SolarWinds MSP's annual recurring revenue (ARR) stream is expected to surpass $225 million by the end of 2018, according to SolarWinds CEO Kevin Thompson. The MSP software business is one slice of the larger SolarWinds IT management software pie. The overall company is striving to generate $1 billion in annual revenues or so by 2020.
Take a closer look at the numbers, and SolarWinds MSP is about the size of rival ConnectWise -- which generates about $243 million in annual revenues, CEO Arnie Bellini revealed at last week's IT Nation Connect 2018 conference in Orlando, Florida. Additional rivals Continuum, Datto and Kaseya have not revealed their annual revenues, though I believe Kaseya is in the $200 million to $300 million neighborhood.
SolarWinds launched an IPO in October 2018. Rivals Continuum, Datto and Kaseya are private equity owned -- though ChannelE2E senses that Kaseya could be acquired or IPOed in 2019 or so. ConnectWise remains closely held by its co-founders, though that company has also explored various funding scenarios from time to time as well, ChannelE2E believes.
How SolarWinds Engaged MSPs
SolarWinds moved into the MSP software market in 2013 when the company acquired N-able Technologies. At the time, about 17 percent of small businesses leveraged MSPs to managed their IT environments, Thompson estimates. Today, about 45 percent of SMBs today leverage MSPs, he adds.
"My view is ultimately we're going to end up with 70 percent or 75 percent of SMBs that are asking MSPs to manage all or a part of their environment," Thompson said during the SolarWinds earnings call earlier this week.
Amid that market growth, SolarWinds continues to expand its MSP-oriented software portfolio. In addition to the company's core RMM (remote monitoring and management) tools, the portfolio includes Threat Monitor, Patch Manager, Backup, and Log & Event Manager. And earlier today, the company unveiled an Access Rights Management tool based on the recent 8MAN acquisition.
SolarWinds MSP Evolution, MSSP Engagements
Looking ahead, SolarWinds Executive VP and CFO Bart Kalsu said the company is looking to evolve how MSPs subscribe for various services -- though the company doesn't expect to see annual-type billing with MSPs, he conceded.
The executives also pointed to SolarWinds' growing focus on the MSSP market. We'll share more details about that on ChannelE2E's sister site, MSSP Alert.
