SolarWinds Corp’s Expansion Rate (2020 – 2022)

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This statistic highlights SolarWinds Corp’s Expansion Rate, reported on a quarterly basis from Q1 2020 onwards.
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This statistic highlights SolarWinds Corp’s Expansion Rate, reported on a quarterly basis from Q1 2020 onwards.

SolarWinds Corp’s Expansion Rate

SolarWinds Corp’s average subscription net retention is used to calculate the company’s growth rate on a quarterly basis. Simply put, this is the percentage of recurring money retained from current customers over a set period of time, including expansion revenue, downgrades, and cancellations. This turnover statistic provides a full picture of both positive and negative changes in client retention.

Category Q3 2020 Q2 2021 Q3 2021
Average subscription net retention (%) 107% 104% 96%

Components affecting Expansion Rate

  • Recurring revenue: Money that comes in on a regular basis. The majority of revenue is recurring, and it comes from subscription and maintenance fees.
  • Subscription revenue: Revenue from subscriptions. Fees collected for subscriptions to our SaaS solutions, and to a lesser degree, time-based licensing arrangements, provide the majority of subscription income. Sales of MSP solutions, as well as cloud infrastructure, application performance monitoring, and IT service management, or ITSM, tools, all contribute to subscription income. Once the service is made accessible to the client or we have the ability to invoice for services delivered, revenue is recognized ratably throughout the subscription period. Subscription agreements are often invoiced monthly based on consumption or in advance throughout the subscription duration on a monthly or annual basis.

Customers add additional subscription goods, upgrade the capacity level of their existing subscription products, or enhance the usage of their subscription products, which increases subscription income. With the rise of end-customers served by our MSP customers, the proliferation of devices managed by those MSPs, and the extension of products utilized by those MSPs to manage end-customers’ IT infrastructures, our revenue from MSP products grows.

Observation

Strong customer retention and expansion in our MSP products drove the net retention rate for subscription products to over 105 percent for each of the trailing twelve-month periods ended December 31, 2020 and 2019. The company defines net retention rate for subscription products as the implied monthly subscription revenue at the end of a period for the base set of customers from which subscription revenue is generated in the year prior to the calculation divided by the implied monthly subscription revenue for that same customer base one year prior to the calculation date.

The Cyber Incident, which is likely to significantly impact sales, profitability, and cash flows in 2021 and beyond, explains the reduced expansion rate in 2021 from Q1 onwards. Certain customers have deferred renewals or canceled contracts, and others may do so in the future, reducing our income. Despite the Cyber Incident, we had an 89% maintenance renewal rate in the previous twelve months.

Trend

•The potential risk of foreign exchange gains and losses related to expenses and sales denominated in currencies other than the functional currency of an associated entity can also affect the company’s revenue;

•The potential risk of foreign exchange gains and losses related to expenses and sales denominated in currencies other than the functional currency of an associated entity can also affect the company’s revenue.

About the company

SolarWinds is a significant provider of infrastructure management software for information technology, or IT. The company’s solutions enable enterprises across the world to monitor and control the performance of their IT systems, whether on-premises, in the cloud, or in hybrid models, regardless of their kind, size, or IT infrastructure complexity. To build the business while simultaneously creating considerable cash flow, the company blends strong, scalable, inexpensive, and simple-to-use goods with a high-velocity, low-touch sales methodology.

The company focuses on developing technologies that help IT professionals manage “all things IT.” The organization works with IT professionals on a regular basis to learn about the issues they encounter in sustaining high-performing and highly available on-premises, public and private cloud, and hybrid IT infrastructures. The organization can design products that tackle well-understood IT management difficulties in the ways that technology professionals want them solved thanks to the insights gathered through interacting with technology professionals. The firm offers a broad range of Core IT Management tools for ITOps, DevOps, and IT security experts. The firm also provides cloud-based software solutions that are designed to help managed service providers, or MSPs, promote digital transformation and growth in small and medium-sized businesses (SMEs) all over the world.

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