SolarWinds CEO: 10 MSP Trends In Q1 2020, And What’s Ahead
SolarWinds CEO Kevin Thompson remains upbeat about the MSP (managed IT services provider) software market, but concedes there could be some challenges ahead. Indeed, Thompson provided some key MSP-focused commentary during the IT management software company’s April 30 earnings call with Wall Street analysts.
Here are 10 takeaways from the SolarWinds earnings call:
1. Big Q1 Priority – Infrastructure: During Q1 of 2020, corporate IT organizations and MSPs shifted their focus from application rollouts toward activating infrastructure that can securely handle a massive increase in remote traffic, he asserted.
2. Retaining MSPs: SolarWinds MSP had a 108% net retention rate in Q1, a sign that MSPs stuck with the software company and increased their overall spend with the company.
3. Growth Goal: The company has not disclosed how large the SolarWinds MSP business is. However, the company is striving to grow its MSP software business 20 percent this year. Admittedly, the company expects to see “some negative impact” in the current economic climate. But the MSP software business continues to perform well.
4. Some Challenges Ahead: As SolarWinds looks at the rest of the year, “we’re taking a little bit of a cautious view and assuming that net retention rate will come down. It’s not based on necessarily on trends we’ve seen yet. It’s based on some level of caution around the group of customers that our MSP business serves.”
5. SolarWinds Service Desk: That product, based on the Samanage acquisition, remains targeted at midmarket corporate IT service management (ITSM) vs. ServiceNow. There are no near-term sales efforts to promote SolarWinds Service Desk as a PSA (professional services automation)-type solution for MSPs. “Today, most of the success we see with that product line is an organization of around kind of 500 employees to 1,000 to 1,500 employees. When you get above 1,500 employees, will our product work? Yes, it works. Does it have capabilities that are valuable? It does. But there are some capabilities that doesn’t have yet,” Thompson allowed.
6. End-points Under Management: SolarWinds saw an increase in the number of devices that MSPs were managing in March 2020. “We saw that kind of settle out in April,” Thompson added. “But we’re not seeing a decrease in the number of devices that our MSP customers are managing.”
7. On MSP Support: “We also have increased the level of investment we have in customer success managers in our MSP business. By doing that, we believe we will be able to build stronger relationships with our MSPs, which would result in higher both growth and net retention.”
8. On potential MSP exposure to small businesses that could close: “When you think about our MSPs and their exposure to SMB customers, remember that our MSPs are not serving the mom and pop grocery store that’s got one location. Our MSPs serve the SMB that has four or five little smaller grocery stores or five or six pawnshops. And those businesses will be the ones that survive as we move through this environment.”
9. Overall Q1 Revenue: $247.0 million, up 14.4% growth on a reported basis.
10. Overall Q1 Net Income: $415,000.