0001739942False00017399422024-08-012024-08-01

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 8-K
 CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
August 1, 2024
Date of Report (Date of earliest event reported)
 
SOLARWINDS CORPORATION
(Exact name of registrant as specified in its charter)
   
Delaware001-3871181-0753267
(State or other jurisdiction
of incorporation)		(Commission
File Number)		(IRS Employer
Identification No.)
7171 Southwest Parkway
Building 400
Austin, Texas 78735
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (512) 682-9300

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, $0.001 par valueSWINew York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 


Item 2.02Results of Operations and Financial Condition.
On August 1, 2024, SolarWinds Corporation (“SolarWinds” or the “Company”) issued a press release regarding, and will hold a conference call announcing, its financial results for the fiscal quarter ended June 30, 2024. A copy of SolarWinds' press release is attached hereto as Exhibit 99.1.
The information contained in this report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. The information in this report shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
SolarWinds refers to non-GAAP financial information in both the press release and the conference call. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.

Item 9.01Financial Statements and Exhibits.
(d)Exhibits.


Exhibit
Number		  Description
 Press release issued by SolarWinds Corporation dated August 1, 2024.
104Cover Page Interactive Data File (formatted as Inline XBRL)



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SOLARWINDS CORPORATION
Dated:August 1, 2024By:/s/ J. Barton Kalsu
J. Barton Kalsu
Chief Financial Officer


Exhibit 99.1
sw_logox.jpg
SolarWinds Announces Second Quarter 2024 Results
AUSTIN, Texas - August 1, 2024 - SolarWinds Corporation (NYSE:SWI), a leading provider of simple, powerful, secure observability and IT management software, today reported results for its second quarter ended June 30, 2024.
Second Quarter Financial Highlights
•Total revenue for the second quarter of $193.3 million, representing 4% year-over-year growth, and total recurring revenue representing 93% of total revenue.
•Net income for the second quarter of $11.1 million.
•Adjusted EBITDA for the second quarter of $92.5 million, representing a margin of 48% of total revenue and 17% year-over-year growth.
•Subscription Annual Recurring Revenue (ARR) of $269.9 million, representing year-over-year growth of 36%, and Total ARR of $704.7 million, representing year-over-year growth of 7%.
Please see the tables below for a reconciliation of our GAAP to non-GAAP results.
“In Q2, we continued the momentum that we have been building over the last several quarters, exceeding the high end of our guidance for total revenue and adjusted EBITDA, and delivering our highest quarterly adjusted EBITDA of the past 15 quarters,” said SolarWinds President and Chief Executive Officer Sudhakar Ramakrishna. “I am proud of our team's focus on helping our customers to accelerate their business transformations through solutions built to improve their productivity while lowering complexity and costs. We look forward to continuing our focus on customer success and delivering great business results with our solutions.”
Recent Business Highlights
•In April, SolarWinds celebrated the 25th anniversary of its founding in Tulsa, Oklahoma in 1999.
•In the second quarter, the company announced enhancements to Plan Explorer®—natively built into SolarWinds SQL Sentry®—designed to help database pros improve their operations, performance, and business outcomes, and unveiled updates to SolarWinds Database Performance Analyzer (DPA), which delivers advanced support for PostgreSQL.
•In May, SolarWinds AI, a generative AI engine developed under its new AI by Design framework, debuted in SolarWinds Service Desk, the company’s ITSM solution.
•In June, SolarWinds announced the appointment of Lewis Black as its Executive Vice President, Chief Financial Officer to be effective in August 2024.
•Also in June, SolarWinds released the findings from its 2024 IT Trends Report, AI: Friend or Foe?, based on a survey of nearly 700 IT professionals about their views on artificial intelligence (AI).
Balance Sheet
At June 30, 2024, total cash and cash equivalents and short-term investments were $169.6 million, and total debt was $1.2 billion. The special cash dividend of $168.2 million declared in March was paid on April 15, 2024.
The financial results included in this press release are preliminary and pending final review by the company and its external auditors. Financial results will not be final until SolarWinds files its quarterly report on Form 10-Q for the period. Information about SolarWinds’ use of non-GAAP financial measures is provided below under “Non-GAAP Financial Measures.”
Financial Outlook
As of August 1, 2024, SolarWinds is providing its financial outlook for the third quarter and its updated financial outlook for the full year of 2024. The financial information below represents forward-looking non-GAAP financial


