Q4 2023 SolarWinds Corp Earnings Call
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Operator: Thank you. I would now like to turn the call over to Tim Kharraja, Group Vice President of Finance. Mr. Karagia, you may begin your conference. Thank you.
Jamie: Thank you I would now like to turn the call over to Tim Crusher Group Vice President of Finance.
Tim Crusher: Mr. Crusher, you may begin your conference.
Tim Crusher: Thank you good morning, everyone and welcome to the solar <unk> fourth quarter 2023 earnings call.
Tim Kharraja: Good morning, everyone, and welcome to the SolarWinds fourth quarter 2023 earnings call. With me today are Sudhakar Ramakrishna, our President and CEO, and Bart Kalsu, our CFO. Following our prepared remarks, we will have a question and answer session.
With me today are Sudhakar, Ramakrishna, our president and CEO and blackouts.
Tim Crusher: Our CFO.
Tim Crusher: Following our prepared remarks, we will have a question and answer session.
Tim Kharraja: This call is being simultaneously webcast on our Investor Relations website at investors.solarwinds.com. You can also find our earnings press release and the summary slide deck, which is intended to supplement our prepared remarks during today's call. Please remember that certain statements made during this call are forward-looking statements, including those concerning our financial outlook, our market opportunities, our expectations regarding customer retention, our continued evolution to a subscription-first mentality, and the timing of the phases of such evolution, our expectations regarding our partner ecosystem, the SEC enforcement action, the impact of the global economic and geopolitical environment on our business, and our growth level of debt. These statements are based on currently available information and And we undertake no duty to update this information, except as required by law.
Tim Crusher: This call is being simultaneously webcast on our Investor relations website at investors Dot solar winds dot com.
Tim Crusher: You can also find our earnings press release, and summary, slide deck, which is intended to supplement our prepared remarks during today's call.
Tim Crusher: Please remember that certain statements made during this call are forward looking statements.
Tim Crusher: Including those cultural and our financial outlook our market opportunities are.
Tim Crusher: Patients regarding customer retention.
Tim Crusher: It will loosen towards subscription first mentality.
Tim Crusher: The timing of the phases of such evaluation.
Tim Crusher: Our expectations regarding our partner ecosystem.
Tim Crusher: The enforcement action the impact of the global economic and geopolitical environment on our business and our gross level of debt.
Tim Crusher: These statements are based on currently available information and assumptions and we undertake no duty to update this information except as required by law.
Tim Kharraja: These statements are subject to a number of risks and uncertainties, including the numerous risks and uncertainties highlighted in today's earnings release and our filings with the SEC. Copies are available from the SEC on our Investor Relations website. We will discuss various non-GAAP financial measures on today's call. Unless otherwise specified, when we refer to financial measures, we will be referring to non-GAAP financial measures.
Tim Crusher: These statements are subject to a number of risks and uncertainties, including the numerous risks and uncertainties highlighted in today's earnings release, and our filings with the SEC copies.
Tim Crusher: Copies are available from the SEC on our Investor Relations website.
Tim Crusher: We will discuss various non-GAAP financial measures on today's call.
Tim Crusher: Unless otherwise specified well when we refer to financial measures, we will be referring to non-GAAP financial measures may recall solution of the differences between GAAP and non-GAAP financial measures and the definition of other financial metrics discussed on today's call are available in our earnings press release and summary slide deck.
Tim Kharraja: A reconciliation of the differences between GAAP and non-GAAP financial measures and the definition of other financial metrics discussed on today's call are available in our earnings press release and summary slide deck on the investor relations page of our website. Finally, we note that the financial results discussed on today's call and our earnings release are preliminary and pending final review by us and our external auditors, and will only be final once we file our annual report on Form 10-K. With that, I will now turn the call over to Sudhakar. Thank you, Tim, and good morning, everyone. I hope you're off to a great start in 2024.
Tim Crusher: On the Investor Relations page of our website.
Tim Crusher: Finally, we note that the financial results discussed on today's call in our earnings release, our preliminary and pending final review by Us and our external auditors.
Tim Crusher: And we will only be final once we file our annual report on Form 10-K with that I will now turn the call over to Sudhakar.
Sudhakar: Thank you, Tim and good morning, everyone.
Sudhakar: Hope you are off to a great start in 2024.
Kasthuri Gopalan Rangan: As always, I'd like to thank our employees, customers, partners, and shareholders for their ongoing commitment to SolarWinds. I'm pleased to report that we delivered another strong quarter, once again, exceeding our guidance across all key metrics, finishing the year on a high note and adding to the momentum we built throughout 2023. We believe our performance continues to demonstrate not only the resiliency of our business model but also the compelling value we deliver to our customers. Now, turning to business highlights from this quarter. First, strong subscription revenue and overall ARR growth demonstrating the continued success of our Subscription First strategy. Second, continued growth and adoption of our observability solution.
Sudhakar: As always I'd like to thank our employees customers partners and shareholders for their ongoing commitment to Sullivan.
Sudhakar: I am pleased to report that we delivered another strong quarter once again exceeding our guidance across all key metrics, finishing the year on a high note and adding to the momentum we built throughout 2023.
Sudhakar: We believe.
Sudhakar: <unk> continues to demonstrate not only the resiliency of our business model, but also the compelling value we deliver to our customers.
Sudhakar: Now turning to business highlights from this quarter.
Sudhakar: First strong subscription revenue and overall are all growth demonstrating the continued success of <unk>.
Sudhakar: <unk> switch strategy.
Sudhakar: Second continued growth and adoption of observer ability solutions.
Kasthuri Gopalan Rangan: Third, strong customer retention, which was a critical priority of ours in 2023. Fourth, significant enhancements we delivered on our SolarWinds platform as it continues to be the foundation that fuels innovation for our self-hosted and SaaS solutions so customers can consolidate tools and experience hybrid visibility, simplicity, and cost-effective productivity across multi-cloud environments. Finally, continued adjusted EBITDA growth and another quarter of achieving the Rule of 50. I will now discuss some of our fourth quarter financial highlights before turning the call over to Bart, who will provide more detail on the quarter, our financial performance in 2023, and our financial outlook for 2024. In Q4 2023, we saw total revenue of $198 million, about the high end of the range we provided, and representing a year-over-year growth rate of 6 percent.
Sudhakar: Third strong customer retention, which was a critical priority of ours in 2023.
Sudhakar: Book significant enhancements, we delivered on our solar Vince platform as it continues to be the foundation that fuels innovation.
Sudhakar: <unk> hosted and SaaS solutions.
