SolarWinds IPO Bucks Economic Trends

network management

SolarWinds, an Austin, Texas-based software company specializing in network performance and operations management, moved to public status Wednesday, marking it as the first IPO of a venture-backed company in the last nine months, according to a MarketWatch report.

"The company is ready," said Kenny Van Zant, SolarWinds senior vice president and chief product strategist. "We felt like the market was open to and receptive to companies that have a good growth story."

The company's more than 12 million shares began publicly trading at $12.50 per share under the ticker symbol of SWI. Of the 12.1 million total shares sold, 9 million come from the company, while an additional 3.1 million shares will be sold by existing shareholders.

Van Zant said that SolarWinds, founded in 1998, established itself as a strategic company and met adequate profitability criteria to generate interest on Wall Street. The company generated $93.1 million in revenue and $42 million in operating income in 2008, growing 51 percent year over year from 2007. Company shares jumped more than 15 percent Wednesday, according to MarketWatch.

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"People are looking for companies that are mature," Van Zant said. "We've been profitable since our inception. And we've shown the ability to grow and we certainly believe that we have a unique market opportunity."

Van Zant noted that the company's wide customer base and horizontal go-to-market strategy were some of its differentiating features that helped, in part, spur its success in the tough economic climate. The company caters to a broad swath of the market, ranging from SMB to enterprise, and touts more than 80,000 customers worldwide, which includes 400 of the Fortune 500.

Additionally, executives said that SolarWinds' network management software touts ease of use, high quality and affordability, and the software has allowed the company to directly target IT administrators by enabling them to make purchasing decisions without pandering to C-level executives and layers of upper management.

"We sell [to companies] from 50 to 50,000 employees and everyone in between. We're focusing on the IT professionals themselves. Those guys exist in companies of all sizes," Van Zant said. "We focus on putting the IT user himself in control of price point. They can make the purchase with their own buying authority."

Van Zant added that the recession has "shone a light on places that you can get more efficiency in managing your network," which has ultimately created more opportunities for SolarWinds as customers sought to cut costs and get more bang for their buck, he said.

Van Zant said he hoped that the company's IPO would generate visibility for both reseller partners and their end users, which would subsequently provide more opportunities for the channel.

Van Zant said that despite the precarious economic climate, he didn't encounter much resistance from Wall Street or encouragement to postpone the IPO until an economic recovery was in sight.

"You don't try to time these things," Van Zant said. "It doesn't make sense to try to time it. At the end of the day, you build your business."