|
|
|
(Mark One)
|
þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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Large accelerated filer
|
¨
|
Accelerated filer
|
¨
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Non-accelerated filer
|
þ
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Smaller reporting company
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¨
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Emerging growth company
|
þ
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PART I
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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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|||
Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 16.
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•
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expectations regarding our financial condition and results of operations, including revenue, revenue growth, cost of revenue, operating expenses, operating income, non-GAAP operating income, non-GAAP operating margin, adjusted EBITDA and adjusted EBITDA margin, cash flows and effective income tax rate;
|
•
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expectations regarding the impact of our adoption of the new revenue recognition standard on our financial results;
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•
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expectations regarding investment in product development and our expectations about the results of those efforts;
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•
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expectations concerning acquisitions and opportunities resulting from our acquisitions;
|
•
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expectations regarding hiring additional personnel globally in the areas of sales and marketing and research and development;
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•
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expectations regarding our international earnings and investment of those earnings in international operations;
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•
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expectations regarding our capital expenditures; and
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•
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our beliefs regarding the sufficiency of our cash and cash equivalents, cash flows from operating activities and borrowing capacity.
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1.
|
We purpose-build products for technology professionals.
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2.
|
Our roadmaps are guided by a large community of users rather than by a select few large customers.
|
3.
|
We develop products that are intended to sell themselves and be easy to use, powerful and immediately valuable to users.
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4.
|
We design and develop our products to integrate and complement each other while providing a consistent user experience.
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•
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large network management and IT vendors such as Netscout, MicroFocus, CA Technologies, IBM and BMC Software; and
|
•
|
smaller companies in the cloud and application monitoring and the MSP IT tools markets, where we do not believe that a single or small group of companies has achieved market leadership.
|
•
|
brand awareness and reputation among technology professionals, including IT professionals, DevOps professionals and MSPs;
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•
|
product capabilities, including scalability, performance and reliability;
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•
|
ability to solve problems for companies of all sizes and infrastructure complexities;
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•
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ease of use;
|
•
|
total cost of ownership;
|
•
|
flexible deployment models, including on-premise, in the cloud or in a hybrid environment;
|
•
|
strength of sales and marketing efforts; and
|
•
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focus on customer success.
|
•
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our ability to maintain and increase sales to existing customers and to attract new customers;
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•
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decline in maintenance or subscription renewals;
|
•
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our ability to capture a significant volume of qualified sales leads;
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•
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our ability to convert qualified sales leads into new business sales at acceptable conversion rates;
|
•
|
the amount and timing of operating expenses and capital expenditures related to the expansion of our operations and infrastructure and customer acquisition;
|
•
|
our failure to achieve the growth rate that was anticipated by us in setting our operating and capital expense budgets;
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•
|
potential foreign exchange gains and losses related to expenses and sales denominated in currencies other than the functional currency of an associated entity;
|
•
|
fluctuations in foreign currency exchange rates that may negatively impact our reported results of operations;
|
•
|
the timing of revenue and expenses related to the development or acquisition of technologies, products or businesses;
|
•
|
potential goodwill and intangible asset impairment charges and amortization associated with acquired businesses;
|
•
|
the timing and success of new product, enhancements or functionalities introduced by us or our competitors;
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•
|
our ability to obtain, maintain, protect and enforce our intellectual property rights;
|
•
|
changes in our pricing policies or those of our competitors;
|
•
|
the impact of new accounting pronouncements;
|
•
|
occasional large customer orders, including in particular those placed by the U.S. federal government;
|
•
|
unpredictability and timing of buying decisions by the U.S. federal government;
|
•
|
general economic, industry and market conditions that impact expenditures for enterprise IT management software in the United States and other countries where we sell our software;
|
•
|
significant security breaches, technical difficulties or interruptions to our products; and
|
•
|
changes in tax rates in jurisdictions in which we operate.
|
•
|
fluctuations in currency exchange rates (which we hedge only to a limited extent at this time);
|
•
|
the complexity of, or changes in, foreign regulatory requirements;
|
•
|
difficulties in managing the staffing of international operations, including compliance with local labor and employment laws and regulations;
|
•
|
potentially adverse tax consequences, including the complexities of foreign value added tax systems, overlapping tax regimes, restrictions on the repatriation of earnings and changes in tax rates;
|
•
|
dependence on resellers and distributors to increase customer acquisition or drive localization efforts;
|
•
|
the burdens of complying with a wide variety of foreign laws and different legal standards;
|
•
|
increased financial accounting and reporting burdens and complexities;
|
•
|
longer payment cycles and difficulties in collecting accounts receivable;
|
•
|
longer sales cycles;
|
•
|
political, social and economic instability abroad;
|
•
|
terrorist attacks and security concerns in general;
|
•
|
reduced or varied protection for intellectual property rights in some countries; and
|
•
|
the risk of U.S. regulation of foreign operations.
|
•
|
difficulties in integrating and managing the operations, personnel, systems, technologies and products of the companies we acquire;
|
•
|
diversion of our management’s attention from normal daily operations of our business;
|
•
|
our inability to maintain the key business relationships and the reputations of the businesses we acquire;
|
•
|
uncertainty of entry into markets in which we have limited or no prior experience and in which competitors have stronger market positions;
|
•
|
our dependence on unfamiliar affiliates, resellers, distributors and partners of the companies we acquire;
|
•
|
our inability to increase revenue from an acquisition for a number of reasons, including our failure to drive demand in our existing customer base for acquired products and our failure to obtain maintenance renewals or upgrades and new product sales from customers of the acquired businesses;
|
•
|
increased costs related to acquired operations and continuing support and development of acquired products;
|
•
|
our responsibility for the liabilities of the businesses we acquire;
|
•
|
potential goodwill and intangible asset impairment charges and amortization associated with acquired businesses;
|
•
|
adverse tax consequences associated with acquisitions;
|
•
|
changes in how we are required to account for our acquisitions under U.S. generally accepted accounting principles, including arrangements that we assume from an acquisition;
|
•
|
potential negative perceptions of our acquisitions by customers, financial markets or investors;
|
•
|
failure to obtain required approvals from governmental authorities under competition and antitrust laws on a timely basis, if at all, which could, among other things, delay or prevent us from completing a transaction, or otherwise restrict our ability to realize the expected financial or strategic goals of an acquisition;
|
•
|
potential increases in our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition;
|
•
|
our inability to apply and maintain our internal standards, controls, procedures and policies to acquired businesses; and
|
•
|
potential loss of key employees of the companies we acquire.
|
•
|
costs incurred to combine the operations of companies we acquire, such as transitional employee expenses and employee retention or relocation expenses;
|
•
|
impairment of goodwill or intangible assets;
|
•
|
a reduction in the useful lives of intangible assets acquired;
|
•
|
impairment of long-lived assets;
|
•
|
identification of, or changes to, assumed contingent liabilities;
|
•
|
changes in the fair value of any contingent consideration;
|
•
|
charges to our operating results due to duplicative pre-merger activities;
|
•
|
charges to our operating results from expenses incurred to effect the acquisition; and
|
•
|
charges to our operating results due to the expensing of certain stock awards assumed in an acquisition.
|
•
|
lost or delayed market acceptance and sales of our products;
|
•
|
a reduction in subscription or maintenance renewals;
|
•
|
diversion of development resources;
|
•
|
legal claims; and
|
•
|
injury to our reputation and our brand.
|
•
|
requiring us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness, thereby reducing the funds available for operations;
|
•
|
increasing our vulnerability to adverse economic and industry conditions, which could place us at a competitive disadvantage compared to our competitors that have relatively less indebtedness;
|
•
|
limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate;
|
•
|
restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;
|
•
|
requiring us under certain circumstances to repatriate earnings from our international operations in order to make payments on our indebtedness, which could subject us to local country income and withholding taxes and/or state income taxes that are not currently accrued in our financial statements;
|
•
|
requiring us to liquidate short-term or long-term investments in order to make payments on our indebtedness, which could generate losses;
|
•
|
exposing us to the risk of increased interest rates as borrowings under the credit agreements are subject to variable rates of interest; and
|
•
|
limiting our ability to borrow additional funds, or to dispose of assets to raise funds, if needed, for working capital, capital expenditures, acquisitions, product development and other corporate purposes.
|
•
|
incur additional indebtedness;
|
•
|
incur liens;
|
•
|
engage in mergers, consolidations, liquidations or dissolutions;
|
•
|
pay dividends and distributions on, or redeem, repurchase or retire our capital stock;
|
•
|
make investments, acquisitions, loans or advances;
|
•
|
create negative pledges or restrictions on the payment of dividends or payment of other amounts owed from subsidiaries;
|
•
|
sell, transfer or otherwise dispose of assets, including capital stock of subsidiaries;
|
•
|
make prepayments of material debt that is subordinated with respect to right of payment;
|
•
|
engage in certain transactions with affiliates;
|
•
|
modify certain documents governing material debt that is subordinated with respect to right of payment;
|
•
|
change our fiscal year; and
|
•
|
change our lines of business.
|
•
|
announcements of new products or technologies, commercial relationships, acquisitions or other events by us or our competitors;
|
•
|
changes in how customers perceive the benefits of our products;
|
•
|
shifts in the mix of revenue attributable to perpetual licenses and to subscriptions from quarter to quarter;
|
•
|
departures of key personnel;
|
•
|
price and volume fluctuations in the overall stock market from time to time;
|
•
|
fluctuations in the trading volume of our shares or the size of our public float;
|
•
|
sales of large blocks of our common stock, including sales by our Sponsors;
|
•
|
actual or anticipated changes or fluctuations in our operating results;
|
•
|
whether our operating results meet the expectations of securities analysts or investors;
|
•
|
changes in actual or future expectations of investors or securities analysts;
|
•
|
litigation involving us, our industry or both;
|
•
|
regulatory developments in the United States, foreign countries or both;
|
•
|
general economic conditions and trends;
|
•
|
major catastrophic events in our domestic and foreign markets; and
|
•
|
“flash crashes,” “freeze flashes” or other glitches that disrupt trading on the securities exchange on which we are listed.
|
•
|
a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors;
|
•
|
after the Lead Sponsors cease to beneficially own, in the aggregate, at least 30% of the outstanding shares of our common stock, removal of directors only for cause;
|
•
|
the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
|
•
|
subject to the rights of the Sponsors under the stockholders’ agreement, allowing only our board of directors to fill vacancies on our board of directors, which prevents stockholders from being able to fill vacancies on our board of directors;
|
•
|
after the Lead Sponsors cease to beneficially own, in the aggregate, at least 40% of the outstanding shares of our common stock, a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
|
•
|
after the Lead Sponsors cease to beneficially own, in the aggregate, at least 40% of the outstanding shares of our common stock, our stockholders may not take action by written consent but may take action only at annual or special meetings of our stockholders. As a result, a holder controlling a majority of our capital stock would not be able to amend our bylaws or remove directors without holding a meeting of our stockholders called in accordance with our bylaws;
|
•
|
after the Lead Sponsors cease to beneficially own, in the aggregate, at least 40% of the outstanding shares of our common stock, the requirement for the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then-outstanding shares of the voting stock, voting together as a single class, to amend the provisions of our restated charter relating to the management of our business (including our classified board structure) or certain provisions of our bylaws, which may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt;
|
•
|
the ability of our board of directors to amend the bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt;
|
•
|
advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us; and
|
•
|
a prohibition of cumulative voting in the election of our board of directors, which would otherwise allow less than a majority of stockholders to elect director candidates.
|
•
|
the composition of our board of directors, which has the authority to direct our business and to appoint and remove our officers;
|
•
|
approving or rejecting a merger, consolidation or other business combination;
|
•
|
raising future capital; and
|
•
|
amending our restated charter and restated bylaws, which govern the rights attached to our common stock.
|
•
|
a majority of the board of directors consist of independent directors as defined under the rules of the NYSE;
|
•
|
the nominating and governance committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and
|
•
|
the compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
|
Period
|
Number of
Shares
Purchased
(1)
|
|
Average
Price Paid
Per Share
|
|
Total
Number
of Shares
Purchased
as Part of a
Publicly
Announced
Plan or Program
|
|
Approximate Dollar
Value of
Shares That
May Yet Be
Purchased
Under the
Plan or Program
(in thousands)
|
||||||
October 1-31, 2018
|
3,000
|
|
|
$
|
0.27
|
|
|
—
|
|
|
$
|
—
|
|
November 1-30, 2018
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
December 1-31, 2018
|
18,800
|
|
|
0.49
|
|
|
—
|
|
|
—
|
|
||
Total
|
21,800
|
|
|
|
|
—
|
|
|
|
(1)
|
All repurchases relate to employee held restricted stock that is subject to vesting. Unvested shares are subject to a right of repurchase by us in the event the employee stockholder ceases to be employed or engaged (as applicable) by us prior to vesting. All shares in the above table were shares repurchased as a result of us exercising this right and not pursuant to a publicly announced plan or program.