Sudhakar: Customers can consolidate tools and expedient hybrid visibility simplicity and cost effective productivity across multi cloud environments.
Sudhakar: Finally continued adjusted EBITDA growth and another quarter of achieving the rule of 50.
Sudhakar: I will now discuss our fourth.
Sudhakar: Fourth quarter financial highlights before turning the call over to Bart who will provide more detail on the quarter, our financial performance in 2023, and our financial outlook for 2024.
Bart: In Q4 2023, we saw total revenue.
Bart: <unk> hundred $98 million.
Bart: About the high end of the range, we provided and representing a year over year growth rate of 6%.
Kasthuri Gopalan Rangan: With the ongoing success of our Subscription First strategy, in the fourth quarter, we delivered subscription revenue growth of 36% and subscription ARR growth of 34%. We delivered fourth quarter adjusted EBITDA of 87 million, about the high end of the range we provided and representing growth of 17% year over year. Our 4th quarter in-quarter maintenance renewal rate was 95%, and our trailing 12-month maintenance renewal rate at the year-end was 96%, an increase from 95% as of the end of the 3rd quarter and 93% as of the year-end 2022. And we delivered 4th quarter total ARR growth of 8% year-over-year with continued execution of our subscription-first and platform squarity. Shifting to our product portfolio, we believe that SolarWinds provides the most comprehensive AI-powered full-stack observability solutions in the industry across networks, infrastructure, applications, and databases.
Bart: With the ongoing success of our subscription first strategy in the fourth quarter, we delivered subscription revenue growth of 36% and subscription <unk> growth of 34%.
Bart: We delivered fourth quarter, adjusted EBITDA, but $87 million above the high end of the range, we provided and representing growth of 17% year over year.
Bart: Our fourth quarter in quarter maintenance renewal rate was 95% and our crew.
Bart: <unk> 12 month maintenance renewal rate.
Bart: And was it 96% an increase from 95% as of the ended the third quarter and 93% as at the year end 'twenty to 'twenty two.
Bart: And we delivered fourth quarter total <unk> growth of 8% year over year with continued execution of our subscription first and platform strategy.
Bart: Shifting to our product portfolio, we believe that <unk> provides the most comprehensive AI powered full stack the observer ability solutions in the industry across network infrastructure applications and databases.
Kasthuri Gopalan Rangan: A multifaceted product portfolio offers observability, database performance, and service management solutions across on-premises, cloud, and hybrid environments, enabling customers to accelerate their business transformations in an increasingly multi-cloud world. We help reduce customers' complexity and cost by eliminating tool sprawl, helping rapidly detect and remediate issues, increase time-to-value, and improve productivity. We believe that SolarWinds hybrid cloud observability contributes to increased retention and conversion rates and that our customers are enjoying increased value as we continue to evolve and extend the capabilities of our solution. Across observability, service management, and database performance management, our teams are continuing to deliver customer-critical capabilities. We believe a broad spectrum of self-hosted and SaaS solutions most effectively enables our customers to accelerate their business transformation with deployment flexibility. Some recent enhancements include: In November, we announced SolarWinds Database Observability, a new offering that delivers comprehensive visibility into databases to increase the performance, scalability, and efficiency of digital services and applications.
Bart: Multi faceted product portfolio offers observer ability database performance and service management solutions across on premises cloud and hybrid environment, enabling.
Bart: Customers to accelerate their business transformation in an increasingly multi cloud world.
Bart: We help reduce customers' complexity and cost by eliminating two strong help rapidly detect and remediate issues increased time to value and improve productivity.
Bart: We believe that <unk> hybrid cloud observer ability contributes to increased retention and conversion rates and that our customers are enjoying increased value as we continue to evolve and extend the capabilities of our solutions.
Bart: Across observed mobility service management and database performance management.
Bart: Teams are continuing to deliver customer critical capabilities.
Bart: We believe our broad spectrum of self hosted SaaS solutions, most effectively enables our customers to accelerate their business transformation with deployment flexibility.
Bart: Recent enhancements include.
Bart: In November we announced the element database observer ability and new offering that delivers comprehensive visibility into databases to increase the performance scalability and efficiency of digital services and applications.
Kasthuri Gopalan Rangan: Combined with our application observability capabilities, we can reduce customers' time-to-detect problems in their multi-cloud environment. At AWS reInvent 2023, we unveiled the latest enhancements to our SAS-delivered observability solution, helping customers accelerate their cloud journeys and including support for open telemetry and new Kubernetes application-centric intelligence, as well as the addition of cloud-enabled, open source, We continue to enhance our self-hosted observability solutions with new device support to provide increased coverage for our customers. We also continue to evolve our network infrastructure and cloud observability solutions, and we have had several customers leverage the power of our solution to gain hybrid visibility. I'm pleased to share that just this week, we announced a series of transformative AI-powered enhancements across our SAS-based observability solutions, most notably to our proven network, infrastructure, and cloud offerings.
Bart: Combined with that application observer ability capabilities, we can reduce customers' time to detect problems in their multi cloud environments.
Bart: At AWS re invent 2023.
Bart: Well the latest enhancements to our SaaS delivered observer ability solution, helping customers accelerate their cloud journey and including support for open telemetry and new Kubernetes application centric intelligence as well as the addition of cloud enabled open source and no sequel.
Bart: Database observe mobility capabilities.
Bart: We continue to enhance our self hosted <unk> solution with the new device support will provide increased coverage for our customers.
Bart: We also continue to evolve our network infrastructure and cloud availability solutions and had several customers leverage the power of our solutions to gain hybrid visibility.
Bart: I am pleased to share that just this week, we announced a series of <unk> AI powered enhancements across our SaaS based observer ability solutions, most notably to our proven network infrastructure and cloud offerings.
Kasthuri Gopalan Rangan: Building upon our networking heritage, we now offer complete visibility across on-premises and cloud networks, including on-premises and cloud network devices, virtual machines, hypervisors, containers, and infrastructure as a service resources. We invite you all to learn more about our latest innovations at our next SolarWinds Day on Wednesday, February 28. Layered through all facets of our offerings is Secure by Design, our standard for secure software development and infrastructure security.
Bart: Building upon our networking heritage, we now offer complete visibility across on premises and cloud networks, including on premises and cloud network devices, which will machines hypervisor.
Bart: Painters and infrastructure as a service resources.
Bart: We invite you all to learn more about our latest innovations.
Bart: Next the elements day on Wednesday February 28.
