The 10-second takeaway
For the quarter ended Dec. 31 (Q4), SolarWinds beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue improved significantly and GAAP earnings per share improved.
Margins dropped across the board.
SolarWinds reported revenue of $55.6 million. The 13 analysts polled by S&P Capital IQ wanted to see a top line of $53.6 million. Sales were 34% higher than the prior-year quarter's $41.4 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.
Non-GAAP EPS came in at $0.29. The six earnings estimates compiled by S&P Capital IQ averaged $0.25 per share on the same basis. GAAP EPS of $0.22 for Q4 were 4.8% higher than the prior-year quarter's $0.21 per share.
Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.
For the quarter, gross margin was 93.9%, 60 basis points worse than the prior-year quarter. Operating margin was 41.9%, 150 basis points worse than the prior-year quarter. Net margin was 29.3%, 770 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $54.5 million. On the bottom line, the average EPS estimate is $0.25.
Next year's average estimate for revenue is $243.0 million. The average EPS estimate is $1.13.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 118 members out of 140 rating the stock outperform, and 22 members rating it underperform. Among 30 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 28 give SolarWinds a green thumbs-up, and two give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on SolarWinds is outperform, with an average price target of $31.38.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.