The 10-second takeaway
For the quarter ended Sep. 30 (Q3), SolarWinds beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue expanded significantly and GAAP earnings per share expanded.
Gross margins grew, operating margins contracted, net margins shrank.
SolarWinds tallied revenue of $71.7 million. The 14 analysts polled by S&P Capital IQ predicted sales of $67.9 million on the same basis. GAAP reported sales were 33% higher than the prior-year quarter's $53.9 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 $0.37. The 15 earnings estimates compiled by S&P Capital IQ forecast $0.31 per share. GAAP EPS of $0.29 for Q3 were 3.6% higher than the prior-year quarter's $0.28 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 93.6%, 20 basis points better than the prior-year quarter. Operating margin was 43.9%, 30 basis points worse than the prior-year quarter. Net margin was 31.4%, 730 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $70.0 million. On the bottom line, the average EPS estimate is $0.31.
Next year's average estimate for revenue is $261.6 million. The average EPS estimate is $1.25.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 129 members out of 163 rating the stock outperform, and 34 members rating it underperform. Among 44 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 32 give SolarWinds a green thumbs-up, and 12 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 $53.85.
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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. The Motley Fool has no positions in the stocks mentioned above. 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.