Bart: Layered through all facets of our offerings is secured by design standard for secure software development and infrastructure security. We developed the secure by design initiated to address the ever changing threat landscape and to illustrate how security is a part of our organization.
Kasthuri Gopalan Rangan: We developed the Secure by Design initiative to address the ever-changing threat landscape and to illustrate how security is a part of our organization's fabric. We believe our initiative not only delivers enhanced security for our customers but also advances cyber safety for SolarWinds and for our industry at large and establishes a new standard for secure software development. Turning now to our partner ecosystem, as you've heard me discuss in recent quarters, our partners, including global system integrators and hyperscalers, are increasingly important for our expanding go-to-market motion and can help us expand our reach to customers in a scalable, efficient, and cost-effective manner. The SolarWinds model of inside and velocity sales is the foundation upon which we are building these additional go-to-market movements.
Bart: <unk> fabric.
Bart: We believe our initiative not only daily with enhanced security for our customers, but it also advances cyber safety for Sullivan's and for our industry at large and establishes a new standard let's take care of software development.
Bart: Turning now to our partner ecosystem as you've heard me discuss in recent quarters, our partners, including global system integrators, and Hyperscale is an increasingly important for our expanding go to market motions.
Bart: And can help us expand our reach to customers in a scalable efficient and cost effective manner.
Bart: The solar winds model of insight and velocity sales is the foundation upon which we are building. These additional go to market motions.
Kasthuri Gopalan Rangan: In August 2023, we announced enhancements to our channel partner program. Designed to accelerate growth and revenue for our partners, these updates provide greater flexibility for our partners to achieve their targets, new opportunities for channel offering improvements, and specialized options for database and ITSM products. We will continue to host our Transform Partner Summits with several exciting events planned for 2024, including our EMEA Summit in Lisbon, our APJ Summit in Bali, and our America Summit in Miami.
Bart: In August 2023, we announced enhancements to our channel partner program design.
Bart: Designed to accelerate growth and revenue with and for our partners. These updates provide greater flexibility for our partners to achieve that target new opportunities for churn offering improvements and specialized option, but database and <unk> products.
Bart: We will continue to close our transform partner summit with several exciting events planned for 2024, including EMEA summit in Lisbon at <unk> Summit in Bali and that America summit in Miami.
Kasthuri Gopalan Rangan: I look forward to meeting our partners and sharing our 2024 plan. I believe that partners are a force multiplier, and together, we can help our customers further accelerate their business transformation. 2023 was a strong year across multiple dimensions, and I'll provide a quick recap.
Bart: I look forward to meeting our partners and sharing our 2024 plants.
Bart: I believe that partners are a force multiplier and together, we can help our customers further accelerate that business transformation.
Bart: 2023 was a strong year across multiple dimensions and I'll provide a quick recap.
Kasthuri Gopalan Rangan: First, we successfully drove subscription adoption across our businesses, which is seen in our strong subscription revenue and ARR growth results. We believe this is consistent with how our customers want to consume our products and that an increase in our subscription rates provides an even more solid foundation for our revenue and margin expansion efforts. Second, we demonstrated rigorous expense discipline in a challenging macro environment by investing selectively while managing costs and improving our operating margins, as reflected in our 17% adjusted EBITDA year-over-year growth in 2023. Third, we continue to prioritize customer success and retention and successfully improve our maintenance renewal rates to 96% on a trailing 12-month basis. Fourth, we delivered on our innovation agenda by extending and enhancing the AI-powered capabilities of our solutions, while also expanding our ecosystem to bring even greater value to our customers.
Bart: First we successfully drove subscription adoption across our businesses with the scene in our strong subscription revenue and <unk> growth results.
Bart: We believe this is consistent with how our customers want to consume our products and that an increase in our subscription blades provides an even more solid foundation for our revenue and margin expansion efforts.
Bart: Second we demonstrated rigorous expense discipline in a challenging macro environment by investing selectively.
Bart: While managing costs and improving our operating margins as reflected in our 17% adjusted EBITDA year over year growth in 2023.
Bart: Could we continue to prioritize customer success and retention and successfully improved our maintenance renewal rate to 96% on a trailing 12 month basis.
Bart: And fourth we delivered on our innovation agenda by extending and enhancing the AI powered capabilities of our solutions, while also expanding our ecosystem to bring even greater value to our customers.
Bart: It is my belief that we built a strong foundation and successful strategy. That's a direct result of our focus on our transformational efforts across all aspects of our business over the last three years.
Kasthuri Gopalan Rangan: It is my belief that we built a strong foundation and a successful strategy that's a direct result of our focus on our transformational efforts across all aspects of our business over the last three years. With that, I will turn it over to Bhat to expand on our financial performance and provide a full year 2024 outlook.
Speaker Change: With that I will turn it over to but to expand on our financial performance and provide a full year 'twenty 'twenty four outlook Buck.
Bart: Thanks to Dr. and thanks to everyone for joining us. 2023 was a successful year for us as we started to see returns on many of the investments that we have made over the past few years. We have grown in total revenue and seen a significant acceleration in our subscription revenue and subscription ARR. Margins were another area of focus for us, and we improved our adjusted EBITDA by $48 million, or 17% year-over-year, and our adjusted EBITDA margin is back to the mid-40s. The fourth quarter was consistent with the first three, as we beat guidance across all key metrics.
Buck: Thanks, <unk> and thanks to everyone for joining us two.
Buck: <unk> 2023 was a successful year for us as we started to see returns on many of the investments that we've made over the past few years.
Buck: We have grown in total revenue and significant acceleration in our subscription revenue and subscription IRR.
Buck: <unk> were another area of focus for us and we improved our adjusted EBITDA by $48 million or 17% year over year and our adjusted EBITDA margin is back to the mid Forty's.
Buck: The fourth quarter was consistent with the first three as we beat guidance across all key metrics.
Bart: We are proud of the financial results we delivered in 2023. We increased the mix of predictable recurring revenue, delivered double-digit adjusted EBITDA growth, and made substantial progress in improving our leverage profile. Turning to the numbers, we finished the fourth quarter with total revenue of $198 million, a 6% increase compared to the prior year, and above the high end of $192.5 million of the outlook for total revenue that we provided last quarter. On a full year basis, total revenue finished at $759 million, above the high end of the outlook for $733 million, and well above the high end of the range of $725 to $740 million that we provided at We ended the fourth quarter with a total ARR of $684 million, up 8% year over year.
Buck: We are proud of the financial results, we delivered in 2023, we.
Buck: We have increased the mix of predictable recurring revenue delivered double digit adjusted EBITDA growth and made substantial progress in improving our leverage profile.