information, including an estimate of adjusted EBITDA and non-GAAP diluted earnings per share. These non-GAAP financial measures exclude, among other items mentioned below, stock-based compensation expense and related employer-paid payroll taxes, amortization, certain expenses related to the cyberattack that occurred in December 2020 (the “Cyber Incident”), restructuring costs, and other costs related to non-recurring items. We have not reconciled our estimates of these non-GAAP financial measures to their most directly comparable GAAP measure as a result of uncertainty regarding, and the potential variability of, these excluded items in future periods. Accordingly, reconciliation is not available without unreasonable effort, although it is important to note that these excluded items could be material to our results computed in accordance with GAAP in future periods. Our reported results provide reconciliations of non-GAAP financial measures to their nearest GAAP equivalents.
Financial Outlook for Third Quarter of 2024
SolarWinds’ management currently expects to achieve the following results for the third quarter of 2024:
•Total revenue in the range of $191 to $196 million, representing growth of approximately 2% as compared to the third quarter of 2023 total revenue at the midpoint of the range.
•Adjusted EBITDA of approximately $90 to $93 million, representing growth of approximately 8% over the third quarter of 2023 adjusted EBITDA at the midpoint of the range.
•Non-GAAP diluted earnings per share of $0.24 to $0.26.
•Weighted average outstanding diluted shares of approximately 173.6 million.
Financial Outlook for Full Year of 2024
SolarWinds’ management currently expects to achieve the following results for the full year of 2024:
•Total revenue in the range of $778 to $788 million, representing growth of approximately 3% over the full year of 2023 total revenue at the midpoint of the range.
•Adjusted EBITDA of approximately $368 to $375 million, representing growth of approximately 13% over the full year of 2023 adjusted EBITDA at the midpoint of the range.
•Non-GAAP diluted earnings per share of $1.04 to $1.08.
•Weighted average outstanding diluted shares of approximately 173.8 million.
The conference call will provide additional details on the company's outlook.
Conference Call and Webcast
In conjunction with this announcement, SolarWinds will host a conference call today to discuss its financial results, business and business outlook at 7:30 a.m. CT (8:30 a.m. ET/5:30 a.m. PT). A live webcast of the call and materials presented during the call will be available on the SolarWinds Investor Relations website at http://investors.solarwinds.com. A live dial-in will be available domestically at +1 (888) 510-2008 and internationally at +1 (646) 960-0306. To access the live call, please dial in 5-10 minutes before the scheduled start time and enter the conference passcode 2975715. A replay of the webcast will be available on a temporary basis shortly after the event on the SolarWinds Investor Relations website.
Forward-Looking Statements
This press release contains “forward-looking” statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our financial outlook for the third quarter and the full year 2024. These forward-looking statements are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements that are not historical facts and may be identified by terms such as “aim,” “anticipate,” “believe,” “can,” “could,” “seek,” “should,” “feel,” “expect,” “will,” “would,” “plan,” “project,” “intend,” “estimate,” “continue,” “may,” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the following: (a) risks related to the Cyber Incident, including with respect to (1) litigation and investigation risks related to the Cyber Incident, including as a result of the pending civil complaint filed by the Securities and Exchange Commission


