The 10-second takeaway
For the quarter ended March 31 (Q1), SolarWinds beat expectations on revenues and earnings per share.
Compared to the prior-year quarter, revenue increased significantly and GAAP earnings per share improved significantly.
Gross margins shrank, operating margins dropped, and net margins increased.
SolarWinds reported revenue of $59.7 million. The 10 analysts polled by S&P Capital IQ anticipated revenue of $56.4 million on the same basis. GAAP reported sales were 39% higher than the prior-year quarter's $43.0 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.30. The nine earnings estimates compiled by S&P Capital IQ predicted $0.25 per share. GAAP EPS of $0.23 for Q1 were 44% higher than the prior-year quarter's $0.16 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 92.8%, 140 basis points worse than the prior-year quarter. Operating margin was 39.7%, 230 basis points worse than the prior-year quarter. Net margin was 28.7%, 150 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $59.1 million. On the bottom line, the average EPS estimate is $0.27.
Next year's average estimate for revenue is $252.7 million. The average EPS estimate is $1.16.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 119 members out of 144 rating the stock outperform, and 25 members rating it underperform. Among 36 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 31 give SolarWinds a green thumbs-up, and five 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 $40.50.
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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.