|
Consolidated Statement of Operations Data:
|
||||||||||||||||||||
|
Successor
|
|
Combined
(1)
|
|
Successor
(1)
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
(Unaudited)
Year Ended December 31, |
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2016
|
|
|
2016
|
||||||||||
|
|
|
(in thousands, except per share data)
|
|
|
|
||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Subscription
|
$
|
265,591
|
|
|
$
|
213,754
|
|
|
$
|
133,511
|
|
|
$
|
126,960
|
|
|
|
$
|
6,551
|
|
Maintenance
|
402,938
|
|
|
357,630
|
|
|
174,734
|
|
|
145,234
|
|
|
|
29,500
|
|
|||||
Total recurring revenue
|
668,529
|
|
|
571,384
|
|
|
308,245
|
|
|
272,194
|
|
|
|
36,051
|
|
|||||
License
|
164,560
|
|
|
156,633
|
|
|
161,176
|
|
|
149,900
|
|
|
|
11,276
|
|
|||||
Total revenue
|
833,089
|
|
|
728,017
|
|
|
469,421
|
|
|
422,094
|
|
|
|
47,327
|
|
|||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of recurring revenue
|
70,744
|
|
|
60,698
|
|
|
55,789
|
|
|
46,238
|
|
|
|
9,551
|
|
|||||
Amortization of acquired technologies
|
175,991
|
|
|
171,033
|
|
|
149,703
|
|
|
147,517
|
|
|
|
2,186
|
|
|||||
Total cost of revenue
|
246,735
|
|
|
231,731
|
|
|
205,492
|
|
|
193,755
|
|
|
|
11,737
|
|
|||||
Gross profit
|
586,354
|
|
|
496,286
|
|
|
263,929
|
|
|
228,339
|
|
|
|
35,590
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales and marketing
|
227,468
|
|
|
205,631
|
|
|
212,419
|
|
|
165,355
|
|
|
|
47,064
|
|
|||||
Research and development
|
96,272
|
|
|
86,618
|
|
|
97,989
|
|
|
65,806
|
|
|
|
32,183
|
|
|||||
General and administrative
|
80,641
|
|
|
67,303
|
|
|
150,647
|
|
|
71,011
|
|
|
|
79,636
|
|
|||||
Amortization of acquired intangibles
|
66,788
|
|
|
67,080
|
|
|
59,470
|
|
|
58,553
|
|
|
|
917
|
|
|||||
Total operating expenses
|
471,169
|
|
|
426,632
|
|
|
520,525
|
|
|
360,725
|
|
|
|
159,800
|
|
|||||
Operating income (loss)
|
115,185
|
|
|
69,654
|
|
|
(256,596
|
)
|
|
(132,386
|
)
|
|
|
(124,210
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net
|
(142,008
|
)
|
|
(169,786
|
)
|
|
(170,373
|
)
|
|
(169,900
|
)
|
|
|
(473
|
)
|
|||||
Other income (expense), net
|
(94,887
|
)
|
|
38,664
|
|
|
(57,243
|
)
|
|
(56,959
|
)
|
|
|
(284
|
)
|
|||||
Total other income (expense)
|
(236,895
|
)
|
|
(131,122
|
)
|
|
(227,616
|
)
|
|
(226,859
|
)
|
|
|
(757
|
)
|
|||||
Loss before income taxes
|
(121,710
|
)
|
|
(61,468
|
)
|
|
(484,212
|
)
|
|
(359,245
|
)
|
|
|
(124,967
|
)
|
|||||
Income tax expense (benefit)
|
(19,644
|
)
|
|
22,398
|
|
|
(149,807
|
)
|
|
(96,651
|
)
|
|
|
(53,156
|
)
|
|||||
Net loss
|
$
|
(102,066
|
)
|
|
$
|
(83,866
|
)
|
|
$
|
(334,405
|
)
|
|
$
|
(262,594
|
)
|
|
|
$
|
(71,811
|
)
|
Net income (loss) available to common stockholders
|
$
|
364,635
|
|
|
$
|
(351,873
|
)
|
|
$
|
(552,309
|
)
|
|
$
|
(480,498
|
)
|
|
|
$
|
(71,811
|
)
|
Net income (loss) available to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings (loss) per share
|
$
|
2.60
|
|
|
$
|
(3.50
|
)
|
|
|
|
$
|
(4.98
|
)
|
|
|
$
|
(1.00
|
)
|
||
Diluted earnings (loss) per share
|
$
|
2.56
|
|
|
$
|
(3.50
|
)
|
|
|
|
$
|
(4.98
|
)
|
|
|
$
|
(1.00
|
)
|
||
Weighted-average shares used to compute net income (loss) available to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Shares used in computation of basic earnings (loss) per share
|
140,301
|
|
|
100,433
|
|
|
|
|
96,465
|
|
|
|
71,989
|
|
||||||
Shares used in computation of diluted earnings (loss) per share
|
142,541
|
|
|
100,433
|
|
|
|
|
96,465
|
|
|
|
71,989
|
|
Consolidated Balance Sheet Data:
|
|
||||||||||
|
As of December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
||||||
|
(in thousands)
|
||||||||||
Cash and cash equivalents
|
$
|
382,620
|
|
|
$
|
277,716
|
|
|
$
|
101,643
|
|
Working capital, excluding deferred revenue
|
402,639
|
|
|
302,012
|
|
|
158,637
|
|
|||
Total assets
|
5,194,649
|
|
|
5,327,064
|
|
|
5,202,689
|
|
|||
Deferred revenue, current and non-current portion
(2)
|
296,132
|
|
|
261,791
|
|
|
217,722
|
|
|||
Long-term debt, net of current portion
|
1,904,072
|
|
|
2,245,622
|
|
|
2,242,892
|
|
|||
Total liabilities
|
2,578,549
|
|
|
2,909,938
|
|
|
2,842,828
|
|
|||
Redeemable convertible Class A common stock
(3)
|
—
|
|
|
3,146,887
|
|
|
2,879,504
|
|
|||
Total stockholders’ equity (deficit)
(3)
|
2,616,100
|
|
|
(729,761
|
)
|
|
(519,643
|
)
|
(1)
|
The operating results of LOGICnow are included in our consolidated financial statements from the acquisition date of May 27, 2016 to December 31, 2016.
|
(2)
|
At December 31, 2017 and 2016, deferred revenue reflects a write-down of $3.0 million and $14.8 million, respectively, associated with purchase accounting adjustments. These cumulative purchase price adjustments did not have an impact on the December 31, 2018 deferred revenue balances.
|
(3)
|
At the completion of our IPO in October 2018, we converted each outstanding share of our Class A common stock into
140,053,370
shares of common stock equal to the result of the liquidation value of such share of Class A common stock, divided by
$19.00
per share. At the time of the conversion of the Class A common stock, we also converted
$717.4 million
of accrued and unpaid dividends on the Class A common stock into
37,758,109
shares of common stock equal to the result of the accrued and unpaid dividends on each share of Class A common stock, divided by
$19.00
per share. See
Note
10. Redeemable Convertible Class A Common Stock
and
Note
11. Stockholders’ Equity (Deficit) and Stock-Based Compensation
in the
Notes to Consolidated Financial Statements
included in Item 8 of Part II of this Annual Report on Form 10-K for additional information regarding the conversion of the Class A common stock.
|
|
Year Ended December 31,
|
|||||||||
|
2018
|
|
2017
|
|
Change
|
|||||
|
|
|
|
|
|
|||||
|
(in thousands, except percentages)
|
|||||||||
GAAP Results
|
|
|
|
|
|
|||||
Total revenue
|
$
|
833,089
|
|
|
$
|
728,017
|
|
|
14.4
|
%
|
Total recurring revenue
|
668,529
|
|
|
571,384
|
|
|
17.0
|
%
|
||
Net loss
|
(102,066
|
)
|
|
(83,866
|
)
|
|
21.7
|
%
|
||
Net cash flow provided by operations
|
254,142
|
|
|
232,693
|
|
|
9.2
|
%
|
||
Non-GAAP Results
(1)
|
|
|
|
|
|
|||||
Non-GAAP total revenue
|
$
|
836,805
|
|
|
$
|
740,998
|
|
|
12.9
|
%
|
Non-GAAP total recurring revenue
|
672,245
|
|
|
584,362
|
|
|
15.0
|
%
|
||
Adjusted EBITDA
|
407,511
|
|
|
361,871
|
|
|
12.6
|
%
|
(1)
|
See "Non-GAAP Financial Measures" for a reconciliation of our GAAP to non-GAAP results.
|
•
|
SolarWinds introduced SolarWinds APM (Application Performance Monitor) to deliver application support for IT Operations and DevOps teams. SolarWinds APM extends the application monitoring capabilities of SolarWinds Server & Application Monitor (SAM) to provide in-depth, code-level monitoring of custom applications. The new solution is designed to deliver deeper performance insights and distributed transaction tracing capabilities across applications hosted in or across on-premise, hybrid IT, and cloud environments.
|
•
|
SolarWinds released Database Performance Analyzer v12.0, a powerful database and query performance monitoring, analysis, and tuning tool built for many of today’s popular databases. The latest enhancements are designed to help database professionals quickly identify and pinpoint the root cause of slow database queries, and easily optimize database tables to help ensure the speed of business-critical applications that rely on them.
|
•
|
SolarWinds also expanded its RMM capabilities for MSPs with Network Device Monitoring. Network Device Monitoring is built to give MSPs the visibility they need to monitor customer switches, printers, routers, and firewalls—in addition to servers and workstations—from a single pane of glass. With greater visibility into the complete network, MSPs can proactively maintain network devices by getting information on hardware health, performance, and utilization.
|
•
|
Recurring Revenue.
The significant majority of our revenue is recurring and consists of subscription and maintenance revenue.
|
▪
|
Subscription Revenue.
We derive subscription revenue from fees received for subscriptions to our cloud management and MSP products. Subscription revenue is recognized ratably over the subscription term after all revenue recognition criteria have been met. We generally invoice subscription agreements monthly in arrears based on usage or monthly in advance over the subscription period. Our subscription revenue grows as customers add new subscription products, upgrade the capacity level of their existing subscription products or increase the usage of their subscription products. Our revenue from MSP products increases with the addition of end customers served by our MSP customers, the proliferation of devices managed by those MSPs and the expansion of products used by those MSPs to manage end customers’ IT infrastructures.
|
•
|
Maintenance Revenue.
We derive maintenance revenue from the sale of maintenance services associated with our perpetual license products. Perpetual license customers pay for maintenance services based on the products they have purchased. Our maintenance revenue grows when we renew existing maintenance contracts and add new perpetual license customers, and as existing customers add new products. Customers typically renew their maintenance contracts at our standard list maintenance renewal pricing for their applicable products. We generally invoice maintenance contracts annually in advance.
|
•
|
License Revenue.
We derive license revenue from sales of perpetual licenses of our products to new and existing customers. We include one year of maintenance services as part of our customers’ initial license purchase. We calculate the amount of revenue allocated to the license by subtracting the fair value, which is determined by our standard maintenance renewal price list, of the applicable maintenance services from the total invoice or contract amount. If we increase list prices for maintenance services without increasing prices by a similar percentage for perpetual licenses, the amount of license revenue we recognize at the time of the sale of the perpetual license could be adversely affected.
|
•
|
Cost of Recurring Revenue.
Cost of recurring revenue consists of technical support personnel costs, royalty fees, hosting fees and an allocation of overhead costs for our subscription revenue and maintenance services. Allocated costs consist of certain facilities, depreciation, benefits and IT costs allocated based on headcount.
|
•
|
Amortization of Acquired Technologies.
We amortize to cost of revenue the capitalized costs of technologies acquired in connection with the Take Private and our other acquisitions.
|
•
|
Sales and Marketing.
Sales and marketing expenses primarily consist of related personnel costs, including our sales, marketing and maintenance renewal and subscription retention teams. Sales and marketing expenses also includes the cost of digital marketing programs such as paid search, search engine optimization and management, website maintenance and design. We expect to continue to hire personnel globally to drive new sales and maintenance renewals.
|
•
|
Research and Development
. Research and development expenses primarily consist of related personnel costs. We expect to continue to grow our research and development organization, particularly internationally.
|
•
|
General and Administrative
. General and administrative expenses primarily consist of personnel costs for our executive, finance, legal, human resources and other administrative personnel, general restructuring charges and other acquisition-related costs, professional fees and other general corporate expenses. In the periods after the Take Private and prior to
|
•
|
Amortization of Acquired Intangibles.
We amortize to operating expenses the capitalized costs of intangible assets acquired in connection with the Take Private and our other acquisitions.
|
•
|
the valuation of goodwill, intangibles, long-lived assets and contingent consideration;
|
•
|
revenue recognition;
|
•
|
stock-based compensation;
|
•
|
income taxes; and
|
•
|
loss contingencies.
|
|
Successor
|
|
Combined
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
(Unaudited)
Year Ended December 31, |
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2016
|
|
|
2016
|
||||||||||
|
|
|
(in thousands, except per share data)
|
|
|
|
||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Subscription
|
$
|
265,591
|
|
|
$
|
213,754
|
|
|
$
|
133,511
|
|
|
$
|
126,960
|
|
|
|
$
|
6,551
|
|
Maintenance
|
402,938
|
|
|
357,630
|
|
|
174,734
|
|
|
145,234
|
|
|
|
29,500
|
|
|||||
Total recurring revenue
|
668,529
|
|
|
571,384
|
|
|
308,245
|
|
|
272,194
|
|
|
|
36,051
|
|
|||||
License
|
164,560
|
|
|
156,633
|
|
|
161,176
|
|
|
149,900
|
|
|
|
11,276
|
|
|||||
Total revenue
|
833,089
|
|
|
728,017
|
|
|
469,421
|
|
|
422,094
|
|
|
|
47,327
|
|
|||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of recurring revenue
|
70,744
|
|
|
60,698
|
|
|
55,789
|
|
|
46,238
|
|
|
|
9,551
|
|
|||||
Amortization of acquired technologies
|
175,991
|
|
|
171,033
|
|
|
149,703
|
|
|
147,517
|
|
|
|
2,186
|
|
|||||
Total cost of revenue
|
246,735
|
|
|
231,731
|
|
|
205,492
|
|
|
193,755
|
|
|
|
11,737
|
|
|||||
Gross profit
|
586,354
|
|
|
496,286
|
|
|
263,929
|
|
|
228,339
|
|
|
|
35,590
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales and marketing
|
227,468
|
|
|
205,631
|
|
|
212,419
|
|
|
165,355
|
|
|
|
47,064
|
|
|||||
Research and development
|
96,272
|
|
|
86,618
|
|
|
97,989
|
|
|
65,806
|
|
|
|
32,183
|
|
|||||
General and administrative
|
80,641
|
|
|
67,303
|
|
|
150,647
|
|
|
71,011
|
|
|
|
