Why Did SolarWinds Shares Plunge 10% Today?

  • SolarWinds Corp SWI reported a third-quarter FY21 revenue decline of 2.1% year-on-year to $181.3 million, beating the consensus of $178.6 million.
  • Maintenance revenue was flat at $119.7 million. Subscription revenue climbed 20.2% Y/Y to $32.3 million.
  • Margins: The non-GAAP gross margin contracted 210 bps to 90.9%, and the non-GAAP EBITDA margin contracted 1,150 bps to 41.5%.
  • Non-GAAP EPS of $0.37 beat the consensus of $0.27.
  • SolarWinds generated $81.9 million in operating cash flow during the nine months ended September 30 and held $708.9 million in cash and equivalents.
  • We continue to make significant progress on a number of key priorities, including customer retention, due to our employees' dedication, the relevance of our solutions, and our partners' and customers' commitment to SolarWinds, CEO Sudhakar Ramakrishna said.
  • Outlook: SolarWinds sees Q4 revenue of $180 million- $184 million, below the consensus of $184.6 million.
  • It sees a Q4 EPS of $0.25 - $0.26 below the consensus of $0.29.
  • SolarWinds sees FY21 revenue of $712 million - $716 million below the consensus of $849.2 million.
  • It sees an FY21 EPS of $1.14 - $1.15 below the consensus of $1.47.
  • Price action: SWI shares closed lower by 9.42% at $16.63 on Thursday.
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