Buck: Turning to the numbers, we finished the fourth quarter with total revenue of $198 million.
Buck: A 6% increase compared to the prior year and above the high end of $192 $5 million of outlook for total revenue that we provided last quarter.
Buck: On a full year basis total revenue finished at $759 million above the high end of outlook of $753 million and well above the high end of the range of $725 million to $740 million that we provided at the start of the year.
Buck: We ended the fourth quarter with total IRR of $684 million up 8% year over year.
Bart: Our subscription ARR at the end of the fourth quarter was $233 million, an increase of 34% year-over-year. This growth continues to be driven by the execution of our subscription-first strategy. We have historically provided the number of customers who have spent more than $100,000 with us over the past 12 months. That number was 945 as of December 31st, which was a 6% increase over the prior year.
Buck: Our subscription IRR at the end of the fourth quarter was $233 million, an increase of 34% year over year.
Buck: This growth continues to be driven by the execution of our subscription first strategy.
Buck: We have historically provided the number of customers who have spent more than $100000 with us over the past 12 months.
Buck: That number was 945 as of December 31, which was a 6% increase over the prior year.
Bart: Moving forward, instead of that metric, and consistent with our subscription transition, we will now be providing the number of customers who have annual recurring revenue, or ARR, of greater than $100,000. We believe that total ARR from customers is a better indicator of the health of the business since annual recurring revenue provides insight into the quality and repeatability of the business. We had 979 customers with over $100,000 in total ARR, representing a 15% growth over the prior year.
Buck: Moving forward instead of that metric and consistent with our subscription transition we will now be providing the number of customers who have annual recurring revenue or <unk> of greater than $100000.
Buck: We believe that total IRR from customers is a better indicator of the health of the business.
Buck: <unk> annual recurring revenue provides insight into the quality and repeat ability of the business.
Buck: We had 979 customers with over 100000.
Buck: Of total IRR, representing a 15% growth over the prior year.
Bart: Digging into the revenue details, our fourth quarter subscription revenue was $68 million, up 36% year-over-year, with full year subscription revenue of $234 million, an increase of 40% year-over-year. The increase in subscription revenue reflects the success of our Subscription First Strategy. Maintenance revenue was $115 million in the fourth quarter, roughly flat compared to the prior year.
Buck: Digging into the revenue details our fourth quarter subscription revenue was $68 million up 36% year over year with full year subscription revenue of $234 million, an increase of 40% year over year.
Buck: The increase in subscription revenue reflects the success of our subscription first strategy.
Buck: Maintenance revenue was $115 million in the fourth quarter, roughly flat compared to the prior year.
Bart: Full-year maintenance revenue was $462 million, up 1% year over year. As we have previously discussed, the conversion of a portion of our maintenance customers to subscriptions has impacted maintenance revenue, and we expect that it will continue to do so as we continue our subscription-first transition. Our maintenance renewal rate is 96% on a trailing 12-month basis and was 95% for the fourth quarter. The improvement in our renewal rate in 2023 was a testament to the loyalty of our customer base and the value of our solution. As we convert maintenance customers to subscriptions, we exclude those customers from this renewal rate calculation. As a result of the subscription revenue growth and strong maintenance renewal rates, we now have 92% of our total revenue as recurring revenue. For the fourth quarter, license revenue was $15 million, down 31% from $22 million in the fourth quarter of 2022. And full-year license revenue was $62 million, down 33% over the years.
Buck: Full year maintenance revenue was $462 million up 1% year over year.
Buck: As we have previously discussed the conversion of a portion of our maintenance customers to subscription has impacted maintenance revenue and we expect that it will continue to do so as we continue our subscription first transition.
Buck: Our maintenance renewal rate is 96% on a trailing 12 month basis and was 95% for the fourth quarter.
Buck: The improvement in our renewal rate in 2023 was a testament to the loyalty of our customer base and the value of our solutions.
Buck: As we convert maintenance customers to subscription we exclude those customers from this renewal rate calculation.
Buck: As a result of the subscription revenue growth and strong maintenance renewal rates, we now have 92% of our total revenue as recurring revenue.
Buck: For the fourth quarter license revenue was $15 million down 31% from $22 million in the fourth quarter of 2022.
Buck: And full year license revenue was $62 million down 33% year over year.
Bart: As a reminder, our subscription-first focus has affected and will continue to affect our license sales. Our focus on operating discipline delivered another quarter of strong non-gap profitability. Fourth quarter adjusted EBITDA was $87 million, growing 17% year-over-year.
Buck: As a reminder, our subscription first focus has affected and will continue to affect our license sales.
Buck: Our focus on operating discipline delivered another quarter of strong non-GAAP profitability.
Buck: Fourth quarter, adjusted EBITDA was $87 million growing 17% year over year.
Bart: Representing an adjusted EBITDA margin of 44 percent and coming in $4.5 million above the high end of the $80.5 to $82.5 million outlook we gave for the quarter. Full year adjusted EBITDA was $328.6 million, growing 17% from the prior year.
Buck: Representing an adjusted EBITDA margin of 44% and coming in $4 $5 million above the high end of the 85% to $82 $5 million outlook, we gave for the quarter.
Buck: Full year, adjusted EBITDA was $328 6 million growing 17% from the prior year.
Bart: Representing an adjusted EBITDA margin of 43% and coming in $4.6 million above the $322 to $324 million guidance we gave last quarter. As we've discussed in prior quarters, we're focused on our capital allocation. Disciplined expense management and driving operational efficiencies across our business while focusing on growth and our broader subscription transition. Given the uncertain macro outlook for 2023, we took measures to optimize our expense structure as part of our ongoing focus on improving operating margins in the first half of the year. During 2023, these measures resulted in 20 million dollars in restructuring charges, primarily associated with 14 million dollars of lease impairments for certain office locations and costs related to headcount reduction.
Buck: Representing an adjusted EBITDA margin of 43%.
Buck: And coming in at $4 $6 million above the $322 million to $324 million guidance, we gave last quarter.
Buck: As we've discussed in prior quarters, we're focused on our capital allocation disciplined expense management and driving operational efficiencies across our business, while focusing on growth and our broader subscription transition.
Buck: Given the uncertain macro outlook for 2023, we took measures to optimize our expense structure as part of our ongoing focus on improving operating margins in the first half of the year.
Buck: During 2023. These measures resulted in $20 million of restructuring charges, primarily associated with $14 million of lease impairment for certain office locations and costs related to head count reductions.