79,636
|
|
|||||
Amortization of acquired intangibles
|
66,788
|
|
|
67,080
|
|
|
59,470
|
|
|
58,553
|
|
|
|
917
|
|
|||||
Total operating expenses
|
471,169
|
|
|
426,632
|
|
|
520,525
|
|
|
360,725
|
|
|
|
159,800
|
|
|||||
Operating income (loss)
|
115,185
|
|
|
69,654
|
|
|
(256,596
|
)
|
|
(132,386
|
)
|
|
|
(124,210
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net
|
(142,008
|
)
|
|
(169,786
|
)
|
|
(170,373
|
)
|
|
(169,900
|
)
|
|
|
(473
|
)
|
|||||
Other income (expense), net
|
(94,887
|
)
|
|
38,664
|
|
|
(57,243
|
)
|
|
(56,959
|
)
|
|
|
(284
|
)
|
|||||
Total other income (expense)
|
(236,895
|
)
|
|
(131,122
|
)
|
|
(227,616
|
)
|
|
(226,859
|
)
|
|
|
(757
|
)
|
|||||
Loss before income taxes
|
(121,710
|
)
|
|
(61,468
|
)
|
|
(484,212
|
)
|
|
(359,245
|
)
|
|
|
(124,967
|
)
|
|||||
Income tax expense (benefit)
|
(19,644
|
)
|
|
22,398
|
|
|
(149,807
|
)
|
|
(96,651
|
)
|
|
|
(53,156
|
)
|
|||||
Net loss
|
$
|
(102,066
|
)
|
|
$
|
(83,866
|
)
|
|
$
|
(334,405
|
)
|
|
$
|
(262,594
|
)
|
|
|
$
|
(71,811
|
)
|
Net income (loss) available to common stockholders
|
$
|
364,635
|
|
|
$
|
(351,873
|
)
|
|
$
|
(552,309
|
)
|
|
$
|
(480,498
|
)
|
|
|
$
|
(71,811
|
)
|
Net income (loss) available to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings (loss) per share
|
$
|
2.60
|
|
|
$
|
(3.50
|
)
|
|
|
|
$
|
(4.98
|
)
|
|
|
$
|
(1.00
|
)
|
||
Diluted earnings (loss) per share
|
$
|
2.56
|
|
|
$
|
(3.50
|
)
|
|
|
|
$
|
(4.98
|
)
|
|
|
$
|
(1.00
|
)
|
||
Weighted-average shares used to compute net income (loss) available to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Shares used in computation of basic earnings (loss) per share
|
140,301
|
|
|
100,433
|
|
|
|
|
96,465
|
|
|
|
71,989
|
|
||||||
Shares used in computation of diluted earnings (loss) per share
|
142,541
|
|
|
100,433
|
|
|
|
|
96,465
|
|
|
|
71,989
|
|
|
Year Ended December 31,
|
|
|
||||||||||||||
|
2018
|
|
2017
|
|
|
||||||||||||
|
Amount
|
|
Percentage of
Revenue
|
|
Amount
|
|
Percentage of
Revenue
|
|
Change
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands, except percentages)
|
|
|
||||||||||||
Subscription
|
$
|
265,591
|
|
|
31.9
|
%
|
|
$
|
213,754
|
|
|
29.4
|
%
|
|
$
|
51,837
|
|
Maintenance
|
402,938
|
|
|
48.4
|
|
|
357,630
|
|
|
49.1
|
|
|
45,308
|
|
|||
Total recurring revenue
|
668,529
|
|
|
80.2
|
|
|
571,384
|
|
|
78.5
|
|
|
97,145
|
|
|||
License
|
164,560
|
|
|
19.8
|
|
|
156,633
|
|
|
21.5
|
|
|
7,927
|
|
|||
Total revenue
|
$
|
833,089
|
|
|
100.0
|
%
|
|
$
|
728,017
|
|
|
100.0
|
%
|
|
$
|
105,072
|
|
|
Year Ended December 31,
|
|
|
||||||||
|
2018
|
|
2017
|
|
|
||||||
|
Amount
|
|
Amount
|
|
Change
|
||||||
|
|
|
|
|
|
||||||
|
|
|
(in thousands)
|
|
|
||||||
Subscription
|
$
|
1,166
|
|
|
$
|
1,464
|
|
|
$
|
(298
|
)
|
Maintenance
|
2,550
|
|
|
11,514
|
|
|
(8,964
|
)
|
|||
Total recurring revenue
|
3,716
|
|
|
12,978
|
|
|
(9,262
|
)
|
|||
License
|
—
|
|
|
3
|
|
|
(3
|
)
|
|||
Total revenue
|
$
|
3,716
|
|
|
$
|
12,981
|
|
|
$
|
(9,265
|
)
|
|
Year Ended December 31,
|
|
|
||||||||||||||
|
2018
|
|
2017
|
|
|
||||||||||||
|
Amount
|
|
Percentage of Revenue
|
|
Amount
|
|
Percentage of Revenue
|
|
Change
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands, except percentages)
|
|
|
||||||||||||
Cost of recurring revenue
|
$
|
70,744
|
|
|
8.5
|
%
|
|
$
|
60,698
|
|
|
8.3
|
%
|
|
$
|
10,046
|
|
Amortization of acquired technologies
|
175,991
|
|
|
21.1
|
|
|
171,033
|
|
|
23.5
|
|
|
4,958
|
|
|||
Total cost of revenue
|
$
|
246,735
|
|
|
29.6
|
%
|
|
$
|
231,731
|
|
|
31.8
|
%
|
|
$
|
15,004
|
|
|
Year Ended December 31,
|
|
|
||||||||||||||
|
2018
|
|
2017
|
|
|
||||||||||||
|
Amount
|
|
Percentage of Revenue
|
|
Amount
|
|
Percentage of Revenue
|
|
Change
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands, except percentages)
|
|
|
||||||||||||
Sales and marketing
|
$
|
227,468
|
|
|
27.3
|
%
|
|
$
|
205,631
|
|
|
28.2
|
%
|
|
$
|
21,837
|
|
Research and development
|
96,272
|
|
|
11.6
|
|
|
86,618
|
|
|
11.9
|
|
|
9,654
|
|
|||
General and administrative
|
80,641
|
|
|
9.7
|
|
|
67,303
|
|
|
9.2
|
|
|
13,338
|
|
|||
Amortization of acquired intangibles
|
66,788
|
|
|
8.0
|
|
|
67,080
|
|
|
9.2
|
|
|
(292
|
)
|
|||
Total operating expenses
|
$
|
471,169
|
|
|
56.6
|
%
|
|
$
|
426,632
|
|
|
58.6
|
%
|
|
$
|
44,537
|
|
|
Year Ended December 31,
|
|
|
||||||||||||||
|
2018
|
|
2017
|
|
|
||||||||||||
|
Amount
|
|
Percentage of Revenue
|
|
Amount
|
|
Percentage of Revenue
|
|
Change
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands, except percentages)
|
|
|
||||||||||||
Interest expense, net
|
$
|
(142,008
|
)
|
|
(17.0
|
)%
|
|
$
|
(169,786
|
)
|
|
(23.3
|
)%
|
|
$
|
27,778
|
|
|
Year Ended December 31,
|
|
|
||||||||||||||
|
2018
|
|
2017
|
|
|
||||||||||||
|
Amount
|
|
Percentage of Revenue
|
|
Amount
|
|
Percentage of Revenue
|
|
Change
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands, except percentages)
|
|
|
||||||||||||
Unrealized net transaction gains (losses) related to remeasurement of intercompany loans
|
$
|
(12,565
|
)
|
|
(1.5
|
)%
|
|
$
|
56,539
|
|
|
7.8
|
%
|
|
$
|
(69,104
|
)
|
Loss on extinguishment of debt
|
(80,137
|
)
|
|
(9.6
|
)
|
|
(18,559
|
)
|
|
(2.5
|
)
|
|
(61,578
|
)
|
|||
Other income (expense)
|
(2,185
|
)
|
|
(0.3
|
)
|
|
684
|
|
|
0.1
|
|
|
(2,869
|
)
|
|||
Total other income (expense), net
|
$
|
(94,887
|
)
|
|
(11.4
|
)%
|
|
$
|
38,664
|
|
|
5.3
|
%
|
|
$
|
(133,551
|
)
|
|
Year Ended December 31,
|
|
|
||||||||||||||
|
2018
|
|
2017
|
|
|
||||||||||||
|
Amount
|
|
Percentage of Revenue
|
|
Amount
|
|
Percentage of Revenue
|
|
Change
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands, except percentages)
|
|
|
||||||||||||
Income tax expense (benefit)
|
$
|
(19,644
|
)
|
|
(2.4
|
)%
|
|
$
|
22,398
|
|
|
3.1
|
%
|
|
$
|
(42,042
|
)
|
Effective tax rate
|
16.1
|
%
|
|
|
|
(36.4
|
)%
|
|
|
|
52.5
|
%
|
|
Successor
|
|
Combined
|
|
|
||||||||||||
|
Year Ended December 31,
|
|
(Unaudited)
Year Ended December 31, |
|
|
||||||||||||
|
2017
|
|
2016
|
|
|
||||||||||||
|
Amount
|
|
Percentage of
Revenue
|
|
Amount
|
|
Percentage of
Revenue
|
|
Change
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands, except percentages)
|
|
|
||||||||||||
Subscription
|
$
|
213,754
|
|
|
29.4
|
%
|
|
$
|
133,511
|
|
|
28.4
|
%
|
|
$
|
80,243
|
|
Maintenance
|
357,630
|
|
|
49.1
|
|
|
174,734
|
|
|
37.2
|
|
|
182,896
|
|
|||
Total recurring revenue
|
571,384
|
|
|
78.5
|
|
|
308,245
|
|
|
65.7
|
|
|
263,139
|
|
|||
License
|
156,633
|
|
|
21.5
|
|
|
161,176
|
|
|
34.3
|
|
|
(4,543
|
)
|
|||
Total revenue
|
$
|
728,017
|
|
|
100.0
|
%
|
|
$
|
469,421
|
|
|
100.0
|
%
|
|
$
|
258,596
|
|
|
Successor
|
|
Combined
|
|
|
||||||
|
Year Ended December 31,
|
|
(Unaudited)
Year Ended December 31, |
|
|
||||||
|
2017
|
|
2016
|
|
|
||||||
|
Amount
|
|
Amount
|
|
Change
|
||||||
|
|
|
|
|
|
||||||
|
|
|
(in thousands)
|
|
|
||||||
Subscription
|
$
|
1,464
|
|
|
$
|
7,219
|
|
|
$
|
(5,755
|
)
|
Maintenance
|
11,514
|
|
|
153,220
|
|
|
(141,706
|
)
|
|||
Total recurring revenue
|
12,978
|
|
|
160,439
|
|
|
(147,461
|
)
|
|||
License
|
3
|
|
|
921
|
|
|
(918
|
)
|
|||
Total revenue
|
$
|
12,981
|
|
|
$
|
161,360
|
|
|
$
|
(148,379
|
)
|
|
Successor
|
|
Combined
|
|
|
||||||||||||
|
Year Ended December 31,
|
|
(Unaudited)
Year Ended December 31, |
|
|
||||||||||||
|
2017
|
|
2016
|
|
|
||||||||||||
|
Amount
|
|
Percentage of Revenue
|
|
Amount
|
|
Percentage of Revenue
|
|
Change
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands, except percentages)
|
|
|
||||||||||||
Cost of recurring revenue
|
$
|
60,698
|
|
|
8.3
|
%
|
|
$
|
55,789
|
|
|
11.9
|
%
|
|
$
|
4,909
|
|
Amortization of acquired technologies
|
171,033
|
|
|
23.5
|
|
|
149,703
|
|
|
31.9
|
|
|
21,330
|
|
|||
Total cost of revenue
|
$
|
231,731
|
|
|
31.8
|
%
|
|
$
|
205,492
|
|
|
43.8
|
%
|
|
$
|
26,239
|
|
|
Successor
|
|
Combined
|
|
|
||||||||||||
|
Year Ended December 31,
|
|
(Unaudited)
Year Ended December 31, |
|
|
||||||||||||
|
2017
|
|
2016
|
|
|
||||||||||||
|
Amount
|
|
Percentage of Revenue
|
|
Amount
|
|
Percentage of Revenue
|
|
Change
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands, except percentages)
|
|
|
||||||||||||
Sales and marketing
|
$
|
205,631
|
|
|
28.2
|
%
|
|
$
|
212,419
|
|
|
45.3
|
%
|
|
$
|
(6,788
|
)
|
Research and development
|
86,618
|
|
|
11.9
|
|
|
97,989
|
|
|
20.9
|
|
|
(11,371
|
)
|
|||
General and administrative
|
67,303
|
|
|
9.2
|
|
|
150,647
|
|
|
32.1
|
|
|
(83,344
|
)
|
|||
Amortization of acquired intangibles
|
67,080
|
|
|
9.2
|
|
|
59,470
|
|
|
12.7
|
|
|
7,610
|
|
|||
Total operating expenses
|
$
|
426,632
|
|
|
58.6
|
%
|
|
$
|
520,525
|
|
|
110.9
|
%
|
|
$
|
(93,893
|
)
|
|
Successor
|
|
Combined
|
|
|
||||||||||||
|
Year Ended December 31,
|
|
(Unaudited)
Year Ended December 31, |
|
|
||||||||||||
|
2017
|
|
2016
|
|
|
||||||||||||
|
Amount
|
|
Percentage of Revenue
|
|
Amount
|
|
Percentage of Revenue
|
|
Change
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands, except percentages)
|
|
|
||||||||||||
Interest expense, net
|
$
|
(169,786
|
)
|
|
(23.3
|
)%
|
|
$
|
(170,373
|
)
|
|
(36.3
|
)%
|
|
$
|
587
|
|
|
Successor
|
|
Combined
|
|
|
||||||||||||
|
Year Ended December 31,
|
|
(Unaudited)
Year Ended December 31, |
|
|
||||||||||||
|
2017
|
|
2016
|
|
|
||||||||||||
|
Amount
|
|
Percentage of Revenue
|
|
Amount
|
|
Percentage of Revenue
|
|
Change
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands, except percentages)
|
|
|
||||||||||||
Unrealized net transaction gains (losses) related to remeasurement of intercompany loans
|
$
|
56,539
|
|
|
7.8
|
%
|
|
$
|
(26,651
|
)
|
|
(5.7
|
)%
|
|
$
|
83,190
|
|
Loss on extinguishment of debt
|
(18,559
|
)
|
|
(2.5
|
)
|
|
(22,767
|
)
|
|
(4.9
|
)
|
|
4,208
|
|
|||
Other income (expense)
|
684
|
|
|
0.1
|
|
|
(7,825
|
)
|
|
(1.7
|
)
|
|
8,509
|
|
|||
Total other income (expense), net
|
$
|
38,664
|
|
|
5.3
|
%
|
|
$
|
(57,243
|
)
|
|
(12.2
|
)%
|
|
$
|
95,907
|
|
|
Successor
|
|
Combined
|
|
|
||||||||||||
|
Year Ended December 31,
|
|
(Unaudited)
Year Ended December 31, |
|
|
||||||||||||
|
2017
|
|
2016
|
|
|
||||||||||||
|
Amount
|
|
Percentage of Revenue
|
|
Amount
|
|
Percentage of Revenue
|
|
Change
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands, except percentages)
|
|
|
||||||||||||
Income tax expense (benefit)
|
$
|
22,398
|
|
|
3.1
|
%
|
|
$
|
(149,807
|
)
|
|
(31.9
|
)%
|
|
$
|
172,205
|
|
Effective tax rate
|
(36.4
|
)%
|
|
|
|
30.9
|
%
|
|
|
|
(67.3
|
)%
|
|
Successor
|
|
Combined
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
(Unaudited)
Year Ended December 31, |
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2016
|
|
|
2016
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
(in thousands)
|
|
|
|
||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
GAAP subscription revenue
|
$
|
265,591
|
|
|
$
|
213,754
|
|
|
$
|
133,511
|
|
|
$
|
126,960
|
|
|
|
$
|
6,551
|
|
Impact of purchase accounting
|
1,166
|
|
|
1,464
|
|
|
7,219
|
|
|
7,219
|
|
|
|
—
|
|
|||||
Non-GAAP subscription revenue
|
266,757
|
|
|
215,218
|
|
|
140,730
|
|
|
134,179
|
|
|
|
6,551
|
|
|||||
GAAP maintenance revenue
|
402,938
|
|
|
357,630
|
|
|
174,734
|
|
|
145,234
|
|
|
|
29,500
|
|
|||||
Impact of purchase accounting
|
2,550
|
|
|
11,514
|
|
|
153,220
|
|
|
153,220
|
|
|
|
—
|
|
|||||
Non-GAAP maintenance revenue
|
405,488
|
|
|
369,144
|
|
|
327,954
|
|
|
298,454
|
|
|
|
29,500
|
|
|||||
GAAP total recurring revenue
|
668,529
|
|
|
571,384
|
|
|
308,245
|
|
|
272,194
|
|
|
|
36,051
|
|
|||||
Impact of purchase accounting
|
3,716
|
|
|
12,978
|
|
|
160,439
|
|
|
160,439
|
|
|
|
—
|
|
|||||
Non-GAAP total recurring revenue
|
672,245
|
|
|
584,362
|
|
|
468,684
|
|
|
432,633
|
|
|
|
36,051
|
|
|||||
GAAP license revenue
|
164,560
|
|
|
156,633
|
|
|
161,176
|
|
|
149,900
|
|
|
|
11,276
|
|
|||||
Impact of purchase accounting
|
—
|
|
|
3
|
|
|
921
|
|
|
921
|
|
|
|
—
|
|
|||||
Non-GAAP license revenue
|
164,560
|
|
|
156,636
|
|
|
162,097
|
|
|
150,821
|
|
|
|
11,276
|
|
|||||
Total GAAP revenue
|
$
|
833,089
|
|
|
$
|
728,017
|
|
|
$
|
469,421
|
|
|
$
|
422,094
|
|
|
|
$
|
47,327
|
|
Impact of purchase accounting
|
$
|
3,716
|
|
|
$
|
12,981
|
|
|
$
|
161,360
|
|
|
$
|
161,360
|
|
|
|
$
|
—
|
|
Total non-GAAP revenue
|
$
|
836,805
|
|
|
$
|
740,998
|
|
|
$
|
630,781
|
|
|
$
|
583,454
|
|
|
|
$
|
47,327
|
|
•
|
Amortization of Acquired Intangible Assets.
We provide non-GAAP information that excludes expenses related to purchased intangible assets associated with our acquisitions. We believe that eliminating this expense from our non-GAAP measures is useful to investors, because the amortization of acquired intangible assets can be inconsistent in amount and frequency and is significantly impacted by the timing and magnitude of our acquisition transactions, which also vary in frequency from period to period. Accordingly, we analyze the performance of our operations in each period without regard to such expenses.
|
•
|
Stock-Based Compensation Expense.
We provide non-GAAP information that excludes expenses related to stock-based compensation. We believe that the exclusion of stock-based compensation expense provides for a better comparison of our operating results to prior periods and to our peer companies as the calculations of stock-based compensation vary from period to period and company to company due to different valuation methodologies, subjective assumptions and the variety of award types. Because of these unique characteristics of stock-based compensation, management excludes these expenses when analyzing the organization’s business performance.
|
•
|
Acquisition and Sponsor Related Costs.
