SolarWinds (SWI) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $193.3 million, up 4–4.4% year-over-year, with 93% from recurring sources and strong subscription growth; subscription ARR grew 36–36.5% to $269.9–$270 million.

• Adjusted EBITDA rose 17% year-over-year to $92.5 million, with a 47.9–48% margin, marking the highest in 15 quarters.

• Net income for Q2 was $11.1 million, up from $0.3 million in Q2 2023; diluted EPS was $0.06.

• Maintenance renewal rate remained high at 97% for the trailing twelve months; large customer base expanded to 1,042 with $100,000+ ARR.

• Product innovation continued with AI-driven enhancements, new ITSM maturity tools, and database performance improvements; celebrated 25th anniversary and appointed Lewis Black as CFO.

Financial highlights

• Q2 2024 total revenue: $193.3 million (up 4–4.4% year-over-year); subscription revenue: $70 million (up 31–31.2%); maintenance revenue: $110–110.3 million (down 5%); license revenue: $12.9–13 million (down 17–17.2%).

• Total ARR reached $704.7–705 million, up 7–7.2% year-over-year.

• Adjusted EBITDA was $92–92.5 million, with a 48% margin.

• Non-GAAP diluted EPS was $0.26, above guidance.

• Cash and equivalents plus short-term investments totaled $169.6–170 million at quarter end.

Outlook and guidance

• Q3 2024 revenue expected between $191–$196 million (approx. 2% year-over-year growth at midpoint); adjusted EBITDA: $90–$93 million (approx. 8% growth at midpoint); non-GAAP diluted EPS: $0.24–$0.26.

• Full-year 2024 revenue guidance: $778–$788 million (approx. 3% growth at midpoint); adjusted EBITDA: $368–$375 million (approx. 13% growth at midpoint); non-GAAP EPS: $1.04–$1.08.

• Management expects continued growth in subscription revenue as customers transition from perpetual licenses, with license revenue expected to decline.

• International revenue is anticipated to increase slightly as a percentage of total revenue.

• Ongoing legal and professional costs related to the Cyber Incident are expected to continue and could be material.