Bart: Looking ahead, we will continue to monitor the environment closely, and we plan to hire selectively and manage our costs in a disciplined manner. Turning to our balance sheet, we significantly improved our leverage position in 2023. Our net leverage ratio at December 31st was approximately 2.9 times our trailing 12 months adjusted EBITDA, which compares to 3.9 times at the end of last year.
Buck: Looking ahead, we will continue to monitor the environment closely and we plan to hire selectively and manage our costs in a disciplined manner.
Buck: Turning to our balance sheet, we significantly improved our leverage position in 2023, our net leverage ratio at December 31 was approximately two nine times, our trailing 12 months adjusted EBITDA. This compares to three nine times at the end of last year.
Bart: In addition, in January of 2024, we refinanced our term loan, decreasing the interest rate by 50 basis points from SOFR plus 375 to SOFR plus 320. Taking advantage of the latest interest rate environment, we continue to generate strong cash flow with $183 million in cash flow from operations in 2023. Our cash and cash equivalents and short-term investment balance was $289 million at year-end, bringing our net debt to under $1 billion.
Buck: In addition in January of 2024, we refinanced our term loan decreasing the interest rate by 50 basis points from silver plus $3 75 to <unk> $3 25.
Buck: Taking advantage of the latest interest rate environment.
Buck: We continue to generate strong cash flow with $183 million in cash flow from operations in 2023, our cash and cash equivalents and short term investment balance was $289 million at year end, bringing our net debt to under $1 billion.
Bart: Our cash position and positive cash flow give us the ability to fund future growth as well as flexibility on capital allocation alternatives moving forward. I will now walk you through our outlook before turning it over to Sudhakar for final thoughts. I will start with our first quarter guidance and then discuss our outlook for the full year. For the first quarter, we expect total revenue to be in the range of $187 to $192 million, representing 2% growth at the midpoint. Adjusted EBITDA for the first quarter is expected to be approximately $81.5 to $84.5 million, representing 7% growth at the midpoint. Non-GAAP fully diluted earnings per share are projected to be $0.20 to $0.22 per share, assuming an estimated 171.3 million fully diluted shares outstanding.
Buck: Our cash position and positive cash flow give us the ability to fund future growth as well as flexibility on capital allocation alternatives moving forward.
Buck: I will now walk you through our outlook before turning it over to Sudhakar for final thoughts.
Sudhakar: I will start with our first quarter guidance, and then discuss our outlook for the full year.
Sudhakar: For the first quarter, we expect total revenue to be in the range of $187 million to $192 million representing.
Sudhakar: Representing 2% growth at the midpoint.
Sudhakar: Adjusted EBITDA for the first quarter is expected to be approximately 81, 5% to $84 $5 million, representing 7% growth at the midpoint.
Sudhakar: non-GAAP fully diluted earnings per share are projected to be 20% to 22 per share assuming an estimated $171 3 million fully diluted shares outstanding.
Bart: And finally, our outlook for the first quarter assumes a non-GAAP tax rate of 26%, and we expect to pay approximately $12 million in cash taxes during the first quarter. For the full year, we expect total revenue to be in the range of $771 to $786 million, representing 3% growth year over year at the midpoint. Adjusted EBITDA for the year is expected to be approximately $350 to $360 million, representing 8% year-over-year growth at the midpoint. Non-GAAP fully diluted earnings per share are projected to be 95 cents to a dollar per share, assuming an estimated 173.2 million fully diluted shares outstanding.
Buck: And finally, our outlook for the first quarter assumes a non-GAAP tax rate of 26% and we expect to pay approximately $12 million in cash taxes during the first quarter.
Buck: For the full year, we expect total revenue to be in the range of $771 million to $786 million.
Buck: Representing 3% growth year over year at the midpoint.
Buck: Adjusted EBITDA for the year is expected to be approximately $350 million to $360 million.
Buck: Representing 8% year over year growth at the midpoint.
Buck: non-GAAP fully diluted earnings per share are projected to be 95 to $1 per share.
Buck: Assuming an estimated $173 2 million fully diluted shares outstanding.
Kasthuri Gopalan Rangan: Our full year and first quarter guidance assumes a euro to dollar exchange rate of 108 to 1. With that, I'll return the call to Siddhartha for his closing remarks. Thank you, Bart. As you can see, the outlook Bart shared represents a continuation of top-line growth and adjusted EBITDA growth. This, coming on the heels of a strong 2023 performance, reflects our belief in the increasing relevance of our broad array of product offerings, combined with our ability to execute and innovate. Customer environments continue to become more complex as they address the challenges and opportunities of their respective businesses. Equally, their budgets remain constrained, especially in this macro environment.
Buck: Our full year and first quarter guidance assumes a euro to dollar exchange rate of 108 to one.
Speaker Change: With that I'll return the call to <unk> for his closing remarks.
Speaker Change: Thank you, but as you can see the outlook box shed represents a continuation of topline growth and adjusted EBITDA growth.
Speaker Change: This coming on the heels of a strong 2020 threep apartments.
Speaker Change: Flex I believe in the increasing relevance of our broad array of product offerings combined with our ability to execute and innovate.
Speaker Change: Customer environments continue to become more complex as they address the challenges and opportunities of their respective businesses equally their budgets remain constrained, especially in this macro environment.
Kasthuri Gopalan Rangan: Customers are looking to consolidate tools and improve security while reducing alert fatigue, all while seeking solutions that are simpler to procure and use, cloud-ready to help them transform at the pace of their business, and cost-effective while enhancing productivity. We believe we are ideally suited to deliver these solutions to our customers. We take our obligations to deliver customer success very seriously while being excited and disciplined about the opportunity ahead. Looking to 2024, we will continue to extend our SolarWinds platform and deliver effective solutions built to help customers manage their hybrid and multi-cloud environment. Invest selectively while continuing to exercise expense discipline and seek to expand profitability.
Buck: Estimates are looking to consolidate two and to improve security, while reducing alert fatigue, all while seeking solutions that are simpler to procure and use cloud ready to help them transform at the pace of their business cost effective while enhancing productivity.
Buck: We believe we are ideally suited to deliver these solutions to our customers, we take our obligations to deliver customer success very seriously while being excited and disciplined about the opportunity ahead looking to 2024, we will continue to.
Buck: Extend our total events platform and deliver effective solutions built to help customers manage their hybrid and multi cloud environments.
Buck: Invest selectively while continuing to exercise expense discipline and seek to expand profitability.