against us and our Chief Information Security Officer, including that we have and may continue to incur significant costs in defending ourselves and may be unsuccessful in doing so, resulting in exposure to potential penalties, judgements, fines, settlement-related costs and other costs and liabilities related thereto, (2) numerous financial, legal, reputational and other risks to us related to the Cyber Incident, including risks that the incident, SolarWinds’ response thereto or litigation related to the Cyber Incident has and may in the future result in the loss of business as a result of termination or non-renewal of agreements, or reduced purchases or upgrades of our products, reputational damage adversely affecting customer, partner, and vendor relationships and investor confidence, increased attrition of personnel and distraction of key and other personnel, indemnity obligations, damages for contractual breach, penalties for violation of applicable laws or regulations, significant costs for remediation, and the incurrence of other liabilities and risks related to the impact of any such costs and liabilities, and (3) the possibility that our steps to secure our internal environment, improve our product development environment, and ensure the security and integrity of the software that we deliver to our customers may not be successful or sufficient to protect against future threat actors or attacks, or be perceived by existing and prospective customers as sufficient to address the harm caused by the Cyber Incident; (b) other risks related to cybersecurity, including that we have experienced and may in the future experience other security incidents and have had and may in the future have vulnerabilities in our systems and services, including to a greater degree, with respect to our legacy products, which vulnerabilities have been and may in the future be exploited, whether through the actions or inactions of our employees, our customers, insider threats or otherwise, which may result in compromises or breaches of our and our customers’ systems or, theft or misappropriation of our and our customers’ confidential, proprietary or personal information, as well as exposure to legal and other liabilities, including the related risk of higher customer, employee and partner attrition and the loss of key personnel, as well as negative impacts to our sales, renewals and upgrades; (c) risks related to the evolving breadth of our sales motion and challenges, investments and additional costs associated with increased selling efforts toward enterprise customers and adopting a subscription first approach; (d) risks relating to increased investments in, and the timing and success of, our ongoing transformation from monitoring to observability; (e) risks related to any shifts in our revenue mix and the timing of how we recognize revenue as we transition to subscription; (f) risks related to using artificial intelligence (“AI”) in our business and our solutions, including risks related to evolving regulation of AI, machine learning and the receipt, collection, storage, processing and transfer of data as well as the threat of cyberattacks created through AI or leveraging AI; (g) potential foreign exchange gains and losses related to expenses and sales denominated in currencies other than the functional currency of an associated entity; (h) any of the following factors either generally or as a result of the impacts of global macroeconomic conditions, including the wars in Israel and Ukraine, geopolitical tensions involving China, disruptions in the global supply chain and energy markets, inflation, uncertainty over liquidity concerns in the broader financial services industry and foreign currency exchange rates and their impact on the global economy or on our business operations and financial condition or on the business operations and financial conditions of our customers, their end-customers and our prospective customers: (1) reductions in information technology spending or delays in purchasing decisions by our customers, their end-customers and our prospective customers, (2) the inability to sell products to new customers or to sell additional products or upgrades to our existing customers or to convert our maintenance customers to subscription products, (3) any decline in our renewal or net retention rates or any delay or loss of U.S. government sales, (4) the inability to generate significant volumes of high quality sales leads from our digital marketing initiatives and convert such leads into new business at acceptable conversion rates, (5) the timing and adoption of new products, product upgrades or pricing model changes by us or our competitors, (6) changes in interest rates, (7) risks associated with our international operations and any international expansion efforts and (8) ongoing sanctions and export controls; (i) the possibility that our operating income could fluctuate and may decline as percentage of revenue as we make further expenditures to expand our infrastructure, product offerings and sales motion in order to support additional growth in our business; (j) our ability to compete effectively in the markets we serve and the risks of increased competition as we enter new markets; (k) our ability to attract, retain and motivate employees; (l) any violation of legal and regulatory requirements or any misconduct by our employees or partners; (m) risks associated with increased efforts and costs to comply with ongoing changes in applicable laws and regulations; (n) our inability to successfully identify, complete, and integrate acquisitions and manage our growth effectively; (o) risks associated with our status as a controlled company; and (p) such other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission, including the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2023 filed on February 16, 2024, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 that SolarWinds anticipates filing on or before August 9, 2024. All information provided in this release is as of the date hereof, and SolarWinds undertakes no duty to update this information except as required by law.


Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with GAAP, we use certain non-GAAP financial measures to clarify and enhance our understanding, and aid in the period-to-period comparison, of our performance. We believe that these non-GAAP financial measures provide supplemental information that is meaningful when assessing our operating performance because they exclude the impact of certain amounts that our management and board of directors do not consider part of core operating results when assessing our operational performance, allocating resources, preparing annual budgets and determining compensation. Accordingly, these non-GAAP financial measures may provide insight to investors into the motivation and decision-making of management in operating the business.
SolarWinds also believes that investors and securities analysts use these non-GAAP financial measures to (a) compare and evaluate its performance from period to period and (b) compare its performance to those of its competitors. These non-GAAP measures exclude certain items that can vary substantially from company to company depending upon their financing and accounting methods, the book value of their assets, their capital structures, and the method by which their assets were acquired.
There are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with GAAP, do not reflect a comprehensive system of accounting and may not be completely comparable to similarly titled measures of other companies due to potential differences in the exact calculation method between companies. Certain items that are excluded from these non-GAAP financial measures can have a material impact on operating and net income (loss).
As a result, these non-GAAP financial measures have limitations and should not be considered in isolation from, or as a substitute for, the most comparable GAAP measures. SolarWinds' management and board of directors compensate for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measure. Set forth in the tables below are the corresponding GAAP financial measures for each non-GAAP financial measure presented. Investors are encouraged to review the reconciliations of these non-GAAP financial measures to their most comparable GAAP financial measures that are set forth in the tables below.
Non-GAAP Revenue on a Constant Currency Basis. We provide non-GAAP revenue on a constant currency basis to provide a framework for assessing our performance, excluding the effect of foreign currency rate fluctuations. To present this information, current period results for entities reporting in currencies other than U.S. Dollars are converted into U.S. Dollars at the average exchange rates in effect during the corresponding prior period presented. We believe that providing non-GAAP revenue on a constant currency basis facilitates the comparison of revenue to prior periods.
Non-GAAP Cost of Revenue and Non-GAAP Operating Income. We provide non-GAAP cost of revenue and non-GAAP operating income and related non-GAAP margins excluding such items as amortization of acquired intangible assets, stock-based compensation expense and related employer-paid payroll taxes, acquisition and other costs, restructuring costs, and Cyber Incident costs. Management believes these measures are useful for the following reasons:

