Solar Winds (SWI, Financial), established in 1999, known for delivering effective and affordable IT, Management & monitoring software across the globe. It serves large corporates to small and medium enterprises. It has been recognised by Forbes as top 10 fastest growing technology companies. Solar Winds is working towards the continuous improvement of developing, pricing and sale –purchase software, delivering the best in the industry. Solar Winds also is working towards easing the server & network monitoring, hence simplifying try, buy, deploy and use.
Retrospection
Solar Winds have shown tremendous growth in the past, and it entered 2015 with strong business momentum. By the end of January 2015, Solar winds presented revenue for fourth quarter with 22% overall growth on reported basis and 24 % growth on constant currency basis. Combined maintenance and subscription revenue for fourth quarter of $73.4 million translating into 28% overall growth in recurring revenue.
Recently the company announced in a press meet that, “It has been a wonderful year so far for Solar Winds and the trend continued with outstanding performance of Q3.It also issued an update on the first Quarter earnings. The company provided earning per share guidance of $0.43-0.46 for the period compared to Thompson Reuter’s consensus of $0.46. The company issued revenue guidance of $116.2 -118.4compared to revenue estimate of $118.29 million.
What Next?
In a recent business highlight, Kevin Thompson, Solar Winds' President and Chief Executive Officer stated, that - "The team is continuously working to enhance our execution and this will remain a focus in 2015 -- both as we continue to capitalize on the opportunity in the on-premise IT Management market and as we expand Solar Winds' offerings and model into technology management for the Cloud. We believe that we have created momentum in the business that will allow us to take advantage of new opportunities in 2015," added Thompson. They also stated that the heavy investments in the business were backed up with belief that has given them immense gains across product lines. The team is also equally excited about the last quarter of 2014. Irrespective of foreign currency headwinds which adversely impacted revenue growth, the last quarter remained strong and robust.
As we talk about, the growth in 2015. It looks glittery and glazing as Solar Winds’ management sets expectation of growth as follows:
- Total revenue in the range of $116.2 to $118.4 million, or 21% to 23% growth over the first quarter of 2014.
- Non-GAAP operating income representing approximately 40% of revenue.
- Non-GAAP diluted earnings per share of $0.43 to $0.46.
- Weighted average outstanding diluted shares of approximately 77.8 million.
Solar Winds’ will host a conference call to discuss the last quarter of 2014 and projected first quarter of 2015.
About growth prospects in 2015, the horizon looks bright and shiny for Solar Winds. Solar Winds offer a wide range of useful tools for IT professionals in order to manage company networks and they have the most competitive pricing in comparison to IBM (IBM, Financial) and HP (HPQ, Financial). In the last few years Solar Winds posted impressive numbers in terms of both revenue and growth. During the 2014, they have shown no signs of slowing down and continue to scale up in 2015 first quarter. The company is well positioned in the market in terms of the choice of its investors. It is also believed to be offering service level cost much lesser to deploy and manage in comparison to the competitors such as HP and IBM. Solar Winds is not shaken or being restless because of the market movements and standing to keep an eye on the big changes. They have also undervalued the products in the market. The reason is to have a favourable technical outlook and to gain exposure to continued growth.
Investor’s Take
Solar Winds have received a buy rating from First Call in their declaration. The rating agency has disclosed the information in equity research recommendation. Multiple analyses has been published and issued the recommendation and the price target on the shares of the company. Analyst at Zacks has given a neutral rating on Solar Winds with a Rank of 3. Hence, Solar Winds makes a higher move in the market, and after posting 3rd quarter earnings, It surged beyond analyst’s projection.
The growth of the company is inevitable. The company is now constantly delivering on its promises and is way beyond the expectations. The super effective team of management has also executed ahead of the initial expectation resulting in stepping up of revenue and earnings, which will act as a catalyst of higher share prices.
The future looks bright for Solar Winds and will make an imprint in terms of business prospects in 2015. This makes us feel bullish on the company and hence a strong buy recommendation on the stocks of the company.