We exclude certain expense items resulting from the Take Private and other acquisitions, such as legal, accounting and advisory fees, changes in fair value of contingent consideration, costs related to integrating the acquired businesses, deferred compensation, severance and retention expense. We consider these adjustments, to some extent, to be unpredictable and dependent on a significant number of factors that are outside of our control. Furthermore, acquisitions result in operating expenses that would not otherwise have been incurred by us in the normal course of our organic business operations. We believe that providing these non-GAAP measures that exclude acquisition and Sponsor related costs, allows users of our financial statements to better review and understand the historical and current results of our continuing operations, and also facilitates comparisons to our historical results and results of less acquisitive peer companies, both with and without such adjustments.
|
•
|
Restructuring Charges and Other.
We provide non-GAAP information that excludes restructuring charges such as severance and the estimated costs of exiting and terminating facility lease commitments, as they relate to our corporate restructuring and exit activities. These restructuring charges are inconsistent in amount and are significantly impacted by the timing and nature of these events. Therefore, although we may incur these types of expenses in the future, we believe that eliminating these charges for purposes of calculating the non-GAAP financial measures facilitates a more meaningful evaluation of our operating performance and comparisons to our past operating performance.
|
|
Successor
|
|
Combined
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
(Unaudited)
Year Ended December 31, |
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2016
|
|
|
2016
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
(in thousands, except margin data)
|
|
|
|
||||||||||||||
GAAP operating income (loss)
|
$
|
115,185
|
|
|
$
|
69,654
|
|
|
$
|
(256,596
|
)
|
|
$
|
(132,386
|
)
|
|
|
$
|
(124,210
|
)
|
Impact of purchase accounting
|
3,716
|
|
|
12,981
|
|
|
161,360
|
|
|
161,360
|
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
5,833
|
|
|
80
|
|
|
87,780
|
|
|
17
|
|
|
|
87,763
|
|
|||||
Amortization of acquired technologies
|
175,991
|
|
|
171,033
|
|
|
149,703
|
|
|
147,517
|
|
|
|
2,186
|
|
|||||
Amortization of acquired intangibles
|
66,788
|
|
|
67,080
|
|
|
59,470
|
|
|
58,553
|
|
|
|
917
|
|
|||||
Acquisition and Sponsor related costs
|
20,401
|
|
|
23,580
|
|
|
97,556
|
|
|
44,512
|
|
|
|
53,044
|
|
|||||
Restructuring costs and other
|
2,999
|
|
|
2,858
|
|
|
4,526
|
|
|
2,962
|
|
|
|
1,564
|
|
|||||
Non-GAAP operating income
|
$
|
390,913
|
|
|
$
|
347,266
|
|
|
$
|
303,799
|
|
|
$
|
282,535
|
|
|
|
$
|
21,264
|
|
GAAP operating margin
|
13.8
|
%
|
|
9.6
|
%
|
|
(54.7
|
)%
|
|
(31.4
|
)%
|
|
|
(262.5
|
)%
|
|||||
Non-GAAP operating margin
|
46.7
|
%
|
|
46.9
|
%
|
|
48.2
|
%
|
|
48.4
|
%
|
|
|
44.9
|
%
|
|
Successor
|
|
Combined
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
(Unaudited)
Year Ended December 31, |
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2016
|
|
|
2016
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
(in thousands, except margin data)
|
|
|
|
||||||||||||||
Net loss
|
$
|
(102,066
|
)
|
|
$
|
(83,866
|
)
|
|
$
|
(334,405
|
)
|
|
$
|
(262,594
|
)
|
|
|
$
|
(71,811
|
)
|
Amortization and depreciation
|
258,362
|
|
|
250,876
|
|
|
219,233
|
|
|
215,325
|
|
|
|
3,908
|
|
|||||
Income tax expense (benefit)
|
(19,644
|
)
|
|
22,398
|
|
|
(149,807
|
)
|
|
(96,651
|
)
|
|
|
(53,156
|
)
|
|||||
Interest expense, net
|
142,008
|
|
|
169,786
|
|
|
170,373
|
|
|
169,900
|
|
|
|
473
|
|
|||||
Impact of purchase accounting on total revenue
|
3,716
|
|
|
12,981
|
|
|
161,360
|
|
|
161,360
|
|
|
|
—
|
|
|||||
Unrealized foreign currency (gains) losses
(1)
|
14,367
|
|
|
(56,368
|
)
|
|
34,598
|
|
|
34,462
|
|
|
|
136
|
|
|||||
Acquisition and Sponsor related costs
|
20,401
|
|
|
23,580
|
|
|
97,598
|
|
|
44,512
|
|
|
|
53,086
|
|
|||||
Debt related costs
(2)
|
81,535
|
|
|
19,546
|
|
|
23,907
|
|
|
23,907
|
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
5,833
|
|
|
80
|
|
|
87,780
|
|
|
17
|
|
|
|
87,763
|
|
|||||
Restructuring costs and other
|
2,999
|
|
|
2,858
|
|
|
4,526
|
|
|
2,962
|
|
|
|
1,564
|
|
|||||
Adjusted EBITDA
|
$
|
407,511
|
|
|
$
|
361,871
|
|
|
$
|
315,163
|
|
|
$
|
293,200
|
|
|
|
$
|
21,963
|
|
Adjusted EBITDA margin
|
48.7
|
%
|
|
48.8
|
%
|
|
50.0
|
%
|
|
50.3
|
%
|
|
|
46.4
|
%
|
(1)
|
Unrealized foreign currency (gains) losses primarily relate to the remeasurement of our intercompany loans and to a lesser extent, unrealized foreign currency (gains) losses on selected assets and liabilities.
|
(2)
|
Debt related costs include fees related to our credit agreements, debt refinancing costs and the related write-off of debt issuance costs. The fees related to our credit agreements were
$1.4 million
, $0.9 million and $1.1 million for the years ended
December 31, 2018
,
2017
and 2016 (on a combined basis) respectively. See
Note
9. Debt
in the
Notes to Consolidated Financial Statements
in Item 8 of Part II of this Annual Report on Form 10-K for additional information regarding our debt and the write-off of debt issuance costs.
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||
|
2018
|
|
2017
|
|
2016
|
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands)
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
254,142
|
|
|
$
|
232,693
|
|
|
$
|
61,175
|
|
|
|
$
|
29,015
|
|
Net cash provided by (used in) investing activities
|
(67,993
|
)
|
|
(34,379
|
)
|
|
(4,854,761
|
)
|
|
|
21,714
|
|
||||
Net cash provided by (used in) financing activities
|
(75,724
|
)
|
|
(35,354
|
)
|
|
4,898,290
|
|
|
|
(1,021
|
)
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(5,521
|
)
|
|
13,113
|
|
|
(3,061
|
)
|
|
|
3,086
|
|
||||
Net increase in cash and cash equivalents
|
104,904
|
|
|
176,073
|
|
|
101,643
|
|
|
|
52,794
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less than 1
year
|
|
1-3 years
|
|
3-5 years
|
|
More than
5 years
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Long-term debt obligations
(1)
|
$
|
1,970,100
|
|
|
$
|
19,900
|
|
|
$
|
39,800
|
|
|
$
|
39,800
|
|
|
$
|
1,870,600
|
|
Cash interest expense
(1)
|
523,524
|
|
|
104,912
|
|
|
206,919
|
|
|
202,378
|
|
|
9,315
|
|
|||||
Operating leases
|
124,016
|
|
|
15,287
|
|
|
29,243
|
|
|
25,752
|
|
|
53,734
|
|
|||||
Purchase obligations
(2)
|
71,970
|
|
|
59,934
|
|
|
12,036
|
|
|
—
|
|
|
—
|
|
|||||
Take Private deferred stock payments
(3)
|
3,257
|
|
|
3,014
|
|
|
243
|
|
|
—
|
|
|
—
|
|
|||||
Acquisition related retention and deferred compensation
|
3,908
|
|
|
3,908
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Transition tax payable
(4)
|
104,592
|
|
|
8,893
|
|
|
17,785
|
|
|
23,531
|
|
|
54,383
|
|
|||||
Total
(5)
|
$
|
2,801,367
|
|
|
$
|
215,848
|
|
|
$
|
306,026
|
|
|
$
|
291,461
|
|
|
$
|
1,988,032
|
|
(1)
|
Represents principal maturities of our Senior Secured First Lien Credit Facility in effect at
December 31, 2018
. The estimated cash interest expense is based upon an interest rate of 5.27%.
|
(2)
|
Purchase obligations primarily represent outstanding purchase orders for purchases of software license and support fees, marketing activities, hosting, corporate health insurance costs, accounting, legal and contractor fees and computer hardware and software costs.
|
(3)
|
As a result of the Take Private, certain restricted stock units, or RSUs, not subject to accelerated vesting were cancelled and converted into the right to receive the per share price of $60.10 less applicable withholding taxes shortly after those RSUs would have vested based on the underlying original RSU vesting schedule and subject to the continued employment of the holders of those RSUs. See
Note
16. Commitments and Contingencies
in the
Notes to Consolidated Financial Statements
included in Item 8 of Part II of this Annual Report on Form 10-K for additional details.
|
(4)
|
Represents the provisional one–time transition tax as a result of the Tax Act which we have elected to pay over eight years. See
Note
15. Income Taxes
in the
Notes to Consolidated Financial Statements
included in Item 8 of Part II of this Annual Report on Form 10-K for additional details of the impact of the Tax Act.
|
(5)
|
Other long-term obligations on our balance sheet at
December 31, 2018
included non-current income tax liabilities of $23.8 million, which are primarily related to unrecognized tax benefits. We have not included this amount in the table above because we cannot reasonably estimate the period during which this obligation may be incurred, if at all.
|
|
Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights
|
|
Weighted Average Exercise Price of Outstanding Options, Warrants and Rights
|
|
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plan (excluding securities reflected in column (a))
|
|
||||
Equity compensation plans approved by security holders
|
10,378,288
|
|
(1)
|
$
|
1.62
|
|
(2)
|
26,501,612
|
|
(3)
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
10,378,288
|
|
|
$
|
1.62
|
|
|
26,501,612
|
|
|
(1)
|
Includes
3,129,900
shares subject to outstanding options under the 2016 Plan,
6,277,466
shares subject to restricted stock units, or RSUs, granted under the 2018 Plan and
970,922
shares subject to performance stock units, or PSUs, granted under the 2018 Plan at the target award amounts. Based on the extent to which the applicable performance measures are achieved, shares issued upon vesting of the outstanding PSUs may range from 0% - 150% of the target award amounts. Excludes restricted stock issued under the 2016 Plan, whether vested or unvested. As of
December 31, 2018
, we did not have any purchase rights accruing under the 2018 Purchase Plan.
|
(2)
|
RSUs and PSUs, which do not have an exercise price, are excluded in the calculation of weighted average exercise price.
|
(3)
|
As of
December 31, 2018
, an aggregate of (i)
22,751,612
shares of common stock were available for issuance under the 2018 Plan and (ii)
3,750,000
shares of common stock were available for issuance under the 2018 Purchase Plan. Our ability to grant any future equity awards under the 2016 Plan was terminated in October 2018. Outstanding equity awards granted under the 2016 Plan prior to October 2018 remain subject to the terms of the 2016 Plan.
|
1.
|
Financial Statements.
|
Reports of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheets
|
|
Consolidated Statements of Operations
|
|
Consolidated Statements of Comprehensive Income (Loss)
|
|
Consolidated Statements of Stockholders' Equity (Predecessor)
|
|
Consolidated Statements of Redeemable Convertible Class A Common Stock and Stockholders' Equity (Deficit) (Successor)
|
|
Consolidated Statements of Cash Flows
|
|
Notes to Consolidated Financial Statements
|
•
|
Schedule II—Valuation and Qualifying Accounts
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
Share Purchase Agreement, dated as of May 8, 2016, among Project Lake Holdings, Ltd., SolarWinds Holdings, Inc., LOGICnow Holding S.à r.l., and LOGICnow Holdings Ltd.
|
|
S-1
|
|
181082032
|
|
2.1
|
|
9/21/2018
|
|
|
Third Amended and Restated Certificate of Incorporation as currently in effect
|
|
10-Q
|
|
181203681
|
|
3.1
|
|
11/27/2018
|
|
|
Amended and Restated Bylaws as currently in effect
|
|
10-Q
|
|
181203681
|
|
3.2
|
|
11/27/2018
|
|
|
Amended and Restated Stockholders' Agreement, dated October 18, 2018, by and among the Company and the stockholders' named therein
|
|
10-Q
|
|
181203681
|
|
4.1
|
|
11/27/2018
|
|
|
Registration Rights Agreement, dated as of February 5, 2016, by and among the registrant and certain stockholders named therein
|
|
S-1
|
|
181082032
|
|
4.3
|
|
9/21/2018
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
First Lien Credit Agreement, dated as of February 5, 2016, by and among SolarWinds Holdings, Inc., as borrower, SolarWinds Intermediate Holdings I, Inc., the other guarantors party thereto, Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent, Goldman Sachs Lending Partners LLC, Credit Suisse Securities (USA) LLC, Macquarie Capital (USA) Inc. and Nomura Securities International, Inc., as joint lead arrangers and joint bookrunners, Goldman Sachs Lending Partners LLC, as syndication agent, and Goldman Sachs Lending Partners LLC, as documentation agent
|
|
S-1
|
|
181082032
|
|
10.1
|
|
9/21/2018
|
|
|
Amendment No. 1 to First Lien Credit Agreement, dated as of May 27, 2016, by and among SolarWinds Holdings, Inc., as borrower, SolarWinds Intermediate Holdings I, Inc., the other guarantors party thereto, Credit Suisse AG, Cayman Islands Branch, as administrative agent, and the lenders party thereto
|
|
S-1
|
|
181082032
|
|
10.1.1
|
|
9/21/2018
|
|
|
Amendment No. 2 to First Lien Credit Agreement, dated as of August 18, 2016, by and among SolarWinds Holdings, Inc., as borrower, SolarWinds Intermediate Holdings I, Inc., the other guarantors party thereto, Credit Suisse AG, Cayman Islands Branch, as administrative agent, and the lenders party thereto
|
|
S-1
|
|
181082032
|
|
10.1.2
|
|
9/21/2018
|
|
|
Amendment No. 3 to First Lien Credit Agreement, dated as of February 21, 2017, by and among SolarWinds Holdings, Inc., as borrower, SolarWinds Intermediate Holdings I, Inc., the other guarantors party thereto, Credit Suisse AG, Cayman Islands Branch, as administrative agent, and the lenders party thereto
|
|
S-1
|
|
181082032
|
|
10.1.3
|
|
9/21/2018
|
|
|
Amendment No. 4 to First Lien Credit Agreement, dated as of March 15, 2018, by and among SolarWinds Intermediate Holdings I, Inc., SolarWinds Holdings, Inc. and Credit Suisse AG, Cayman Islands Branch, as administrative agent, and the lenders party thereto
|
|
S-1
|
|
181082032
|
|
10.1.4
|
|
9/21/2018
|
|
|
Second Lien Credit Agreement, dated as of March 15, 2018, by and among SolarWinds Holdings I, Inc., SolarWinds Holdings, Inc., the other guarantors party thereto, Wilmington Trust, National Association, as administrative agent, and the other lenders party thereto
|
|
S-1
|
|
181082032
|
|
10.2
|
|
9/21/2018
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
Management Fee Agreement, dated as of February 5, 2016, among the registrant, SolarWinds Intermediate Holdings II, Inc., SolarWinds Intermediate Holdings I, Inc., SolarWinds Holdings, Inc., SolarWinds MSP Holdings Limited, SolarWinds International Holdings, Ltd., SolarWinds, Inc., Silver Lake Management Company IV, L.L.C., Thoma Bravo, LLC and Thoma Bravo Partners XI, L.P.
