A SolarWinds IPO (initial public offering) could raise as much as $500 million, according to an SEC filing from the IT management software company.
- Updated October 6, 2018: An updated SEC filing has emerged. It reveals a revised $320 million IPO goal.
- The content below is from an earlier filing around September 23, 2018:
For those tracking the potential SolarWinds IPO, here are 10 key financial and business stats to know:
1. How We Got Here: Private equity firms Silver Lake Partners and Thoma Bravo acquired SolarWinds for $4.5 billion in October 2015.
SolarWinds, led by CEO Kevin Thompson, has made multiple acquisitions since that time -- including LogicNow for multiple MSP tools, and Trusted Metrics for threat monitoring management software.
The company has gradually blurred the line between its software portfolios. For instance, LogicNow's backup software is now available to both MSP and corporate IT customers.
I don't know the company's current valuation, but some pundits think the company could be worth as much as $10 billion by the end of this year. I doubt the figure is quite that high, but the IPO should reveal answers...
2. Revenues: Company revenues reached $398.6 million for the first six months of 2018, up from $340.6 million in the first six months of 2017.
SolarWinds doesn't break out its MSP-centric software revenues, but industry chatter suggests it's somewhere between $200 million and $260 million annually...
3. MSP Reach: The company has 22,000 MSP customers that serve more than 450,000 organizations globally.
4. Customer Reach: An overwhelming 499 of the Fortune 500 run SolarWinds' software. The company has more than 275,000 customers in 190 countries.
5. Gross Margins: SolarWinds' gross margins were 69.2 percent in the first six months of 2018, up from 66.5 percent in the corresponding period last year.
6. Net Income: The company had a net loss of $86.9 million in the first half of 2018, larger than a $45.7 million net loss for the corresponding period last year.
7. Headcount: As of June 30, 2018, the company 2,540 employees, of which 979 were employed in the United States and 1,561 were employed outside of the United States.
8. Patents: The company has 29 issued U.S. patents and 148 issued foreign patents, with expiration dates ranging from October 2026 to May 2036. The company also has 40 pending patent applications.
9. R&D: SolarWinds spent $48.5 million on research and development during the first half of 2018, up from $42.9 million in the corresponding period for 2017.
10. Key Rivals: According to the SEC filing, the company believes its key rivals in the corporate IT market are BMC Software, CA Inc., IBM, NetScout Systems, and Micro Focus International, and "smaller companies in the cloud and application monitoring and the MSP IT tools markets, where we do not believe that a single or small group of companies has achieved market leadership."
That's an interesting statement -- basically downplaying MSP-centric players like Datto, ConnectWise, Continuum and Kaseya by not mentioning by name.
Also, the company didn't mention ServiceNow, which is starting to dominate enterprise ITSM platform deployments while moving into SecOps and more. Nor did the company mention fast-growth application performing monitoring and infrastructure monitoring companies by name -- where rivals like Cisco AppDynamics, Data Dog and New Relic have been gaining share.
MSP Software Implications
MSP software industry rivals are closely watching SolarWinds' potential IPO and resulting valuation. The financial figures are particularly important to such companies as Datto, ConnectWise, Continuum and Kaseya. All of those companies except ConnectWise have private equity owners.
Datto CEO Austin McChord has IPO aspirations, and Kaseya CEO Fred Voccola is mulling a range of long-term moves. ConnectWise remains closely held, and Continuum was recently acquired by Thoma Bravo. No doubt, each of those companies will closely monitor a SolarWinds IPO...
