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SolarWinds Announces Third Quarter 2022 Results

SolarWinds Corporation (NYSE:SWI), a leading provider of simple, powerful, and secure IT management software, today reported results for its third quarter ended September 30, 2022.

Third Quarter Financial Highlights from Continuing Operations

  • Total revenue for the third quarter of $179.4 million, representing a slight decline year-over-year on a reported basis and 1% year-over-year growth on a constant currency basis, and total recurring revenue representing 87% of total revenue.1
  • Net loss for the third quarter of $292.2 million, which includes $284.6 million in impairment charges.
  • Adjusted EBITDA for the third quarter of $70.3 million, representing a margin of 39% of total revenue.

For a reconciliation of our GAAP to non-GAAP results, please see the tables below.

“Our third quarter results were highlighted by 31% subscription revenue growth, continued execution on customer retention, solid adjusted EBITDA margins, and expansions in our partnership strategy, all against the backdrop of a challenging macroeconomic environment,” said Sudhakar Ramakrishna, President and Chief Executive Officer, SolarWinds. “I am especially proud of the recent launch of SolarWinds Observability, our most impactful observability solution to date delivered in a cloud-native SaaS model. With this milestone, we are building on our foundation of simple, powerful, secure, and value-based monitoring tools with new observability solutions that empower every customer to drive digital transformation regardless of where they are in their cloud journey.”

Recent Business Highlights

  • SolarWinds introduced SolarWinds Observability, a fully integrated cloud-native SaaS offering available on both Azure® and AWS® clouds.
  • A new version of SolarWinds Hybrid Cloud Observability with enhanced anomaly detection capabilities powered by artificial intelligence and machine learning. Hybrid Cloud Observability and SolarWinds Observability provide customers with ultimate flexibility to deploy on a private cloud, public cloud, or fully as a service.
  • The company unveiled its Transform Partner Program to drive growth through the channel, including support for managed service providers.
  • Chad Reese, a technology industry veteran with 25 years of experience including leadership positions at IBM® and VMware®, joined SolarWinds as President of Americas Sales and Global Channel.

_______________

1 Beginning with the first quarter of 2022, we no longer adjust our revenue for the impact of purchase accounting, so GAAP total revenue on a reported basis is equivalent to our non-GAAP total revenue measure we have historically reported.

Balance Sheet

During the third quarter, we made a $300.0 million voluntary prepayment of our outstanding debt. At September 30, 2022, following the prepayment, total cash and cash equivalents and short-term investments were $492.5 million and total debt was $1.6 billion.

As of September 30, 2022, in light of the decline in the total market value of SolarWinds’ outstanding shares of common stock during the third quarter and the impact of current macroeconomic conditions on the assumptions used in determining the fair value of our reporting unit, we determined it appropriate to perform an interim quantitative assessment of our reporting unit. As a result of the interim goodwill impairment analysis, a $278.7 million non-cash goodwill impairment charge was recognized for the third quarter. In addition, we determined the estimated fair value of the SolarWinds trade name, recorded in connection with the take private transaction in early 2016 (“Take Private”), was less than its carrying value and recorded a $5.9 million non-cash impairment charge which is included in general and administrative expense in our consolidated statements of operations for the third quarter.

The financial results included in this press release are preliminary and pending final review by the company and its external auditors. Financial results will not be final until SolarWinds files its quarterly report on Form 10-Q for the period. Information about SolarWinds’ use of non-GAAP financial measures is provided below under “Non-GAAP Financial Measures.”

SolarWinds completed the previously announced separation and distribution of its managed service provider (“N-able”) business into a newly created and separately traded public company, N-able, Inc. on July 19, 2021. N‑able's historical financial results through July 19, 2021, are reflected in SolarWinds' consolidated financial statements as discontinued operations. Effective July 30, 2021, SolarWinds effected a 2:1 reverse stock split of its common stock. As a result of the reverse stock split, all share and per share figures contained in the financial statements have been retroactively restated as if the reverse stock split occurred at the beginning of the periods presented.

Financial Outlook

As of November 3, 2022, SolarWinds is providing its financial outlook for the fourth quarter and its updated financial outlook for the full year of 2022. The financial information below represents forward-looking non-GAAP financial information, including an estimate of adjusted EBITDA margin and non-GAAP diluted earnings per share. These non-GAAP financial measures exclude, among other items mentioned below, stock-based compensation expense and related employer-paid payroll taxes, amortization, certain expenses related to the cyberattack that occurred in December 2020 (the “Cyber Incident”), restructuring costs, goodwill and indefinite-lived intangible asset impairment charges and other costs related to non-recurring items. We have not reconciled our estimates of these non-GAAP financial measures to their most directly comparable GAAP measure as a result of uncertainty regarding, and the potential variability of, these excluded items in future periods. Accordingly, reconciliation is not available without unreasonable effort, although it is important to note that these excluded items could be material to our results computed in accordance with GAAP in future periods. Our reported results provide reconciliations of non-GAAP financial measures to their nearest GAAP equivalents.

Financial Outlook for Fourth Quarter of 2022

SolarWinds’ management currently expects to achieve the following results for the fourth quarter of 2022:

  • Total revenue in the range of $178 to $183 million, representing a decline of 2% to 5% as compared to the fourth quarter of 2021 total revenue, or a decline of 2% to growth of 1% on a constant currency basis assuming the same average foreign currency exchange rates as those in the fourth quarter of 2021.
  • Adjusted EBITDA margin of approximately 38% to 39% of total revenue.
  • Non-GAAP diluted earnings per share of $0.23 to $0.25.
  • Weighted average outstanding diluted shares of approximately 162.2 million.

Financial Outlook for Full Year of 2022

SolarWinds’ management currently expects to achieve the following results for the full year of 2022:

  • Total revenue in the range of $710 to $715 million, representing a slight decline of 1% over the full year of 2021 total revenue from continuing operations, or growth of 1% to 2% on a constant currency basis assuming the same average foreign currency exchange rates as those in 2021.
  • Adjusted EBITDA margin of approximately 39% of total revenue.
  • Non-GAAP diluted earnings per share of $0.87 to $0.89.
  • Weighted average outstanding diluted shares of approximately 161.7 million.

Additional details on the company's outlook will be provided on the conference call.