|
|
S-1
|
|
181082032
|
|
10.3
|
|
9/21/2018
|
|
|
Form of Indemnification Agreement between the registrant and each of its directors and executive officers
|
|
S-1
|
|
181082032
|
|
10.4
|
|
9/21/2018
|
|
|
SolarWinds Corporation Equity Plan, dated as of June 24, 2016, and forms of agreement thereunder
|
|
S-1
|
|
181082032
|
|
10.5
|
|
9/21/2018
|
|
|
SolarWinds Corporation 2018 Equity Incentive Plan and forms of agreements thereunder
|
|
10-Q
|
|
181203681
|
|
10.1
|
|
11/27/2018
|
|
|
SolarWinds Corporation 2018 Employee Stock Purchase Plan
|
|
|
|
|
|
|
|
|
|
|
Form of SolarWinds Corporation Bonus Plan
|
|
S-1
|
|
181082032
|
|
10.8
|
|
9/21/2018
|
|
|
Second Amended and Restated Employment Agreement, dated as of September 30, 2016, between SolarWinds, Inc. and Kevin B. Thompson
|
|
S-1
|
|
181082032
|
|
10.9
|
|
9/21/2018
|
|
|
Amended and Restated Employment Agreement, dated as of April 27, 2016, between SolarWinds Worldwide, LLC and J. Barton Kalsu
|
|
S-1
|
|
181082032
|
|
10.10
|
|
9/21/2018
|
|
|
Employment Agreement, dated as of October 15, 2015, between SolarWinds Worldwide, LLC and David Gardiner
|
|
S-1
|
|
181082032
|
|
10.11
|
|
9/21/2018
|
|
|
Amendment to Employment Agreement, dated as of April 27, 2016, between SolarWinds Worldwide, LLC and David Gardiner
|
|
S-1
|
|
181082032
|
|
10.11.1
|
|
9/21/2018
|
|
|
Letter of Assignment (2017–2018), dated as of July 1, 2017, between SolarWinds Worldwide, LLC and David Gardiner
|
|
S-1
|
|
181082032
|
|
10.11.2
|
|
9/21/2018
|
|
|
List of subsidiaries of the registrant
|
|
|
|
|
|
|
|
|
|
|
Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm
|
|
|
|
|
|
|
|
|
|
|
Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
Certifications of Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
#
|
Indicates management contract or compensatory plan or arrangement.
|
+
|
Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. SolarWinds Corporation agrees to furnish supplementally to the SEC a copy of any omitted schedule or exhibit upon request.
|
*
|
Filed herewith
|
**
|
The certifications attached as Exhibit 32.1 accompanying this Annual Report on Form 10-K, are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing
|
|
|
SOLARWINDS CORPORATION
|
|
|
|
|
|
Dated:
|
February 25, 2019
|
By:
|
/s/ J. Barton Kalsu
|
|
|
|
|
|
|
|
J. Barton Kalsu
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Kevin B. Thompson
|
|
President and Chief Executive Officer and Director
(Principal Executive Officer) |
|
February 25, 2019
|
Kevin B. Thompson
|
|
|
|
|
|
|
|
|
|
/s/ J. Barton Kalsu
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer) |
|
February 25, 2019
|
J. Barton Kalsu
|
|
|
|
|
|
|
|
|
|
/s/ Michael Bingle
|
|
Director
|
|
February 25, 2019
|
Michael Bingle
|
|
|
|
|
|
|
|
|
|
/s/ William Bock
|
|
Director
|
|
February 25, 2019
|
William Bock
|
|
|
|
|
|
|
|
|
|
/s/ Seth Boro
|
|
Director
|
|
February 25, 2019
|
Seth Boro
|
|
|
|
|
|
|
|
|
|
/s/ Paul Cormier
|
|
Director
|
|
February 25, 2019
|
Paul Cormier
|
|
|
|
|
|
|
|
|
|
/s/ Kenneth Y. Hao
|
|
Director
|
|
February 25, 2019
|
Kenneth Y. Hao
|
|
|
|
|
|
|
|
|
|
/s/ Michael Hoffmann
|
|
Director
|
|
February 25, 2019
|
Michael Hoffmann
|
|
|
|
|
|
|
|
|
|
/s/ Catherine Kinney
|
|
Director
|
|
February 25, 2019
|
Catherine Kinney
|
|
|
|
|
|
|
|
|
|
/s/ James Lines
|
|
Director
|
|
February 25, 2019
|
James Lines
|
|
|
|
|
|
|
|
|
|
/s/ Jason White
|
|
Director
|
|
February 25, 2019
|
Jason White
|
|
|
|
|
|
Page
|
S
OLAR
W
INDS
N
ORTH
A
MERICA,
I
NC. (
P
REDECESSOR,
F
ORMERLY
S
OLAR
W
INDS,
I
NC.) AND
|
|
S
OLAR
W
INDS
C
ORPORATION (
S
UCCESSOR,
F
ORMERLY
S
OLAR
W
INDS
P
ARENT,
I
NC.)
|
|
|
|
|
December 31,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
382,620
|
|
|
$
|
277,716
|
|
Accounts receivable, net of allowances of $3,196 and $2,065 as of December 31, 2018 and December 31, 2017, respectively
|
100,528
|
|
|
85,133
|
|
||
Income tax receivable
|
893
|
|
|
1,713
|
|
||
Prepaid and other current assets
|
16,267
|
|
|
24,331
|
|
||
Total current assets
|
500,308
|
|
|
388,893
|
|
||
Property and equipment, net
|
35,864
|
|
|
34,209
|
|
||
Deferred taxes
|
6,873
|
|
|
4,425
|
|
||
Goodwill
|
3,683,961
|
|
|
3,695,640
|
|
||
Intangible assets, net
|
956,261
|
|
|
1,194,499
|
|
||
Other assets, net
|
11,382
|
|
|
9,398
|
|
||
Total assets
|
$
|
5,194,649
|
|
|
$
|
5,327,064
|
|
Liabilities, redeemable convertible common stock and stockholders’ equity (deficit)
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
9,742
|
|
|
$
|
9,657
|
|
Accrued liabilities and other
|
52,055
|
|
|
39,593
|
|
||
Accrued interest payable
|
290
|
|
|
11,632
|
|
||
Income taxes payable
|
15,682
|
|
|
9,049
|
|
||
Current portion of deferred revenue
|
270,433
|
|
|
241,513
|
|
||
Current debt obligation
|
19,900
|
|
|
16,950
|
|
||
Total current liabilities
|
368,102
|
|
|
328,394
|
|
||
Long-term liabilities:
|
|
|
|
||||
Deferred revenue, net of current portion
|
25,699
|
|
|
20,278
|
|
||
Non-current deferred taxes
|
147,144
|
|
|
167,523
|
|
||
Other long-term liabilities
|
133,532
|
|
|
148,121
|
|
||
Long-term debt, net of current portion
|
1,904,072
|
|
|
2,245,622
|
|
||
Total liabilities
|
2,578,549
|
|
|
2,909,938
|
|
||
Commitments and contingencies (
Note 16
)
|
|
|
|
||||
Redeemable convertible Class A common stock, $0.001 par value: no shares authorized, issued or outstanding at December 31, 2018; 5,755,000 shares authorized and 2,661,030 shares issued and outstanding as of December 31, 2017
|
—
|
|
|
3,146,887
|
|
||
Stockholders’ equity (deficit):
|
|
|
|
||||
Common stock, $0.001 par value: 1,000,000,000 shares authorized and 304,942,415 shares issued and outstanding as of December 31, 2018; 233,000,000 shares authorized and 100,734,056 shares issued and outstanding as of December 31, 2017
|
305
|
|
|
101
|
|
||
Preferred stock, $0.001 par value: 50,000,000 shares authorized and no shares issued and outstanding as of December 31, 2018; no shares authorized, issued and outstanding as of December 31, 2017
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
3,011,080
|
|
|
—
|
|
||
Accumulated other comprehensive income (loss)
|
17,043
|
|
|
75,294
|
|
||
Accumulated deficit
|
(412,328
|
)
|
|
(805,156
|
)
|
||
Total stockholders’ equity (deficit)
|
2,616,100
|
|
|
(729,761
|
)
|
||
Total liabilities, redeemable convertible common stock and stockholders’ equity (deficit)
|
$
|
5,194,649
|
|
|
$
|
5,327,064
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||
|
2018
|
|
2017
|
|
2016
|
|
|
2016
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
||||||||
Subscription
|
$
|
265,591
|
|
|
$
|
213,754
|
|
|
$
|
126,960
|
|
|
|
$
|
6,551
|
|
Maintenance
|
402,938
|
|
|
357,630
|
|
|
145,234
|
|
|
|
29,500
|
|
||||
Total recurring revenue
|
668,529
|
|
|
571,384
|
|
|
272,194
|
|
|
|
36,051
|
|
||||
License
|
164,560
|
|
|
156,633
|
|
|
149,900
|
|
|
|
11,276
|
|
||||
Total revenue
|
833,089
|
|
|
728,017
|
|
|
422,094
|
|
|
|
47,327
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
||||||||
Cost of recurring revenue
|
70,744
|
|
|
60,698
|
|
|
46,238
|
|
|
|
9,551
|
|
||||
Amortization of acquired technologies
|
175,991
|
|
|
171,033
|
|
|
147,517
|
|
|
|
2,186
|
|
||||
Total cost of revenue
|
246,735
|
|
|
231,731
|
|
|
193,755
|
|
|
|
11,737
|
|
||||
Gross profit
|
586,354
|
|
|
496,286
|
|
|
228,339
|
|
|
|
35,590
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
227,468
|
|
|
205,631
|
|
|
165,355
|
|
|
|
47,064
|
|
||||
Research and development
|
96,272
|
|
|
86,618
|
|
|
65,806
|
|
|
|
32,183
|
|
||||
General and administrative
|
80,641
|
|
|
67,303
|
|
|
71,011
|
|
|
|
79,636
|
|
||||
Amortization of acquired intangibles
|
66,788
|
|
|
67,080
|
|
|
58,553
|
|
|
|
917
|
|
||||
Total operating expenses
|
471,169
|
|
|
426,632
|
|
|
360,725
|
|
|
|
159,800
|
|
||||
Operating income (loss)
|
115,185
|
|
|
69,654
|
|
|
(132,386
|
)
|
|
|
(124,210
|
)
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(142,008
|
)
|
|
(169,786
|
)
|
|
(169,900
|
)
|
|
|
(473
|
)
|
||||
Other income (expense), net
|
(94,887
|
)
|
|
38,664
|
|
|
(56,959
|
)
|
|
|
(284
|
)
|
||||
Total other income (expense)
|
(236,895
|
)
|
|
(131,122
|
)
|
|
(226,859
|
)
|
|
|
(757
|
)
|
||||
Loss before income taxes
|
(121,710
|
)
|
|
(61,468
|
)
|
|
(359,245
|
)
|
|
|
(124,967
|
)
|
||||
Income tax expense (benefit)
|
(19,644
|
)
|
|
22,398
|
|
|
(96,651
|
)
|
|
|
(53,156
|
)
|
||||
Net loss
|
$
|
(102,066
|
)
|
|
$
|
(83,866
|
)
|
|
$
|
(262,594
|
)
|
|
|
$
|
(71,811
|
)
|
Net income (loss) available to common stockholders
|
$
|
364,635
|
|
|
$
|
(351,873
|
)
|
|
$
|
(480,498
|
)
|
|
|
$
|
(71,811
|
)
|
Net income (loss) available to common stockholders per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share
|
$
|
2.60
|
|
|
$
|
(3.50
|
)
|
|
$
|
(4.98
|
)
|
|
|
$
|
(1.00
|
)
|
Diluted earnings (loss) per share
|
$
|
2.56
|
|
|
$
|
(3.50
|
)
|
|
$
|
(4.98
|
)
|
|
|
$
|
(1.00
|
)
|
Weighted-average shares used to compute net income (loss) available to common stockholders per share:
|
|
|
|
|
|
|
|
|
||||||||
Shares used in computation of basic earnings (loss) per share
|
140,301
|
|
|
100,433
|
|
|
96,465
|
|
|
|
71,989
|
|
||||
Shares used in computation of diluted earnings (loss) per share
|
142,541
|
|
|
100,433
|
|
|
96,465
|
|
|
|
71,989
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||
|
2018
|
|
2017
|
|
2016
|
|
|
2016
|
||||||||
Net loss
|
$
|
(102,066
|
)
|
|
$
|
(83,866
|
)
|
|
$
|
(262,594
|
)
|
|
|
$
|
(71,811
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
(58,251
|
)
|
|
141,341
|
|
|
(66,047
|
)
|
|
|
3,835
|
|
||||
Unrealized gains on investments, net of income tax expense $15 for the period ended February 4, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
|
27
|
|
||||
Other comprehensive income (loss)
|
(58,251
|
)
|
|
141,341
|
|
|
(66,047
|
)
|
|
|
3,862
|
|
||||
Comprehensive income (loss)
|
$
|
(160,317
|
)
|
|
$
|
57,475
|
|
|
$
|
(328,641
|
)
|
|
|
$
|
(67,949
|
)
|
Predecessor:
|
Common Stock
|
|
Additional
Paid-in Capital |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Accumulated
Earnings |
|
Total
Stockholders’ Equity |
|||||||||||||
Shares
|
|
Amount
|
|
|||||||||||||||||||
Balance at December 31, 2015
|
71,884
|
|
|
$
|
72
|
|
|
$
|
135,872
|
|
|
$
|
(28,231
|
)
|
|
$
|
415,548
|
|
|
$
|
523,261
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
3,835
|
|
|
—
|
|
|
3,835
|
|
|||||
Unrealized gains on investments, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|
27
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(71,811
|
)
|
|
(71,811
|
)
|
|||||
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
(67,949
|
)
|
||||||||||
Exercise of stock options
|
50
|
|
|
—
|
|
|
1,311
|
|
|
—
|
|
|
—
|
|
|
1,311
|
|
|||||
Restricted stock units issued, net of shares withheld for taxes
|
107
|
|
|
—
|
|
|
(2,333
|
)
|
|
—
|
|
|
—
|
|
|
(2,333
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
87,799
|
|
|
—
|
|
|
—
|
|
|
87,799
|
|
|||||
Balance at February 4, 2016
|
72,041
|
|
|
$
|
72
|
|
|
$
|
222,649
|
|
|
$
|
(24,369
|
)
|
|
$
|
343,737
|
|
|
$
|
542,089
|
|
|
Redeemable Convertible Class A
Common Stock
|
|
|
Common Stock
|
|
Additional
Paid-in Capital |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Accumulated
Deficit |
|
Total
Stockholders’ Equity (Deficit) |
||||||||||||||||||
Shares
|
|
Amount
|
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
Successor:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at February 5, 2016
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(66,047
|
)
|
|
—
|
|
|
(66,047
|
)
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(262,594
|
)
|
|
(262,594
|
)
|
||||||
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
(328,641
|
)
|
|||||||||||
Issuance of stock
|
2,662
|
|
|
2,661,600
|
|
|
|
99,356
|
|
|
99
|
|
|
26,786
|
|
|
—
|
|
|
—
|
|
|
26,885
|
|
||||||
Accumulating dividends
|
—
|
|
|
217,904
|
|
|
|
|
|
|
|
(26,803
