SWI - SolarWinds: Strong Earnings And Positive Long-Term Prospects (Rating Upgrade)

2024-02-13 21:49:09 ET

Summary

• SolarWinds surpasses expectations in Q4 2023 earnings, marking its fourth consecutive quarter of beating EPS and revenue forecasts.
• Transitioning to a subscription-based revenue model, SolarWinds witnessed a substantial 34% YoY increase in annual recurring revenue, signaling strong customer retention and acquisition strategies.
• With improving financials, including impressive adjusted EBITDA growth and a promising outlook for FY2024, SolarWinds emerges as an undervalued investment opportunity, warranting an upgrade to a buy rating.

SolarWinds ( SWI ) recently reported its Q4 2023 earnings , in which the company beat EPS and revenue expectations for the fourth consecutive quarter. In 2022, I previously recommended a hold rating because the company was still early in the transition phase of moving its customers to a more profitable subscription-based revenue model, and the company was yet to generate profits. Furthermore, I was also still cautious of the long-term reputational damage to the company's well-documented hack in 2020. Since my first article, the stock value has increased by 60.46%....

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