Conference Call and Webcast

In conjunction with this announcement, SolarWinds will host a conference call today to discuss its financial results, business and business outlook at 7:30 a.m. CT (8:30 a.m. ET/5:30 a.m. PT). A live webcast of the call and materials presented during the call will be available on the SolarWinds Investor Relations website at http://investors.solarwinds.com. A live dial-in will be available domestically at (888) 510-2008 and internationally at +1 (646) 960-0306. To access the live call, please dial in 5-10 minutes before the scheduled start time and enter the conference passcode 2975715. A replay of the webcast will be available on a temporary basis shortly after the event on the SolarWinds Investor Relations website.

Forward-Looking Statements

This press release contains “forward-looking” statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our financial outlook for the fourth quarter and the full year 2022. These forward-looking statements are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements that are not historical facts and may be identified by terms such as “aim,” “anticipate,” “believe,” “can,” “could,” “seek,” “should,” “feel,” “expect,” “will,” “would,” “plan,” “project,” “intend,” “estimate,” “continue,” “may,” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the following: (a) numerous risks related to the Cyber Incident, including with respect to (1) the discovery of new or different information regarding the Cyber Incident, (2) the possibility that our mitigation and remediation efforts with respect to the Cyber Incident may not be successful, (3) the possibility that additional confidential, proprietary, or personal information, including information of SolarWinds’ current or former employees and customers, was accessed and exfiltrated as a result of the Cyber Incident, (4) numerous financial, legal, reputational and other risks to us related to the Cyber Incident, including risks that the incident or SolarWinds’ response thereto, may result in the loss, compromise or corruption of data and proprietary information, loss of business as a result of termination or non-renewal of agreements or reduced purchases or upgrades of our products, reputational damage adversely affecting customer, partner and vendor relationships and investor confidence, increased attrition of personnel and distraction of key and other personnel, U.S. or foreign regulatory investigations and enforcement actions, exposure to litigation and other proceedings and judgements or settlements related thereto, indemnity obligations, damages for contractual breach, penalties for violation of applicable laws or regulations, significant costs for remediation and the incurrence of other liabilities, (5) risks that our insurance coverage may not be available or sufficient to compensate for all liabilities we incur related to these matters and (6) the possibility that our steps to secure our internal environment, improve our product development environment and ensure the security and integrity of the software that we deliver to our customers may not be successful or sufficient to protect against future threat actors or attacks or be perceived by existing and prospective customers as sufficient to address the harm caused by the Cyber Incident; (b) other risks related to cyber security, including that we may experience other security incidents or have vulnerabilities in our systems and services exploited, whether through the actions or inactions of our employees or otherwise, which may result in compromises or breaches of our and our customers’ systems or, theft or misappropriation of our and our customers’ confidential, proprietary or personal information, as well as exposure to legal and other liabilities, including the related risk of higher customer, employee and partner attrition and the loss of key personnel, as well as negative impacts to our sales, renewals and upgrades; (c) risks related to the evolving breadth of our sales motion and challenges, investments and additional costs associated with increased selling efforts toward enterprise customers and adopting a subscription first approach; (d) risks relating to increased investments in, and the timing of, our transformation from monitoring to observability; (e) regulatory risks, including risks related to evolving regulation of artificial intelligence, machine learning and the receipt, collection, storage, processing and transfer of data, (f) potential foreign exchange gains and losses related to expenses and sales denominated in currencies other than the functional currency of an associated entity; (g) any of the following factors either generally or as a result of the impacts of the Cyber Incident, the war in Ukraine, inflation or the global COVID-19 pandemic on the global economy or on our business operations and financial condition or on the business operations and financial conditions of our customers, their end-customers and our prospective customers: (1) reductions in information technology spending or delays in purchasing decisions by our customers, their end-customers and our prospective customers, (2) the inability to sell products to new customers or to sell additional products or upgrades to our existing customers, (3) any decline in our renewal or net retention rates, (4) the inability to generate significant volumes of high quality sales leads from our digital marketing initiatives and convert such leads into new business at acceptable conversion rates, (5) the timing and adoption of new products, product upgrades or pricing model changes by SolarWinds or its competitors, (6) changes in interest rates, (7) risks associated with our international operations and (8) ongoing sanctions and disruptions resulting from the war in Ukraine; (h) the possibility that our operating income could fluctuate and may decline as percentage of revenue as we make further expenditures to expand our operations in order to support additional growth in our business; (i) risks associated with the estimates and assumptions used in our impairment testing; (j) risks related to the spin-off of the N-able business into a newly created and separately traded public company, including that we could incur significant liability if the separation is determined to be a taxable transaction, or that potential indemnification liabilities incurred in connection with the separation could materially affect our business and financial results; (k) our ability to compete effectively in the markets we serve and the risks of increased competition as we enter new markets; (l) our ability to refinance our long-term indebtedness; (m) our ability to attract, retain and motivate employees; (n) our inability to successfully identify, complete, and integrate acquisitions and manage our growth effectively; (o) risks associated with our status as a controlled company; and (p) such other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission, including the risk factors discussed in our Annual Report on Form 10-K for the period ended December 31, 2021 filed on February 25, 2022, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 filed on August 5, 2022 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 that SolarWinds anticipates filing on or before November 9, 2022. All information provided in this release is as of the date hereof and SolarWinds undertakes no duty to update this information except as required by law.

Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with GAAP, we use certain non-GAAP financial measures to clarify and enhance our understanding, and aid in the period-to-period comparison, of our performance. We believe that these non-GAAP financial measures provide supplemental information that is meaningful when assessing our operating performance because they exclude the impact of certain amounts that our management and board of directors do not consider part of core operating results when assessing our operational performance, allocating resources, preparing annual budgets and determining compensation. Accordingly, these non-GAAP financial measures may provide insight to investors into the motivation and decision-making of management in operating the business.

SolarWinds also believes that these non-GAAP financial measures are used by investors and security analysts to (a) compare and evaluate its performance from period to period and (b) compare its performance to those of its competitors. These non-GAAP measures exclude certain items that can vary substantially from company to company depending upon their financing and accounting methods, the book value of their assets, their capital structures, and the method by which their assets were acquired.

