SolarWinds Corp. is a provider of observability and information technology (IT) infrastructure management software. The process of observability employs software to monitor applications and networks, analyze problems, and resolve issues in an automated, efficient, and timely manner so that businesses can operate with fewer IT-related interruptions.
The company creates products that can power the secure monitoring and management of IT environments in multi-cloud or hybrid environments. Its overall goal is to help their customers strengthen and transform their businesses’ digital capabilities with simple and secure solutions.
The company’s broad suite of tools is designed to serve the needs of network engineers, systems engineers, database administrators, storage administrators, DevOps, service desk professionals, and managed service providers (MSPs).
Key Takeaways
- SolarWinds provides observability and IT infrastructure management software.
- The company derives revenue from subscriptions, maintenance services, and licenses.
- The company’s biggest revenue generator is its maintenance services, but subscriptions are growing fast.
- SolarWinds’ FY2023 total revenue was $758.7 million, up 5% from 2022.
- First quarter 2024 total revenue was $193.3 million, with net income of $15.6 million.
SolarWinds’ Industry
SolarWinds (SWI) operates in the Software-Infrastructure industry within the Technology sector.
It focuses on relationships with technology professionals and industry leaders so that it can deliver meaningful solutions that help businesses thrive. As of the end of 2023, the company had more than 300,000 customers throughout the world.
SolarWinds’ products are built on the SolarWinds platform so that they’re easy to access and put to work. The company feels that the centralized nature of its platform is more efficient and effective compared to trying out and using separate individual products.
Moreover, the platform handles observability needs well, which include operations management, network management, service management, security analytics, intelligence, response, and database administration and development tools.
Competition
SolarWinds operates in a highly competitive industry. Types of rivals and specific competitors include:
Network management and IT vendors
Cloud and application performance monitoring vendors
IT service management vendors
Database management vendors
SolarWinds is the 169th largest software company in the world as measured by market cap.
SolarWinds’ Financials
As of June 2024, SolarWinds’ market capitalization was $2 billion.
SolarWinds’ 2023 annual report reported the company’s financial results for the 2023 fiscal year (FY) ended Dec. 31, 2023. Additionally, on May 2, 2024, the company announced financial results for the quarter ended March 31, 2024.
SolarWinds generates revenue from fees for subscriptions to its software-as-a-service (SaaS) and time-based license agreements. Maintenance and license sales of on-premises network, systems, storage, and database management perpetual license products also contribute to revenue.
The company’s objective is to increase subscription revenue by selling more subscriptions than perpetual licenses.
The company operates as a single business segment but breaks down recurring and non-recurring revenue by the aforementioned subscriptions, maintenance, and license categories.
Total Revenue
For FY 2023, total revenue was $758.7 million, an increase of 5% over the previous year’s $719 million. For the first quarter of FY 2024, total revenue was $193.3 million, an increase of 4.4% over the previous year’s first quarter.
Subscription (Recurring)
For FY 2023, Subscription revenue was $234.2 million, an increase of 40% over the previous year’s revenue. For the first quarter of FY 2024, it was $68.7 million, an increase of 26% over the previous year’s first quarter.
Maintenance (Recurring)
For FY 2023, Maintenance revenue was $462 million, an increase of 0.6% over the previous year’s revenue. For the first quarter of FY 2024, it was $111.7 million, a decrease of 2.4% from the previous year’s first quarter.
License (Non-Recurring)
For FY 2023, License revenue was $62.4 million, a decrease of 32% from the previous year’s revenue. For the first quarter of FY 2024, it was $12.8 million, a decrease of 25% from the previous year’s first quarter.
Operating Income
For FY 2023, operating income was $150.3 million, an increase over the previous year’s loss of $(819) million. For the first quarter of FY 2024, operating income was $46.89 million, an increase over the $35.83 million of the previous year’s first quarter.
Net Income
For FY 2023, the net loss was $(9.1) million, a better performance than the previous year’s loss of $(929) million. For the first quarter of FY 2024, net income was $15.6 million, an increase over the net loss of $(5.6) million in the previous year’s first quarter.
History and Leadership
SolarWinds was founded by brothers David and Donald Yonce in 1999 in Tulsa, Okla. to provide businesses with IT management assistance. In 2006, the company moved its headquarters to Austin, Tex.
In 2015, the company was sold to private equity investors. It completed a second IPO in 2018.
Since January 2021, Sudhakar Ramakrishna has been SolarWinds’ President and CEO. He has 25 years of tech experience in cloud, mobility, networking, security, and collaboration markets. He previously served in leadership roles at Pulse Secure, Citrix, Motorola, and U.S. Robotics.
J. Barton Kalsu is Executive Vice President, Chief Financial Officer and Treasurer. He joined the company in 2007 to serve as Chief Accountant and Vice President, Finance. He previously worked for JPMorgan Chase and Red Hat.
Cullen Childress is Senior Vice President of Product and came to SolarWinds with extensive experience founding software startups and directing successful software product groups.
Recent Developments
• In April 2024, SolarWinds celebrated its 25th anniversary and its leadership as a provider of cutting-edge solutions for companies as they evolve digitally. The company released its SolarWinds IT Evolution Survey, which underscored the massive changes to enterprise technology that have occurred over the past two-plus decades and provided noteworthy insights from technology pros.
• In October 2023, the U.S. Securities and Exchange Commission leveled charges against SolarWinds and chief information security officer, Tim Brown, for “fraud and internal control failures relating to allegedly known cybersecurity risks and vulnerabilities.” The SEC alleged that the company misled investors by disclosing hypothetical risks rather than specific, known problems with its cybersecurity practices and increasingly elevated risks to it. In 2020, the company had announced a two-year cyberattack.
• In May 2023, the company announced that it would be incorporating transformative AI and machine learning capabilities into its IT service management solutions. The AI features would help customers solve everyday IT problems and provide guided incident resolution to resolve complex issues.
What’s the Value of a Share of SolarWinds?
On June 19, 2024, a share of SolarWinds was trading at $11.93.
Is SolarWinds Still in Business?
Yes, it is. But it has had recent challenges. The SEC charged the company in late 2023 with fraud for mishandling a prolonged cyberattack from 2018 to 2020. This complaint was amended in 2024 to provide additional details. More than 50 tech and cybersecurity industry leaders have called for the dismissal of the SEC complaint.
Who Was Affected by the SolarWinds Hack?
Over 18,000 clients were affected by the cyberattack via a legitimate software patch issued by the company. Some of the organizations whose security was breached as a result include the Department of Homeland Security, the State Department, the Treasury Department, AT&T, Microsoft, and Cisco.
The Bottom Line
SolarWinds is a software company that produces and delivers observability and information technology infrastructure management software to companies large and small. Its goal is to provide effective solutions that can improve customers’ productivity and reduce product complexity and costs.