Kasthuri Gopalan Rangan: We focus on subscription and ARR growth, customer success and retention, growing profitability and cash flow, and creating more value for our shareholders. Although many unknowns around the macro environment persist, we remain focused on the things we can control. I'm pleased with all the work our teams have done to help us cap 2023 with a strong fourth quarter, and I'm as confident as ever in the direction of our business. I could not be prouder of our team's commitment to customer success. Again, I thank our employees, partners, customers, and shareholders for their commitment to SolarWinds. Bart and I are now happy to address your questions. Again, if you would like to ask a question... Press the star followed by the number one on your telephone keypad.
Buck: Focus on subscription and AOR growth customer success, and retention growing profitability and cash flow and creating more value for our shareholders.
Buck: Although many unknowns at out in the macro environment persists, we remain focused on the things we can control.
Buck: I'm pleased with all the work our teams have done to help us cap 2023, with a strong fourth quarter and im as confident as ever in the direction of our business.
Buck: Could not be prouder of our team's commitment to customer success.
Buck: Again, I think got it employees partners customers and shareholders for their commitment its element.
Buck: Bart and I are now happy to address your questions.
Speaker Change: Again, if you would like to ask a question.
Buck: Yes.
Speaker Change: Star followed by the number one on your telephone keypad, we will now pause to compile the Q&A roster.
Operator: We will now pause to compile the Q&A. Your first question comes from the line of Rob Oliver with Baird. Your line is open. Hi, good morning, guys.
Speaker Change: Okay.
Speaker Change: Your first question comes from the line of Rob Oliver with Baird. Your line is open.
Rob Oliver: Hi, Good morning, guys. Thank you very much for taking my question I had two and the first.
Rob Oliver: Thank you very much for taking my question. I had two, and the first, and this could be for Sudhakar or for you, Bart, I just wanted to ask for a bit more color around the 2024 top-line guide. There's a fairly significant divergence between the Q4 exit rate growth of 5.9% and what you guys have guided for the full year. And given some of the success you guys are seeing in the move to subscription and platform sale, I just want to better contextualize that guidance for 2024. And then I had a quick follow-up. Thanks, Rob. First of all, I hope you're doing wonderful.
Rob Oliver: And this could be for Chicago for you Barb.
Rob Oliver: I just wanted to.
Rob Oliver: Ask for a bit more color around the Q.
Rob Oliver: 2020 for topline guide, there's a fairly significant divergence between the Q4 exit rate growth.
Speaker Change: Five 9% and what you guys have guided for the full year end.
Speaker Change: Even some of the success you guys are seeing in the move to subscription in the platform. So I just want a better contextualize.
Speaker Change: That that guidance for 'twenty, four and then I had a quick follow up.
Speaker Change: Thanks, Rob first upon Copia doing wonderful.
Kasthuri Gopalan Rangan: Let me put some context around the 2024 guide, and I'll ask Bart to add any comments he has at that point. First, as you noted and as you saw from our results, we have been executing well on our plan and our priorities, as evidenced by the 2023 results. We are not anticipating significant changes to the macro environment in 2024.
Speaker Change: Let me put some.
Rob: Context around the 2020 full guide and I'll ask Bob to add any comments he has at that point.
Speaker Change: First as you noted and as you saw from our results.
Speaker Change: We have been executing well to our plan and priorities as evidenced in the 2023 results we are not anticipating significant.
Speaker Change: <unk> to the macro environment in 2024.
Kasthuri Gopalan Rangan: But at the same time, we are confident in our solution set, the confidence that the customers have in us, and our ability to execute. So we balanced a bunch of things, including if there are any macro unforeseen conditions, and appropriately created our guidance with the goal that we continue to perform and perform well relative to it going forward. Yeah, Rob, I would just reiterate, there's still a little bit of uncertainty out there in the environment and macro. And so we just want to make sure when we set guidance, we're just taking that into consideration. We haven't seen any noticeable changes or buying patterns as we go into 24. We're just trying to be prudent.
Sudhakar: But at the same time, we are confident in our solution set the confidence that customers have in us.
Speaker Change: And our ability to execute so rebalanced, a bunch of things, including if there are any macro unforeseen conditions.
Speaker Change: And appropriately created our guidance with the goals that we continue to perform and perform well related to it going forward.
Speaker Change: Yes, Rob I would just reiterate.
Rob: There still is a little bit of uncertainty out there in the environment and macro and so we just wanted to when we set guidance. We're just taking that into consideration we haven't seen any noticeable changes in buying patterns as we go into 'twenty four we're just trying to be prudent.
Bart: Got it. Okay. Great. Thanks.
Speaker Change: Got it okay, great. Thanks helpful and then.
Rob Oliver: And then my follow-up question was around the partner program, Sadaqr. Definitely one of the changes that you've made here in putting your fingerprints on the company, and it really sounds like you guys are making progress. I know it's been a lot of effort to kind of build this partner network, build trust with the partners in a business that wasn't traditionally partner-focused. Could you help us?
Speaker Change: My follow up was around.
Speaker Change: The partner program Sudhakar definitely one of the changes that you've made here.
Rob Oliver: In your fingerprints on the company and it really sounds like.
Speaker Change: You guys are making progress I know its been.
Speaker Change: A lot of effort to kind of build this partner network build trust with our partners at a business that wasn't traditionally partner focused.
Rob Oliver: Could you help US you mentioned a lot of events you had this year can you just help us understand.
Kasthuri Gopalan Rangan: You mentioned a lot of the events you have planned this year. Can you just help us understand, with numbers or some kind of parameters, what would constitute success? How should we think about the contributions to the business from partners later this year? What would you like to see?
Speaker Change: Yes.
Kasthuri Gopalan Rangan: Members or what's kind of parameters what would constitute success like how should we think about the contributions to.
Speaker Change: So the business from partners later this year, what would you like to say thank you.
Kasthuri Gopalan Rangan: Thank you. Absolutely, Rob. While we have made great strides with our partner program, I will say that we are still in the early innings of our transformation towards leveraging partners globally. And when I talk about partners, I speak about, call it, traditional resellers and distributors, global system integrators, cloud service providers, and MSPs, as well as hyperscalers. So we have activities in all of these dimensions, but at various levels of maturity.
Kasthuri Gopalan Rangan: After they made up.
Sudhakar: We have made great strides with our partner program I will say that we are still in the early innings of our transformation towards a levy.
Kasthuri Gopalan Rangan: Leveraging partners globally, and when I talk about partners I speak about.
Kasthuri Gopalan Rangan: Call it traditional resellers and distributors global system integrators cloud service providers and MSP as.
