Kevin Thompson CEO of SolarWinds said the strength of the company39s business model delivered strong revenues and profits in spite of falling short of internal forecasts

Kevin Thompson, CEO of SolarWinds, said the strength of the company's business model delivered strong revenues and profits, in spite of falling short of internal forecasts.

SolarWinds Delivers Strong Q1 Growth, Lowers Full Year Outlook

SolarWinds' strong Q1 revenue and net income still fell short of the company's internal projections. And yet revenue growth remained in the double-digit range.  Here's what it means for the full year forecast.

IT management software maker SolarWinds (NYSE:SWI) reported revenue of $72.9 million, a 22 percent increase in revenue for its first quarter year over year, with icense revenue of $30.7 million for the quarter, a 12 percent increase year over year. Maintenance revenue was $42.2 million, a 31 percent increase over the same period a year ago. (SolarWinds is part of the Talkin' Cloud Stocks Index.) And yet, those results, strong as they were, was not as high as what the company had been shooting for. Here are the details.

First, a look at the margins. Diluted earnings per share hit 30 cents in Q1, compared to 23 cents for the same period last year.  CEO Kevin Thompson provided the following perspective on the quarter in a prepared statement:

"Despite a good start to the first quarter, solid interest in many of our core products did not translate into the level of new license sales we anticipated, and we did not deliver the level of new license sales and total revenue growth we expected for the first quarter of 2013,” he said. “However, given 31 percent year-over-year maintenance revenue growth along with the operating leverage inherent in our unique business model, we were once again able to deliver strong profitability that exceeded expectations."

Thompson attributed the strong results in spite of challenges to the company’s solid business model.

Q1 Product News

The company said core product transaction volume for the first quarter of 2013 grew by 53 percent compared to the first quarter of 2012.

SolarWinds hit several milestones in Q1 including the release of its first full-featured free product, Alert Central, designed to simplify alert management. The company also updated SolarWinds Server and Application Monitor.

Looking ahead to Q2, SolarWinds expects total revenue in the range of $77.8 million to $78.8 million, or 21 percent to 23 percent growth over the second quarter of 2012.

For the full year the company is lowering its outlook to revenue in the range of $326.5 million to $334.0 million, or 21 percent to 24 percent year-over-year growth. (Previously the company had forecast revenue of $330 million to $338 million or 23 percent to 26 percent growth year over year.)


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