There are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with GAAP, do not reflect a comprehensive system of accounting and may not be completely comparable to similarly titled measures of other companies due to potential differences in the exact method of calculation between companies. Certain items that are excluded from these non-GAAP financial measures can have a material impact on operating and net income (loss).

As a result, these non-GAAP financial measures have limitations and should not be considered in isolation from, or as a substitute for, the most comparable GAAP measures. SolarWinds' management and board of directors compensate for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measure. Set forth in the tables below are the corresponding GAAP financial measures for each non-GAAP financial measure presented. Investors are encouraged to review the reconciliations of these non-GAAP financial measures to their most comparable GAAP financial measures that are set forth in the tables below. Unless noted otherwise, all non-GAAP financial measures are derived from our GAAP financial measures from continuing operations.

Non-GAAP Revenue. We define non-GAAP total revenue as total revenue excluding the impact of purchase accounting from acquisitions. The non-GAAP revenue growth rate we provide is calculated using non-GAAP total revenue from the comparable prior period. We historically monitored this measure to assess our performance because we believed our revenue growth rate would be overstated without this adjustment. We believed presenting non-GAAP total revenue aided in the comparability between periods and in assessing our overall operating performance. Beginning in the first quarter of 2022, we no longer adjust our GAAP revenue for the impact of purchase accounting.

Non-GAAP Revenue on a Constant Currency Basis. We provide non-GAAP revenue on a constant currency basis to provide a framework for assessing our performance excluding the effect of foreign currency rate fluctuations. To present this information, current period results for entities reporting in currencies other than U.S. Dollars are converted into U.S. Dollars at the average exchange rates in effect during the corresponding prior period presented. We believe that providing non-GAAP revenue on a constant currency basis facilitates the comparison of non-GAAP revenue to prior periods.

Non-GAAP Cost of Revenue and Non-GAAP Operating Income. We provide non-GAAP cost of revenue and non-GAAP operating income and related non-GAAP margins using non-GAAP revenue and excluding such items as the write-down of deferred revenue related to purchase accounting, amortization of acquired intangible assets, stock-based compensation expense and related employer-paid payroll taxes, acquisition and other costs, restructuring costs, Cyber Incident costs and goodwill and indefinite-lived asset impairment. Management believes these measures are useful for the following reasons:

  • Amortization of Acquired Intangible Assets. We provide non-GAAP information that excludes expenses related to purchased intangible assets associated with our acquisitions. We believe that eliminating this expense from our non-GAAP measures is useful to investors, because the amortization of acquired intangible assets can be inconsistent in amount and frequency and is significantly impacted by the timing and magnitude of our acquisition transactions, which also vary in frequency from period to period. Accordingly, we analyze the performance of our operations in each period without regard to such expenses.
  • Stock-Based Compensation Expense and Related Employer-paid Payroll Taxes. We provide non-GAAP information that excludes expenses related to stock-based compensation and related employer-paid payroll taxes. We believe that the exclusion of stock-based compensation expense provides for a better comparison of our operating results to prior periods and to our peer companies as the calculations of stock-based compensation vary from period to period and company to company due to different valuation methodologies, subjective assumptions, and the variety of award types. Employer-paid payroll taxes on stock-based compensation is dependent on our stock price and the timing of the taxable events related to the equity awards, over which our management has little control, and does not correlate to the core operation of our business. Because of these unique characteristics of stock-based compensation and related employer-paid payroll taxes, management excludes these expenses when analyzing the organization’s business performance.
  • Acquisition and Other Costs. We exclude certain expense items resulting from acquisitions, such as legal, accounting and advisory fees, changes in fair value of contingent consideration, costs related to integrating the acquired businesses, deferred compensation, severance and retention expense. In addition, we exclude certain other costs including expense related to our offerings. We consider these adjustments, to some extent, to be unpredictable and dependent on a significant number of factors that are outside of our control. Furthermore, acquisitions result in operating expenses that would not otherwise have been incurred by us in the normal course of our organic business operations. We believe that providing these non-GAAP measures that exclude acquisition and other costs, allows users of our financial statements to better review and understand the historical and current results of our continuing operations, and also facilitates comparisons to our historical results and results of less acquisitive peer companies, both with and without such adjustments.
  • Restructuring Costs. We provide non-GAAP information that excludes restructuring costs such as severance and the estimated costs of exiting and terminating facility lease commitments, as they relate to our corporate restructuring and exit activities and costs related to the separation of employment with executives of the Company. In addition, we exclude certain costs resulting from the spin-off of N-able reported in continuing operations. These costs are inconsistent in amount and are significantly impacted by the timing and nature of these events. Therefore, although we may incur these types of expenses in the future, we believe that eliminating these costs for purposes of calculating the non-GAAP financial measures facilitates a more meaningful evaluation of our operating performance and comparisons to our past operating performance.
  • Cyber Incident Costs. We exclude certain expenses resulting from the Cyber Incident. Expenses include costs to investigate and remediate the Cyber Incident, costs of lawsuits and investigations related thereto, including settlement costs and legal and other professional services, and consulting services being provided to customers at no charge. Cyber Incident costs are provided net of expected and received insurance reimbursements, although the timing of recognizing insurance reimbursements may differ from the timing of recognizing the associated expenses. We expect to incur significant legal and other professional services expenses associated with the Cyber Incident in future periods. The Cyber Incident results in operating expenses that would not have otherwise been incurred by us in the normal course of our organic business operations. We believe that providing non-GAAP measures that exclude these costs facilitates a more meaningful evaluation of our operating performance and comparisons to our past operating performance. We continue to invest significantly in cybersecurity and expect to make additional investments. These estimated investments are in addition to the Cyber Incident costs and not included in the net Cyber Incident costs reported.
  • Goodwill and Indefinite-lived Intangible Asset Impairment. We provide non-GAAP information that excludes non-cash goodwill and indefinite-lived intangible asset impairment charges. We believe that providing these non-GAAP measures that exclude these non-cash impairment charges allows users of our financial statements to better review and understand our historical and current operating results. In addition, as a significant portion of our goodwill and indefinite-lived intangible assets were derived from the Take Private transaction, providing these non-GAAP measures that exclude these impairment charges facilitates comparisons to our peers who may not have undertaken a transformational acquisition resulting in significant goodwill and indefinite-lived intangible assets.

Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) Per Diluted Share. We believe that the use of non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share is helpful to our investors to clarify and enhance their understanding of past performance and future prospects. Non-GAAP net income (loss) is calculated as net income (loss) excluding the adjustments to non-GAAP revenue, non-GAAP cost of revenue and non-GAAP operating income, losses on extinguishment of debt, certain other non-operating gains and losses and the income tax effect of the non-GAAP exclusions. We define non-GAAP net income (loss) per diluted share as non-GAAP net income (loss) divided by the weighted average outstanding diluted common shares.

Adjusted EBITDA and Adjusted EBITDA Margin. We regularly monitor adjusted EBITDA and adjusted EBITDA margin, as it is a measure we use to assess our operating performance. We define adjusted EBITDA as net income or loss, excluding the impact of purchase accounting on total revenue, amortization of acquired intangible assets and developed technology, depreciation expense, stock-based compensation expense and related employer-paid payroll taxes, restructuring costs, acquisition and other costs, Cyber Incident costs, goodwill and indefinite-lived intangible asset impairment, interest expense, net, debt related costs including fees related to our credit agreements, debt extinguishment and refinancing costs, unrealized foreign currency (gains) losses, and income tax expense (benefit). We define adjusted EBITDA margin as adjusted EBITDA divided by non-GAAP revenue. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are: although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; adjusted EBITDA excludes the impact of the write-down of deferred revenue due to purchase accounting in connection with acquisitions, and therefore includes revenue that will never be recognized under GAAP; adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Unlevered Free Cash Flow. Unlevered free cash flow is a measure of our liquidity used by management to evaluate cash flow from operations, after the deduction of capital expenditures and prior to the impact of our capital structure, acquisition and other costs, restructuring costs, Cyber Incident costs, employer-paid payroll taxes on stock awards and other one-time items, that can be used by us for strategic opportunities and strengthening our balance sheet. However, given our debt obligations, unlevered free cash flow does not represent residual cash flow available for discretionary expenses.

#SWIfinancials

About SolarWinds

SolarWinds (NYSE:SWI) is a leading provider of simple, powerful, and secure IT management software built to enable customers to accelerate their digital transformation. Our solutions provide organizations worldwide—regardless of type, size, or complexity—with a comprehensive and unified view of today’s modern, distributed, and hybrid network environments. We continuously engage with technology professionals—IT service and operations professionals, DevOps and SecOps professionals, and Database Administrators (DBAs) – to understand the challenges they face in maintaining high-performing and highly available IT infrastructures, applications, and environments. The insights we gain from them, in places like our THWACK® community, allow us to address customers’ needs now, and in the future. Our focus on the user and our commitment to excellence in end-to-end hybrid IT management have established SolarWinds as a worldwide leader in solutions for observability, IT service management, application performance, and database management. Learn more today at www.solarwinds.com.

The SolarWinds, SolarWinds & Design, Orion, and THWACK trademarks are the exclusive property of SolarWinds Worldwide, LLC or its affiliates, are registered with the U.S. Patent and Trademark Office, and may be registered or pending registration in other countries. All other SolarWinds trademarks, service marks, and logos may be common law marks or are registered or pending registration. All other trademarks mentioned herein are used for identification purposes only and are trademarks of (and may be registered trademarks of) their respective companies.

© 2022 SolarWinds Worldwide, LLC. All rights reserved.

SolarWinds Corporation

Condensed Consolidated Balance Sheets

(In thousands, except share and per share information)

(Unaudited)

 

 

September 30,

 

December 31,

 

2022

 

2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

441,661

 

 

$

732,116

 

Short-term investments

 

50,878

 

 

 

 

Accounts receivable, net of allowances of $900 and $476 as of September 30, 2022 and December 31, 2021, respectively

 

92,621

 

 

 

95,095

 

Income tax receivable

 

1,013

 

 

 

1,114

 

Prepaid and other current assets

 

49,113

 

 

 

30,515

 

Total current assets

 

635,286

 

 

 

858,840

 

Property and equipment, net

 

26,987

 

 

 

29,722

 

Operating lease assets

 

63,977

 

 

 

74,318

 

Deferred taxes

 

124,818

 

 

 

144,162

 

Goodwill

 

2,328,085

 

 

 

3,308,405

 

Intangible assets, net

 

255,880

 

 

 

342,563

 

Other assets, net

 

43,479

 

 

 

34,117

 

Total assets

$

3,478,512

 

 

$

4,792,127

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

9,589

 

 

$

7,327

 

Accrued liabilities and other

 

60,334

 

 

 

41,328

 

Current operating lease liabilities

 

14,898

 

 

 

14,382

 

Accrued interest payable

 

261

 

 

 

153

 

Income taxes payable

 

15,016

 

 

 

3,086

 

Current portion of deferred revenue

 

313,363

 

 

 

327,701

 

Current debt obligation

 

19,900

 

 

 

19,900

 

Total current liabilities

 

433,361

 

 

 

413,877

 

Long-term liabilities:

 

 

 

Deferred revenue, net of current portion

 

36,557

 

 

 

34,968

 

Non-current deferred taxes

 

6,785

 

 

 

16,918

 

Non-current operating lease liabilities

 

62,060

 

 

 

74,543

 

Other long-term liabilities

 

74,843

 

 

 

93,156

 

Long-term debt, net of current portion

 

1,564,441

 

 

 

1,870,769

 

Total liabilities

 

2,178,047

 

 

 

2,504,231

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

Common stock, $0.001 par value: 1,000,000,000 shares authorized and 161,338,727 and 159,176,042 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

161

 

 

 

159

 

Preferred stock, $0.001 par value: 50,000,000 shares authorized and no shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

 

 

 

 

Additional paid-in capital

 

2,612,665

 

 

 

2,566,783

 

Accumulated other comprehensive income (loss)

 

(113,007

)

 

 

1,306

 

Accumulated deficit

 

(1,199,354

)

 

 

(280,352

)

Total stockholders’ equity

 

1,300,465

 

 

 

2,287,896

 

Total liabilities and stockholders’ equity

$

3,478,512

 

 

$

4,792,127

 