|
)
|
|
—
|
|
|
(191,101
|
)
|
|
(217,904
|
)
|
||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
|
|
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||||||
Balance at December 31, 2016
|
2,662
|
|
|
2,879,504
|
|
|
|
99,356
|
|
|
99
|
|
|
—
|
|
|
(66,047
|
)
|
|
(453,695
|
)
|
|
(519,643
|
)
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
141,341
|
|
|
—
|
|
|
141,341
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(83,866
|
)
|
|
(83,866
|
)
|
||||||
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,475
|
|
|||||||||||||
Exercise of stock options
|
—
|
|
|
—
|
|
|
|
5
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Issuance of stock
|
—
|
|
|
74
|
|
|
|
1,468
|
|
|
2
|
|
|
397
|
|
|
—
|
|
|
—
|
|
|
399
|
|
||||||
Repurchase of stock
|
(1
|
)
|
|
(697
|
)
|
|
|
(95
|
)
|
|
—
|
|
|
(67
|
)
|
|
—
|
|
|
—
|
|
|
(67
|
)
|
||||||
Accumulating dividends
|
—
|
|
|
268,006
|
|
|
|
—
|
|
|
—
|
|
|
(411
|
)
|
|
—
|
|
|
(267,595
|
)
|
|
(268,006
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
80
|
|
|
—
|
|
|
—
|
|
|
80
|
|
||||||
Balance at December 31, 2017
|
2,661
|
|
|
3,146,887
|
|
|
|
100,734
|
|
|
101
|
|
|
—
|
|
|
75,294
|
|
|
(805,156
|
)
|
|
(729,761
|
)
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58,251
|
)
|
|
—
|
|
|
(58,251
|
)
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(102,066
|
)
|
|
(102,066
|
)
|
||||||
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(160,317
|
)
|
|||||||||||||
Issuance of stock upon initial public offering, net of offering costs
|
—
|
|
|
—
|
|
|
|
25,000
|
|
|
25
|
|
|
353,501
|
|
|
—
|
|
|
—
|
|
|
353,526
|
|
||||||
Exercise of stock options
|
—
|
|
|
—
|
|
|
|
46
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
||||||
Issuance of stock
|
—
|
|
|
—
|
|
|
|
1,408
|
|
|
1
|
|
|
405
|
|
|
—
|
|
|
—
|
|
|
406
|
|
||||||
Repurchase of stock
|
—
|
|
|
(17
|
)
|
|
|
(57
|
)
|
|
—
|
|
|
(473
|
)
|
|
—
|
|
|
—
|
|
|
(473
|
)
|
||||||
Accumulating dividends
|
—
|
|
|
231,549
|
|
|
|
—
|
|
|
—
|
|
|
(15,196
|
)
|
|
—
|
|
|
(216,353
|
)
|
|
(231,549
|
)
|
||||||
Conversion of Class A shares and accumulated dividends to common stock upon initial public offering
|
(2,661
|
)
|
|
(3,378,419
|
)
|
|
|
177,811
|
|
|
178
|
|
|
2,666,994
|
|
|
—
|
|
|
711,247
|
|
|
3,378,419
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
5,833
|
|
|
—
|
|
|
—
|
|
|
5,833
|
|
||||||
Balance at December 31, 2018
|
—
|
|
|
$
|
—
|
|
|
|
304,942
|
|
|
$
|
305
|
|
|
$
|
3,011,080
|
|
|
$
|
17,043
|
|
|
$
|
(412,328
|
)
|
|
$
|
2,616,100
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||
|
2018
|
|
2017
|
|
2016
|
|
|
2016
|
||||||||
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(102,066
|
)
|
|
$
|
(83,866
|
)
|
|
$
|
(262,594
|
)
|
|
|
$
|
(71,811
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
258,362
|
|
|
250,876
|
|
|
215,325
|
|
|
|
3,908
|
|
||||
Provision for doubtful accounts
|
2,498
|
|
|
2,489
|
|
|
1,713
|
|
|
|
64
|
|
||||
Stock-based compensation expense
|
5,833
|
|
|
80
|
|
|
17
|
|
|
|
87,763
|
|
||||
Amortization of debt issuance costs
|
11,675
|
|
|
18,859
|
|
|
18,766
|
|
|
|
12
|
|
||||
Loss on extinguishment of debt
|
80,137
|
|
|
18,559
|
|
|
22,767
|
|
|
|
—
|
|
||||
Deferred taxes
|
(22,101
|
)
|
|
(101,522
|
)
|
|
(108,735
|
)
|
|
|
(17,864
|
)
|
||||
(Gain) loss on foreign currency exchange rates
|
13,410
|
|
|
(54,875
|
)
|
|
33,088
|
|
|
|
(692
|
)
|
||||
Other non-cash expenses (benefits)
|
3,443
|
|
|
(3,754
|
)
|
|
889
|
|
|
|
13
|
|
||||
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business combinations:
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable
|
(18,010
|
)
|
|
(2,358
|
)
|
|
(15,574
|
)
|
|
|
2,181
|
|
||||
Income taxes receivable
|
707
|
|
|
35,005
|
|
|
(498
|
)
|
|
|
(34,534
|
)
|
||||
Prepaid and other current assets
|
(4,497
|
)
|
|
6,184
|
|
|
(2,387
|
)
|
|
|
(1,829
|
)
|
||||
Accounts payable
|
(28
|
)
|
|
293
|
|
|
(16,372
|
)
|
|
|
10,668
|
|
||||
Accrued liabilities and other
|
9,776
|
|
|
(7,544
|
)
|
|
(27,151
|
)
|
|
|
43,894
|
|
||||
Accrued interest payable
|
(11,342
|
)
|
|
609
|
|
|
11,023
|
|
|
|
362
|
|
||||
Income taxes payable
|
(10,673
|
)
|
|
119,594
|
|
|
4,925
|
|
|
|
(568
|
)
|
||||
Deferred revenue
|
35,507
|
|
|
34,043
|
|
|
186,519
|
|
|
|
7,536
|
|
||||
Other long-term liabilities
|
1,511
|
|
|
21
|
|
|
(546
|
)
|
|
|
(88
|
)
|
||||
Net cash provided by operating activities
|
254,142
|
|
|
232,693
|
|
|
61,175
|
|
|
|
29,015
|
|
||||
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
||||||||
Purchases of investments
|
—
|
|
|
—
|
|
|
(2,000
|
)
|
|
|
—
|
|
||||
Maturities of investments
|
—
|
|
|
2,000
|
|
|
—
|
|
|
|
22,839
|
|
||||
Purchases of property and equipment
|
(15,945
|
)
|
|
(7,594
|
)
|
|
(6,946
|
)
|
|
|
(809
|
)
|
||||
Purchases of intangible assets
|
(2,687
|
)
|
|
(4,786
|
)
|
|
(3,198
|
)
|
|
|
(316
|
)
|
||||
Acquisitions, net of cash acquired
|
(60,578
|
)
|
|
(23,999
|
)
|
|
(507,531
|
)
|
|
|
—
|
|
||||
Acquisition of SolarWinds, Inc., net of cash acquired
|
—
|
|
|
—
|
|
|
(4,335,086
|
)
|
|
|
—
|
|
||||
Proceeds from sale of cost method investment and other
|
11,217
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||
Net cash provided by (used in) investing activities
|
(67,993
|
)
|
|
(34,379
|
)
|
|
(4,854,761
|
)
|
|
|
21,714
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||
|
2018
|
|
2017
|
|
2016
|
|
|
2016
|
||||||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
||||||||
Proceeds from our initial public offering, net of underwriting discounts
|
357,188
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||
Proceeds from issuance of common stock and incentive restricted stock
|
1,723
|
|
|
313
|
|
|
2,679,935
|
|
|
|
—
|
|
||||
Repurchase of common stock and incentive restricted stock
|
(578
|
)
|
|
(930
|
)
|
|
(4
|
)
|
|
|
(2,332
|
)
|
||||
Exercise of stock options
|
16
|
|
|
1
|
|
|
—
|
|
|
|
1,311
|
|
||||
Premium paid on debt extinguishment
|
(36,900
|
)
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||
Proceeds from credit agreement
|
626,950
|
|
|
3,500
|
|
|
2,724,516
|
|
|
|
—
|
|
||||
Repayments of borrowings from credit agreement
|
(1,014,900
|
)
|
|
(36,950
|
)
|
|
(341,215
|
)
|
|
|
—
|
|
||||
Payment of debt issuance costs
|
(5,561
|
)
|
|
(1,288
|
)
|
|
(164,942
|
)
|
|
|
—
|
|
||||
Payment for deferred offering costs
|
(3,662
|
)
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||
Net cash provided by (used in) financing activities
|
(75,724
|
)
|
|
(35,354
|
)
|
|
4,898,290
|
|
|
|
(1,021
|
)
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(5,521
|
)
|
|
13,113
|
|
|
(3,061
|
)
|
|
|
3,086
|
|
||||
Net increase in cash and cash equivalents
|
104,904
|
|
|
176,073
|
|
|
101,643
|
|
|
|
52,794
|
|
||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
||||||||
Beginning of period
|
277,716
|
|
|
101,643
|
|
|
—
|
|
|
|
196,913
|
|
||||
End of period
|
$
|
382,620
|
|
|
$
|
277,716
|
|
|
$
|
101,643
|
|
|
|
$
|
249,707
|
|
|
|
|
|
|
|
|
|
|
||||||||
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
||||||||
Cash paid for interest
|
$
|
142,944
|
|
|
$
|
147,106
|
|
|
$
|
140,719
|
|
|
|
$
|
238
|
|
Cash paid (received) for income taxes
|
$
|
8,950
|
|
|
$
|
(32,069
|
)
|
|
$
|
6,877
|
|
|
|
$
|
14
|
|
Non-cash investing and financing transactions
|
|
|
|
|
|
|
|
|
||||||||
Non-cash equity contribution by SolarWinds, Inc.’s management at Take Private
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,429
|
|
|
|
$
|
—
|
|
Conversion of redeemable convertible Class A common stock and accumulated dividends to common stock
|
$
|
3,378,419
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
•
|
the valuation of goodwill, intangibles, long-lived assets and contingent consideration;
|
•
|
revenue recognition;
|
•
|
stock-based compensation;
|
•
|
income taxes; and
|
•
|
loss contingencies.
|
•
|
License and Recurring Revenue.
We expect that adoption of the new standard will result in changes to the classification and timing of our revenue recognition. Under the new guidance, the requirement to establish VSOE to recognize license revenue separately from the other elements is eliminated. This change is expected to impact the allocation of the transaction price and timing of our revenue recognition between deliverables, or performance obligations, within an arrangement. In addition, we will recognize time-based license revenue upon the transfer of the license and the associated maintenance revenue over the contract period under the new standard instead of recognizing both the license and maintenance revenue ratably over the contract period. We expect the overall adoption impact to total revenue to be immaterial, though we do expect some changes to the timing and classification between license and recurring revenue. Additionally, some historical deferred revenue, primarily from arrangements involving time-based licenses, will never be recognized as revenue and instead will be a cumulative effect adjustment within accumulated deficit. We expect a reduction of approximately
$2.8 million
to the deferred revenue balance as a cumulative effect adjustment as of January 1, 2019.
|
•
|
Contract Acquisition Costs.
We expense all sales commissions as incurred under current guidance. The new guidance requires the deferral and amortization of certain incremental costs incurred to obtain a contract. This guidance will require us to capitalize and amortize certain sales commission costs over the remaining contractual term or over an expected period of benefit, which we have determined to be approximately
six years
. As part of the transition to the new guidance, we expect to recognize a contract asset of approximately
$5.2 million
as a cumulative effect adjustment as of January 1, 2019.
|
•
|
Other Items.
The impact of the adoption of the new standard on income taxes will result in an increase of deferred income tax liabilities of approximately
$1.7 million
as of January 1, 2019. We do not expect that the adoption of this standard will impact our operating cash flows.
|
|
Useful Life
(in years) |
Equipment, servers and computers
|
3 - 5
|
Furniture and fixtures
|
5 - 7
|
Software
|
3 - 5
|
Leasehold improvements
|
Lesser of
lease term or
useful life
|
|
Foreign Currency Translation Adjustments
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||
|
|
|
|
||||
|
(in thousands)
|
||||||
Balance at December 31, 2016
|
$
|
(66,047
|
)
|
|
$
|
(66,047
|
)
|
Other comprehensive gain (loss) before reclassification
|
141,341
|
|
|
141,341
|
|
||
Amount reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
—
|
|
||
Net current period other comprehensive income (loss)
|
141,341
|
|
|
141,341
|
|
||
Balance at December 31, 2017
|
75,294
|
|
|
75,294
|
|
||
Other comprehensive gain (loss) before reclassification
|
(58,251
|
)
|
|
(58,251
|
)
|
||
Amount reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
—
|
|
||
Net current period other comprehensive income (loss)
|
(58,251
|
)
|
|
(58,251
|
)
|
||
Balance at December 31, 2018
|
$
|
17,043
|
|
|
$
|
17,043
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||
|
2018
|
|
2017
|
|
2016
|
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands)
|
|
|
|
||||||||||
Amortization of acquired license technologies
|
$
|
144,857
|
|
|
$
|
142,417
|
|
|
$
|
124,259
|
|
|
|
$
|
1,455
|
|
Amortization of acquired subscription technologies
|
31,134
|
|
|
28,616
|
|
|
23,258
|
|
|
|
731
|
|
||||
Total amortization of acquired technologies
|
$
|
175,991
|
|
|
$
|
171,033
|
|
|
$
|
147,517
|
|
|
|
$
|
2,186
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||
|
2018
|
|
2017
|
|
2016
|
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands)
|
|
|
|
||||||||||
Advertising expense
|
$
|
38,477
|
|
|
$
|
38,213
|
|
|
$
|
28,655
|
|
|
|
$
|
2,293
|
|
*
|
There were
no
grants of stock options made in the Predecessor period from January 1, 2016 through February 4, 2016.
