SolarWinds Closer to IPO (SWI)

SolarWinds, Inc. has been on the potential IPO docket for more than a year now.  It looks like it is now going to be closer to fruition.  Keep in mind that this Bain-backed company is different than what its name might lead you to believe.  This one will trade under the proposed ticker of “SWI” on the New York Stock Exchange.

SolarWinds is selling 12,116,279 shares in an IPO.  Of the offering, some 9,000,000 shares are being sold by the company and stockholders are selling an additional 3,116,279 shares.  The company has set an offering price of between $9.50 and $11.50 per share.

JPMorgan Chase, Goldman Sachs, and Morgan Stanley are the lead underwriters on the offering; and co-managers are listed as Jefferies & Co., Thomas Weisel Partners, and Ladenburg Thalmann are the listed underwriters of the offering.

Is the company a solar or wind player?  Not exactly, and not at all.  Here is how it describes itself in the prospectus:
We are a leading provider of powerful yet easy-to-use enterprise-class network management software designed by network professionals for network professionals. Our offerings range from individual software tools to more comprehensive software products, solve problems faced every day by network professionals and help to enable efficient and effective network management. All of our products are ready-to-use, featuring intuitive and easily customizable user interfaces and built-in workflows. Our products can be downloaded directly from our websites and installed and configured by our end-users in a matter of hours. We design our software to meet the requirements of networks and implementations of varying sizes and levels of complexity, ranging from a single device to over 100,000 installed devices.

For the years ended December 31, 2006, 2007 and 2008 and the three months ended March 31, 2009, it generated:

• Revenue of $38.2 million, $61.7 million, $93.1 million and $24.1 million, respectively;
• Operating income of $25.4 million, $30.9 million, $42.0 million and $10.0 million, respectively;
• Adjusted EBITDA of $27.1 million, $35.4 million, $48.4 million and $12.1 million, respectively.

The company plans to use its cash from the offering to repay some debt, to repay about $20 million to original shareholders, and for general corporate purposes.

JON C. OGG