•Amortization of Acquired Intangible Assets. We provide non-GAAP information that excludes expenses related to purchased intangible assets associated with our acquisitions including our acquired technologies. We believe that eliminating this expense from our non-GAAP measures is useful to investors because the amortization of acquired intangible assets can be inconsistent in amount and frequency and is significantly impacted by the timing and magnitude of our acquisition transactions, which also vary in frequency from period to period. Accordingly, we analyze the performance of our operations in each period without regard to such expenses.
•Stock-Based Compensation Expense and Related Employer-Paid Payroll Taxes. We provide non-GAAP information that excludes expenses related to stock-based compensation and related employer-paid payroll taxes. We believe that the exclusion of stock-based compensation expense provides for a better comparison of our operating results to prior periods and to our peer companies as the calculations of stock-based compensation vary from period to period and company to company due to different valuation methodologies, subjective assumptions, and the variety of award types. Employer-paid payroll taxes on stock-based compensation is dependent on our stock price and the timing of the taxable events related to the equity awards, over which our management has little control and does not correlate to the core


operation of our business. Because of these unique characteristics of stock-based compensation and related employer-paid payroll taxes, management excludes these expenses when analyzing the organization’s business performance.
•Acquisition and Other Costs. We exclude certain expense items resulting from acquisitions, such as legal, accounting and advisory fees, changes in fair value of contingent consideration, costs related to integrating the acquired businesses, deferred compensation, severance and retention expense. In addition, we exclude certain other non-recurring costs, including internal investigation costs. We consider these adjustments, to some extent, to be unpredictable and dependent on a significant number of factors that are outside of our control. Furthermore, acquisitions result in operating expenses we would not have otherwise incurred in the normal course of our organic business operations. We believe that providing these non-GAAP measures that exclude acquisition and other costs allows users of our financial statements to better review and understand the historical and current results of our operations, and also facilitates comparisons to our historical results and results of less acquisitive peer companies, both with and without such adjustments.
•Restructuring Costs. We provide non-GAAP information that excludes restructuring costs such as severance paid in connection with corporate restructuring activities, as well as costs related to the separation of employment with executives of the company. In addition, we exclude lease impairments and other costs incurred in connection with the exiting of certain leased facilities and other contracts as they relate to our corporate restructuring and exit activities. These costs are infrequent, inconsistent in amount and are significantly impacted by the timing and nature of these events. Therefore, although we may incur these types of expenses in the future, we believe that eliminating these costs for purposes of calculating the non-GAAP financial measures facilitates a more meaningful evaluation of our operating performance and comparisons to our past operating performance.
•Cyber Incident Costs. We exclude certain expenses resulting from the Cyber Incident. Expenses include costs to investigate and remediate the Cyber Incident, costs of lawsuits and investigations related thereto, including settlement costs and legal and other professional services, and estimated loss contingencies. Cyber Incident costs are provided net of insurance reimbursements, although the timing of recognizing insurance reimbursements has differed from the timing of recognizing the associated expenses. We expect to incur significant legal and other professional services expenses associated with the Cyber Incident in future periods. The Cyber Incident results in operating expenses that we would not have otherwise incurred by us in the normal course of our organic business operations. We believe that providing non-GAAP measures that exclude these costs facilitates a more meaningful evaluation of our operating performance and comparisons to our past operating performance. We expect to continue to invest significantly in cybersecurity, and such additional investments are not included in the net Cyber Incident costs reported.
Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) Per Diluted Share. We believe that the use of non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share is helpful to our investors to clarify and enhance their understanding of past performance and future prospects. Non-GAAP net income (loss) is calculated as net income (loss) excluding the adjustments to non-GAAP cost of revenue and non-GAAP operating income, certain other non-operating gains and losses and the income tax effect of the non-GAAP exclusions. We define non-GAAP net income (loss) per diluted share as non-GAAP net income (loss) divided by the weighted average outstanding diluted common shares.
Adjusted EBITDA and Adjusted EBITDA Margin. We regularly monitor adjusted EBITDA and adjusted EBITDA margin, as it is a measure we use to assess our operating performance. We define adjusted EBITDA as net income (loss), excluding amortization of acquired intangible assets and developed technology, depreciation expense, stock-based compensation expense and related employer-paid payroll taxes, restructuring costs, acquisition and other costs, Cyber Incident costs, net, interest expense, net, debt-related costs including fees related to our credit agreements, debt extinguishment and refinancing costs, unrealized foreign currency (gains) losses, and income tax expense (benefit). We define adjusted EBITDA margin as adjusted EBITDA divided by total revenue. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are: although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements. Additionally, adjusted EBITDA: excludes the impact of restructuring impairment charges related to exited leased facilities which may continue to require future cash rent payments; does not reflect changes in, or cash requirements for, our working capital needs; does not reflect the significant


interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; and does not reflect tax payments that may represent a reduction in cash available to us. Other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
Unlevered Free Cash Flow. Unlevered free cash flow is a measure of our liquidity used by management to evaluate cash flow from operations after the deduction of capital expenditures and prior to the impact of our capital structure, acquisition and other costs, restructuring costs, Cyber Incident costs, net, employer-paid payroll taxes on stock awards and other one-time items, that can be used by us for strategic opportunities and strengthening our balance sheet. However, given our debt obligations, unlevered free cash flow does not represent residual cash flow available for discretionary expenses.
Other Defined Terms
Subscription Annual Recurring Revenue (Subscription ARR). Subscription ARR represents the annualized recurring value of all active subscription contracts at the end of a reporting period.
Total Annual Recurring Revenue (Total ARR). Total ARR represents the sum of Subscription ARR and the annualized value of all maintenance contracts related to perpetual licenses active at the end of a reporting period assuming those contracts are renewed at their existing terms.
We use Subscription ARR and Total ARR to better understand and assess the performance of our business, as our mix of revenue generated from recurring revenue has increased in recent years. Subscription ARR and Total ARR each provides a normalized view of customer retention, renewal and expansion, as well as growth from new customers. Subscription ARR and Total ARR should each be viewed independently of revenue and deferred revenue and are not intended to be combined with or to replace either of those items.

#SWIfinancials
About SolarWinds
SolarWinds (NYSE:SWI) is a leading provider of simple, powerful, secure observability and IT management software built to enable customers to accelerate their digital transformation. Our solutions provide organizations worldwide—regardless of type, size, or complexity—with a comprehensive and unified view of today’s modern, distributed, and hybrid network environments. We continuously engage IT service and operations professionals, DevOps and SecOps professionals, and Database Administrators (DBAs) to understand the challenges they face in maintaining high-performing and highly available IT infrastructures, applications, and environments. The insights we gain from them, in places like our THWACK® community, allow us to address customers’ needs now, and in the future. Our focus on the user and our commitment to excellence in end-to-end hybrid IT management have established SolarWinds as a worldwide leader in solutions for observability, IT service management, application performance, and database management. Learn more today at www.solarwinds.com.
The SolarWinds, SolarWinds & Design, Orion, and THWACK trademarks are the exclusive property of SolarWinds Worldwide, LLC or its affiliates, are registered with the U.S. Patent and Trademark Office, and may be registered or pending registration in other countries. All other SolarWinds trademarks, service marks, and logos may be common law marks or are registered or pending registration. All other trademarks mentioned herein are used for identification purposes only and are trademarks of (and may be registered trademarks of) their respective companies.
© 2024 SolarWinds Worldwide, LLC. All rights reserved.
CONTACTS:
Media:Investors:
Jenne Barbour
Phone: 512.498.6804
Media: pr@solarwinds.com		Tim Karaca
Phone: 512.498.6739
Investors: ir@solarwinds.com