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||
|
2018
|
|
2017
|
|
2016
|
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands)
|
|
|
|
||||||||||
Impact to income (loss) before income taxes due to stock-based compensation
|
$
|
5,833
|
|
|
$
|
80
|
|
|
$
|
17
|
|
|
|
$
|
87,763
|
|
Income tax benefit related to stock-based compensation
|
1,054
|
|
|
—
|
|
|
—
|
|
|
|
22,981
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
|
|
||||
|
(in thousands)
|
||||||
Demand deposit accounts
|
$
|
265,520
|
|
|
$
|
210,616
|
|
Money market funds
|
117,100
|
|
|
67,100
|
|
||
Total cash and cash equivalents
|
$
|
382,620
|
|
|
$
|
277,716
|
|
|
Total
Fair Value
|
||
|
(in thousands)
|
||
Current assets, including cash acquired of $248.3 million
|
$
|
351,721
|
|
Property and equipment
|
35,255
|
|
|
Other assets
|
12,964
|
|
|
Identifiable intangible assets
|
1,495,400
|
|
|
Goodwill
|
3,212,255
|
|
|
Current liabilities
|
(87,459
|
)
|
|
Deferred tax liabilities
|
(366,454
|
)
|
|
Deferred revenue
|
(31,813
|
)
|
|
Other long-term liabilities
|
(28,993
|
)
|
|
Total consideration
|
$
|
4,592,876
|
|
|
Fair Value
|
|
Weighted-average useful life
|
||
|
(in thousands)
|
|
(in years)
|
||
Developed product technologies
|
$
|
906,200
|
|
|
6
|
Customer relationships
|
450,100
|
|
|
10
|
|
Tradenames - indefinite-lived
|
82,300
|
|
|
—
|
|
In process research and development
|
48,300
|
|
|
—
|
|
Customer backlog
|
6,200
|
|
|
2
|
|
Trademarks
|
2,300
|
|
|
1
|
|
Total identifiable intangible assets
|
$
|
1,495,400
|
|
|
|
|
Total
Fair Value
|
||
|
(in thousands)
|
||
Current assets, including cash acquired
|
$
|
4,821
|
|
Deferred tax asset
|
1,550
|
|
|
Fixed assets
|
1,352
|
|
|
Identifiable intangible assets
|
18,412
|
|
|
Goodwill
|
43,746
|
|
|
Current liabilities
|
(3,331
|
)
|
|
Deferred tax liabilities
|
(666
|
)
|
|
Deferred revenue
|
(2,944
|
)
|
|
Total consideration
|
$
|
62,940
|
|
|
Fair Value
|
|
Weighted-average useful life
|
||
|
(in thousands)
|
|
(in years)
|
||
Developed product technologies
|
$
|
13,317
|
|
|
5
|
Customer relationships
|
4,805
|
|
|
4
|
|
Trademarks
|
290
|
|
|
3
|
|
Total identifiable intangible assets
|
$
|
18,412
|
|
|
|
|
Total
Fair Value
|
||
|
(in thousands)
|
||
Current assets, including cash acquired
|
$
|
25,969
|
|
Property and equipment and other assets
|
5,848
|
|
|
Identifiable intangible assets
|
119,300
|
|
|
Goodwill
|
374,086
|
|
|
Current liabilities
|
(14,785
|
)
|
|
Deferred tax liabilities
|
(8,401
|
)
|
|
Deferred revenue
|
(2,548
|
)
|
|
Total consideration
|
$
|
499,469
|
|
|
Fair Value
|
|
Weighted-average useful life
|
||
|
(in thousands)
|
|
(in years)
|
||
Developed product technologies
|
$
|
31,100
|
|
|
4
|
Customer relationships
|
87,000
|
|
|
5
|
|
Trademarks
|
1,200
|
|
|
1
|
|
Total identifiable intangible assets
|
$
|
119,300
|
|
|
|
|
Year ended
December 31,
|
||
|
2016
|
||
|
|
||
(in thousands)
|
(unaudited)
|
||
Revenue
|
$
|
507,981
|
|
Net loss
|
(353,719
|
)
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization |
|
Net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Developed product technologies
|
$
|
1,006,999
|
|
|
$
|
(494,459
|
)
|
|
$
|
512,540
|
|
|
$
|
1,006,454
|
|
|
$
|
(324,196
|
)
|
|
$
|
682,258
|
|
Customer relationships
|
541,717
|
|
|
(181,902
|
)
|
|
359,815
|
|
|
546,207
|
|
|
(118,930
|
)
|
|
427,277
|
|
||||||
Intellectual property
|
829
|
|
|
(129
|
)
|
|
700
|
|
|
547
|
|
|
(59
|
)
|
|
488
|
|
||||||
Trademarks
|
84,462
|
|
|
(1,256
|
)
|
|
83,206
|
|
|
85,257
|
|
|
(1,075
|
)
|
|
84,182
|
|
||||||
Customer backlog
|
—
|
|
|
—
|
|
|
—
|
|
|
6,200
|
|
|
(5,906
|
)
|
|
294
|
|
||||||
Total intangible assets
|
$
|
1,634,007
|
|
|
$
|
(677,746
|
)
|
|
$
|
956,261
|
|
|
$
|
1,644,665
|
|
|
$
|
(450,166
|
)
|
|
$
|
1,194,499
|
|
|
Estimated Amortization
|
||
|
(in thousands)
|
||
2019
|
$
|
237,461
|
|
2020
|
235,116
|
|
|
2021
|
205,196
|
|
|
2022
|
67,497
|
|
|
2023
|
42,694
|
|
|
Fair Value Measurements at
December 31, 2018 Using
|
|
|
||||||||||||
|
Quoted Prices in
Active Markets for Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands)
|
|
|
||||||||||||
Money market funds
|
$
|
117,100
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
117,100
|
|
|
Fair Value Measurements at
December 31, 2017 Using
|
|
|
||||||||||||
|
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands)
|
|
|
||||||||||||
Money market funds
|
$
|
67,100
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
67,100
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
|
|
||||
|
(in thousands)
|
||||||
Equipment, servers and computers
|
$
|
32,081
|
|
|
$
|
23,790
|
|
Furniture and fixtures
|
7,393
|
|
|
6,760
|
|
||
Software
|
2,475
|
|
|
3,143
|
|
||
Leasehold improvements
|
21,341
|
|
|
20,688
|
|
||
|
$
|
63,290
|
|
|
$
|
54,381
|
|
Less: Accumulated depreciation and amortization
|
(27,426
|
)
|
|
(20,172
|
)
|
||
Property and equipment, net
|
$
|
35,864
|
|
|
$
|
34,209
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
|
|
||||
|
(in thousands)
|
||||||
Payroll-related accruals
|
$
|
31,028
|
|
|
$
|
24,995
|
|
Other accrued expenses and current liabilities
|
21,027
|
|
|
14,598
|
|
||
Total accrued liabilities and other
|
$
|
52,055
|
|
|
$
|
39,593
|
|
|
December 31,
|
|
December 31,
|
||||||||||
|
2018
|
|
2017
|
||||||||||
|
Amount
|
|
Effective Rate
|
|
Amount
|
|
Effective Rate
|
||||||
|
|
|
|
|
|
|
|
||||||
|
(in thousands, except interest rates)
|
||||||||||||
Revolving credit facility
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
First Lien Term Loan (as amended) due Feb 2024
|
1,970,100
|
|
|
5.27
|
%
|
|
1,678,050
|
|
|
5.07
|
%
|
||
Second Lien Floating Rate Notes (as amended) due Feb 2024
|
—
|
|
|
—
|
%
|
|
680,000
|
|
|
10.14
|
%
|
||
Total principal amount
|
1,970,100
|
|
|
|
|
2,358,050
|
|
|
|
||||
Unamortized discount and debt issuance costs
|
(46,128
|
)
|
|
|
|
(95,478
|
)
|
|
|
||||
Total debt
|
1,923,972
|
|
|
|
|
2,262,572
|
|
|
|
||||
Less: Current portion of long-term debt
|
(19,900
|
)
|
|
|
|
(16,950
|
)
|
|
|
||||
Total long-term debt
|
$
|
1,904,072
|
|
|
|
|
$
|
2,245,622
|
|
|
|
•
|
a
$1.99 billion
First Lien Term Loan with a final maturity date of February 5, 2024; and
|
•
|
a
$125.0 million
revolving credit facility (with a letter of credit sub-facility in the amount of
$35.0 million
), or the Revolving Credit Facility, consisting of (i) a
$100.0 million
multicurrency tranche and (ii) a
$25.0 million
tranche available only in U.S. dollars, of which
$7.5 million
has a final maturity date of February 5, 2021 and
$17.5 million
has a final maturity date of February 5, 2022.
|
|
As of December 31, 2018
|
||
|
|
||
|
(in thousands)
|
||
2019
|
$
|
19,900
|
|
2020
|
19,900
|
|
|
2021
|
19,900
|
|
|
2022
|
19,900
|
|
|
2023
|
19,900
|
|
|
Thereafter
|
1,870,600
|
|
|
Total minimum principal payments
|
$
|
1,970,100
|
|
|
Number of
Shares
Outstanding
|
|
Weighted-
Average
Exercise
Price
|
|
Aggregate
Intrinsic
Value
(in thousands)
|
|
Weighted-
Average
Remaining
Contractual
Term
(in years)
|
|||||
Outstanding balances at December 31, 2017
|
2,156,550
|
|
|
$
|
0.45
|
|
|
|
|
|
||
Options granted
|
1,327,475
|
|
|
3.40
|
|
|
|
|
|
|||
Options exercised
|
(46,100
|
)
|
|
0.36
|
|
|
|
|
|
|||
Options forfeited
|
(288,075
|
)
|
|
1.38
|
|
|
|
|
|
|||
Options expired
|
(35,050
|
)
|
|
0.36
|
|
|
|
|
|
|||
Outstanding balances at December 31, 2018
|
3,114,800
|
|
|
$
|
1.62
|
|
|
|
|
|
||
Options exercisable at December 31, 2018
|
659,950
|
|
|
$
|
0.40
|
|
|
$
|
8,865
|
|
|
7.92
|
Options vested and expected to vest at December 31, 2018
|
3,114,800
|
|
|
$
|
1.62
|
|
|
$
|
38,022
|
|
|
8.59
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
|
Period From February 5 Through
December 31, |
||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Weighted-average grant date fair value per share of options granted during the period
|
$
|
1.98
|
|
|
$
|
0.28
|
|
|
$
|
0.12
|
|
Aggregate intrinsic value of options exercised during the period
|
407
|
|
|
2
|
|
|
—
|
|
|||
Aggregate fair value of options vested during the period
|
109
|
|
|
35
|
|
|
—
|
|
|
Number of
Shares
Outstanding
|
|
Unvested balances at December 31, 2017
|
5,789,401
|
|
Restricted stock granted and issued
|
820,500
|
|
Restricted stock vested
|
(1,407,834
|
)
|
Restricted stock repurchased - unvested shares
|
(216,633
|
)
|
Unvested balances at December 31, 2018
|
4,985,434
|
|
|
Number of
Units
Outstanding
|
|
Weighted-Average Grant Date Fair Value Per Share
|
|
Aggregate Intrinsic Value (in thousands)
|
|
Weighted-Average Remaining Contractual Term
(in years)
|
|||||
Unvested balances at December 31, 2017
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Restricted stock units granted
|
6,283,232
|
|
|
14.21
|
|
|
|
|
|
|||
Restricted stock units vested
|
—
|
|
|
—
|
|
|
|
|
|
|||
Restricted stock units forfeited
|
(5,766
|
)
|
|
14.21
|
|
|
|
|
|
|||
Unvested balances at December 31, 2018
|
6,277,466
|
|
|
$
|
14.21
|
|
|
$
|
86,817
|
|
|
3.81
|
|
Number of
Units
Outstanding
|
|
Weighted-Average Grant Date Fair Value Per Share
|
|
Aggregate Intrinsic Value (in thousands)
|
|
Weighted-Average Remaining Contractual Term
(in years)
|
|||||
Unvested balances at December 31, 2017
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Performance stock units granted
|
970,922
|
|
|
14.21
|
|
|
|
|
|
|||
Performance stock units vested
|
—
|
|
|
—
|
|
|
|
|
|
|||
Performance stock units forfeited
|
—
|
|
|
—
|
|
|
|
|
|
|||
Unvested balances at December 31, 2018
|
970,922
|
|
|
$
|
14.21
|
|
|
$
|
13,428
|
|
|
2.16
|
|
Period From January 1 Through
February 4, 2016
|
||
Weighted-average grant date fair value per share of options granted during the period
|
$
|
—
|
|
Aggregate intrinsic value of options exercised during the period
|
1,584
|
|
|
Aggregate fair value of options vested during the period
|
3,702
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||
|
2018
|
|
2017
|
|
2016
|
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands)
|
|
|
|
||||||||||
Basic net earnings (loss) per share
|
|
|
|
|
|
|
|
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(102,066
|
)
|
|
$
|
(83,866
|
)
|
|
$
|
(262,594
|
)
|
|
|
$
|
(71,811
|
)
|
Accretion of dividends on Class A common stock
|
(231,549
|
)
|
|
(268,007
|
)
|
|
(217,904
|
)
|
|
|
—
|
|
||||
Gain on conversion of Class A common stock
|
711,247
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||
Earnings allocated to unvested restricted stock
|
(12,997
|
)
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||
Net income (loss) available to common stockholders
|
$
|
364,635
|
|
|
$
|
(351,873
|
)
|
|
$
|
(480,498
|
)
|
|
|
$
|
(71,811
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding used in computing basic net earnings (loss) per share
|
140,301
|
|
|
100,433
|
|
|
96,465
|
|
|
|
71,989
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Diluted net earnings (loss) per share
|
|
|
|
|
|
|
|
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) available to common stockholders
|
$
|
364,635
|
|
|
$
|
(351,873
|
)
|
|
$
|
(480,498
|
)
|
|
|
$
|
(71,811
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used in computing basic net earnings (loss) per share
|
140,301
|
|
|
100,433
|
|
|
96,465
|
|
|
|
71,989
|
|
||||
Add stock-based incentive stock awards
|
2,240
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||
Weighted-average shares used in computing diluted net earnings (loss) per share
|
142,541
|
|
|
100,433
|
|
|
96,465
|
|
|
|
71,989
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
Year Ended December 31,
|
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||
|
2018
|
|
2017
|
|
2016
|
|
|
2016
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
|
(in thousands)
|
|
|
|
||||||
Stock options to purchase common stock
|
524
|
|
|
1,635
|
|
|
493
|
|
|
|
659
|
|
Performance-based stock options to purchase common stock
|
119
|
|
|
105
|
|
|
5
|
|
|
|
—
|
|
Non-vested restricted stock incentive awards
|
3,442
|
|
|
3,565
|
|
|
1,524
|
|
|
|
—
|
|
Performance-based non-vested restricted stock incentive awards
|
1,559
|
|
|
2,527
|
|
|
965
|
|
|
|
—
|
|
Restricted stock units
|
1,139
|
|
|
—
|
|
|
—
|
|
|
|
16
|
|
Performance stock units
|
175
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
Total anti-dilutive shares
|
6,958
|
|
|
7,832
|
|
|
2,987
|
|
|
|
675
|
|
|
Year Ended December 31,
|
|
Period From February 5 Through
December 31, |
||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
||||||
|
(in thousands)
|
||||||||||
Silver Lake Management
|
$
|
4,063
|
|
|
$
|
5,000
|
|
|
$
|
4,519
|
|
Thoma Bravo
|
3,309
|
|
|
4,073
|
|
|
3,681
|
|
|||
TB Partners
|
753
|
|
|
927
|
|
|
838
|
|
|||
|
$
|
8,125
|
|
|
$
|
10,000
|
|
|
$
|
9,038
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||
|
2018
|
|
2017
|
|
2016
|
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands)
|
|
|
|
||||||||||
U.S.
