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SolarWinds may spin off MSP business

Having just produced results showing higher growth in the MSP side, SolarWinds is looking at making the MSP arm a separate business. The MSP business - probably less than half the size of the parent in 2020, in spite of double-digit growth would have its own M&A strategy and funds to implement it.

It expects that the IT management business would continue to generate good returns and take market share, but the MSP business would be structured for growth as a SaaS business. As a whole, the SolarWinds company is planning on growth of around 5%-7% in the Q3 2020 with an adjusted EBITDA margin of just under 50%.  Customer numbers have increased only marginally in the last two quarters, but revenues have been driven by rising sales to larger customers

The MSP business has been adding around 1500 new MSP customers a quarter on a TTM basis, it says.

The plan is to explore the option of creating a separate, publicly listed business, and that this would aim at the SMB sector through MSPs.