SolarWinds Profit Forecast Trails Estimates After Huge Hack

Jordan Robertson, Bloomberg News

SolarWinds Corp. headquarters in Austin, Texas, U.S., on Tuesday, Dec. 22, 2020. A former security adviser at the IT monitoring and network management company SolarWinds Corp. said he warned management of cybersecurity risks and laid out a plan to improve it that was ultimately ignored. Photographer: Bronte Wittpenn/Bloomberg , Bloomberg

(Bloomberg) -- SolarWinds Corp., a software maker at the center of a major supply-chain cyber-attack, forecast earnings that were lower than analysts’ estimates as the company grapples with the cost of cleaning up the hack and sprawling government and private-sector investigations reveal a deepening impact.

The Austin, Texas-based company said Thursday that adjusted earnings for the current quarter will be 19 to 20 cents per share, versus an analysts’ average estimate of 22 cents per share. Adjusted revenue will be $247 million to $252 million, versus the estimate of $253.8 million.

SolarWinds’s shares were down slightly, less than 1%, to $15.70 as of 10:07 a.m. on Thursday.

The breach, disclosed in December, affected as many as 18,000 SolarWinds customers that downloaded software updates from the company that had been manipulated to include malware by suspected Russian state-sponsored hackers. The White House said that nine federal agencies and about 100 companies were then targeted for further exploitation, and that determining the full impact and rebuilding networks will take months.

In the most recent quarter, SolarWinds reported adjusted earnings of 26 cents per share per share on adjusted revenue of $265.5 million. Analysts had projected adjusted earnings of 25 cents per share on revenue of $259.4 million.

SolarWinds said that it incurred $3.5 million in one-time expenses in the last quarter related to the hacking attack, and executives said on a conference call with investors that they project costs of $20 million to $25 million related to the hack and upgrading the company’s security in 2021.

(Updates share price in third paragraph and costs of cyber response in last paragraph.)