Kasthuri Gopalan Rangan: As well as the Hyperscale is so we have motions and all of these dimensions, but at various levels of maturity.
Kasthuri Gopalan Rangan: We take a fairly holistic approach to partners where we truly believe that they are extensions of us. We've already seen results from partners generating demand, identifying new opportunities, and closing them. So I'm very optimistic that we can work very closely together and truly build a force multiplier while at the same time doing it cost effectively.
Kasthuri Gopalan Rangan: We take a fairly holistic approach to partners, where we truly believe that that extensions to us we've already seen results.
Kasthuri Gopalan Rangan: From partners generating demand identifying new opportunities and closing them. So I'm very optimistic that we can work very closely together and truly build a forced multiplier.
Kasthuri Gopalan Rangan: At the same time doing it cost effectively that's a foundation of how we operate at Sullivans and that will continue so that youre going to see some of the effects of it as we move forward it, especially with the <unk> we are getting.
Kasthuri Gopalan Rangan: That's a foundation of how we operate at SolarWinds, and that will continue. So where you're going to see some of the effects of it as we move forward is, especially with the GSIs, we are getting access to larger accounts and winning a lot of those large enterprise accounts as well. Thank you.
Speaker Change: Access to larger accounts and winning a lot of those large enterprise accounts as well.
Kasthuri Gopalan Rangan: This is not to say that we have a broad sales force in the field, which is expensive and speculative. It is very targeted on a solution by solution basis, working with GSI and that gives us significant leverage from our cost of sales standpoint, and then from there it trickles down to traditional resellers MSP.
Kasthuri Gopalan Rangan: This is not to say that we have a broad sales force in the field, which is expensive and speculative. It is very targeted on a solution-by-solution basis, working with the GSIs, and that gives us significant leverage from a cost-of-sales standpoint. And then from there, it trickles down to traditional resellers, MSPs, and CSPs that continue to drive subscription solutions, and so on. So that's where I see the leverage.
Kasthuri Gopalan Rangan: That continued to drive MSP Csp's that continue to drive our subscription solutions and so on so that's where I see the leverage we're not really breaking down any financials, there, but hopefully you'll continue to see that in our.
Kasthuri Gopalan Rangan: Overall, the financial backdrop.
Kasthuri Gopalan Rangan: We're not really breaking down any financials there, but hopefully you'll continue to see that in our overall financial report. Great, very helpful. Thank you very much.
Speaker Change: Great helpful. Thank you very much.
Kasthuri Gopalan Rangan: Your next question comes from the line of Matt Hedberg with RBC capital markets. Your line is open.
Speaker Change: Great guys. Thanks for taking my question I guess, a follow up on kind of the guidance, but also the <unk> the.
Matthew George Hedberg: Your next question comes from the line of Matt Hedberg with RBC Capital Markets. Your line is open. Great, guys. Thanks for taking my question. I guess a follow-up on kind of the guidance, but also the three, the four key results. You had a really strong beat this quarter.
Speaker Change: <unk> results you had a really strong beat this quarter.
Speaker Change: Really good performance.
Matthew George Hedberg: Youre kind of seeing the macro environment remains uncertain, but I guess at a high level did things get better for you in <unk> versus <unk> or was maybe just a little bit more budget flush that you plan on just because the growth was particularly strong this quarter.
Matthew George Hedberg: You know, really, really good performance. You're kind of saying the macro environment remains uncertain, but I guess at a high level. Did things get better for you in 4Q versus 3Q, or was maybe it just a little bit more budget flush that you planned on because the growth was particularly strong this quarter? Matt, I would say it was simply a continued focus on our execution. So we did not see any, I would say, anomalies either positive or negative as it relates to Q4.
Matthew George Hedberg: Matt I would say it was simple simply a continued focus on execution. So we did not see any I would say anomalies either to the positive or the negative as it relates to Q4 Q4 as you know is a seasonally.
Matthew George Hedberg: Bigger quarter for most enterprise software companies. We are no exception. So we did have the benefit of that effect, but outside of that there was nothing unnatural.
Speaker Change: Got it Okay and then.
Kasthuri Gopalan Rangan: Q4, as you know, is a seasonally bigger quarter for most enterprise software companies. We are no exception. So we did have the benefit of that effect. But outside of that, there was nothing. Call it unnatural.
Matthew George Hedberg: On the maintenance conversion I think historically, you've said that you're converting those customers on a higher at a higher dollar value.
Kasthuri Gopalan Rangan: Wondering if you have any metrics that you could share on some of the conversion efforts.
Kasthuri Gopalan Rangan: So the conversion metrics have stayed robust all through 2023, but I also want to provide some context as to why that is the case.
Kasthuri Gopalan Rangan: Got it. Okay. And then, you know, on the maintenance conversion, I think historically, you've said that you're converting those customers at a higher dollar value. I'm wondering if you have any metrics that you could share on some of the conversion efforts. So, the conversion metrics have stayed robust all through 2023. But I also want to provide some context as to why that is the case.
Kasthuri Gopalan Rangan: As I've said in previous calls it does not simply a matter of converting our maintenance dollar to a subscription dollar as much as when we are doing it.
Kasthuri Gopalan Rangan: We're doing it from typically a single point product or a small number of point products to observe ability suite.
Kasthuri Gopalan Rangan: That gives customers greater access to our complete functionality enables them to do tool consolidation. So some of it is plain conversion and in most deals. There is significant expansion is about so when we talk about conversion factors, it's a blended rate of those two things.
Kasthuri Gopalan Rangan: As I've said in previous calls, it is not simply a matter of converting a maintenance dollar to a subscription dollar, as much as when we are doing it from typically a single point product or a small number of point products to our observability suite. That gives customers greater access to our complete functionality and enables them to do tool consolidation. So, some of it is plain conversion, and in most deals, there is significant expansion as well. So, when we talk about conversion factors, it's a blended rate of those two things.
Speaker Change: Got it thanks Sudhakar.
Speaker Change: Thank you.
Kasthuri Gopalan Rangan: Again, if you would like to ask a question press star followed by the number one on your telephone keypad.
Kasthuri Gopalan Rangan: Your next question comes from the line of pendulum Bora with J P. Morgan Your line is open.
Speaker Change: Hey, guys didn't Patel on for pendulum. One quick question on our end what is assumed in the guide in relation to the legal proceedings are you assuming any disruption there and what are you assuming for maintenance conversion going into 'twenty four thanks.
Kasthuri Gopalan Rangan: Got it. Thanks, Sudhakar. Thank you. Again, if you would like to ask a question, press star followed by the number one on your telephone keypad.