|
$
|
(116,459
|
)
|
|
$
|
(13,857
|
)
|
|
$
|
(255,846
|
)
|
|
|
$
|
(107,749
|
)
|
International
|
(5,251
|
)
|
|
(47,611
|
)
|
|
(103,399
|
)
|
|
|
(17,218
|
)
|
||||
Loss before income taxes
|
$
|
(121,710
|
)
|
|
$
|
(61,468
|
)
|
|
$
|
(359,245
|
)
|
|
|
$
|
(124,967
|
)
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||
|
2018
|
|
2017
|
|
2016
|
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands)
|
|
|
|
||||||||||
Current:
|
|
|
|
|
|
|
|
|
||||||||
Federal
|
$
|
(10,906
|
)
|
|
$
|
118,909
|
|
|
$
|
9,831
|
|
|
|
$
|
(33,958
|
)
|
State
|
2,191
|
|
|
455
|
|
|
579
|
|
|
|
—
|
|
||||
International
|
10,759
|
|
|
1,009
|
|
|
605
|
|
|
|
(1,343
|
)
|
||||
|
2,044
|
|
|
120,373
|
|
|
11,015
|
|
|
|
(35,301
|
)
|
||||
Deferred:
|
|
|
|
|
|
|
|
|
||||||||
Federal
|
(14,978
|
)
|
|
(90,498
|
)
|
|
(92,602
|
)
|
|
|
(11,155
|
)
|
||||
State
|
670
|
|
|
79
|
|
|
(967
|
)
|
|
|
(2,771
|
)
|
||||
International
|
(7,380
|
)
|
|
(7,556
|
)
|
|
(14,097
|
)
|
|
|
(3,929
|
)
|
||||
|
(21,688
|
)
|
|
(97,975
|
)
|
|
(107,666
|
)
|
|
|
(17,855
|
)
|
||||
|
$
|
(19,644
|
)
|
|
$
|
22,398
|
|
|
$
|
(96,651
|
)
|
|
|
$
|
(53,156
|
)
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||
|
2018
|
|
2017
|
|
2016
|
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands)
|
|
|
|
||||||||||
Expense (benefit) derived by applying the federal statutory income tax rate to income (loss) before income taxes
|
$
|
(25,558
|
)
|
|
$
|
(21,514
|
)
|
|
$
|
(125,736
|
)
|
|
|
$
|
(43,739
|
)
|
State taxes, net of federal benefit
|
2,435
|
|
|
297
|
|
|
(241
|
)
|
|
|
(1,801
|
)
|
||||
Permanent items
|
224
|
|
|
(613
|
)
|
|
1,819
|
|
|
|
3,145
|
|
||||
Impact of the Tax Act
|
|
|
|
|
|
|
|
|
||||||||
One-time transition tax
|
140
|
|
|
130,802
|
|
|
—
|
|
|
|
—
|
|
||||
Rate change
|
—
|
|
|
(91,545
|
)
|
|
—
|
|
|
|
—
|
|
||||
Domestic production activity benefit
|
—
|
|
|
(3,794
|
)
|
|
—
|
|
|
|
(308
|
)
|
||||
Research and experimentation tax credits
|
(1,955
|
)
|
|
(270
|
)
|
|
329
|
|
|
|
(2,199
|
)
|
||||
Withholding tax
|
2,486
|
|
|
—
|
|
|
3,951
|
|
|
|
—
|
|
||||
Net operating loss carryback
|
—
|
|
|
—
|
|
|
—
|
|
|
|
3,872
|
|
||||
Stock-based compensation
|
238
|
|
|
—
|
|
|
—
|
|
|
|
(14,076
|
)
|
||||
Effect of foreign operations
|
2,346
|
|
|
9,035
|
|
|
23,227
|
|
|
|
1,950
|
|
||||
|
$
|
(19,644
|
)
|
|
$
|
22,398
|
|
|
$
|
(96,651
|
)
|
|
|
$
|
(53,156
|
)
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
|
|
||||
|
(in thousands)
|
||||||
Deferred tax assets:
|
|
|
|
||||
Allowance for doubtful accounts
|
$
|
436
|
|
|
$
|
201
|
|
Accrued expenses
|
3,133
|
|
|
4,323
|
|
||
Net operating loss
|
26,652
|
|
|
47,631
|
|
||
Research and experimentation credits
|
1,689
|
|
|
2,177
|
|
||
Stock-based compensation
|
1,090
|
|
|
—
|
|
||
Interest
|
1,528
|
|
|
—
|
|
||
Deferred revenue
|
1,164
|
|
|
—
|
|
||
Other credits
|
790
|
|
|
2,920
|
|
||
Total deferred tax assets
|
36,482
|
|
|
57,252
|
|
||
Valuation allowance
|
(1,775
|
)
|
|
(1,811
|
)
|
||
Deferred tax assets, net of valuation allowance
|
34,707
|
|
|
55,441
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Property and equipment
|
9,107
|
|
|
11,891
|
|
||
Prepaid expenses
|
1,805
|
|
|
1,230
|
|
||
Deferred revenue
|
—
|
|
|
101
|
|
||
Debt costs
|
9,118
|
|
|
14,917
|
|
||
Foreign royalty
|
2,017
|
|
|
714
|
|
||
Intangibles
|
152,931
|
|
|
189,686
|
|
||
Total deferred tax liabilities
|
174,978
|
|
|
218,539
|
|
||
Net deferred tax liability
|
$
|
140,271
|
|
|
$
|
163,098
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||
|
2018
|
|
2017
|
|
2016
|
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands)
|
|
|
|
||||||||||
Balance, beginning of year
|
$
|
19,504
|
|
|
$
|
22,888
|
|
|
$
|
17,631
|
|
|
|
$
|
16,370
|
|
Increases for tax positions related to the current year
|
59
|
|
|
502
|
|
|
4,421
|
|
|
|
1,335
|
|
||||
Decreases for tax positions related to the current year
|
—
|
|
|
(715
|
)
|
|
—
|
|
|
|
—
|
|
||||
Increases for tax positions related to prior years
|
146
|
|
|
—
|
|
|
836
|
|
|
|
230
|
|
||||
Decreases for tax positions related to prior years
|
—
|
|
|
(3,171
|
)
|
|
—
|
|
|
|
(304
|
)
|
||||
Reductions due to lapsed statute of limitations
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||
Balance, end of year
|
$
|
19,709
|
|
|
$
|
19,504
|
|
|
$
|
22,888
|
|
|
|
$
|
17,631
|
|
|
Minimum Lease
Payments
|
||
|
(in thousands)
|
||
2019
|
$
|
15,287
|
|
2020
|
15,105
|
|
|
2021
|
14,138
|
|
|
2022
|
13,412
|
|
|
2023
|
12,340
|
|
|
Thereafter
|
53,734
|
|
|
Total minimum lease payments
|
$
|
124,016
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||
|
2018
|
|
2017
|
|
2016
|
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands)
|
|
|
|
||||||||||
Rent expense
|
$
|
18,249
|
|
|
$
|
16,298
|
|
|
$
|
12,688
|
|
|
|
$
|
1,088
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
Year Ended December 31,
|
|
Period From February 5 Through
December 31, |
|
|
Period From January 1 Through
February 4, |
||||||||||
|
2018
|
|
2017
|
|
2016
|
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(in thousands)
|
|
|
|
||||||||||
Revenue
|
|
|
|
|
|
|
|
|
||||||||
United States, country of domicile
|
$
|
505,304
|
|
|
$
|
459,701
|
|
|
$
|
268,426
|
|
|
|
$
|
31,797
|
|
International
|
327,785
|
|
|
268,316
|
|
|
153,668
|
|
|
|
15,530
|
|
||||
Total revenue
|
$
|
833,089
|
|
|
$
|
728,017
|
|
|
$
|
422,094
|
|
|
|
$
|
47,327
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
|
|
||||
|
(in thousands)
|
||||||
Long-lived assets, net
|
|
|
|
||||
United States, country of domicile
|
$
|
22,953
|
|
|
$
|
20,986
|
|
Switzerland
|
4,878
|
|
|
3,941
|
|
||
All other international
|
8,033
|
|
|
9,282
|
|
||
Total long-lived assets, net
|
$
|
35,864
|
|
|
$
|
34,209
|
|
|
Three months ended,
|
||||||||||||||||||||||||||||||
|
Dec 31,
2018 |
|
Sep 30,
2018 |
|
June 30, 2018
|
|
Mar 31, 2018
|
|
Dec 31, 2017
|
|
Sep 30, 2017
|
|
June 30, 2017
|
|
Mar 31, 2017
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||
|
(unaudited)
|
||||||||||||||||||||||||||||||
Revenue
|
$
|
221,181
|
|
|
$
|
213,277
|
|
|
$
|
201,718
|
|
|
$
|
196,913
|
|
|
$
|
198,339
|
|
|
$
|
189,112
|
|
|
$
|
175,441
|
|
|
$
|
165,125
|
|
Gross profit
|
159,184
|
|
|
151,420
|
|
|
140,043
|
|
|
135,707
|
|
|
139,268
|
|
|
130,409
|
|
|
117,932
|
|
|
108,677
|
|
||||||||
Loss before income taxes
|
(14,342
|
)
|
|
(524
|
)
|
|
(38,577
|
)
|
|
(68,267
|
)
|
|
(4,894
|
)
|
|
(1,418
|
)
|
|
(2,375
|
)
|
|
(52,781
|
)
|
||||||||
Net income (loss)
|
(14,743
|
)
|
|
(398
|
)
|
|
(27,015
|
)
|
|
(59,910
|
)
|
|
(39,761
|
)
|
|
1,637
|
|
|
(2,004
|
)
|
|
(43,738
|
)
|
||||||||
Net income (loss) available to common stockholders
|
668,426
|
|
|
(75,006
|
)
|
|
(99,193
|
)
|
|
(129,745
|
)
|
|
(109,563
|
)
|
|
(66,627
|
)
|
|
(68,043
|
)
|
|
(107,640
|
)
|
||||||||
Basic income (loss) per share
|
$
|
2.63
|
|
|
$
|
(0.73
|
)
|
|
$
|
(0.97
|
)
|
|
$
|
(1.28
|
)
|
|
$
|
(1.09
|
)
|
|
$
|
(0.66
|
)
|
|
$
|
(0.68
|
)
|
|
$
|
(1.08
|
)
|
Diluted income (loss) per share
|
$
|
2.60
|
|
|
$
|
(0.73
|
)
|
|
$
|
(0.97
|
)
|
|
$
|
(1.28
|
)
|
|
$
|
(1.09
|
)
|
|
$
|
(0.66
|
)
|
|
$
|
(0.68
|
)
|
|
$
|
(1.08
|
)
|
Shares used in computation of basic income (loss) per share
|
254,209
|
|
|
102,078
|
|
|
102,018
|
|
|
101,644
|
|
|
100,737
|
|
|
100,759
|
|
|
100,404
|
|
|
99,817
|
|
||||||||
Shares used in computation of diluted income (loss) per share
|
256,711
|
|
|
102,078
|
|
|
102,018
|
|
|
101,644
|
|
|
100,737
|
|
|
100,759
|
|
|
100,404
|
|
|
99,817
|
|
|
Beginning Balance
|
|
Additions
(Charge to Expense)
|
|
Deductions
(Write-offs, net of Recoveries)
|
|
Ending Balance
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands)
|
||||||||||||||
Allowance for doubtful accounts, customers and other:
|
|
|
|
|
|
|
|
||||||||
Predecessor period ended February 4, 2016
|
$
|
649
|
|
|
$
|
64
|
|
|
$
|
45
|
|
|
$
|
668
|
|
Successor period ended December 31, 2016
|
—
|
|
|
1,713
|
|
|
711
|
|
|
1,002
|
|
||||
Year ended December 31, 2017
|
1,002
|
|
|
2,489
|
|
|
1,426
|
|
|
2,065
|
|
||||
Year ended December 31, 2018
|
2,065
|
|
|
2,498
|
|
|
1,367
|
|
|
3,196
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Tax valuation allowances:
|
|
|
|
|
|
|
|
||||||||
Predecessor period ended February 4, 2016
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Successor period ended December 31, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Year ended December 31, 2017
|
—
|
|
|
1,811
|
|
|
—
|
|
|
1,811
|
|
||||
Year ended December 31, 2018
|
1,811
|
|
|
—
|
|
|
36
|
|
|
1,775
|
|
|
|
|
Page
|
1.
|
|
Establishment, Purpose and Term of Plan
|
1
|
|
1.1
|
Establishment
|
1
|
|
1.2
|
Purpose
|
1
|
|
1.3
|
Term of Plan
|
1
|
2.
|
|
Definitions and Construction
|
1
|
|
2.1
|
Definitions
|
1
|
|
2.2
|
Construction
|
6
|
3.
|
|
Administration
|
6
|
|
3.1
|
Administration by the Committee
|
6
|
|
3.2
|
Authority of Officers
|
6
|
|
3.3
|
Power to Adopt Sub-Plans
|
7
|
|
3.4
|
Power to Vary Terms with Respect to Non-U.S. Employees
|
7
|
|
3.5
|
Power to Establish Separate Offerings with Varying Terms
|
7
|
|
3.6
|
Policies and Procedures Established by the Company
|
7
|
|
3.7
|
Indemnification
|
8
|
4.
|
|
Shares Subject to Plan
|
8
|
|
4.1
|
Maximum Number of Shares Issuable
|
8
|
|
4.2
|
Annual Increase in Maximum Number of Shares Issuable
|
8
|
|
4.3
|
Adjustments for Changes in Capital Structure
|
8
|
5.
|
|
Eligibility
|
9
|
|
5.1
|
Employees Eligible to Participate
|
9
|
|
5.2
|
Exclusion of Certain Stockholders
|
10
|
|
5.3
|
Determination by Company
|
10
|
6.
|
|
Offerings
|
10
|
|
6.1
|
Offering Periods
|
10
|
|
6.2
|
Non-United States Offerings
|
11
|
7.
|
|
Participation in the Plan
|
11
|
|
7.1
|
Initial Participation
|
11
|
|
7.2
|
Continued Participation
|
11
|
8.
|
|
Right to Purchase Shares
|
12
|
|
8.1
|
Grant of Purchase Right
|
12
|
|
8.2
|
Calendar Year Purchase Limitation
|
12
|
9.
|
|
Purchase Price
|
12
|
10.
|
|
Accumulation of Purchase Price through Payroll Deduction
|
13
|
|
10.1
|
Amount of Payroll Deductions
|
13
|
|
10.2
|
Commencement of Payroll Deductions
|
13
|
|
10.3
|
Election to Decrease or Stop Payroll Deductions
|
13
|
|
10.4
|
Election to Increase Payroll Deductions for Subsequent Offering
|
13
|
|
10.5
|
Administrative Suspension of Payroll Deductions
|
13
|
|
10.6
|
Participant Accounts
|
14
|
|
10.7
|
No Interest Paid
|
14
|
|
10.8
|
Voluntary Withdrawal from Plan Account
|
14
|
|
|
|
Page
|
11.
|
|
Purchase of Shares
|
14
|
|
11.1
|
Exercise of Purchase Right
|
14
|
|
11.2
|
Pro Rata Allocation of Shares
|
15
|
|
11.3
|
Delivery of Title to Shares
|
15
|
|
11.4
|
Return of Plan Account Balance
|
16
|
|
11.5
|
Tax Withholding
|
16
|
|
11.6
|
Expiration of Purchase Right
|
16
|
|
11.7
|
Provision of Reports and Stockholder Information to Participants
|
16
|
12.
|
|
Withdrawal from Plan
|
16
|
|
12.1
|
Voluntary Withdrawal from the Plan
|
16
|
|
12.2
|
Return of Plan Account Balance
|
17
|
13.
|
|
Termination of Employment or Eligibility
|
17
|
14.
|
|
Effect of Change in Control on Purchase Rights
|
17
|
15.
|
|
Nontransferability of Purchase Rights
|
18
|
16.
|
|
Compliance with Applicable Law
|
18
|
17.
|
|
Rights as a Stockholder and Employee
|
18
|
18.
|
|
Notification of Disposition of Shares
|
19
|
19.
|
|
Legends
|
19
|
20.
|
|
Designation of Beneficiary
|
19
|
|
20.1
|
Designation Procedure
|
19
|
|
20.2
|
Absence of Beneficiary Designation
|
20
|
21.
|
|
Notices
|
20
|
22.
|
|
Amendment or Termination of the Plan
|
20
|
23.
|
|
No Representations with Respect to Tax Qualification
|
20
|
24.
|
|
Choice of Law
|
21
|
|
|
|
|
|
/s/ JASON W. BLISS
|
|
Jason W. Bliss, Secretary
|
1.
|
PURPOSE OF THE SUB-PLAN.
|
2.
|
TERMS OF THE SUB-PLAN.
|
1.
|
I have reviewed this annual report on Form 10-K of SolarWinds Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
|
c.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 25, 2019
|
By:
|
/s/ Kevin B. Thompson
|
|
|
|
Kevin B. Thompson
|
|
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this annual report on Form 10-K of SolarWinds Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
|
c.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 25, 2019
|
By:
|
/s/ J. Barton Kalsu
|
|
|
|
J. Barton Kalsu
|
|
|
|
Chief Financial Officer
(Principal Financial Officer)
|
Date:
|
February 25, 2019
|
By:
|
/s/ Kevin B. Thompson
|
|
|
|
Kevin B. Thompson
|
|
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
Date:
|
February 25, 2019
|
By:
|
/s/ J. Barton Kalsu
|
|
|
|
J. Barton Kalsu
|
|
|
|
Chief Financial Officer
(Principal Financial Officer)
|