Thoma Bravo and Silver Lake are buying SolarWinds (NYSE:SWI) for $4.5B, or $60.10/share, in cash. The price represents a 20% premium to Tuesday's close, and a 43% premium to where the systems/app management software firm traded before Reuters first reported of sale talks on Oct. 9.
The deal, the latest in a string of P-E purchases of enterprise tech companies, is expected to close in Q1 2016. SolarWinds is halted.
Update (10:01AM ET): SolarWinds has come off its halt. Shares are up 15.8% to $58.14.
Less than two hours after Reuters reported the company is in talks with P-E firms about potentially selling itself, SolarWinds (SWI +6.5%) announces it "has commenced a review of its strategic alternatives," including a possible sale or other business combination. JPMorgan and law firm DLA Piper have been hired to help out.
Shares have pared the initial gains seen following Reuters' report, but remain sharply higher.
In addition to missing Q2 revenue estimates (while beating on EPS), SolarWinds (NYSE:SWI) is guiding for Q3 revenue of $130M-$134M (+15%-19% Y/Y, below a $136.1M consensus) and 2015 revenue of $502M-$512M (+17%-19% Y/Y, below a $519.7M consensus).
EPS guidance is better: $0.49-$0.53 for Q3 (consensus is at $0.52) and $2.00-$2.08 for 2015 (consensus is at $2.00). Forex is expected to have an $18M-$19M impact on 2015 revenue.
Weighing on Q2 sales: License revenue rose only 3% Y/Y to $38.6M. Maintenance revenue (driven by older license deals) rose 17% to $67.6M; subscription revenue (cloud software-related) rose 122% to $12.9M.
With forex taking a toll, SolarWinds (NYSE:SWI) expects Q2 revenue of $120.6M-$123.8M (+19%-22% Y/Y) and EPS of $0.45-$0.47, mostly below a consensus of $124.3M and $0.47. Full-year guidance is a little better: Revenue of $512M-$527M (+19%-23% Y/Y) and EPS of $1.92-$2.04 vs. a consensus of $521.3M and $2.00.
The systems management software vendor also announces it's buying Papertrail, a provider of cloud-data log data management software tools, for $41M in cash. Papertrail's products are used by IT pros and developers to monitor/troubleshoot websites and cloud apps; machine data/IT operational intelligence analytics leader Splunk is a rival.
SolarWinds already offers log management tools for on-premise software installations. The Papertrail deal follows SolarWinds' 2014 acquisition of website monitoring software firm Pingdom.
License revenue rose 17% Y/Y in Q1 to $42.4M, and maintenance/subscription revenue 25% to $74.4M. Total revenue growth was 22% in actual dollars, and 27% in constant currency.
In a sign of the times, SolarWinds (NYSE:SWI) has made its Database Performance Analyzer (DPA) app, which monitors/optimizes the performance of Oracle, Microsoft, SAP, and IBM databases, available on companies using Amazon Web Services (NASDAQ:AMZN), by far the world's biggest public cloud infrastructure (IaaS) platform.
AWS support is one of the features provided in a DPA update that also includes the ability to simultaneously monitor hundreds of database instances (whether on-premise or in the cloud), and the ability to annotate configuration changes and link them to performance changes.
The AWS version of DPA (monitors databases running on the platform) is available through a machine image offered on the AWS Marketplace; SolarWinds claims it can be deployed in minutes. Amazon announced last November AWS' customer base has topped 1M.
Last June: SolarWinds buys website monitoring software firm Pingdom