Operator: Your next question comes from the line of Penjalamboro with J.P. Morgan. Your line is open. Hey guys, Jayden Patel on for Pendulum.
Speaker Change: Thanks pendulum on the on the legal proceedings.
Penjalamboro: Can say that.
Penjalamboro: Thanks to the focus of our teams, we really have not had any distractions related to that from an operational standpoint, we have a very competent team that is managing that and.
Jayden Patel: One quick question on our end. What is assumed in the guide in relation to the legal proceedings? Are you assuming any disruption there? And what are you assuming for maintenance conversion going into 24?
Speaker Change: All of US, including me are able to focus on our customers are not employees and on growing our business.
Kasthuri Gopalan Rangan: Thanks, Pendulum. On the legal proceedings, I can say that, thanks to the focus of our teams, we really have not had any distractions related to that from an operational standpoint. We have a very competent team that is managing that, and all of us, including me, are able to focus on our customers, on our employees, and on growing our business. Our customers have significant trust in us. We don't take that lightly, and we continue to earn their trust every single day.
Kasthuri Gopalan Rangan: Our customers have significant trust in us.
Kasthuri Gopalan Rangan: Don't take that lightly and we continue to earn their trust every single day and I'm sure you've seen that in our customer retention rates growth rates, even after some of the more recent announcement around the legal proceedings have come through and it is my belief that as we continue to work with the authorities the facts will come out and.
Kasthuri Gopalan Rangan: We feel very confident in opex.
Speaker Change: Got it thanks for taking the questions.
Kasthuri Gopalan Rangan: Your next question comes from the line of Erik <unk> with JMP Securities. Your line is open.
Jayden Patel: And I'm sure you've seen that in our customer retention rates and growth rates, even after some of the more recent announcements around the legal proceedings have come through. It is my belief that as we continue to work with the authorities, the facts will come out, and we feel very confident in our findings.
Speaker Change: Yeah. Thanks for taking the question.
Jayden Patel: What are your competitors out this morning.
Jayden Patel: <unk>.
Jayden Patel: Talk to talk more about how.
Jayden Patel: There is a growing demand for tool consolidation or there is an acceleration in that demand.
Eric Sipager: Thanks for taking the question. Your next question comes from the line of Eric Sipager with JMP Securities. Your line is open.
Eric Sipager: And when the customer is making a tool consolidation decision.
Eric Sipager: It's extended the sales cycle, because it's a more complex decision there is more sign off and things of that nature I am curious if you had seen anything along those lines.
Kasthuri Gopalan Rangan: Yeah, thanks for taking the question. One of your competitors out this morning talked more about how there's a growing demand for tool consolidation, or there's an acceleration in that demand. And when the customer is making a tool consolidation decision, it's extending the sales cycle because it's a more complex decision, there's more sign-off, and things of that nature. I'm curious if you have seen anything along those lines.
Kasthuri Gopalan Rangan: Eric first of all it is true that customers are looking to consolidate tools.
Kasthuri Gopalan Rangan: Our hybrid cloud Absorbability solutions, one of the express value proposition of that is to help customers simplify and consolidate the one distinguishing factor I would say.
Kasthuri Gopalan Rangan: Eric, first of all, it is true that customers are looking to consolidate tools. In fact, one of the express value propositions of our hybrid cloud observability solutions is to help customers simplify and consolidate. The one distinguishing factor, I would say, relative to some of the other competitors is that we're able to get that consolidation and the deployment in an extremely simple fashion. Time to value is one of our key drivers, and that has always been the case for SolarWinds. So that enables us to continue to drive velocity. That's number one. Number two is that we have a very low customer concentration with a very large mid-market customer base. Therefore, we are able to maintain the velocity of our business, even as we compete and win larger deals, which tend to have naturally longer sales cycles as well. So we are not concentrated like some of the customers in, let's say, only the enterprise segment and do not have to deal with the consequences of elongated sales cycles.
Kasthuri Gopalan Rangan: Relative to some of the other competitors.
Kasthuri Gopalan Rangan: We're able to get that consolidation in the deployment.
Kasthuri Gopalan Rangan: In a extremely simple patch and time to value is one of our key drivers and that has always been the case with one of them. So that enables us to continue to drive velocity. That's number one number two is that we have very low customer concentration with a very large mid market customer base.
Kasthuri Gopalan Rangan: And therefore, we are able to maintain the velocity of our business, even as we compete and win larger deals which tend to have naturally longer sales cycles as well. So we're not concentrated like some of the customers in like let's say only the enterprise segment and not have to deal with the consequences of elongated sale.
Speaker Change: But do I see it and are deemed to be yet but is it impacting our business.
Speaker Change: Very good thank you.
Kasthuri Gopalan Rangan: <unk>.
Kasthuri Gopalan Rangan: There are no further questions at this time I will now turn the call back over to Sudhakar Ramakrishna for closing remarks.
Speaker Change: Thank you again and thanks, all for your support of soil events.
Kasthuri Gopalan Rangan: We'll continue to work towards our strategic priorities execute and look forward to sharing our results on an ongoing basis.
Eric Sipager: But do I see it in a deal to deal? Yes. But is it impacting our business? No. Very good. Thank you. There are no further questions at this time. I will now turn the call back over to Siddhakar Ramakrishna for closing remarks. Thank you again and thank you all for your support of SolarWinds.
Speaker Change: This concludes today's call you may now disconnect.
Speaker Change: Please wait the conference will begin shortly.
Eric Sipager: Yes.
Eric Sipager: [music].
Eric Sipager: Okay.
Eric Sipager: [music].
Eric Sipager: Okay.
Eric Sipager: Okay.
Eric Sipager: Sure.
Eric Sipager: No.
Eric Sipager: Yeah.
Kasthuri Gopalan Rangan: We will continue to work towards our strategic priorities, and execute and look forward to sharing our results on an ongoing basis. This concludes today's call. You may now disconnect.
Eric Sipager:
Kasthuri Gopalan Rangan: Yes.
Kasthuri Gopalan Rangan: Yes.
Speaker Change: [music] Arena.
Kasthuri Gopalan Rangan: Thanks.
Kasthuri Gopalan Rangan: [music].
Kasthuri Gopalan Rangan: Yes.
Kasthuri Gopalan Rangan: [music].
Operator: Please wait. The conference will begin shortly. Please wait. The conference will begin shortly. Please wait. The conference will begin shortly. Please wait. The conference will begin shortly.
Operator: Sure.
Operator: Yes.
Operator: [music].