SolarWinds Inc (SWI) hit a record level of recurring revenue in Q3, and what is driving the high growth is an increase in customer retention rates, a unique pricing model and a new subscription revenue stream from the company’s acquisition of N-able, says Kevin Thompson, President and CEO of SolarWinds Inc.
“We’ve seen a couple of things over the last 24 months that are really driving that very high growth in recurring revenues. First, we’ve always had very high customer retention rate, so once you’re a customer of ours, you generally stay a customer for very long time, and you continue to pay us maintenance revenue every year because we deliver a lot of value to you for that maintenance revenue. In general, we’re going to release two new versions of our products every 12 months, and your maintenance contract is for 12 months, so unlike a lot of companies that have a new release every two or three years, we’re going to put new technology in your hands a couple of times every 12 months while you’re under maintenance with us,” Thompson said.
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Thompson also points to the company’s unique pricing and packaging model, which is focused on the long-term value of a customer, as another area that is driving the growth in recurring revenue. Additionally, with SWI‘s acquisition of N-able, they are also seeing revenues from a monthly subscription service.
“We acquired a company called N-able back about five months ago now, and they sell a set of technologies through MSP channel to a bunch of very small businesses around the world that have anywhere between 15 employees and maybe a couple hundred employees, and they sell all in a subscription model. So that technology is delivered in a fast way from the cloud. Some of that technology is deployed on premise, but it’s all sold in a monthly subscription, so when you combine increasing customer retention rate with the subscription revenue model we added to the business, we now have 61% of our total revenue, which is recurring, which is really unusual for a license model-based software company,” Thompson said.
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