revenue in the range of $330.0-$338.0 million, or 23% to 26% year-over-year growth.
Non-GAAP operating income for the full year representing 51%-52% of revenue.
Non-GAAP diluted earnings per share of $1.57-$1.62.
Weighted average outstanding diluted shares of approximately 78.0 million.
In conjunction with this announcement, SolarWinds will host a conference call today to discuss its financial results and other business at 4:00pm CT (5:00pm ET/2:00pm PT). A live webcast of the event, including any supplemental information, will be available on the SolarWinds Investor Relations website at . A live dial-in will be available domestically at 800-390-5311 and internationally at +1-719-325-2207. 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.
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 statements regarding SolarWinds- financial outlook and growth opportunity. 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,” “expect,” 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- ability to successfully identify, complete, and integrate acquisitions; (f) the timing and success of new product introductions and product upgrades 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-K that SolarWinds anticipates filing on or before March 1, 2013. 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.
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, allocate resources, prepare annual budgets, and determine employee incentive compensation. Accordingly, these measures may provide helpful insight to investors into 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.
SolarWinds (NYSE: SWI) provides powerful and affordable IT management software to customers worldwide from Fortune 500 enterprises to small businesses. In all of our market areas, our approach is consistent. We focus exclusively on IT Pros and strive to eliminate the complexity that they have been forced to accept from traditional enterprise software vendors. SolarWinds delivers on this commitment with unexpected simplicity through products that are easy to find, buy, use and maintain while providing the power to address any IT management problem on any scale. Our solutions are rooted in our deep connection to our user base, which interacts in our online community to solve problems, share technology and best practices, and directly participate in our product development process. Learn more today at .
SolarWinds, SolarWinds & Design, thwack, FTP Voyager and Serv-U are registered trademarks of SolarWinds. All other SolarWinds marks are the exclusive property of SolarWinds, may be pending registration with the U.S. Patent and Trademark Office, and may be registered or pending registration in other countries. Any other company and product names mentioned are used only for identification purposes and may be trademarks or registered trademarks of their respective companies.
Copyright © 2013 SolarWinds Worldwide, LLC. All rights reserved.
Dave Hafner
Phone: 512.682.9867
Tiffany Nels
Phone: 512.682.9545
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