SolarWinds Corporation
Condensed Consolidated Balance Sheets
(In thousands, except share and per share information)
(Unaudited)
June 30,December 31,
20242023
Assets
Current assets:
Cash and cash equivalents$158,845 $284,695 
Short-term investments10,705 4,477 
Accounts receivable, net of allowances of $761 and $743 as of June 30, 2024 and December 31, 2023, respectively
88,111 103,455 
Income tax receivable1,024 459 
Prepaid and other current assets24,149 28,241 
Total current assets282,834 421,327 
Property and equipment, net18,852 19,669 
Operating lease assets36,182 43,776 
Deferred taxes133,690 133,224 
Goodwill2,379,739 2,397,545 
Intangible assets, net155,133 183,688 
Other assets, net52,257 51,686 
Total assets$3,058,687 $3,250,915 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$9,505 $9,701 
Accrued liabilities and other43,491 56,643 
Current operating lease liabilities14,225 14,925 
Accrued interest payable889 942 
Income taxes payable42,248 29,240 
Current portion of deferred revenue332,120 344,907 
Current debt obligation12,357 12,450 
Total current liabilities454,835 468,808 
Long-term liabilities:
Deferred revenue, net of current portion42,815 42,070 
Non-current deferred taxes1,896 1,933 
Non-current operating lease liabilities42,839 49,848 
Other long-term liabilities15,578 55,278 
Long-term debt, net of current portion1,195,415 1,190,934 
Total liabilities1,753,378 1,808,871 
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value: 1,000,000,000 shares authorized and 169,377,216 and 166,637,506 shares issued and outstanding as of June 30, 2024 and December 31, 2023 respectively
169 167 
Preferred stock, $0.001 par value: 50,000,000 shares authorized and no shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively
— — 
Additional paid-in capital2,546,118 2,688,854 
Accumulated other comprehensive loss(48,767)(28,103)
Accumulated deficit(1,192,211)(1,218,874)
Total stockholders’ equity1,305,309 1,442,044 
Total liabilities and stockholders’ equity$3,058,687 $3,250,915 


SolarWinds Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share information)
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Revenue:
Subscription$70,033 $53,389 $138,790 $107,746 
Maintenance110,306 116,056 222,026 230,534 
Total recurring revenue180,339 169,445 360,816 338,280 
License12,911 15,589 25,745 32,730 
Total revenue193,250 185,034 386,561 371,010 
Cost of revenue:
Cost of recurring revenue18,481 18,533 36,653 36,927 
Amortization of acquired technologies1,767 3,425 4,431 6,861 
Total cost of revenue20,248 21,958 41,084 43,788 
Gross profit173,002 163,076 345,477 327,222 
Operating expenses:
Sales and marketing55,304 59,838 110,225 125,754 
Research and development26,399 24,081 54,227 47,872 
General and administrative 30,321 34,418 61,629 60,019 
Amortization of acquired intangibles11,492 12,094 23,011 25,099 
Total operating expenses123,516 130,431 249,092 258,744 
Operating income
49,486 32,645 96,385 68,478 
Other income (expense):
Interest expense, net(28,047)(29,443)(54,877)(58,024)
Other income (expense), net
(61)13 (10)(76)
Total other expense(28,108)(29,430)(54,887)(58,100)
Income before income taxes
21,378 3,215 41,498 10,378 
Income tax expense10,274 2,955 14,835 15,739 
Net income (loss)
$11,104 $260 $26,663 $(5,361)
Net income (loss) available to common stockholders
$11,104 $260 $26,663 $(5,361)
Net income (loss) available to common stockholders per share:
Basic income (loss) per share
$0.07 $— $0.16 $(0.03)
Diluted income (loss) per share
$0.06 $— $0.15 $(0.03)
Weighted-average shares used to compute net income (loss) available to common stockholders per share:
Shares used in computation of basic income (loss) per share
168,768 164,193 168,093 163,487 
Shares used in computation of diluted income (loss) per share
172,562 165,386 172,109 163,487 





SolarWinds Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended June 30,
20242023
Cash flows from operating activities
Net income (loss)
$26,663 $(5,361)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization37,794 43,132 
Provision for losses on accounts receivable83 1,293 
Stock-based compensation expense37,526 34,494 
Amortization of debt issuance costs5,360 5,361 
Deferred taxes(4,371)(3,593)
(Gain) loss on foreign currency exchange rates
(162)116 
Lease impairment charges2,141 11,689 
Other non-cash expenses (benefit)(135)245 
Changes in operating assets and liabilities:
Accounts receivable14,009 15,873 
Income taxes receivable(584)(999)
Prepaid and other assets4,844 (9,522)
Accounts payable(165)(3,048)
Accrued liabilities and other(15,037)(29,736)
Accrued interest payable(53)(272)
Income taxes payable(26,575)(6,171)
Deferred revenue(7,944)(3,734)
Net cash provided by operating activities73,394 49,767 
Cash flows from investing activities
Purchases of investments(18,945)(988)
Maturities of investments12,922 26,535 
Purchases of property and equipment(3,932)(1,387)
Capitalized software development costs
(6,996)(6,759)
Purchases of intangible assets(170)(108)
Other investing activities— 564 
Net cash provided by (used in) investing activities(17,121)17,857 
Cash flows from financing activities
Proceeds from issuance of common stock under employee stock purchase plan1,594 1,711 
Repurchase of common stock
(14,270)(10,167)
Exercise of stock options12 112 
Dividends paid(168,162)— 
Repayments of borrowings from credit agreement— (3,113)
Payment of debt issuance costs(1,036)— 
Net cash used in financing activities(181,862)(11,457)
Effect of exchange rate changes on cash and cash equivalents(261)(711)
Net increase (decrease) in cash and cash equivalents
(125,850)55,456 
Cash and cash equivalents
Beginning of period284,695 121,738 
End of period$158,845 $177,194 


