Software Stock SolarWinds Plunges After Q2 Beat, Guidance Boost (UPDATED)

Editor’s note: This story has been updated to more accurately describe SolarWinds as a software company. SolarWinds is a provider of observability and IT management software.

SolarWinds Corp SWI reported a fiscal second-quarter 2024 revenue growth of 4% year-on-year to $193.3 million, beating the analyst consensus estimate of $188.7 million. 

Adjusted EPS of 26 cents beat the analyst consensus estimate of $0.23. The stock price slid after the print.

Maintenance revenue declined 5% Y/Y at $110.3 million. Subscription revenue climbed 31.2% Y/Y to $70 million, while License revenue declined 17.2% to $12.9 million.

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The adjusted gross margin increased by 50 bps to 90.8%, and the adjusted EBITDA margin increased by 510 bps to 47.9%.

SolarWinds held $169.6 million in cash and equivalents as of June 30, 2024.

Outlook: SolarWinds expects third-quarter revenue of $191 million—$196 million, versus the consensus of $188.67 million. It projects an adjusted EPS of 24 cents — 26 cents versus the consensus of 23 cents.

SolarWinds expects fiscal 2024 revenue of $778—$788 million (prior $771 million—$786 million) versus the consensus of $779.31 million.

SolarWinds expects fiscal 2024 adjusted EPS of $1.04—$1.08 (prior $1.00—$1.04) versus the consensus of $1.03.

SolarWinds stock gained over 12% in the last 12 months.

Price Action: SWI shares traded lower by 2.43% at $11.64 at the last check Thursday.

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