SolarWinds' Q3 Revenue Lags Consensus As Decline In Maintenance, License Segments Weigh Amid Macro Challenges

SolarWinds Corp SWI reported a third-quarter FY22 revenue decline of 1% year-on-year to $179.4 million, missing the consensus of $182.1 million.
Maintenance revenue fell 4.5% Y/Y to $114.4 million. Subscription revenue climbed 30.8% Y/Y to $42.2 million.
License revenue declined 22% to $22.8 million.
Margins: The non-GAAP gross margin expanded 10 bps to 91%, and the non-GAAP EBITDA margin contracted 230 bps to 39.2%.
Non-GAAP EPS of $0.20 was in-line with the consensus.
SolarWinds held $492.5 million in cash and equivalents.
"Our third quarter results were highlighted by 31% subscription revenue growth, continued execution on customer retention, solid adjusted EBITDA margins, and expansions in our partnership strategy, all against the backdrop of a challenging macroeconomic environment," CEO said Sudhakar Ramakrishna.
Outlook: SolarWinds sees Q4 revenue of $178 million- $183 million, below the consensus of $185.6 million.
It sees a non-GAAP EPS of $0.23 - $0.25, above the consensus of $0.19.
SolarWinds cut the FY22 revenue guidance from $715 million - $725 million to $710 million - $715 million, below the consensus of $719.6 million.
SolarWinds raised the non-GAAP EPS outlook from $0.81 - $0.86 to $0.87 - $0.89, above the consensus of $0.84.
Price Action: SWI shares traded lower by 5.63% at $8.21 on the last check Thursday.

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