SolarWinds Earnings: Here’s Why the Stock is Falling Now

SolarWinds, Inc. (NYSE:SWI) delivered a profit and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 7.89%.

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SolarWinds, Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased 23.33% to $0.37 in the quarter versus EPS of $0.30 in the year-earlier quarter.

Revenue: Rose 22.17% to $72.9 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: SolarWinds, Inc. reported adjusted EPS income of $0.37 per share. By that measure, the company missed the mean analyst estimate of $0.38. It missed the average revenue estimate of $75.61 million.

Quoting Management: “The first quarter of 2013 provides a good example of the overall strength of the business model we have built at SolarWinds. 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. However, given 31% 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,” said Kevin Thompson, SolarWinds’ Chief Executive Officer.

Key Stats (on next page)…

Revenue decreased 0.86% from $73.53 million in the previous quarter. EPS increased 2.78% from $0.36 in the previous quarter.

Looking Forward: Analysts have a more positive outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has risen from a profit of $0.37 to a profit $0.39. For the current year, the average estimate has moved up from a profit of $1.54 to a profit of $1.62 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)

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