SolarWinds Corporation

session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Team Karaja, Group Vice President of Finance. Please go.

Thank you. Good morning, everyone, and welcome to the SolarWinds First Quarter 2024 Earnings Call. Sudhakar Ramakrishna, our president and CEO, and Bart Kaltu, our CFO, are with me today. Following our prepared remarks, we will have a question and answer session. This call is being simultaneously webcast on our investor relations website at investors.solarwinds.com. You can also find our earnings press release and the summary slide deck, which is intended to supplement our prepared remarks during today's call. Please remember that certain statements made during this call are forward-looking statements, including those concerning our financial outlook, our market opportunities, our expectations regarding customer retention, our continued evolution to a subscription-first mentality, and the timing of the phases of such evolution, our expectations regarding our partner ecosystem, the SEC enforcement action, the impact of the global economic and geopolitical environment on our business, and our gross level of debt. These statements are based on currently available information and assumptions, and we undertake no duty to update this information except as required by law. These statements are subject to a number of risks and uncertainties, including the numerous risks and uncertainties highlighted in today's earnings release and our filings with the SEC. Copies are available from the SEC on our investor relations website. We will discuss various non-GAAP financial measures on today's call. Others otherwise specified when we refer to financial measures, we will be referring to non-GAAP financial measures. A reconciliation of the differences between GAAP and non-GAAP financial measures and the definition of other financial metrics discussed on today's call are available in our earnings press release and summary slide deck on the Investor Relations page of our website. Finally, we note that the financial results discussed on today's call and in our earnings release are preliminary and pending final review by us and our external auditors and will only be final once we file our quarterly report on form thank you. With that, I will now turn the call over to Sunakar.

Thank you, Tim, and good morning, everyone. Thank you for joining us today. As always, I'd like to thank our employees, customers, partners, and shareholders for their ongoing commitment to SolarWinds. I'm pleased to report that we delivered a strong start to the year once again exceeding our guidance across our key metrics and demonstrating the compelling value of our platform solutions and the strength of our business model. In particular, our ongoing evolution from a provider of monitoring tools to a comprehensive full-stack provider of observability, database monitoring, and service management solutions across hybrid and multi-cloud environments is increasingly having a positive impact on our ability both to support customers in their business transformations and to achieve our strategic and financial objectives. I'm pleased with the strong execution of our teams, resulting in sustained ARR growth and the strongest quarterly adjusted EBITDA margin in over three years. Now, turning to business highlights from this quarter. In Q1 2024, we saw total revenue of $193 million above the high end of the range we provided and representing year-over-year growth of 4%. Our total ARR grew 7% in Q1 of 2024. We continue to experience strong adoption of our hybrid cloud observability solutions and expect to exceed $100 million in total ARR for these solutions in the second quarter. This significant milestone is a result of the ongoing conversion of our maintenance base with a healthy conversion factor, as well as the acquisition of new customers. We believe that tools consolidation, cloud modernization, and simplicity are the key driving factors, and there continues to be a significant incremental opportunity ahead of us. With the ongoing success of our subscription first strategy in the first quarter, we delivered subscription growth of 26% and subscription ARR growth of 36%. We delivered first quarter adjusted EBITDA of $92 million, above the high end of the range we provided, and representing growth of 19% year-over-year an adjusted EBITDA margin of 48% up 6 percentage points year-over-year. And as I mentioned earlier, this represents the highest quarterly level in over three years. Our first quarter in-quarter maintenance renewal rate was 98%, and our trailing 12-month maintenance renewal rate is at 97%, an increase from 96% as of the end of the fourth quarter. And we delivered first quarter total ARR growth of 7% year over year with continued execution of our subscription first strategy that's rooted in delivering the best time to value, time to detect, time to remediate issues for customers in their multi-cloud environment. On April 2nd, we celebrated our 25th anniversary as a company. And I want to take a moment to reflect on what we have accomplished and what it means for our future. SolarWinds was founded in 1999 by a network engineer with a goal of building tools designed to simplify the lives of IT professionals. Through our team's focused execution over the years, we now have the privilege of serving over 300,000 customers around the world. Harkening back to our founding, our purpose is to enrich the lives of the people we serve, including our employees, customers, partners, and shareholders. This purpose continues to guide us as we help customers accelerate their business transformations via simple, powerful, and secure solutions. We've evolved from being a provider of monitoring tools to a provider of powerful, full-stack observability, database performance monitoring, and service management solutions. We believe our comprehensive platform enables our customers to consolidate tools, reduce the complexities they face, lower costs, and improve their productivity. We provide our customers with the flexibility to move at their own pace in their digital transformation journeys by offering a robust set of hybrid capabilities in addition to cloud native ones. As I look to our future, I'm confident in our team's ability to identify new opportunities, prioritize our investments, execute with discipline, continue serving the emerging needs of our customers, and delivering strong financial results. I will now share a few key product and solution updates we believe will better serve our customers and aid us in increasing our relevance to them. We expanded our observability offerings already rich support of devices, containers, SD-WAN, and cloud types with enhanced support for Azure, Palo Alto, ServiceNow, Aruba, and others. These enhancements further improve customer capabilities to consolidate their tools achieve hybrid visibility, and create node and lifetime value expansion opportunities for us. We continue to enhance our common AI services framework across our observability and service management solutions. These services are designed to reduce alert fatigue and help our customers manage the complexity of their environments. We believe we have the broadest platform support in database monitoring. We added significant performance enhancements for PostgreSQL and remain very committed to open source database technology. Finally, consistent with our Secure by Design initiatives and commitment, we are proud to have announced last month that we are the first software provider to publish a self-attestation in alignment with a new cybersecurity and infrastructure security agency secure software development framework. We believe that these initiatives further the public-private partnerships that we have been fostering. On the go-to-market fund, we have made significant progress aligning our motions with our subscription-first strategy, including investing in our partner program, to increase our reach efficiently and cost-effectively. Our recent Transform Partner Summit further amplify the opportunity we can create by working with and through our partners. Our partners, including distributors, resellers, global system integrators, and cloud service providers, continue to contribute to our success. These and other go-to-market efforts continue to build on our world-class inside sales motion, complemented by our simple, powerful, and secure solution. As I turn the call over to Bart, I will reiterate my optimism that we will continue to accelerate the gains that are a direct result of our transformation efforts across all aspects of the business over the past three years. Specifically, we believe the ongoing uptake of our observability solutions along with our database and service management solutions will continue to support and sustain ARR growth while we invest judiciously in the future, resulting in continued adjusted EBITDA growth and margin expansion. I will now ask Bart to expand on our financial performance and provide our second quarter and full year 2024 outlook. Bob?