Six Months Ended June 30,
20242023
Supplemental disclosure of cash flow information
Cash paid for interest$54,285 $54,935 
Cash paid for income taxes$43,795 $24,140 
Non-cash investing and financing transactions
Stock-based compensation included in capitalized software development costs$565 $644 


SolarWinds Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
(in thousands, except margin data)
GAAP cost of revenue$20,248 $21,958 $41,084 $43,788 
Stock-based compensation expense and related employer-paid payroll taxes(617)(551)(1,207)(1,070)
Amortization of acquired technologies(1,767)(3,425)(4,431)(6,861)
Restructuring costs — — (39)(377)
Non-GAAP cost of revenue$17,864 $17,982 $35,407 $35,480 
GAAP gross profit$173,002 $163,076 $345,477 $327,222 
Stock-based compensation expense and related employer-paid payroll taxes617 551 1,207 1,070 
Amortization of acquired technologies1,767 3,425 4,431 6,861 
Restructuring costs— — 39 377 
Non-GAAP gross profit$175,386 $167,052 $351,154 $335,530 
GAAP gross margin89.5 %88.1 %89.4 %88.2 %
Non-GAAP gross margin90.8 %90.3 %90.8 %90.4 %
GAAP sales and marketing expense$55,304 $59,838 $110,225 $125,754 
Stock-based compensation expense and related employer-paid payroll taxes(5,895)(6,190)(11,097)(11,726)
Restructuring costs (154)(43)(1,062)(2,617)
Non-GAAP sales and marketing expense$49,255 $53,605 $98,066 $111,411 
GAAP research and development expense$26,399 $24,081 $54,227 $47,872 
Stock-based compensation expense and related employer-paid payroll taxes(3,594)(3,413)(7,085)(6,425)
Restructuring costs (260)(2)(889)(242)
Non-GAAP research and development expense$22,545 $20,666 $46,253 $41,205 
GAAP general and administrative expense$30,321 $34,418 $61,629 $60,019 
Stock-based compensation expense and related employer-paid payroll taxes(9,980)(8,389)(19,420)(16,479)
Acquisition and other costs(485)(69)(992)(124)
Restructuring costs (1,327)(7,190)(3,125)(14,958)
Cyber Incident costs, net(2,104)(580)(5,109)7,190 
Non-GAAP general and administrative expense$16,425 $18,190 $32,983 $35,648 


 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
(in thousands, except margin data)
GAAP operating expenses$123,516 $130,431 $249,092 $258,744 
Stock-based compensation expense and related employer-paid payroll taxes(19,469)(17,992)(37,602)(34,630)
Amortization of acquired intangibles(11,492)(12,094)(23,011)(25,099)
Acquisition and other costs(485)(69)(992)(124)
Restructuring costs(1,741)(7,235)(5,076)(17,817)
Cyber Incident costs, net(2,104)(580)(5,109)7,190 
Non-GAAP operating expenses$88,225 $92,461 $177,302 $188,264 
GAAP operating income $49,486 $32,645 $96,385 $68,478 
Stock-based compensation expense and related employer-paid payroll taxes20,086 18,543 38,809 35,700 
Amortization of acquired technologies1,767 3,425 4,431 6,861 
Amortization of acquired intangibles11,492 12,094 23,011 25,099 
Acquisition and other costs485 69 992 124 
Restructuring costs1,741 7,235 5,115 18,194 
Cyber Incident costs, net2,104 580 5,109 (7,190)
Non-GAAP operating income$87,161 $74,591 $173,852 $147,266 
GAAP operating margin25.6 %17.6 %24.9 %18.5 %
Non-GAAP operating margin45.1 %40.3 %45.0 %39.7 %
GAAP net income (loss) $11,104 $260 $26,663 $(5,361)
Stock-based compensation expense and related employer-paid payroll taxes20,086 18,543 38,809 35,700 
Amortization of acquired technologies1,767 3,425 4,431 6,861 
Amortization of acquired intangibles11,492 12,094 23,011 25,099 
Acquisition and other costs485 69 992 124 
Restructuring costs1,741 7,235 5,115 18,194 
Cyber Incident costs, net2,104 580 5,109 (7,190)
Loss on extinguishment of debt— — 65 — 
Tax expense associated with above adjustments
(4,481)(8,140)(10,064)(6,478)
Non-GAAP net income$44,298 $34,066 $94,131 $66,949 
GAAP diluted earnings (loss) per share
$0.06 $— $0.15 $(0.03)
Non-GAAP diluted earnings per share$0.26 $0.21 $0.55 $0.41 




Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA
(Unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
(in thousands, except margin data)
Net income (loss)
$11,104 $260 $26,663 $(5,361)
Amortization and depreciation18,398 20,027 37,438 40,958 
Income tax expense10,274 2,955 14,835 15,739 
Interest expense, net28,047 29,443 54,877 58,024 
Unrealized foreign currency (gains) losses
68 (68)(162)116 
Acquisition and other costs485 69 992 124 
Debt-related costs
189 98 890 203 
Stock-based compensation expense and related employer-paid payroll taxes20,086 18,543 38,809 35,700 
Restructuring costs(1)
1,741 7,235 5,115 18,194 
Cyber Incident costs, net2,104 580 5,109 (7,190)
Adjusted EBITDA$92,496 $79,142 $184,566 $156,507 
Adjusted EBITDA margin47.9 %42.8 %47.7 %42.2 %
_______
(1)Restructuring costs include non-cash lease impairment and other charges incurred in connection with the exiting of certain leased facilities of $0.9 million and $7.1 million for the three months ended June 30, 2024 and 2023, respectively, and $2.5 million and $13.9 million for the six months ended June 30, 2024 and 2023, respectively.



Reconciliation of Revenue to Non-GAAP Revenue
on a Constant Currency Basis
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
 20242023Growth Rate20242023Growth Rate
(in thousands, except percentages)
Total revenue$193,250 $185,034 4.4 %$386,561 $371,010 4.2 %
Estimated foreign currency impact(1)
253 — 0.1 (154)— — 
Non-GAAP total revenue on a constant currency basis$193,503 $185,034 4.6 %$386,407 $371,010 4.2 %
_______
(1)The estimated foreign currency impact is calculated using the average foreign currency exchange rates in the comparable prior year monthly periods and applying those rates to foreign-denominated revenue in the corresponding monthly periods in the three and six months ended June 30, 2024.










Reconciliation of Unlevered Free Cash Flow
(Unaudited)
 Six Months Ended June 30,
 20242023
(in thousands)
Net cash provided by operating activities$73,394 $49,767 
Capital expenditures(1)
(11,098)(8,254)
Free cash flow62,296 41,513 
Cash paid for interest and other debt related items50,395 53,139 
Cash paid for acquisition and other costs, restructuring costs, Cyber Incident costs, net(2), employer-paid payroll taxes on stock awards and other one-time items
12,772 26,587 
Unlevered free cash flow (excluding forfeited tax shield)125,463 121,239 
Forfeited tax shield related to interest payments(3)
(14,114)(14,283)
Unlevered free cash flow
$111,349 $106,956 
_______________
(1)Includes purchases of property and equipment, capitalized software development costs and purchases of intangible assets.
(2)Includes the $26 million consolidated putative class action lawsuit settlement payment made during the six months ended June 30, 2023.
(3)Forfeited tax shield related to interest payments assumes a statutory rate of 26.0% for both the six months ended June 30, 2024 and 2023.


v3.24.2.u1
COVER PAGE COVER PAGE
Aug. 01, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Aug. 01, 2024
Entity Registrant Name SOLARWINDS CORP
Entity Incorporation, State or Country Code DE
Entity File Number 001-38711
Entity Tax Identification Number 81-0753267
Entity Address, Address Line One 7171 Southwest Parkway
Entity Address, Address Line Two Building 400
Entity Address, City or Town Austin
Entity Address, State or Province TX
Entity Address, Postal Zip Code 78735
City Area Code 512
Local Phone Number 682-9300
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, $0.001 par value
Trading Symbol SWI
Security Exchange Name NYSE
Entity Emerging Growth Company false
Entity Central Index Key 0001739942
Amendment Flag false
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