SolarWinds Reports 5.5% Revenue Growth, Net Income Recovery in Q3 2024

SolarWinds Corporation reported a positive financial performance for the third quarter and the first nine months of 2024, reflecting a strategic shift towards subscription-based revenue models. For the three months ended September 30, 2024, total revenue reached $200.0 million, a 5.5% increase from $189.6 million in the same period of 2023. Subscription revenue surged by 30.1% to $76.5 million, up from $58.8 million, contributing significantly to the overall revenue growth. Total recurring revenue also increased to $187.1 million from $175.2 million year-over-year.

The company achieved a gross profit of $179.0 million for the quarter, compared to $168.2 million in the prior year, leading to an operating income of $51.7 million, up from $38.5 million. Notably, net income for the quarter was $12.6 million, a substantial recovery from a net loss of $3.2 million in Q3 2023. This translated to a basic income per share of $0.07, compared to a loss of $0.02 per share in the previous year.

For the nine months ended September 30, 2024, total revenue was $586.6 million, a 4.6% increase from $560.6 million in the same period of 2023. Subscription revenue for this period rose by 29.3% to $214.5 million, while net income improved to $39.2 million from a net loss of $8.5 million in the prior year.

The company’s strategic focus on transitioning to a subscription-first model is evident, with a notable increase in customers with Total Annual Recurring Revenue (ARR) exceeding $100,000, rising to 1,100 from 935 year-over-year. However, maintenance revenue decreased by 5.0% due to customer conversions to subscription products.

Operating expenses reflected a mixed trend; sales and marketing expenses decreased by 4.6%, while research and development expenses saw a slight decline of 3.5%. General and administrative expenses increased by 4.7%, driven by higher debt refinancing costs and restructuring charges.

SolarWinds declared a special cash dividend of $1.00 per share, totaling $168.2 million, paid in April 2024. The company continues to navigate challenges from global macroeconomic conditions and the aftermath of a cyber incident, which has led to ongoing legal proceedings and increased operational costs.

As of September 30, 2024, SolarWinds reported total assets of $3.1 billion, with total stockholders’ equity at $1.4 billion. The company’s total indebtedness remained stable at approximately $1.2 billion, with a weighted-average effective interest rate on debt decreasing to 8.2% from 9.0% in the prior year.