SolarWinds Corporation

Condensed Consolidated Statements of Operations

(In thousands, except per share information)

(Unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2022

 

2021

 

2022

 

2021

Revenue:

 

 

 

 

 

 

 

Subscription

$

42,248

 

 

$

32,293

 

 

$

117,975

 

 

$

90,218

 

Maintenance

 

114,381

 

 

 

119,742

 

 

 

343,848

 

 

 

360,909

 

Total recurring revenue

 

156,629

 

 

 

152,035

 

 

 

461,823

 

 

 

451,127

 

License

 

22,767

 

 

 

29,236

 

 

 

70,475

 

 

 

80,788

 

Total revenue

 

179,396

 

 

 

181,271

 

 

 

532,298

 

 

 

531,915

 

Cost of revenue:

 

 

 

 

 

 

 

Cost of recurring revenue

 

16,563

 

 

 

17,949

 

 

 

49,854

 

 

 

49,331

 

Amortization of acquired technologies

 

3,628

 

 

 

39,882

 

 

 

24,503

 

 

 

120,397

 

Total cost of revenue

 

20,191

 

 

 

57,831

 

 

 

74,357

 

 

 

169,728

 

Gross profit

 

159,205

 

 

 

123,440

 

 

 

457,941

 

 

 

362,187

 

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing

 

64,813

 

 

 

58,642

 

 

 

190,472

 

 

 

174,384

 

Research and development

 

22,562

 

 

 

26,285

 

 

 

68,092

 

 

 

78,474

 

General and administrative

 

42,558

 

 

 

28,551

 

 

 

116,505

 

 

 

90,135

 

Amortization of acquired intangibles

 

13,045

 

 

 

13,784

 

 

 

39,387

 

 

 

41,704

 

Goodwill impairment

 

278,706

 

 

 

 

 

 

891,101

 

 

 

 

Total operating expenses

 

421,684

 

 

 

127,262

 

 

 

1,305,557

 

 

 

384,697

 

Operating loss

 

(262,479

)

 

 

(3,822

)

 

 

(847,616

)

 

 

(22,510

)

Other income (expense):

 

 

 

 

 

 

 

Interest expense, net

 

(23,181

)

 

 

(15,897

)

 

 

(57,669

)

 

 

(48,262

)

Other income (expense), net

 

(2,418

)

 

 

1,478

 

 

 

(1,861

)

 

 

1,865

 

Total other expense

 

(25,599

)

 

 

(14,419

)

 

 

(59,530

)

 

 

(46,397

)

Loss before income taxes

 

(288,078

)

 

 

(18,241

)

 

 

(907,146

)

 

 

(68,907

)

Income tax expense (benefit)

 

4,141

 

 

 

(19,321

)

 

 

11,856

 

 

 

(26,322

)

Net income (loss) from continuing operations

 

(292,219

)

 

 

1,080

 

 

 

(919,002

)

 

 

(42,585

)

Net income (loss) from discontinued operations, net of tax

 

 

 

 

(10,059

)

 

 

 

 

 

14,822

 

Net loss

$

(292,219

)

 

$

(8,979

)

 

$

(919,002

)

 

$

(27,763

)

Net income (loss) from continuing operations available to common stockholders

$

(292,219

)

 

$

920

 

 

$

(919,002

)

 

$

(42,745

)

Net income (loss) from discontinued operations available to common stockholders

$

 

 

$

(10,059

)

 

$

 

 

$

14,822

 

Net income (loss) available to common stockholders per share:

 

 

 

 

 

 

 

Basic earnings (loss) from continuing operations per share

$

(1.81

)

 

$

0.01

 

 

$

(5.72

)

 

$

(0.27

)

Basic earnings (loss) from discontinued operations per share

 

 

 

 

(0.06

)

 

 

 

 

 

0.09

 

Basic loss per share

$

(1.81

)

 

$

(0.06

)

 

$

(5.72

)

 

$

(0.18

)

Diluted earnings (loss) from continuing operations per share

$

(1.81

)

 

$

0.01

 

 

$

(5.72

)

 

$

(0.27

)

Diluted earnings (loss) from discontinued operations per share

 

 

 

 

(0.06

)

 

 

 

 

 

0.09

 

Diluted loss per share

$

(1.81

)

 

$

(0.06

)

 

$

(5.72

)

 

$

(0.18

)

Weighted-average shares used to compute net income (loss) available to common stockholders per share:

 

 

 

 

 

 

 

Shares used in computation of basic earnings (loss) per share

 

161,111

 

 

 

158,202

 

 

 

160,545

 

 

 

157,730

 

Shares used in computation of diluted earnings (loss) per share

 

161,111

 

 

 

160,328

 

 

 

160,545

 

 

 

157,730

 

SolarWinds Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Nine Months Ended September 30,

 

2022

 

2021

Cash flows from operating activities

 

 

 

Net loss from continuing operations

$

(919,002

)

 

$

(42,585

)

Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

74,107

 

 

 

173,362

 

Goodwill and indefinite-lived intangible asset impairment

 

906,350

 

 

 

 

Provision for losses on accounts receivable

 

612

 

 

 

230

 

Stock-based compensation expense

 

50,599

 

 

 

43,472

 

Amortization of debt issuance costs

 

6,794

 

 

 

6,794

 

Loss on extinguishment of debt

 

1,930

 

 

 

 

Deferred taxes

 

(10,019

)

 

 

(26,277

)

Gain on foreign currency exchange rates

 

(898

)

 

 

(1,504

)

Other non-cash expenses (benefit)

 

(220

)

 

 

758

 

Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business combinations:

 

 

 

Accounts receivable

 

(2,326

)

 

 

3,428

 

Income taxes receivable

 

4

 

 

 

(2,348

)

Prepaid and other assets

 

(20,319

)

 

 

(9,556

)

Accounts payable

 

2,385

 

 

 

1,335

 

Accrued liabilities and other

 

18,964

 

 

 

(16,906

)

Accrued interest payable

 

108

 

 

 

(5

)

Income taxes payable

 

(6,398

)

 

 

(32,478

)

Deferred revenue

 

4,017

 

 

 

(15,499

)

Other long-term liabilities

 

38

 

 

 

(276

)

Net cash provided by operating activities from continuing operations

 

106,726

 

 

