SolarWinds Shares Tumbled 21% On Weak Outlook, Q2 Revenue Miss View

(RTTNews) - Shares of SolarWinds, Inc. (SWI) tumbled more than 21 percent in extended trade on Thursday after the network management software company provided guidance for the third quarter below Street view, and slashed is forecast for the full-year 2013. Meanwhile, adjusted earnings per share topped analysts' expectations, while quarterly revenues missed their estimates.

The company reported a profit for the quarter that increased from last year, reflecting revenue growth.

"While we addressed a number of strategic and operational items during the second quarter that we believe will positively impact our future results, our license sales results did not meet our expectations. Despite the shortfall in license sales, we delivered solid year-over-year total revenue growth of 21% and non-GAAP operating margins and non-GAAP EPS well ahead of our outlook," President and CEO Kevin Thompson said in a statement.

Austin, Texas-based SolarWinds' reported net income of $22.80 million or $0.30 per share for the second quarter, up from $19.43 million or $0.26 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter were $30.73 million or $0.40 per share, compared to $24.78 million or $0.33 per share in the year-ago quarter.

On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.36 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenues for the quarter grew 21 percent to $77.591 million from $64.04 million in the same quarter last year, but missed twelve Wall Street analysts' consensus estimate of $78.94 million.

License revenue for the quarter rose 6 percent to $31.13 million, as well as maintenance and other revenue increased 31 percent to $45.37 million in the year-ago quarter. Subscription revenue was $1.02 million.

Operating margin for the quarter contracted 160 basis points to 40.4 percent from last year as gross profit margin declined 120 basis points.

Looking ahead to the third quarter, the company expects adjusted earnings in a range of $0.35 to $0.36 per share, on projected revenues between $84.7 million to $87.2 million. Analysts expected the company to report earnings of $0.39 per share for the quarter on revenues of $90.45 million.

For fiscal 2013, SolarWinds slashed its adjusted earnings guidance to a range of $1.51 to $1.54 per share from the prior forecast range of $1.59 to $1.65 per share. The company also now anticipates revenues between $322.7 million and $327.7 million, down from the previous guidance between $326.5 million and $334.0 million.

Street is currently looking for full-year 2013 earnings of $1.55 per share on annual revenues of $336.64 million.

"Although we have had a slow start to 2013 relative to our outlook, our confidence in our core business is high. We believe that we have a large and growing market opportunity across our network management, systems management, and MSP tools businesses that remains largely untapped," Thompson added.

SWI closed Thursday's regular trading session at $46.09, up $0.82 or 1.81% on a volume of 1.43 million shares. However, the stock plunged $9.89 or 21.46% in after-hours trading.