A SolarWinds IPO (initial public offering) plan now seeks to rase roughly $323 million, according to an updated SEC filing on October 5. Private equity firms Thoma Bravo and Silver Lake Partners will retain somewhere between 81 percent to 83 percent of SolarWinds after the IPO, according to the plan. which will seek to price the software company at $17 to $19 per share.
Updated October 15, 2018: The actual target raise is closer to $756 million, according to Renaissance Capital IPO Research.
Among those likely watching the IPO plans: SolarWinds MSP partners, along with rivals from across the MSP software ecosystem -- particularly ConnectWise, Continuum, Datto and Kaseya. Private equity firms that own MSP-oriented technology companies also are taking note. The reason: Everyone is trying to figure out how to valuate MSP-centric tech companies.
It's a tricky conversation since so many technology firms have blended models. SolarWinds, for instance, supports corporate IT pros and DevOps pros -- while a dedicated MSP division supports roughly 22,000 managed services providers (MSPs).
SolarWinds Quarterly Revenue Estimates
The company does not disclose MSP-centric revenues. But new details about SolarWinds' overall financial performance emerged in the October 5 SEC filing. In that filing, the company disclosed estimated financial results for its most recent quarter ended September 30, 2018 -- though the SolarWinds' accounting firm (PricewaterhouseCoopers LLP) has not yet audited or reviewed the information. Among the estimated figures to note:
- Total revenue was between $211.8 million and $212.8 million, up from $189.1 million compared to the three months ended September 30, 2017.
- Total recurring revenue was between $168.5 million and $169.2 million, up 13.4% to 13.8% as compared to total recurring revenue of $148.6 million for the three months ended September 30, 2017.
- License revenue was between $43.3 million and $43.6 million , up 6.9% to 7.7% as compared to license revenue of $40.5 million for the three months ended September 30, 2017.
- Operating income was between $32.5 million and $33.9 million compared to operating income of $26.8 million for the three months ended September 30, 2017.
- Adjusted EBITDA was between $104.0 million and $106.0 million compared to adjusted EBITDA of $99.3 million for the three months ended September 30, 2017.
SolarWinds MSP Priorities
The potential SolarWinds IPO draws near as the company continues to round out its offerings for MSPs. In addition to the company's core RMM (remote monitoring and management) software, SolarWinds MSP continues to enhances network monitoring, backup and security-oriented solutions.
Among the latest moves: SolarWinds MSP recently unveiled a Threat Monitoring Service Program at the company’s Empower MSP conference in Phoenix. The effort essentially sets the stage for a two-tier security services channel -- with MSSPs increasingly supporting smaller MSPs over time.