 

81,945

 

Cash flows from investing activities

 

 

 

Purchases of investments

 

(67,133

)

 

 

 

Maturities of investments

 

16,000

 

 

 

 

Purchases of property and equipment

 

(5,570

)

 

 

(6,968

)

Purchases of intangible assets

 

(11,099

)

 

 

(3,066

)

Acquisitions, net of cash acquired

 

(6,500

)

 

 

447

 

Other investing activities

 

176

 

 

 

 

Net cash used in investing activities from continuing operations

 

(74,126

)

 

 

(9,587

)

Cash flows from financing activities

 

 

 

Proceeds from issuance of common stock under employee stock purchase plan

 

3,151

 

 

 

5,658

 

Repurchase of common stock and incentive restricted stock

 

(9,123

)

 

 

(10,717

)

Exercise of stock options

 

58

 

 

 

527

 

Distributions from spin-off of discontinued operations, net

 

 

 

 

505,580

 

Dividends paid

 

 

 

 

(237,214

)

Repayments of borrowings from credit agreement

 

(314,925

)

 

 

(15,975

)

Payment of debt issuance costs

 

 

 

 

(234

)

Net cash provided by (used in) financing activities from continuing operations

 

(320,839

)

 

 

247,625

 

Effect of exchange rate changes on cash and cash equivalents from continuing operations

 

(2,216

)

 

 

(3,803

)

Cash flows of discontinued operations

 

 

 

Operating activities of discontinued operations

 

 

 

 

39,040

 

Investing activities of discontinued operations

 

 

 

 

(15,003

)

Financing activities of discontinued operations

 

 

 

 

(903

)

Effect of exchange rate changes on cash and cash equivalents from discontinued operations

 

 

 

 

(922

)

Net cash provided by discontinued activities

 

 

 

 

22,212

 

Net increase (decrease) in cash and cash equivalents

 

(290,455

)

 

 

338,392

 

Cash and cash equivalents

 

 

 

Beginning of period

 

732,116

 

 

 

370,498

 

End of period

$

441,661

 

 

$

708,890

 

 

 

 

 

Supplemental disclosure of cash flow information

 

 

 

Cash paid for interest

$

54,629

 

 

$

42,060

 

Cash paid for income taxes

$

25,177

 

 

$

38,120

 

SolarWinds Corporation

Reconciliation of GAAP to Non-GAAP Financial Measures from Continuing Operations

(Unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

(in thousands, except margin data)

Total GAAP revenue

$

179,396

 

 

$

181,271

 

 

$

532,298

 

 

$

531,915

 

Impact of purchase accounting(1)

 

 

 

 

 

 

 

 

 

 

134

 

Total non-GAAP revenue

$

179,396

 

 

$

181,271

 

 

$

532,298

 

 

$

532,049

 

 

 

 

 

 

 

 

 

GAAP cost of revenue

$

20,191

 

 

$

57,831

 

 

$

74,357

 

 

$

169,728

 

Stock-based compensation expense and related employer-paid payroll taxes

 

(489

)

 

 

(604

)

 

 

(1,586

)

 

 

(1,627

)

Amortization of acquired technologies

 

(3,628

)

 

 

(39,882

)

 

 

(24,503

)

 

 

(120,397

)

Acquisition and other costs

 

 

 

 

(1

)

 

 

 

 

 

(5

)

Restructuring costs

 

 

 

 

(517

)

 

 

 

 

 

(517

)

Cyber Incident costs

 

(6

)

 

 

(364

)

 

 

(169

)

 

 

(1,836

)

Non-GAAP cost of revenue

$

16,068

 

 

$

16,463

 

 

$

48,099

 

 

$

45,346

 

 

 

 

 

 

 

 

 

GAAP gross profit

$

159,205

 

 

$

123,440

 

 

$

457,941

 

 

$

362,187

 

Impact of purchase accounting(1)

 

 

 

 

 

 

 

 

 

 

134

 

Stock-based compensation expense and related employer-paid payroll taxes

 

489

 

 

 

604

 

 

 

1,586

 

 

 

1,627

 

Amortization of acquired technologies

 

3,628

 

 

 

39,882

 

 

 

24,503

 

 

 

120,397

 

Acquisition and other costs

 

 

 

 

1

 

 

 

 

 

 

5

 

Restructuring costs

 

 

 

 

517

 

 

 

 

 

 

517

 

Cyber Incident costs

 

6

 

 

 

364

 

 

 

169

 

 

 

1,836

 

Non-GAAP gross profit

$

163,328

 

 

$

164,808

 

 

$

484,199

 

 

$

486,703

 

GAAP gross margin

 

88.7

%

 

 

68.1

%

 

 

86.0

%

 

 

68.1

%

Non-GAAP gross margin

 

91.0

%

 

 

90.9

%

 

 

91.0

%

 

 

91.5

%

 

 

 

 

 

 

 

 

GAAP sales and marketing expense

$

64,813

 

 

$

58,642

 

 

$

190,472

 

 

$

174,384

 

Stock-based compensation expense and related employer-paid payroll taxes

 

(5,554

)

 

 

(5,508

)

 

 

(16,787

)

 

 

(16,271

)

Acquisition and other costs

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Restructuring costs

 

 

 

 

(742

)

 

 

(163

)

 

 

(964

)

Cyber Incident costs

 

 

 

 

(85

)

 

 

(130

)

 

 

(1,607

)

Non-GAAP sales and marketing expense

$

59,259

 

 

$

52,306

 

 

$

173,392

 

 

$

155,541

 

 

 

 

 

 

 

 

 

GAAP research and development expense

$

22,562

 

 

$

26,285

 

 

$

68,092

 

 

$

78,474

 

Stock-based compensation expense and related employer-paid payroll taxes

 

(3,015

)

 

 

(3,354

)

 

 

(8,370

)

 

 

(9,824

)

Acquisition and other costs

 

 

 

 

(16

)

 

 

 

 

 

(355

)

Restructuring costs

 

 

 

 

(68

)

 

 

 

 

 

(593

)

Cyber Incident costs

 

 

 

 

(44

)

 

 

(2

)

 

 

(52

)

Non-GAAP research and development expense

$

19,547

 

 

$

22,803

 

 

$

59,720

 

