SolarWinds (SWI): N-able Owner Q2 Earnings Preview

SolarWinds (SWI), which acquired N-able Technologies in May 2013, is set to announce Q2 2013 earnings on Thursday, July 25. The earnings statement could provide more clues about SolarWinds’ plans for N-able and the managed services software market.

At the time of the $120 million acquisition, SolarWinds said the N-able deal will negatively impact earnings by about 11 cents per share in 2013. That stament spooked investors a bit. But SolarWinds is focused on a long-term strategy and believes N-able’s total addressable market opportunity is massive. SolarWinds CEO Kevin Thompson also asserted that N-able leads the fragmented RMM (remote monitoring and management) software market. 

SolarWinds Plus N-able Equals Growth?

During the July 25 earnings call, it’s a safe bet Thompson will reiterate N-able’s value while also updating investors on the integration process. 

No doubt, Thomspon remains focused on growth. During SolarWinds’ Q1 2013 earnings call in April, he conceded that the company’s quarterly growth rate at the time (22 percent year over year) was not meeting expectations. “While many software companies will be satisfied with revenue growth of 22%, we are not. We believe that we have a large and relatively untapped market opportunity and that we are capable of consistently delivering meaningfully higher growth rates than our first quarter 2013 growth rate of 22%.”

Surely, N-able plays a key role in that growth strategy. The deal could allow SolarWinds to move down-market from enterprises and mid-market customers into the SMB sector, where N-able’s MSP base is strong. But on the flip-side rivals like Kaseya — recently acquired by Insight Venture Partners — are trying to move upstream. And new potential rivals — including the just-launched LogMeIn channel partner program — seem to emerge daily. 

All that said, the spotlight will shift to SolarWinds and the N-able buyout during the July 25 earnings call. We’ll offer updates at that time.