SolarWinds Shares Gain On Q2 Revenue Beat; Issues Mixed Q3 Guidance

SolarWinds Corp SWI reported second-quarter FY21 non-GAAP revenue growth of 6.3% year-on-year to $262 million, beating the analyst consensus of $256.44 million.
Non-GAAP Core IT Management revenue rose 2.1% Y/Y to $176.8 million. Non-GAAP N-able revenue increased 16.1% Y/Y to $85.2 million.
Non-GAAP Recurring revenue grew 10.5% Y/Y to $235.3 million.
Non-GAAP Maintenance revenue increased 5.5% Y/Y to $122.9 million. Non-GAAP subscription revenue climbed 16.7% Y/Y to $112.5 million.
The non-GAAP gross margin contracted 140 bps to 90%, and the non-GAAP EBITDA margin contracted 590 bps to 42.4%.
Non-GAAP EPS of $0.44 missed the analyst consensus of $0.49.
SolarWinds generated $56.1 million in operating cash flow and held $410.6 million in cash and equivalents.
Outlook: SolarWinds sees Q3 non-GAAP total revenue of $176.0 million- $180.0 million, below the analyst consensus of $267.2 million.
It sees a Q3 non-GAAP EPS of $0.27, above the analyst consensus of $0.23.
Morgan Stanley maintained Equal-Weight on SolarWinds and raised the price target to $40 from $20, implying a 77.95 upside.
Price action: SWI shares traded higher by 3.44% at $22.83 on the last check Tuesday.

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