 

$

67,650

 

 

 

 

 

 

 

 

 

GAAP general and administrative expense

$

42,558

 

 

$

28,551

 

 

$

116,505

 

 

$

90,135

 

Stock-based compensation expense and related employer-paid payroll taxes

 

(8,933

)

 

 

(6,553

)

 

 

(24,726

)

 

 

(16,690

)

Acquisition and other costs

 

(146

)

 

 

(214

)

 

 

(432

)

 

 

(1,042

)

Restructuring costs

 

(43

)

 

 

(1,269

)

 

 

(1,310

)

 

 

(2,822

)

Cyber Incident costs, net

 

(10,823

)

 

 

(2,434

)

 

 

(19,992

)

 

 

(20,327

)

Goodwill and indefinite-lived intangible asset impairment

 

(5,884

)

 

 

 

 

 

(15,249

)

 

 

 

Non-GAAP general and administrative expense

$

16,729

 

 

$

18,081

 

 

$

54,796

 

 

$

49,254

 

 

 

 

 

 

 

 

 

GAAP operating expenses

$

421,684

 

 

$

127,262

 

 

$

1,305,557

 

 

$

384,697

 

Stock-based compensation expense and related employer-paid payroll taxes

 

(17,502

)

 

 

(15,415

)

 

 

(49,883

)

 

 

(42,785

)

Amortization of acquired intangibles

 

(13,045

)

 

 

(13,784

)

 

 

(39,387

)

 

 

(41,704

)

Acquisition and other costs

 

(146

)

 

 

(231

)

 

 

(432

)

 

 

(1,398

)

Restructuring costs

 

(43

)

 

 

(2,079

)

 

 

(1,473

)

 

 

(4,379

)

Cyber Incident costs, net

 

(10,823

)

 

 

(2,563

)

 

 

(20,124

)

 

 

(21,986

)

Goodwill and indefinite-lived intangible asset impairment

 

(284,590

)

 

 

 

 

 

(906,350

)

 

 

 

Non-GAAP operating expenses

$

95,535

 

 

$

93,190

 

 

$

287,908

 

 

$

272,445

 

 

 

 

 

 

 

 

 

GAAP operating loss

$

(262,479

)

 

$

(3,822

)

 

$

(847,616

)

 

$

(22,510

)

Impact of purchase accounting(1)

 

 

 

 

 

 

 

 

 

 

134

 

Stock-based compensation expense and related employer-paid payroll taxes

 

17,991

 

 

 

16,019

 

 

 

51,469

 

 

 

44,412

 

Amortization of acquired technologies

 

3,628

 

 

 

39,882

 

 

 

24,503

 

 

 

120,397

 

Amortization of acquired intangibles

 

13,045

 

 

 

13,784

 

 

 

39,387

 

 

 

41,704

 

Acquisition and other costs

 

146

 

 

 

232

 

 

 

432

 

 

 

1,403

 

Restructuring costs

 

43

 

 

 

2,596

 

 

 

1,473

 

 

 

4,896

 

Cyber Incident costs, net

 

10,829

 

 

 

2,927

 

 

 

20,293

 

 

 

23,822

 

Goodwill and indefinite-lived intangible asset impairment

 

284,590

 

 

 

 

 

 

906,350

 

 

 

 

Non-GAAP operating income

$

67,793

 

 

$

71,618

 

 

$

196,291

 

 

$

214,258

 

GAAP operating margin

 

(146.3

)%

 

 

(2.1

)%

 

 

(159.2

)%

 

 

(4.2

)%

Non-GAAP operating margin

 

37.8

%

 

 

39.5

%

 

 

36.9

%

 

 

40.3

%

 

 

 

 

 

 

 

 

GAAP net income (loss) from continuing operations

$

(292,219

)

 

$

1,080

 

 

$

(919,002

)

 

$

(42,585

)

Impact of purchase accounting(1)

 

 

 

 

 

 

 

 

 

 

134

 

Stock-based compensation expense and related employer-paid payroll taxes

 

17,991

 

 

 

16,019

 

 

 

51,469

 

 

 

44,412

 

Amortization of acquired technologies

 

3,628

 

 

 

39,882

 

 

 

24,503

 

 

 

120,397

 

Amortization of acquired intangibles

 

13,045

 

 

 

13,784

 

 

 

39,387

 

 

 

41,704

 

Acquisition and other costs

 

146

 

 

 

232

 

 

 

432

 

 

 

1,403

 

Restructuring costs

 

43

 

 

 

1,376

 

 

 

1,433

 

 

 

3,676

 

Cyber Incident costs, net

 

10,829

 

 

 

2,927

 

 

 

20,293

 

 

 

23,822

 

Goodwill and indefinite-lived intangible asset impairment

 

284,590

 

 

 

 

 

 

906,350

 

 

 

 

Loss on extinguishment of debt

 

1,930

 

 

 

 

 

 

1,930

 

 

 

 

Tax benefits associated with above adjustments

 

(8,389

)

 

 

(15,644

)

 

 

(23,148

)

 

 

(50,326

)

Non-GAAP net income

$

31,594

 

 

$

59,656

 

 

$

103,647

 

 

$

142,637

 

 

 

 

 

 

 

 

 

GAAP diluted earnings (loss) from continuing operations per share

$

(1.81

)

 

$

0.01

 

 

$

(5.72

)

 

$

(0.27

)

Non-GAAP diluted earnings per share

$

0.20

 

 

$

0.37

 

 

$

0.65

 

 

$

0.90

 

_______________

(1)

Adjustment represents the impact of purchase accounting to the subscription revenue line item.

Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA from Continuing Operations

(Unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

(in thousands, except margin data)

Net loss

$

(292,219

)

 

$

(8,979

)

 

$

(919,002

)

 

$

(27,763

)

Less: Net income (loss) from discontinued operations

 

 

 

 

(10,059

)

 

 

 

 

 

14,822

 

Net income (loss) from continuing operations

 

(292,219

)

 

 

1,080

 

 

 

(919,002

)

 

 

(42,585

)

Amortization and depreciation

 

20,048

 

 

 

57,354

 

 

 

74,107

 

 

 

173,362

 

Income tax expense (benefit)

 

4,141

 

 

 

(19,321

)

 

 

11,856

 

 

 

(26,322

)

Interest expense, net

 

23,181

 

 

 

15,897

 

 

 

57,669

 

 

 

48,262

 

Impact of purchase accounting on total revenue

 

 

 

 

 

 

 

 

 

 

134

 

Unrealized foreign currency gains

 

(458

)

 

 

(388

)

 

 

(898

)

 

 

(1,504

)

Acquisition and other costs

 

146

 

 

 

232

 

 

 

432

 

 

 

1,403

 

Debt related costs(1)

 

2,025

 

 

 

92

 

 

 

2,222

 

 

 

284

 

Stock-based compensation expense and related employer-paid payroll taxes

 

17,991

 

 

 

16,019

 

 

 

51,469

 

 

 

44,412

 

Restructuring costs

 

43

 

 

 

1,376

 

 

 

1,433

 

 

 

3,676

 

Cyber Incident costs, net

 

10,829

 

 

 

2,927

 

 

 

20,293

 

 

 

23,822

 

Goodwill and indefinite-lived intangible asset impairment

 

284,590

 

 

 

 

 

 

906,350

 

 

 

 

Adjusted EBITDA

$

70,317

 

 

$

75,268

 

 

$

205,931

 

 

$

224,944

 

Adjusted EBITDA margin

 

39.2

%

 

 

41.5

%

 

 

38.7

%

 

 

42.3

%

_______________

(1)

Debt related costs include fees related to our credit agreements of $0.1 million for both the three months ended September 30, 2022 and 2021, and $0.3 million for both the nine months ended September 30, 2022 and 2021, in addition to a non-cash loss on extinguishment of debt of $1.9 million for the three and nine months ended September 30, 2022.

Reconciliation of Revenue to Non-GAAP Revenue

on a Constant Currency Basis from Continuing Operations

(Unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2022

 

2021

 

Growth Rate

 

2022

 

2021

 

Growth Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except percentages)

Total GAAP revenue

$

179,396

 

$

181,271

 

(1.0

)%

 

$

532,298

 

$

531,915

 

0.1

%

Impact of purchase accounting(1)

 

 

 

 

 

 

 

 

 

134

 

(0.1

)

Non-GAAP total revenue

 

179,396

 

 

181,271

 

(1.0

)

 

 

532,298

 

 

532,049

 

 

Estimated foreign currency impact(2)

 

4,438

 

 

 

2.4

 

 

 

9,984

 

 

 

1.9

 

Non-GAAP total revenue on a constant currency basis

$

183,834

 

$

181,271

 

1.4

%

 

$

542,282

 

$

532,049

 

1.9

%

 

 

 

 

 

 

 

 

 

 

 

 

_______________

(1)

Adjustment represents the impact of purchase accounting to the subscription revenue line item.

(2)

The estimated foreign currency impact is calculated using the average foreign currency exchange rates in the comparable prior year monthly periods and applying those rates to foreign-denominated revenue in the corresponding monthly periods in the three and nine months ended September 30, 2022.

Reconciliation of Revenue to Adjusted Non-GAAP Revenue

Assuming Rates in Previously Issued Outlook

(Unaudited)

 

 

Three Months Ended

September 30, 2022

 

 

 

(in thousands)

Total revenue

$

179,396

Estimated foreign currency impact(1)

 

897

Total adjusted non-GAAP revenue assuming foreign currency exchange rates used in previously issued outlook

$

180,293

_______________

(1)

Estimated foreign currency impact represents the impact of the difference between the actual foreign currency exchange rates in the period used to calculate our three months ended September 30, 2022 actual non-GAAP results and the rates assumed in our previously issued outlook dated August 2, 2022.

Reconciliation of Non-GAAP Total Revenue Outlook on a Constant Currency Basis

 

 

Q4 2022

 

Low

 

High

 

Low(2)

 

High(2)

 

 

 

 

 

 

 

 

 

(in millions, except year-over-year percentages)

Total revenue

$

178

 

$

183

 

(5

)%

 

(2

)%

Estimated foreign currency impact

 

5

 

 

5

 

3

 

 

3

 

Non-GAAP total revenue on a constant currency basis(1)

$

183

 

$

188

 

(2

)%

 

1

%

 

Full Year 2022

 

Low

 

High

 

Low(2)

 

High(2)

 

 

 

 

 

 

 

 

 

(in millions, except year-over-year percentages)

Total revenue

$

710

 

$

715

 

(1

)%

 

(1

)%

Estimated foreign currency impact

 

15

 

 

15

 

2

 

 

3

 

Non-GAAP total revenue on a constant currency basis(1)

$

725

 

$

730

 

1

%

 

2

%

_______________

(1)

Non-GAAP revenue on a constant currency basis is calculated using the average foreign currency exchange rates in the comparable prior year periods and applying those rates to the estimated foreign-denominated revenue in the corresponding periods rather than the forecasted foreign currency exchange rates for the future periods.

(2)

Revenue growth rates are calculated using non-GAAP revenue from the comparable prior period.

Reconciliation of Unlevered Free Cash Flow from Continuing Operations

(Unaudited)

 

 

Nine Months Ended September 30,

 

2022

 

2021

 

 

 

 

 

(in thousands)

Net cash provided by operating activities from continuing operations

$

106,726

 

 

$

81,945

 

Capital expenditures(1)

 

(16,669

)

 

 

(10,034

)

Free cash flow

 

90,057

 

 

 

71,911

 

Cash paid for interest and other debt related items

 

51,060

 

 

 

41,851

 

Cash paid for acquisition and other costs, restructuring costs, Cyber Incident costs, net, employer-paid payroll taxes on stock awards and other one-time items

 

26,340

 

 

 

35,466

 

Unlevered free cash flow (excluding forfeited tax shield)

 

167,457

 

 

 

149,228

 

Forfeited tax shield related to interest payments(2)

 

(13,384

)

 

 

(9,884

)

Unlevered free cash flow

$

154,073

 

 

$

139,344

 

_______________

(1)

Includes purchases of property and equipment and purchases of intangible assets.

(2)

Forfeited tax shield related to interest payments assumes a statutory rate of 24.5% for the nine months ended September 30, 2022 and 23.5% for the nine months ended September 30, 2021.

 

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